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Ex Parte Loring

PETITION for a mandamus to the Circuit Court of the United States for the Eastern District of Michigan.

This petition shows that at the June Term, 1874, of the Circuit Court of the United States for the Eastern District of Michigan, William B. True, the plaintiff in an action then pending in that court against Elisha T. Loring, the petitioner, after a jury had been empanelled and the testimony on his part concluded, elected to become nonsuit, and that a judgment to that effect was entered. On the 17th October, 1876, at a subsequent term of the court, after notice to the attorney of Loring, True moved to set aside this judgment and restore the cause to the docket for trial. This motion was granted Oct. 31, and, later in the term, Loring appeared by his co nsel, and moved to vacate the order then made. This last motion was refused, Jan. 15, 1877, and, Jan. 29, this petition was filed by Loring for a writ of mandamus to the judges of the Circuit Court, requiring them 'to vacate the order setting aside said nonsuit.'

Mr. Alfred Russell for the petitioner.

No opposing counsel.

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

title: Ex Parte Loring


text: Talk:Ex Parte Loring

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

title: Talk:Ex Parte Loring


text:
Ex Parte Loring/Opinion of the Court

It seems clear to us that the object in this case is to use the writ of mandamus as a writ of error. This cannot be done. We may require the Circuit Court to decide in a proper case if it refuses to act, but cannot control its decision. Here the court has acted, and given its decision upon a motion made. We are asked now to require it to reverse that decision. For that, resort must be had to a writ of error after a final judgment has been rendered. The writ of mandamus has no such office to perform.

Petition denied.

title: Ex Parte Loring/Opinion of the Court


text: Talk:Ex Parte Loring/Opinion of the Court


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Selden v. Equitable Trust Company

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

The facts are stated in the opinion of the court.

Argued by Mr. Assistant Attorney-General Smith for the plaintiff in error, and by Mr. Augustus Brandegee and Mr. Jeremiah Halsey, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Selden v. Equitable Trust Company


text: Talk:Selden v. Equitable Trust Company

title: Talk:Selden v. Equitable Trust Company


text:
Selden v. Equitable Trust Company/Opinion of the Court

The Equitable Trust Company is a corporation created by the laws of the State of Connecticut, and its principal office or place of business is at New Haven, in that State. Its 'only business has been and is the investing of its own capital in mortgage securities on real estate, and selling such mortgage securities with the company's guaranty. It does not collect or receive, nor has it ever collected or received, any deposit of money subject to be paid, or remitted on draft, check, or order; nor does it receive deposits, issue notes, or make discounts of any description whatsoever, nor do any other business than above stated.' In 'investing said capital in mortgage securities on real estate as aforesaid, the manner adopted by the corporation has been and is as follows: To make loans thereof to individuals, taking from the borrower a bond,. . . and securing the payment of said bond by a mortgage deed of real estate, executed by the borrower in conformity with the laws of the State where such real estate is situated. To the negotiation, sale, and guaranty of such bonds this company is exclusively devoted, and it incurs no obligations except those arising from such guaranty.' That such is the character of the company, and that such is the nature of its business, is stipulated of record; and the only question presented by the case is, whether a corporation doing such a business is a 'banker' within the meaning of sect. 3407 of the Revised Statutes of the United States relative to internal revenue.

Clearly, the company is not a banker in the ordinary acceptation of the word. But Congress has defined who shall be regarded as bankers, for the purposes of taxation under the revenue laws. Sect. 3407 of the Revised Statutes, p. 673, enacts that 'every incorporated or other bank, and every person, firm, or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid, or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale, shall be regarded as a bank or as a banker.'

The statute describes three classes of artificial and of natural persons, distinguished by the nature of the business transacted by them, and declares that individuals embraced in either of the classes shall be considered bankers. The first class is composed of those who have a place of business where credits are opened by the deposit or collection of mon y or currency, subject to be paid or remitted upon draft, check, or order. It is not claimed the company engaged in that branch of business, or that they are included in this first class. The agreed state of facts expressly repels any such claim.

