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Baltimore & Ohio Railroad Company v. Harris/Opinion of the Court

ERROR to the Supreme Court of the District of Columbia, the case being thus:

On the 28th February, 1827, the State of Maryland incorporated a company known as the Baltimore and Ohio Railroad Company. It was, of course, a Maryland corporation, with capacity to sue and be sued, to take and condemn lands, subject to certain restrictions, and with the ordinary powers, rights, and privileges of corporations in that State and elsewhere. The place where the board of directors was to meet was Baltimore. There its dividends from the company's earnings were to be declared, and there was to be the seat of its government generally. It had power to make lateral roads. But the principal and declared purpose of the charter of the company, a purpose indicated by the company's name, was 'the construction of a railroad from the city of Baltimore to some suitable point on the Ohio River;' a matter to do which, in a line at all direct, it was necessary to have some action of the legislature of Virginia. Accordingly the legislature of Virginia, within eight days after the legislature of Maryland had passed its act of incorporation, passed an act to 'confirm' the same. The Virginia act reads thus:

'Whereas, an act has passed the legislature of Maryland, entitled 'An act to incorporate the Baltimore and Ohio Railroad Company, in the following words and figures,' viz.: (setting out the Maryland act,) Therefore be it enacted by the General Assembly, that the same rights and privileges shall be and are hereby granted to the aforesaid company, within the territory of Virginia, as are granted to them within the territory of Maryland. The said company shall be subject to the same pains, penalties, and obligations as are imposed by said act; and the same rights, privileges, and immunities which are reserved to the State of Maryland, or to the citizens thereof, are hereby reserved to the State of Virginia and her citizens, except as to making lateral roads; and that the road shall not strike the Ohio at a point below the mouth of the Little Kanawha; that the words 'other property,' in the 17th section of the Maryland act, shall not be construed to extend to any property other than materials necessary for the road, works, and buildings; and that in procuring land and materials for the road, they shall pursue the course pointed out by the Virginia laws.'

Under these acts a railroad was accordingly made between Baltimore and the Ohio River.

Subsequently to this date, that is to say, on the 22d February, 1831, the legislature of Maryland gave the company authority to build a lateral road, from the main road between Baltimore to the Ohio, to the line of the District of Columbia. In immediate sequence, Congress passed a law by which a connection with the Capital was opened through the District. The act of Congress, which was approved March 2d, 1831, entitled 'An act to authorize the extension, construction, and use of a lateral branch of the Baltimore and Ohio Railroad, into and within the District of Columbia,' ran thus:

'Whereas, It is represented to this present Congress that the Baltimore and Ohio Railroad Company, incorporated by the General Assembly of the State of Maryland, by an act passed the 28th day of February, 1827, are desirous under the powers which they claim to be vested in them by virtue of the provisions of the beforementioned act, to construct a lateral branch from the said Baltimore and Ohio Railroad to the District of Columbia; therefore,

'Be it enacted, &c., That the Baltimore and Ohio Railroad Company, incorporated by the said act of the General Assembly of the State of Maryland, shall be, and they are hereby authorized to extend into and within the District of Columbia, a lateral railroad, such as the said company shall construct or cause to be constructed, in a direction towards the said District, in connection with the road they have located and are constructing from the city of Baltimore to the Ohio River, in pursuance of said act of incorporation. And the said Baltimore and Ohio Railroad Company are hereby authorized to exercise the same powers, rights, and privileges, and shall be subject to the same restrictions in the construction and extension of the said lateral road into and within the said District, as they may exercise or be subject to under or by virtue of the said act of incorporation in the extension and construction of any railroad within the State of Maryland, and shall be entitled to the same rights, benefits, and immunities, in the use of said road and in regard thereto, as are provided in the said charter, except the right to construct any lateral road or roads in said District from said lateral road.'

A supplementary act of the legislature of Maryland, passed March 14th, 1832, provided that the stock issued by the company to complete this lateral road 'shall, united, form the capital upon which the net profits derived from the use of said road shall be apportioned.'

Under this act of Congress, and the act of Maryland authorizing a lateral road, a road was made from Washington to a point on the main road called the Washington Junction, not far from Baltimore, and so a complete road by rail opened from Washington to the Ohio River. At this point the Baltimore and Ohio Railroad terminated. From Belair, in Ohio, opposite this point of termination, began another road (the Ohio Central), running to Columbus. While, however, the road from Washington to the Ohio River was thus made up of two parts, one from Washington to the Junction, and one from the Junction to the Ohio River, each part, as the reader will have observed, was made in virtue of two different enactments; the former, from Washington to the Junction, by the act of Congress and the act of Maryland; the latter, or main branch, by the act of Maryland and the act of Virginia.

In this state of things, one Harris bought, at an office which the Baltimore and Ohio Railroad Company had established in Washington, a ticket with which to go to Columbus, Ohio. This ticket was made up of three coupons, one for travel between Washington City and the Washington Junction; another for travel between Washington Junction and the Ohio River, over the line of the Baltimore and Ohio Railroad, and the third and last, for travel from Belair, in Ohio, opposite the terminus of the Baltimore and Ohio Railroad, to Columbus, in Ohio, over the line of the Central Ohio Railroad, already mentioned as confessedly disconnected with the Baltimore and Ohio one, except in the matter of running junction.

Over the first coupon was a memorandum thus:

'Responsibility for safety of person or loss of baggage on each portion of the route is confined to the proprietors of that portion alone.'

'CONDITIONED AS ABOVE.'

While travelling on the Baltimore and Ohio Railroad, at Mannington, in the State of Virginia, Harris was severely injured by a collision between the train in which he was so travelling, and another train of the Baltimore and Ohio Railroad Company. He accordingly brought suit against the railroad in the Supreme Court of the District of Columbia for the injury he had suffered. The writ was served on the President of the Baltimore and Ohio Railroad Company. At the time that the writ was thus served, there was no act of Congress, authorizing suits against foreign corporations, doing business in the District. Some time afterwards, that is to say, on the 22d of February, 1867, Congress enacted:

'That in actions against foreign corporations doing business in the District of Columbia, all process may be served on the agent of such corporation, or person conducting its business aforesaid, or in case he is absent and cannot be found, by leaving a copy thereof at the principal place of business of, in the District, and such service shall be effectual to bring the corporation before the court.'

The declaration was against the company, describing it not as a citizen, or resident, or inhabitant of the District, or of any State, but as 'a corporation duly and legally established by law, having and professing a legal and recognized existence, within the limits of the District of Columbia, and exercising therein corporate powers, rights, and privileges, in the making of the contracts, receiving freight and passengers, for transportation in and along their said railroad, from the city of Washington to the Ohio River;' and it relied on the purchase of the ticket, and a contract in virtue thereof, to carry the plaintiff safely to the Ohio River, and the breach of the contract in what had occurred.

The company pleaded in abatement,

1st. That the company was not an inhabitant of the District of Columbia when the writ was served.

2d. That the company was not found in the District of Columbia when the writ was served.

The view of the company in their pleas apparently was, that no new corporation had been created by the act of Congress of 1831, within the District, and so made an inhabitant of it; that the old corporation by virtue of that act, did not become such an inhabitant, or found within the District, and that the court in which the action was brought had succeeded but to the jurisdiction of the Circuit Court of the District; a court in regard to whose jurisdiction it was provided by the 6th section of an act of February 27th, 1801, identical, so far as this suit was concerned, with the 11th section of the Judiciary Act of 1789:

'That no action or suit shall be brought before said court, by any original process, against any person who shall not be an inhabitant of, or found within said District at the time of serving the writ.'

To the first of the above-mentioned pleas, Harris replied that the company was an inhabitant of the District of Columbia, by virtue of the act of Congress already mentioned, the date and title of which he set forth, and that they had accepted its provisions, and constructed their roads under the act, availing themselves of the privileges thus conferred, and doing business under it in the District of Columbia.

To the second, that the company was found within the District of Columbia when the writ was served, and was within the jurisdiction of the court, by virtue of the acts of Congress mentioned in the first replication, and that due and legal service of the writ was made upon the person of the president within the District, &c.

The company demurred to these replications, adding to the demurrer an admission of the service on the president, but denying that such service was a legal service, or service on the company. The demurrers were overruled. The company thereupon filed the general issue of Not Guilty. Upon the trial, the counsel of the company asked the court to instruct the jury that upon the evidence before them the plaintiff could not recover.

The court refused to give the instruction, and the jury having found $8250 damages for the plaintiff, the company brought the case here.

It was argued at the last term, when a re-argument was directed upon one of the points raised in the first argument, to wit:

'Whether the acts of Congress and the statutes of West Virginia, relating to the Baltimore and Ohio Railroad Company, created a new and distinct corporation under that name in the said State and District of Columbia respectively, or whether they are only enabling acts, as respected the corporation under that name, created by the State of Maryland.'

Messrs. Bradley and Buchanan, on the different arguments, for the plaintiffs in error:

1. The instruction asked for should have been given, for this reason among others, that the declaration was essentially defective. The decisions of this court require that the averment of jurisdiction shall be positive; that the declaration shall state expressly the fact on which jurisdiction depends. Now all that this declaration avers it could aver under the Bank of Augusta v. Earle, though that case decided that 'a corporation can have no legal existence outside of the place in which it was created; must dwell in the place of its creation, and cannot migrate to another sovereignty.' For, though a non-resident corporation, it might contract, through its agents, within the District of Columbia, and thus exercise a corporate power, right, and privilege, in the making of such contracts. There is thus an absolute failure in the averment of this narr to state the single and necessary circumstances, essential to the jurisdiction of this court. And this defect which is reached by the demurrer, is fatal to the case of the plaintiff.

2. The company has lost none of the benefits of its pleas to the jurisdiction or its demurrer by pleading over; and if it appears, from an inspection of the whole record, either that the court below had no jurisdiction of the case at bar, or that the pleadings of the plaintiff below were so defective that the court below should have rendered judgment for the defendant, this court will reverse the judgment given.

3. But supposing the narr good. Was this defendant an inhabitant of the District of Columbia, or capable of being found within it?

'If a corporation, as is well settled, and is declared in words in the case of the Ohio and Mississippi Railroad Company v. Wheeler, can have no legal existence beyond the State or sovereignty which brings it into life,' and must dwell in the place of its creation, this defendant cannot, by possibility, be an inhabitant of this District, or be found within this District, unless it can be shown that it has been incorporated by a law of Congress, operating within this District. Now, before a sovereignty can be said to give existence to a corporation, it must authorize such a body to have perpetual succession, to sue and be sued, implead and be impleaded, grant and receive by its corporate name, to have a common seal, to make by-laws, to have the power of amotion or removal of members. Certainly the act of Congress did not incorporate this company. Yet unless the company be incorporated in the District it cannot be sued there against its will. It is not enough that the corporation should be able to hold, control, and manage property, or possess certain privileges and powers within the District. All this may be done by an agent; it may still be a non-resident. The late case of Day v. Newark India-rubber Company is a case in point adverse to the right of Harris to sue the defendant in the Supreme Court of the District of Columbia. The defendant corporation was there sued in the Circuit Court for the district of New York, whose jurisdiction under the eleventh section of the Judiciary Act of 1789, is identical with that given to the Supreme Court of the District of Columbia under the act of 1801, local to the District, which regulates this case. The court relying on the cases cited by us held that there was no jurisdiction. The syllabus is thus:

'Where a manufacturing corporation, chartered by New Jersey, and having its place of business and manufactory in that State, had a store in New York, conducted by its agents, where its goods were sold, and a suit was commenced in this court by attaching the goods found in that store, and serving a summons on its president at New York, yet held that the corporation was not an inhabitant of the district of New York, or found within it at the time of serving the process.'

And this view of the law is sustained by nearly every legislature in the country, as also by Congress. Certainly it has been found necessary to provide, by legislation, for giving jurisdiction, even to State courts, having common law powers, over foreign corporations, having agents within the State, and there exercising some of their franchises. This was done in Maryland by art. 75, secs. 100, 101, and 102, of the Public General Laws of that State; in Pennsylvania, by the act of 21st March, 1849; in New York, by the act of 1849, ch. 107. In other States, as in Illinois, a foreign corporation coming into the State is required by statute to enter into a stipulation that its agents shall accept service of writs issued against it. And what shall we say of this very District of Columbia? Why was the act of February 27th, 1867, passed, authorizing service upon a foreign corporation doing business within the District, if the power to make such service was already in existence? This act of 1867 is a declaration by Congress that its act of 1831 authorizing the introduction of the railroad into the District, gave no such right against the road. But the act of 1867 was not passed till after this suit was brought.

The language of the Virginia act is very different from that of the act of Congress. It re-enacts, totidem verbis, the Maryland statute of incorporation. In other words it reincorporates the company; and hence in The Baltimore and Ohio Railroad Company v. Gallahue, reported in 12th Grattan, it was decided that this act of Virginia did make the company a clear and complete Virginia corporation. The same view was taken-the question being afterwards regarded as hardly longer open to question-by the Court of Appeals of West Virginia in the subsequent cases of Goshorn v. The Supervisors, and The Baltimore and Ohio Railroad Company v. The Supervisors. But, on the question of jurisdiction, we are not concerned with what the statute of Virginia did. The question is, did the act of Congress re-incorporate? Plaintly it did not.

But if the company is incorporated within the District of Columbia, there were three distinct corporations; for if the act of Congress made a corporation in the District, the act of Virginia did, a fortiori, make one in Virginia. But if there were three distinct corporations, the instruction asked for ought certainly to have been given; for that corporation in the District was no more responsible for the injuries which Harris sustained near Mannington, in Virginia, than it would have been had the same been sustained on the line of the Central Ohio Railroad in the State of Ohio. The American rule is, that in the absence of special contract, each company is only liable for the extent of its own route.

Instead of producing and proving the ticket as laid in his narr, the plaintiff produced a ticket consisting of three coupons, by which the liability of each company was limited to its respective route. This was a fatal variance.

Messrs. T. I. D. Fuller and W. D. Davidge, contra, contended that the declaration, reasonably interpreted, and especially as helped by the replication, demurred to, and all whose allegations of fact were thus admitted, did show a habitat; which was all that was necessary for it to show; that whether the act of Congress and the act of Virginia created new and distinct corporations or were only enabling acts, was not, as respected the great point in the case-the right to sue the corporation in the District-a practical question, for that even though no new corporation was created in the District, still if the old corporation had a habitat there, that this was enough: that coming there to exercise its franchise, to take, condemn, and hold, to take land, fares and freight, to run its cars in and out, it was estopped to deny a habitat.

The true view of the case, the learned counsel contended, was that there was but one company and one road; though a road divided for convenience into sections; sections, however, not identical with the territories of the different sovereignties. It had never been pretended by any one (they argued), that there was more than one company, one organization, and one set of officers. Three distinct corporations would destroy the unity of purpose and action essential to the ends of the charter. The charter as originally conferred by the State of Maryland, contemplated the exercise of corporate powers outside of the State, and such as were not within the power of the State alone to confer. It contemplated the extension and construction of the road into two other sovereignties for its termini. And, immediately after its creation by the State of Maryland, the company applied to Congress and the State of Virginia for the privilege of extending its road into their jurisdictions, and obtained it, with the corporate right to exercise the same powers as were conferred by the parent act. But when the corporation actually came into the District or into Virginia, whether by being 'enabled' or 're-incorporated' it was not the less in the place whither it had come, and having a habitat there it was liable to process. The broad language used by this court in The Ohio and Mississippi Railroad Company v. Wheeler, 'that a corporation can have no legal existence beyond the State which created it,' should be limited to the question then before the court-that of citizenship.

If the act of Congress did not re-incorporate, and if re-incorporation was necessary to give a right to sue, to what inconvenience is the suitor not exposed! The argument cannot be better put than in the language of the court in 12th Grattan.

'It would be a startling proposition if in all such cases citizens of the District and others should be denied all remedy in its courts, for causes of action arising under contracts and acts entered into or done within its territory, and should be turned over to the courts and laws of a sister State to seek redress.'

Did Congress in allowing the entry into the District design this great inconvenience?

The argument of the other side, founded on the coupons or division of the tickets, assumed that there were three separate corporations; an assumption now shown to be without foundation.

Reply: The argument ab inconvenienti in 12th Grattan was used to help out the argument, which logically or legally it cannot at all help out, that the legislature of Virginia had meant to create a new and separate corporation; the exact point decided in that case and affirmed in the two cases from West Virgina. It was not used to show that a corporation of one State extending its road into another, even with its leave, became liable to be sued in that other without being re-incorporated. But the argument ab inconvenienti amounts to nothing. The rule of the common law and whatever of inconvenience it has, is remediable by a statute of two or three lines, and everywhere is being remedied as corporations go into foreign States, and the necessity for a remedy arises.

What Congress meant to do on this particular point by its act of 1831 is a point to be settled by the language of the act, not by the suggestion of an inconvenience but fancied. What Congress itself considered that it meant by its act of 1831, and what it considered had both been done and left undone by that act, Congress has itself declared by another act; its act of 1867. From the last-named year, and not before, Congress declares that it meant to change the rule of the common law. As this perhaps is the only case in the District where service on a foreign corporation has been sought for, the inconvenience has hitherto been little. Since 1867 and for all future time it is nothing.

Mr. Justice SWAYNE delivered the opinion of the court.

This is a writ of error to the Supreme Court of the District of Columbia.

Harris sued the Baltimore and Ohio Railroad Company for injuries which he received by a collision. The declaration sets out that the company is a corporation established by law by the name of the Baltimore and Ohio Railroad Company, having a legal and recognized existence within the limits of the District of Columbia and exercising there their corporate rights and privileges in the making of contracts and receiving freight and passengers for transportation upon their roads from the city of Washington to the Ohio River; that at the city of Washington, on the 23d of October, 1864, the plaintiff, wishing to be transported by the company over their roads to the Ohio River and towards the city of Columbus in the State of Ohio, for the sum of fifteen dollars, paid to the company, purchased of them a ticket for a seat and passage in their cars, to be transported along their roads from the city of Washington to the Ohio River and towards the city of Columbus; that in pursuance of this contract he took his seat in one of the cars of the company; that the company, in consideration of the money so paid, undertook and promised to transport him safely to the Ohio River; that the company managed their trains so negligently and carelessly that two trains, running in opposite directions, came in collision near Mannington, in the State of Virginia, whereby the plaintiff received the injuries complained of.

The company pleaded two pleas in abatement.

(1) That the company was not an inhabitant of the District of Columbia when the writ was served. (2) That the company was not found in the District of Columbia when the writ was served.

To the first plea Harris replied that the company was an inhabitant of the District of Columbia by virtue of certain acts of Congress, the dates and titles of which are set forth, and that they had accepted the provisions of those acts and constructed their roads under them, availing themselves of the privileges thus conferred and doing business under them in the District of Columbia. To the second plea he replied that the company was found within the District of Columbia when the writ was served, and was within the jurisdiction of the court by virtue of the acts of Congress mentioned in the first replication.

The company demurred to these replications. The demurrers were overruled. The company thereupon filed the general issue of not guilty. The cause was tried by a jury and a verdict found for the plaintiff, upon which judgment was entered.

Upon the trial the counsel for the company prayed the court to instruct the jury that upon the evidence before them the plaintiff was not entitled to recover. The court refused to give this instruction, and the company excepted. Other exceptions appear by the record to have been taken, but they were not embodied in a bill of exceptions and we cannot therefore consider them. The errors insisted upon here, at the first argument of the case, were:

The overruling of the demurrers to the replications to the pleas in abatement.

The refusal of the court to give the instruction above set forth.

And that the declaration is fatally defective, wherefore the judgment should have been arrested and must now be reversed.

When the case was first considered by this court in conference, it was found that while all the judges were of opinion that the judgment should be affirmed, there was a difference of opinion upon the question whether the acts of Congress and the statutes of Virginia relating to the company created a new and distinct corporation in the District of Columbia and in the State of Virginia respectively, or whether they were only enabling acts in respect to the corporation under the name of the 'Baltimore and Ohio Railroad Company,' as originally created by the State of Maryland. Subsequently the question was ordered to stand for reargument, and it has been reargued by the counsel on both sides. As the solution of this question must determine, to a large extent, the grounds upon which the judgment of the court is to be placed, it is necessary carefully to consider the subject.

The Baltimore and Ohio Railroad Company was incorporated by an act of the legislature of Maryland, passed on the 28th of February, 1827. On the 8th of March following, the legislature of Virginia passed an act whereby, after reciting the Maryland act, it was declared 'that the same rights and privileges shall be, and are hereby, granted to the aforesaid company within the territory of Virginia, and the said company shall be subject to the same pains, penalties, and obligations as are imposed by said act, and the same rights, privileges, and immunities which are reserved to the State of Maryland or to the citizens thereof are hereby reserved to the State of Virginia and her citizens.'

Several other statutes relating to the company were subsequently passed in Virginia, but they do not materially affect the question under consideration, and need not be more particularly adverted to. By an act of the legislature of Maryland, of the 22d of February, 1831, the company was authorized to build a lateral road to the line of the District of Columbia. On the 2d of March, 1831, Congress passed an act which, after reciting, by a preamble, the original act of incorporation, enacted 'that the Baltimore and Ohio Railroad Company, incorporated by the said act of the General Assembly of the State of Maryland, shall be, and they are hereby, authorized to extend into and within the District of Columbia a lateral railroad.'. . . 'And the said Baltimore and Ohio Railroad Company are hereby authorized to exercise the same powers, rights, and privileges, and shall be subject to the same restrictions in the construction and extension of the said lateral road into and within the said District as they may exercise or be subject to under or by virtue of the said act of incorporation in the extension and construction of any railroad within the State of Maryland, and shall be entitled to the same rights, benefits, and immunities in the use of said road and in regard thereto as are provided in the said charter, except the right to construct any lateral road or roads in said District from said lateral road.' A number of local regulations follow, which are not material to be considered. A supplementary act of the legislature of Maryland, passed March 14th, 1832, provided that the stock issued by the company to complete this lateral road 'shall, united, form the capital upon which the net profits derived from the use of said road shall be apportioned,' &c.

The act of Congress of February 26th, 1834, and of March 3d, 1835, are confined to matters of detail, and may be laid out of view.

When the case was reargued as directed by this court, the counsel for the company admitted that the acts of Congress in question were only enabling acts, and that they did not create a new corporation, but they insisted that the acts of Virginia were of a different character, and that they worked that result.

As regards the point under consideration we find no substantial difference. In both the original Maryland act of incorporation is referred to, but neither expressly or by implication create a new corporation. The company was chartered to construct a road in Virginia as well as in Maryland. The latter could not be done without the consent of Virginia. That consent was given upon the terms which she thought proper to prescribe. With a few exceptions, not material to the question before us, they were the same as to powers, privileges, obligations, restrictions, and liabilities as those contained in the original charter. The permission was broad and comprehensive in its scope, but it was a license and nothing more. It was given to the Maryland corporation as such, and that body was the same in all its elements and in its identity afterwards as before. In its name, locality, capital stock, the election and power of its officers, in the mode of declaring dividends, and doing all its business, its unity was unchanged. Only the sphere of its operations was enlarged.

In what it does in Virginia the same principle is involved as in the transactions of the Georgia corporation in Alabama, which came under the consideration of this court in The Bank of Augusta v. Earle. The distinction is that here the assent of the foreign authority is express, while there it was implied. A corporation is in law, for civil purposes, deemed a person. It may sue and be sued, grant and receive, and do all other acts not ultra vires which a natural person could do. The chief point of difference between the natural and the artificial person is that the former may do whatever is not forbidden by law; the latter can do only what is authorized by its charter. It cannot migrate, but may exercise its authority in a foreign territory upon such conditions as may be prescribed by the law of the place. One of these conditions may be that it shall consent to be sued there. If it do business there it will be presumed to have assented and will be bound accordingly. For the purposes of Federal jurisdiction it is regarded as if it were a citizen of the State where it was created, and no averment or proof as to the citizenship of its members elsewhere will be permitted. There is a presumption of law which is conclusive.

We see no reason why several States cannot, by competent legislation, unite in creating the same corporation or in combining several pre-existing corporations into a single one. The Philadelphia, Wilmington, and Baltimore Railroad Company is one of the latter description. In the case of that company against Maryland, Chief Justice Taney, in delivering the opinion of this court, said: 'The plaintiff in error is a corporation composed of several railroad companies, which had been previously chartered by the States of Maryland, Delaware, and Pennsylvania, and which, by corresponding laws of the respective States, were united together and form one corporation, under the name and style of The Philadelphia, Wilmington, and Baltimore Railroad Company. The road of this corporation extends from Philadelphia to Baltimore.' He gives the history of the legislation by which this result was produced. No question was raised on the subject, but the opinion assumes the valid existence of the corporation thus created. The case was brought into this court under the 25th section of the Judiciary Act of 1789. The jurisdictional effect of the existence of such a corporation, as regards the Federal courts, is the same as that of a copartnership of individual citizens residing in different States. Nor do we see any reason why one State may not make a corporation of another State, as there organized and conducted, a corporation of its own, quo ad hoc any property within its territorial jurisdiction. That this may be done was distinctly held in The Ohio and Mississippi Railroad Co. v. Wheeler. It is well settled that corporations of one State may exercise their faculties in another, so far, and on such terms, and to such extent as may be permitted by the latter. We hold that the case before us is within this latter category. The question is always one of legislative intent, and not of legislative power or legal possibility. So far as there is anything in the language of the court in the case of The Ohio and Mississippi Railroad Co. v. Wheeler, in conflict with what has been here said, it is intended to be restrained and qualified by this opinion. We will add, however, that as the case appears in the report, we think the judgment of the court was correctly given. It was the case of an Indiana railroad company licensed by Ohio, suing a citizen of Indiana in the Federal court of that State.

In The Baltimore and Ohio Railroad Co. v. Gallahue's Administrator, 12 Grattan, it was held by the Court of Appeals of Virginia that the company was suable in that State. In this we concur. We think this condition is clearly implied in the license, and that the company, by constructing its road there, assented to it. The authority of that case was recognized by the Court of Appeals of West Virginia, in Goshorn v. The Supervisors, and in The Baltimore and Ohio Railroad Co. v. The Supervisors et al. Here the question is whether the company was suable in the District of Columbia. In the case reported in Grattan, it was said: 'It would be a startling proposition if in all such cases citizens of Virginia and others should be denied all remedy in her courts, for causes of action arising under contracts and acts entered into or done within her territory, and should be turned over to the courts and laws of a sister State to seek redress.' The same consideration apply to the case before us. When this suit was commenced, if the theory maintained by the counsel for the plaintiff in error be correct, however large or small the cause of action, and whether it were a proper one for legal or equitable cognizance, there could be no legal redress short of the seat of the company in another State. In many instances the cost of the remedy would have largely exceeded the value of its fruits. In suits local in their character, both at law and in equity, there could be no relief. The result would be, to a large extent, immunity from all legal responsibility. It is not to be supposed that Congress intended that the important powers and privileges granted should be followed by such results.

But turning our attention from this view of the subject and looking at the statute alone, and reading it by its own light, we entertain no doubt that it made the company liable to suit, where this suit was brought in all respects as if it had been an independent corporation of the same locality.

We will now consider, specifically, the several objections to the judgment, relied upon by the plaintiffs in error.

The pleas in abatement were bad. The demurrers reached back to the first error in the pleadings, and judgment was properly given against the party who committed it. If the replications were bad, bad replications were sufficient answers to bad pleas. But it is said the declaration was bad, and that the demurrers brought the defect in that pleading under review. The principle has no application where the defect is one of form and not of substance.

The alleged defect in the declaration will be considered in connection with the error assigned relating to that subject. But if the court decided erroneously, the company waived the error by pleading over in bar. If it were desired to bring up the judgment upon the pleadings for examination by this court the company should have stood by the demurrers. In the proper order of pleading which is obligatory a plea in bar waives all pleas, and the right to plead, in abatement.

The bill of exceptions which brought upon the record the refusal of the court to instruct the jury that the plaintiff was not entitled to recover, exhibits, among others, the following facts: Harris contracted, paid his money, and received his tickets at the city of Washington. The tickets consisted of three coupons-one for his passage from Baltimore to Columbus, Ohio; another for his passage from Washington Junction to Baltimore, and the third for his passage from Washington City to Washington Junction. It is necessary to consider only the two last mentioned. They are both headed 'Baltimore and Ohio Railroad,' and signed 'L. M. Cole, general ticket agent.' Above the coupon first mentioned is this memorandum: 'Responsibility for safety of person or loss of baggage on each portion of the route is confined to the proprietors of that portion alone.' Each coupon has printed on its face the words 'Conditioned as above.' The coupon last mentioned gave Harris the right of passage over the lateral branch both in the District of Columbia and in Maryland. The second coupon gave him the same right in respect to the main stem both in Maryland and in Virginia.

The instruction asked for assumed erroneously that there were two corporations under the same name, one of them in Virginia, and that the latter was liable and alone liable to the plaintiff. The attempted limitation of responsibility by the memoranda at the head and on the face of the coupons proceeded upon the same erroneous assumption as to the duality of the corporate ownership of the roads.

These views are sufficiently answered by what has been already said upon the subject. But if we concurred with the counsel for the plaintiff in error we should then hold that the agent who issued the coupons was the agent of both corporations; that the contract was a joint one; and that it involved a joint liability, unless the knowledge of the memoranda on the coupons and the assent of the plaintiff were clearly brought home to him. In all such cases the burden of proof rests upon the carrier. The bill of exceptions does not show that any testimony was given upon that subject. The court was asked to assume that the limitation on the face of coupons was itself conclusive, and to instruct the jury accordingly. But having held the unity of the corporation, of the proprietorship of the roads, and of the contract, it is needless further to consider the case in this aspect. The instruction asked for was properly refused.

The jurisdiction of the court was not governed by the 11th section of the Judiciary Act of 1789. It did not depend upon the citizenship of the parties. It was controlled by acts of Congress local to the district. A citizen of the district cannot sue in the Circuit Courts of a State. If a corporation appear and defend in a foreign State it is bound by the judgment. If the declaration were insufficient, the additional averments in the replications admitted by the demurrer to be true, cured the defect.

JUDGMENT AFFIRMED.


text: Talk:Baltimore & Ohio Railroad Company v. Harris/Opinion of the Court

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


text:
French v. Shoemaker (79 U.S. 86)

THESE were two motions by the opposite parties, in an appeal from a decree of the Circuit Court of the United States for the District of Virginia.

1. A motion on behalf of the appellee to dismiss the appeal for want of jurisdiction, on the ground of the decree's being interlocutory and not final.

2. A motion on behalf of the appellant for a supersedeas, or for any suitable order prohibiting the court from proceedings on the decree while the appeal was pending.

The case was thus:

In the year 1854, two persons, James S. French and Walter Lenox, subscribed for the whole stock of the Washington and Alexandria Railroad Company, then recently incorporated by the State of Virginia; French taking three-fourths and Lenox one-fourth, and French being made President of the company. The road was built. French and Lenox, however, spent very little money of their own in its construction, but raised large sums by borrowing. When, therefore, the road was built the company was seriously embarrassed. Two deeds of trust had been executed in 1855, and in 1857 another deed was made to Lenox, as trustee, to secure bonds, issued to raise money for the purposes of the road.

The civil war broke out when the road was in this condition, and French and Lenox went South, and were disabled by the condition of the country and by the government's taking military possession of the road from asserting their title to the property.

During their absence, a proceeding was instituted in the Alexandria County Court for the removal of Lenox as trustee in the deed of trust to him, and this resulted in an order for such removal, and for the substitution of one Stewart as trustee in his place. The new trustee proceeded in alleged conformity to the deed of trust to sell the railroad.

Under the sale thus made, a new company was organized, which assumed the name of the Washington, Alexandria, and Georgetown Railroad Company; and the government having relinquished the road in 1865, this company took possession of it at once; and not long afterwards entered into a contract with the Adams Express Company in relation to the conveyance of express freight, and the furnishing by the latter of means to work the road. This contract did not prove satisfactory, and by consent of both parties, a lease for ten years was made to two persons, named Stevens and Phelps, in May, 1866; and in the following June, another contract for means of operation and for the conveyance of express freight was made for ten years with the Adams Express Company.

Litigation soon arose upon this lease and upon these contracts. One Davison, asserting himself to be a stockholder of the Washington, Alexandria, and Georgetown Railroad Company, filed his bill in the Alexandria County Court in November, 1866, alleging that the lease was made without authority, and in fraud of the rights of the stockholders, and praying that it might be set aside and annulled. The Adams Express Company filed its bill about the same time, in the Circuit Court of the United States for the District of Virginia, praying for the enforcement of its contract with the company, and with the lessees; and under that proceeding an order was made by the Circuit Court for the appointment of receivers of the road, who took possession.

The Adams Express Company was not a party to the suit in the State court, nor was the Washington and Alexandria Railroad Company a party to the suit in the Federal court.

The Washington and Alexandria Railroad Company describing itself as that company by James S. French, its President, had already in March, 1866 (the government having with the suppression of the rebellion, given up, as already said, its possession, and French and Lenox having returned from the South), filed its bill in the Alexandria County Court asserting its title to the road, charging fraud in the whole proceeding for the organization of the Washington, Alexandria, andria, and Georgetown Railroad Company, and praying that it might be declared void, and that a decree might be made establishing its own original title to the road as unimpaired by that proceeding.

In this condition of conflicting claims, and with these and other suits pending, two instruments were executed with a view to adjust things between all the parties at issue; and who were the said French and Lenox, Stevens and Phelps, and one Shoemaker, representing the Adams Express Company. Two other persons, viz., Brent and Smith, also had an interest.

The transaction vested in Shoemaker the interest of French in the Washington and Alexandria Railroad Company as security to himself and the Adams Express Company for the repayment of the $5000 then advanced, and the sums to be thereafter advanced in payment of the liabilities of the company, and of the lessees incurred on account of the road, and as security to all the parties for the performance of the covenants contained in the agreement, and especially for the reorganization of the company upon the rendering of a decree by the said Alexandria County Court establishing its title to the road, and for the distribution of the stock of the company among the parties in the stipulated proportions. These instruments, which made what might be called a sort of settlement contract, were intended as an adjustment of controversies relating to the Washington and Alexandria Railroad Company, so far as the parties to it were concerned, and as an arrangement for means to liquidate its just liabilities, and put it into successful and profitable operation. The decree, on the rendering of which the contract was to be carried into effect, was rendered in the said Alexandria County Court on the 28th of August, 1868. It declared the sale by the trustee, Stuart, and the organization of the new company fraudulent, null, and void; and ordered that on execution of a bond in a sum specified, to account to creditors for the receipts of the road, it should be 'restored' by the officers of the so-called new company 'to the possession of the Alexandria and Washington Railroad Company, its duly constituted officers and agents.' At the time of this decree the road was in possession of the receivers appointed by the Federal court at teh suit of Adams Express Company.

In this state of things thus far completed, Shoemaker filed a bill in the court below, the Circuit Court for Virginia, against French; and French then filed a cross-bill against him. The original bill, after stating the rendering of the decree contemplated by the settlement contract, as just above mentioned, stating also the alleged equities arising from the contract, and the action of the parties to it, except French, charged that notwighstanding French's conveyance, and notwithstanding that a meeting had been held of all the parties to the contract, to reorganize the roal under the contract (he having been present), French, under color of the order of restoration, had executed a pretended bond in the sum specified in the order, as the bond required by the decree, and that he had ordered the clerk of the Circuit Court to issue a writ of possession ordering the restoration of the road and property of the company, and under color of this fraudulent and illegal proceeding had attempted to take possession of the road, notwithstanding that it was at the time in possession of the receivers of the Circuit Court at the suit of the Adams Express Company, represented by the complainant; charging further, that French was so reckless of his obligation to him, the complainant, Shoemaker, and so determined to prevent the execution of the reorganization of the company, that unless enjoined he would damage the interest of the complainant and the others irreparably. The bill prayed that French be enjoined from attempting to do any act as President of the said Alexandria and Washington Railroad Company, and from intermeddling with the road and property of the company, or with the parties to the agreement, or with the complainant in carrying out its provisions, or from holding any meeting for the reorganization of the company, or from taking any proceedings at law or in equity for that purpose, except by proceedings in the suit in which the bill was filed in the Circuit Court of the United States for Virginia, or by attending the meetings for the purpose of such reorganization, and voting or using the interest he may have under the settlement, if he have any, for the quiet and proper object of the said meetings; and that his said interest be sold by a commissioner of the court, for the payment of said sum of $5000, according to the practice of the court; and that the complainant, in his own behalf, and as trustee of said parties to said agreement, have such other and further relief as his case and their interest might require.

The answer of French admitted the execution of the contract, and that he was then and for some time afterwards satisfied with it; but proceeded to allege circumstances of hardship and imposition under which he was induced to become a party to it, and various other matters supposed to show a want of equity in the complainant.

The matters set up in the answer were again set up in the cross-bill of French, together with other matter of complaint, as grounds for his prayer that the settlement contract might be annulled, and the parties to it be restrained from all attempts to enforce any pretended rights under it. The point too was taken in the cross-bill, that Stevens and Phelps were necessary parties to the original bill.

The answer of the original complainant to this bill denied every substantial allegation of fact on which relief against the contract was claimed.

The decree was thus made, Chase, C. J., presiding:

title: French v. Shoemaker (79 U.S. 86)


text: Talk:French v. Shoemaker (79 U.S. 86)

title: Talk:French v. Shoemaker (79 U.S. 86)


text:
French v. Shoemaker (79 U.S. 86)/Opinion of the Court

'This cause coming on to be heard upon the bill, answer, and replication, and upon the cross-bill, answer, and replication, and upon the proofs, and being maturely considered, the court is of opinion that the equity of the case is with the complainant in the original bill, and thereupon do order, adjudge, and decree that James S. French, the defendant in the original bill, be perpetually enjoined and restrained from any use of the name or title of the president of the Washington and Alexandria Railroad Company under any election to that office heretofore held, and from any action by himself or any attorney or agent to interfere with any proceeding for the reorganization of the said company under the contracts mentioned in said bill, and dated on the 6th of December, 1867, and from any proceeding whatever not in accordance with the said contracts, without prejudice, however, to the right of the said French to the stock assigned to him by said contract, or to assert any claim he may have against said company reorganized under said contract, or against the said Shoemaker, or against the Adams Express Company, not in contravention of the said contract, or to pursue by proper proceedings in law or equity any claim he may have in respect to the distribution of stock made in and by said contract, founded upon the failure of consideration or other cause.

'It is further ordered, adjudged, and decreed, that the said defendant, French, pay the costs in this cause, and leave is given to either party to apply at the foot of this decree for such further order as may be necessary to its due execution, or as may be required in relation to any matter not finally determined by it.'

From this decree an appeal to this court was immediately and within ten days asked for by French, and allowed by the Chief Justice, 'upon the defendant's giving bond with good and sufficient security in the sum of $500.' The bond, & c., was given.

In this state of things the bill and cross-bill in the equity suit, on which the decree has just above been given, having been, as the reader will have observed, a proceeding between French and Shoemaker alone, and the objection to the bill for want of proper parties taken and overruled, French began a suit in the Supreme Court of the District of Columbia against all the parties to the settlement contract except Shoemaker, for the purpose of setting aside the agreement. His bill being demurred to because Shoemaker was not a party, and the demurrer being sustained, Shoemaker was added.

Hereupon, on the application of Shoemaker to the Circuit Court of Virginia, that court ordered French to dismiss his bill in the District, and to stop proceedings under pain of imprisonment. He dismissed his bill.

It was in this state of things that the two motions mentioned at the opening of the report (on page 87), came before this court.

I. ON THE FIRST MOTION, to wit, that of Shoemaker, the appellee, to dismiss the appeal, it was argued:In support of the motion, that the decree was not final, because it had not touched the prayer for foreclosure of the mortgage for $5000, one important object of the bill.

Neither had it dismissed the cross-bill. Yet in Ayres v. Carver, a decree was held not final on dismissal of a cross-bill the original bill being left. This was but a converse of that case.

That the decree was not meant to be final was shown by the language of the decree, which anticipated further action of the court in matters not finally disposed of.

Contra, as respected this motion, it was said that the subject not disposed of, to wit, the mortgage for $5000, was distinct from that which formed the substance of the decree, and that, in fact, the bill was multifarious in joining these two separate claims. The decree completely disposed of one of them, and was final as to that. That was enough.

To what was said about the cross-bill not being dismissed, it was replied, that it had been in effect dismissed when on a cause declared to have been heard on bill and cross-bill, the equity was declared to have been with the complainant in the original bill.

The leave reserved was to apply on the foot of the decree, and plainly was meant for formal orders only. The Chief Justice, who made the decree with this reservation, allowed an appeal immediately; a proof that he did consider that he had made a final decree.

II. AS TO THE SECOND MOTION, for a supersedeas, or for any suitable order prohibiting the court below from proceeding, &c., it was argued-the parties reserving their position of parties moving-in favor of the appellant,

1. That while the merits of this case could not be fully considered on a motion, it was necessary to refer to the main points in the case in order to act on the motion. The agreement was not between French and Shoemaker alone, but was signed by five other persons, to wit: Lenox, Stevens, Phelps, Smith, and Brent. These persons were so interested in the contracts that they were necessary parties to the suit. Now the objection for want of parties had been distinctly made in the cross-bill, on the hearing in the Circuit Court below. The decree nevertheless went the full length of setting up the contracts, and enjoined French 'from any proceedings whatever not in accordance with' them. It was in effect an injunction against the Alexandria and Washington Railroad Company, which was no party to the record. And the effect of the order subsequently made, to stop proceedings in the court of the District, was to prevent the appellant from pursuing his remedy against the parties named, and to make the decree conclusive in their favor, although they were not parties to the proceeding in which it was rendered.

2. By the appeal taken and bond filed within ten days, the decree was suspended and the case removed to this court. No further proceedings as to that decree could be taken in the court below while the appeal was pending here. For any violation of the decree, the appellant was answerable to this court and not to the Circuit Court.

But, independently of the supersedeas thus claimed, this court had the right, under the 14th section of the Judiciary Act., 'to issue any writ necessary to render its appellate jurisdiction effectual.'

The order of the Circuit Court placed a construction on the decree previously made which was unreasonable. It was in fact equivalent to a new decree, inasmuch as it extended its operation not only beyond the parties to the cause, but beyond the terms of the decree itself. If a court could do this, pending an appeal; if it had the power to construe the decree and enforce it by process of contempt in doubtful cases, then it was evident that the inferior court might evade the appellate jurisdiction, and use the decree for purposes which this court would not sanction. This court should either prohibit such proceedings altogether or should examine them when they were alleged to have taken place, in order to prevent wrong and oppression, such as appeared in this case.

Contra. The appeal cannot operate as a supersedeas because of the insufficiency of the bond. The bond is in the penalty of $500. A writ of error or an appeal is not a supersedeas unless bond be given in a sum sufficient to secure the whole amount of the judgment or decree, in case of affirmance.

But if there is a supersedeas this will not prevent the court below preventing a plain contempt of its decrees. Such a contempt was made by the suit in the Supreme Court of the District.

The argument of the other side is in fact an argument on merits, which are not now open to discussion.

Mr. F. P. Stanton, for the appellant; Messrs. R. T. Merrick and G. W. Brent, contra.

Mr. Justice CLIFFORD delivered the opinion of the court.

Accurate conclusions in motions like the present, involving important questions of practice, are essential to the correct administration of justice in all judicial tribunals exercising appellate powers, but they are especially so in this court, whether the case is brought here from a State court or a Circuit Court, as the jurisdiction of the court is special and must in every case be tested by the Constitution and the laws of Congress.

Considerable importance is attached in this case to the motion for a supersedeas as well as to the motion to dismiss the appeal, but the court, in view of the circumstances, will first examine the motion to dismiss, as it is in its nature preliminary, and if granted will render it unnecessary to examine the other motion.

On the sixteenth of November, 1868, the appellee filed a bill of complaint against the appellant in the Circuit Court of the United States for the District of Virginia, setting up two written agreements therein described, and to which special reference is made as exhibited in the record. They are both of the same date. Without entering much into details, suffice it to say that one purports to be an assignment by the appellant to the appellee of all his right, title, interest, claim, and demand whatsoever in and to the property, stock, road, road-bed, franchise, and charter of the Alexandria and Washington Railroad Company, for two specific purposes. (1) To secure the payment to the appellee of the sum of five thousand dollars advanced by the appellee to the appellant. (2) To carry into effect the purposes and objects set forth in the other written agreement. Both agreements are signed by the appellant, and upon the back of the one given to secure the payment of the money advanced is the following agreement and consent: 'We, the undersigned, do hereby agree and consent to the terms and conditions of the within assignment,' which expressly recites that it was executed to accomplish the two purposes already described. Reference to the record will show that the assignment is signed by the appellant and that the indorsement is signed by all the other parties supposed by him to have an interest in the assigned property.

Special reference is made in the instrument of assignment to the purposes and objects set forth in the other written agreement, in which it is stipulated in substance and effect as follows: (1) That the appellant and Walter Lenox will convey all their right, title, and interest in that railroad company to a new corporation, to be formed as therein specified, or to devote all of that interest to the common benefit of the parties to the instrument, in the proportions therein specified, in case the old company should be revived. (2) That they agree to assign to the new company, when the parties shall actually organize the same, all their interest as lessees of the Washington, Alexandria, and Georgetown Railroad, or to hold the same for the exclusive use of the parties to the agreement, according to their respective interests. (3) That the appellee, for himself and the Adams Express Company, covenants to aid the new company, with money and credits, to pay, settle, or compromise certain specified liabilities as set forth in the agreement. Certain other important conditions are also inserted in the instrument, but they are not material in this investigation.

Process was duly issued and served, and the appellant appeared and filed an answer setting up various defences to the merits of the claim made by the appellee. Subsequent to the filing of the answer the appellee filed the general replication, and the cause being at issue proofs were taken by both parties. Before the final hearing, however, the appellant filed a cross-bill, in which he insisted upon the defences set up in the answer, and also alleged that the other parties to the agreements were necessary parties to the bill of complaint. Due answer was made by the appellee to the cross-bill, and the appellant filed to the same the general replication.

Such being the state of the pleadings, the cause, on the twenty-first of June last, came on for final hearing 'upon the bill, answer, and replication, and upon the cross-bill, answer, and replication, and upon the proofs,' and the statement in the decree is that 'the court is of the opinion that the equity of the case is with the complainant,' and that the court 'thereupon do order, adjudge, and decree that James S. French, the defendant in the original bill, be perpetually enjoined and restrained from any use of the name or title of the president of the Washington and Alexandria Railroad Company, under any election to that office heretofore held, and from any action by himself or any attorney or agent to interfere with any proceeding for the reorganization of the said company under the contract mentioned in said bill, &c., and from any proceeding whatever not in accordance with the said contracts, without prejudice,' as therein recited. Omitting the qualifications stated in the recitals, the decree continues as follows: 'It is further ordered, adjudged, and decreed that the said defendant, French, pay the costs in this cause.'

Final decrees in suits in equity passed in a Circuit Court, where the matter in dispute exceeds the sum or value of two thousand dollars exclusive of costs, may be re-examined in this court, but the act of Congress does not define what is meant by the phrase 'final decree.' Objection is made that the decree is not final because it does not in terms dismiss the cross-bill, but the court is of the opinion that the statement contained in the decree, that the equity of the case is with the complainant, by necessary implication disposes of the cross-bill as effectually as it does of the answer filed by the appellant to the original bill of complaint. Leave, it is true, is given to either party to apply, at the foot of the decree, for such further order as may be necessary to the due execution of the same, or as may be required in relation to any matter not finally determined by it, but it is quite apparent that that reservation was superadded to the decree as a precaution and not because the court did not regard the whole issue between the parties as determined by the decree. Such was doubtless the view of the Chief Justice who passed the decree, as the application for the appeal was made to him at the same term and was immediately granted without objection.

Several cases might be referred to where it is held that a decree of foreclosure and sale of mortgaged premises is a final decree, and that the defendant is entitled to his appeal without waiting for the return and confirmation of the sale by a decretal order, upon the ground that the decree of foreclosure and sale is final as to the merits, and that the unlterior proceedings are but a mode of executing the original decree.

Unquestionably the whole law of the case before the court was settled by the Chief Justice in that decree, and as nothing remains to be done, unless a new application shall be made at the foot of the decree, the court is of the opinion that the decree is a final one, as it has conclusively settled all the legal rights of the parties involved in the pleadings

2. Beyond all doubt the appeal of the respondent in this case was allowed within ten days from the date of the decree, and the record shows that the bond to prosecute the writ to effect and answer all damages and costs if he fail to make his plea good was filed and duly approved within the same period, but it is denied by the appellee that the appeal operates as a supersedeas, because it is insisted that the bond given in the case is not in a sum sufficient to constitute indemnity for the whole amount of the decree.

Where the judgment or decree is for the recovery of money, not otherwise secured, the indemnity must be for the whole amount of the judgment or decree, including just damages for delay, and costs and interest on the appeal.

But in all suits where the property in controversy necessarily follows the event of the suit, as in real actions, replevin, and in suits on mortgages, indemnity is only required in an amount sufficient to secure the sum recovered for the use or detention of the property and the other incidental items, as in cases where the judgment or decree is for money. What is necessary is that it be sufficient, and when it is desired to make the appeal a supersedeas, that it be filed within ten days from the rendering of the decree, and the question of sufficiency must be determined in the first instance by the judge who signs the citation, but after the allowance of the appeal that question as well as every other in the cause becomes cognizable here. It is therefore matter of discretion with the court to increase or diminish the amount of the bond and to require additional sureties or otherwise as justice may require.

All that is required in a case where the writ of error is not a supersedeas is that the bond shall be in an amount sufficient to answer the costs in case the judgment or decree is affirmed. Nothing appears in the record to show that the indemnity given is insufficient, and inasmuch as nothing appears to the contrary the court is of the opinion that it must be presumed that the amount is sufficient.

Appeals and writs of error are constituted a supersedeas in certain cases by virtue of the twenty-third section of the Judiciary Act, when the conditions there prescribed are fulfilled. Where those conditions are complied with the act of Congress operates to suspend the jurisdiction of the subordinate court and stay execution pending the writ of error or appeal, and until the case is determined or remanded.

Power to issue a supersedeas to a decree in a subordinate court does not exist in this court where the appeal was not taken and the proper bond given within ten days from the date of the order, except where an appeal was duly taken within ten days, and the aggrieved party is obliged to take a second appeal in consequence of the clerk below having neglected to send up the record in season, or where the granting of such a writ becomes necessary to the exercise of the appellate jurisdiction of the court, as where the subordinate court improperly rejected the sureties to the bond because they were not residents of the district.

Appellate power in the controversy under consideration is conferred upon this court, and it is clear that this court may issue a supersedeas in such a case whenever it becomes necessary to the exercise of its appropriate jurisdiction.

Attention will now be called to the grounds of the motion for a supersedeas, as shown in the affidavit of the appellant. He states that he filed a bill in equity in the Supreme Court of this district against Oscar A. Stevens, George W. Brent, W. Jackson Phelps, Richard T. Merrick, J. Dean Smith, and Walter Lenox; that the respondents demurred to the bill on the ground that the appellee before the court was a necessary party respondent in the case, and that the court where the bill was pending sustained the demurrer. Wherefore the appellant here amended his bill, and made the appellee a party respondent.

Consequent upon those proceedings, as the affiant states, the Circuit Court for the District of Virginia laid a rule on him requiring him to appear in that court, on a day named in the rule, to show cause why he should not be fined and attached for the acts set forth in the petition, and charged therein to be in violation of the aforesaid order and decree of the court below in this case; that he appeared and showed cause as required, but that the court there being of opinion that he had violated the decree in the case before the court by filing his bill in equity in the Supreme Court of this district, ordered that he forthwith dismiss the same and cease all proceedings under the same on pain of imprisonment, and that he, having no alternative but to go to jail or to submit to the order of the court, chose the latter, and dismissed his bill of complaint. His views are that the Circuit Court erred in passing that order, and that that court gave an erroneous construction to the decree entered by the Chief Justice in the case, making it more comprehensive than its language will warrant, and he moves this court to issue a supersedeas or other suitable order to correct those errors.

Suppose the theory of the appellant is correct that the circuit judge in construing the decree gave it a scope beyond its legitimate meaning, very grave doubts are entertained whether this court, under the present motion, could afford the appellant any remedy, as the facts supposed would not show that anything had been done to defeat or impair the appellate jurisdiction of this court. Acts void in themselves may be done by the Circuit Court outside of the jurisdiction of the Circuit Court which this court cannot re-examine. Authority does not exist in this court to issue a supersedeas, except in cases where it is necessary to the exercise of its appellate jurisdiction, but the court is not inclined to rest its decision in this case upon that ground, as we are all of the opinion that the circuit judge did not err in his construction of the order and decree enjoining the appellant in that decree. He is perpetually enjoined and restrained from any use of the name or title of the president of the company under any election to that office heretofore held, and from any action, by himself or any attorney or agent, to interfere with any proceeding for the reorganization of the company under the contracts, or from any proceeding whatever not in accordance with the said contracts. More comprehensive language could hardly be employed, and argument can hardly make it plainer or add anything to its force or effect.

BOTH MOTIONS DENIED.


text: Talk:French v. Shoemaker (79 U.S. 86)/Opinion of the Court


text:
Fowler v. Rathbones

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

This was an action of assumpsit, brought in the court below by the owners of the ship Oneiza, to recover from the defendants, as consignees and owners of cargo transported aboard of that vessel on a voyage from Calcutta to New York, a sum alleged to be due to the plaintiffs by way of a general average for losses and expenses incurred in consequence of an alleged voluntary stranding of the ship.

The facts, which appeared from the protest and the testimony of witnesses, were, in the main, undisputed.

The ship arrived off Sandy Hook January 16th, 1867, and anchored that night inside of the Hook. There was so much ice in the bay that she could not proceed until the 21st, when she was towed up, in the afternoon, as far as the quarantine ground and anchored there. The water was full of floating ice. The next morning it was discovered that the ship was settling by the head, and by 7 o'clock A.M. she had six feet of water in her; the leak being caused by holes broken in both of her bows by the ice. Attempts were made to free her from water by her pumps. They were, however, ineffectual; the water being about forty-two feet where she was anchored, and the Staten Island flats where the water was shoaler being near, the master caused the ship to be towed a distance of three hundred yards into such water, on the flats, until she grounded on the bottom at about 8 o'clock A.M. The bottom at the place where she had been anchored was soft. What sort of bottom was at the place where she grounded-whether uneven or soft-was not clear. The evidence was not full or perhaps quite consistent, but it was submitted to the jury. At the time the ship grounded she had ten feet of water in her. If she had sunk where she had been anchored, she would have been totally submerged. A wrecking vessel reached her about noon. The tide was then an hour ebb, and the water was about the same height inside of her and outside. A diver was sent down and the holes were stopped. A pump was then started about 4 o'clock P.M. The water had reached to within two feet of her upper deck. Some of her cargo was not wet. The cargo consisted of linseed in bags, gunny cloth, and saltpetre. She was pumped out by 9 o'clock P.M. After that she was kept free of water, and no more water reached her cargo. About half of her cargo was taken off by lighters. The ship was then taken to the city and the rest discharged. The ship could have been raised if she had sunk where she was anchored. The question of saving the vessel and cargo at either place was only a question of the expense of raising them. The wrecking bill was over $12,000, and would have been $30,000, if she had sunk where she was anchored. The defendants, on the 23d of January, 1867, signed 'an average bond,' whereby they agreed to pay as consignees of cargo, what should be found to be due from them, on their share of the cargo, for general average losses and expenses arising out of the transaction, provided such losses and expenses should be stated and apportioned by Johnson & Higgins, average adjusters, in accordance witn the established usage and laws of the State of New York in similar cases. An adjustment was made by those persons, and they ascertained the balance due from the defendants to be $11,380.78, July 20th, 1867. The adjusters made no allowance to the defendants for the damages sustained by their cargo from the water which entered the ship, on the ground that such damage was caused by water which entered through the holes made in the bows of the vessel by the ice, and, therefore, by a peril of the sea, and was not caused by the stranding, and was not a general average loss. The effect of the water upon the linseed in bags, as evidence showed, was greatly to swell it, and the ship was found to have been much strained vertically. The swelling of the linseed and the lying on the bottom at the place of stranding, together, started up the deck and strained and broke the beams and the straps over the beams.

The adjusters did not allow as a general average loss anything for any damage sustained by the ship from the swelling of the linseed, on the ground that such swelling was caused by water which entered through the holes in the bows from a peril of the sea, and, therefore, was not caused by the stranding; but they did allow, as a general average loss, the damage caused to the ship by laying on in what they inferred to have been an uneven bottom when she was stranded; inferring this from injuries of a certain kind, which the keel and keelson of the ship were found to have suffered, though some of the direct testimony went to prove that the bottom, like that of the place where the vessel had been anchored, was soft. The adjusters stated to the jury the ground on which the adjustment on this point was made. 'We could not tell absolutely,' they said, 'what damage was caused by lying on the bottom, and what from swelling of the cargo, but we decided it as well as we could;' and the same witness described particularly the damages. The defendants called no witnesses to disparage the conclusions of the adjusters. The salvage expenses were put into general average. According to custom, one-half of the gross freight for the whole voyage was taken as the net freight to be contributed for.

The counsel for the defendants prayed the court to charge the jury as follows:

'Fourth. That if they found that the stranding or taking of the bottom was not a different one from what was originally impending in consequence of the damage received from the action of the ice at the time the master determined to run or tow the ship into shallower water, but was a merely incidental and unsubstantial modification of such original stranding or taking of the bottom, then the expenses incurred for repairing the damage to the ship, arising from her lying upon the bottom, were not the proper subject of a general average.

'Fifth. That, unless at the time the master came to the determination to run her upon the flats, there was a substantial and valuable chance that the ship might be kept from sinking where she was anchored, which chance the master voluntarily abandoned, the injuries sustained by said ship in consequence of lying upon the bottom are not a subject for general average.

'Sixth. That if the ship was, at the time the master came to his determination to run her upon the bottom in shallower water, so exposed to the injuries which she sustained from going upon and lying upon the bottom, that such injuries could not by any possibility or in any event be prevented, such injuries are not to be made good by a general average contribution.

'Eighth. That there is no evidence from which the jury can determine what particular repairs were rendered necessary by the ship lying on the bottom, and what were rendered necessary by the swelling of the cargo; and that as it appears that both these causes concurred in producing the injuries to the ship, one-half of such injuries should be deemed to have been occasioned by the one cause, and one-half of the other, as the nearest practicable approximation to justice.

'Ninth. That inasmuch as it appeared that all the freight on the cargo had been collected, and the disaster happening at the very entrance of the port of destination, such freight should contribute in general average upon its full value, after deducting such expenses, if any, as were necessarily incurred in order to earn it; and the jury should, in making up their verdict, so estimate the contributory value of freight.'

But the court refused thus to charge, and charged.

'1st. That if the jury found that the ship and cargo were exposed to a common peril of sinking and becoming submerged in deep water, and that the expenses of raising and saving them from such place would have been greater than if stranded in shoal water, and that the master, to save the ship and cargo from such increased expenses, ran the ship on the flats, and so stranded her in shoal water, and thereby increased the peril to the ship and diminished the damages and expenses of saving the ship and cargo-then, that there was a voluntary stranding within the meaning of the law, and that the plaintiffs are entitled to recover in general average their just proportion of all damages and expenses occasioned thereby.

'2d. That if they found that no water entered the ship which reached and damaged the cargo, except what came through the holes cut in the bows by the ice-then that the defendants were not entitled to be allowed anything for the damages to their cargo by water, by way of general average, or by way of reduction of the plaintiffs' claim, because such damages were not caused by or the result of the act of stranding the ship, but were caused by a peril of the sea which had overtaken the cargo before it was determined to strand the ship.

'3d. That the plaintiffs were entitled to recover in general average only those expenses which were caused by stranding the ship, not including any occasioned by damage to the ship through the swelling of the cargo caused by water which entered through the holes in the bows; and therefore, if the jury found that the ship was injured by such stranding and by lying on an uneven bottom, that the plaintiffs were entitled to recover the expenses for repairing such injuries, by way of general average; and that it was for the jury to determine from the evidence what such repairs amounted to.

'4th. That if, in respect to the contributory value of freight, they found that the adjustment, as made up by Johnson & Higgins, the average adjusters, was according to the usage and custom of the port of New York, and that no more had been allowed for damages to the ship than was attributable to the stranding then that the plaintiffs were entitled to the amount stated in the adjustment to be due from the defendants to the plaintiffs as their general average contribution, with interest from the date of the said adjustment.'

To all these instructions the defendants excepted.

The jury having found a verdict for the plaintiffs for $12,071.73, and judgment having been entered accordingly, the case was now here on error.

Mr. J. C. Carter, for the plaintiff in error:

I. There is no dispute as to certain principal facts. They are these:

1st. That at the time the determination was taken to put the ship on the flats, she was not simply exposed to a peril which seemed inevitable, but that the stroke had already fallen upon her; that she was already smitten with a deathblow proceeding directly from the action of the elements; that she was not simply in danger of sinking, but was actually sinking from the direct effect of the accidental injury, and that there was no power to save her from it.

2d. That she continued sinking all the time after she started for the flats until she took the bottom upon them, having six feet of water in her when she started and ten when she struck the flats.

3d. That she did not expect to encounter, and did not in fact encounter, any new peril in going upon the flats; that she was sinking to the bottom when she started; that she expected to sink and did sink upon the flats.

Upon these facts the conclusion follows, that the actual sinking or stranding was substantially the same sinking or stranding which was in progress under the direct action of the elements at the time of the voluntary resolution to run her upon the flats. It was therefore an accidental and not a voluntary sinking or stranding. All that could be done was to employ the time she should occupy in sinking to the best advantage. All that was done was to move her while she was sinking, a space of some three hundred yards, to mitigate and abridge some of the disastrous results of a deathblow already received. It was the master's duty, in the plainest and clearest sense of the term, to do the thing he did. The instinct of self-preservation would have permitted him to take no other course.

The distinctions are decisive between the case at bar and those cases which have heretofore been held to be cases for a general contribution, where a vessel staunch and strong, and capable of contending with the winds and waves, and yet unsmitten by any deathblow from an accidental peril, finds herself upon a lee shore and in apparently inevitable danger of being cast upon it; but still with a chance of escape, desperate though it be, and then concludes to abandon this chance and seek the most favorable spot on which to strand herself. In those cases the peril which was impending, however inevitable it might seem, had not in fact arrived. There was no accidental cause from the actual operation of which the injuries were received. They seemed indeed inevitable; but that they were absolutely certain could not be affirmed. There was nothing therefore to the direct action of which the damage could be with certainty attributed but the voluntary act.

The ordinary duty of the shipowner represented by the master is to navigate the ship, not to run her ashore. A claim for a general contribution cannot be founded upon any act of the master in the course of this ordinary duty. Shippers of goods have the right to all this. The presence of an overwhelming peril may make it best for the interests of all, treated as a unit, to depart from mere navigation and strand the ship. This is something beyond what any one of the interests has the right to require of the ship, and is therefore outside of the ordinary duty of the master. The true foundation of the doctrine of a general contribution in cases of voluntary stranding lies in these considerations. But when, as in the case at bar, the actual operation of an accidental cause has, of itself, already put an end to the business of navigating the ship, all the master's ordinary duties are not at an end. It is still his duty to do all in his power to save what he may of the interests intrusted to his charge; and it cannot be pretended-when his ship is sinking and it is in his power to mitigate the consequences of such sinking by working his ship into shallower water-that it is not his duty to do so.

If these positions are true, the charge on the main point of the case-that is to say, the first instruction-was erroneous. It was based upon a direct denial of them. It made the question of liability for a general contribution turn entirely upon these three points:1st. Whether the master ran the ship upon the flats for the purpose of diminishing the damages and expenses of raising and saving ship and cargo?

2d. Whether in so doing the peril to the ship was increased?

3d. Whether by so doing the damages and expenses of saving and raising the ship and cargo were diminished?

Now these inquiries might each be answered in the affirmative and yet the actual stranding be only an unsubstantial modification of the stranding or submersion originally impending. The point was distinctly made by the request to charge that the grounds of difference between the actual and the impending disaster should be substantial, but this element was disregarded by the judge. The error thus committed was this, that if a loss has been occasioned by the action of two concurring causes, one of which is a particular average cause and the other of which is a general average cause, the loss is to be taken as a general average, without any inquiry as to the respective degrees of efficiency with which these two causes may have operated, it being enough if the general average cause contributed in any degree to the loss. It is impossible to vindicate such a proposition.

But even if the proposition of the court below had, as a general principle of law, been sound, there was no evidence in the case warranting the submission of it to the jury. The court recognized the necessity of the condition that the peril to the ship should have been increased by the master's voluntary action, and made that a turning-point with the jury. But the only suggestion of any increase of peril was the claim by the plaintiffs below that the bottom where the ship actually took the ground was different from the bottom where she lay at anchor, it being uneven in the former place. Now the only evidence of this was conjecture. The lying upon a bottom of any sort and the swelling of the cargo were sufficient to account for all the injuries to the vessel, except that produced by the ice. The cargo was mainly flaxseed. It was proved that the effect of water upon this article was to swell it. The ship, upon examination, was found to have been subjected to a vertical strain, pressing her decks and beams upwards with such force as to break the iron straps securing the beams to the stanchions. This must have been the effect of the swelling of the seed.

If the claim for a general average has any foundation, the damage to the cargo, or some part of such damage, must be contributed for. Nor would there be any serious difficulty in making the discrimination. When the master came to his determination to run the ship on the flats there were only six feet of water in her; after she had settled on the flats there were from twenty-two to twenty-six. It is ascertainable how much and what of her cargo was above, and how much and what was below the water in her when she left the spot where she was anchored.

The freight should be made to contribute at its full value. The rule adopted by the adjusters of taking it at one-half its value, when the whole was earned and received, is too unjust to prevail, unless it has some better warrant than custom. The custom alleged is well enough in the cases of voyages partly performed; but it is a rule touching customs that they must be reasonable. In cases like the present there seems to be no good reason why the freight should not be made to contribute at its full value. Especially should it be the case when, as here, the entire expense of bringing the cargo to the place of discharge was carried into the general average account.

Messrs. E. H. Owens and S. P. Nash, contra:

The instruction, chiefly complained of-the first-was in accordance with the law as well settled in the Federal courts.

It is sufficient to make the act of sacrifice voluntary, that it is adopted as a matter of judgment, that upon deliberation the will decides. It is none the less voluntary, that no other way of escape seems open. The idea of sacrifice in the law of general average is not that the property shall be doomed to certain loss, for the goods thrown overboard may have a fair chance of being recovered, or the vessel, which it is determined to run ashore, of being saved. It is the selection of one particular interest, of either vessel or cargo, to take a special, though it may be no greater, and be even a less, risk for the benefit of the whole, that makes the special loss or damage consequent upon the act vicarious. It is true, in this case, that but for the stranding the vessel would have gone down with the cargo, and true also that by stranding her the master may possibly have not subjected the vessel to any greater peril than she was in before. But the fact that he changed the peril from one to ship and cargo in common, to a peril to the ship alone, constituted a sacrifice in the legal sense. If any damage was in fact caused to the vessel by stranding, it is no answer to her claim for contribution to say that she would have been equally damaged by sinking. That the act of stranding was a benefit to the cargo is undisputed, and that it was also a benefit to the ship, only makes her claim less in amount than it would have been had she been lost by the act of stranding. She could only claim and has only been allowed the damages caused specially by the stranding, which was the voluntary and vicarious act, which saved the cargo from a heavier damage and expense.

The other exceptions relate to the sufficiency of the evidence, and are not available on writ of error. The seventh and eighth are of this sort.

But the rule is, that if there is evidence proper to be submitted to the jury it should be submitted. If the jury give too much weight to it the remedy is by motion for a new trial, which is not reviewable by writ of error. The evidence showed that a careful discrimination by experts was made between the repairs. This might have been shown to be weak had the defendants below called any witnesses to disparage it, but as they did not, the court properly left it to the jury.

Whether the ship lay on an uneven bottom or not was a question auxiliary merely to the determination of the question, whether certain damages were caused to the hull of the ship by the stranding. The testimony showed that experts finding the fastenings about the keel and keelson broken, and the vessel strained, attributed this to the vessel's lying on an uneven bottom. No objection was made to the giving of this evidence, and being in the case it was properly submitted to the jury.

There was no ground for asking to have the damages caused to the ship by the swelling of the cargo, and by straining, equally divided. There is no law for such a division, and no evidence was given to show its propriety.

The charge that if the jury found from the evidence that no water entered the ship which reached and damaged the cargo, except what came through the holes made by the ice, then that the cargo would not be entitled to any contribution for its damage, was manifestly correct. It was a question of fact how the damage to the cargo was caused. It seemed clear, from the evidence, that no water came to it except through the holes made by the ice before the stranding, and the defendants below cannot complain that the jury were left at liberty to find that some damage was done otherwise.

The jury, under instructions, found that the adjustment was made up according to 'the usage and custom of the port of New York,' which was proved to be to estimate for net freight and one-half the gross amount. The contract of the defendants below was to pay, if the adjustment should be made in accordance with such usage. No evidence was given contradicting that of the plaintiffs below as to the usage. The charge was, therefore, correct, and the ninth request properly refused. The general rule is, it is true, that it is the net freight which contributes. But how to ascertain the net freight is sometimes a difficult question, and the rule of taking one-half the gross freight is not only customary in New York, and was, therefore, made the rule by the contract sued upon, but the rule has also been sanctioned by the court so as to have become a rule of law in that State.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Fowler v. Rathbones


text: Talk:Fowler v. Rathbones

title: Talk:Fowler v. Rathbones