The second class are those who have a place of business where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes. It is contended on behalf of the plaintiff in error that the company is included in this class, because it advances or loans money on bonds. The case, however, states that all the loans the company makes are investments of its own capital in mortgage securities on real estate. It is true the bonds of the borrowers are taken with the mortgages, but the bonds are mere evidence of the debt. The money is advanced or loaned on the security of the real estate mortgaged, and not on the security of the bond. We think Congress, in the clause of the act we are now considering, intended reference to transactions entirely different from loans or advances made on the personal promise or undertaking of the borrower. The words used are not technical. They are, therefore, to be understood in their common and popular sense. Dwarris on Statutes, 573. And that, in common understanding, an advance or loan of money on stocks, bonds, bullion, bills of exchange, or promissory notes is an advance or loan where those species of property are pledged as collaterals, or are hypothecated to secure the return of the advance or the payment of the sum lent, is unquestionably true. It can be nothing else where the money is advanced or lent on stocks or bullion; and, by the statute, bonds, bills of exchange, and promissory notes are placed in the same catalogue with stocks and bullion. All of them are alike the subjects on which the advance or loan is made. It is a fair presumption, therefore, that Congress regarded an advance or loan on bonds as similar in its character to an advance or loan on stocks, involving in each case an hypothecation of the subject on which the advance is made. If not so, if it was intended to embrace loans generally, there was no necessity for introducing the qualifying words 'on bonds, bills of exchange, or promissory notes.' It was, however, not the lending, but the method or mode of operation, which was in view. If it was mere lending Congress had in contemplation, it is difficult to conceive of a reason why mortgages of real estate were not included with stocks, bonds, bullion, &c. But it is a well-known common usage for banks to make advances or loans on the hypothecation or pledge of such property, though not upon the hypothecation or mortgage of real estate. There was a reason, therefore, for omitting real estate from the catalogue of things upon which the advances or loans contemplated might be made. Advances on that are not within the ordinary business of a banker. To us, therefore, it appears plain that it is the business of advancing or lending in the mode usual with bankers-that is, on collaterals or on the pledge of personal property-that, by the statute, is defined to be banking, within the intention of Congress, and that lending upon mortgages of real estate is not intended.

The third class described by the statute comprises those who have a place of business where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale. The language is not 'where stocks, bonds, &c., are sold,' or 'are held for sale.' 'Surely Congress did not intend that corporations or persons who have a place of business where they sell their own stocks, bonds, bullion, bills, or notes should be regarded as bankers. If they did, a vast proportion of the corporations and of the merchants and manufacturers of the country would be included. But the language of the statute is, 'where' such property is 'received' 'for discount or for sale.' The use of the word 'received' is significant. In no proper sense can it be understood that one receives his own stocks and bonds, or bills, or notes, or discount or for sale. He receives the bonds, bills, or notes belonging to him as evidences of debt, though he may sell them afterwards. Nobody would understand that to be banking business. But when a corporation or natural person receives from another person, for discount, bills of exchange or promissory notes belonging to that other, he is acting as a banker; and when a customer brings bonds, bullion, or stocks for sale, and they are received for the purpose for which they are brought, that is, to be sold, the case is presented which we think was contemplated by the statute. In common understanding, he who receives goods for sale is one who receives them as an agent for a principal who is the owner. He is not one who buys and sells on his own account.

The Equitable Trust Company lent its own money, taking bonds and mortgages therefor. Those bonds it sold with a guaranty. It sold only its own property, not that received from other owners for sale. Such a business, in our opinion, did not constitute the corporation a banker, as defined by the revenue laws.

Judgment affirmed.


text: Talk:Selden v. Equitable Trust Company/Opinion of the Court


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Davis v. Brown

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

This action was against the defendants, as second indorsers of certain promissory notes, transferred by them to the Ocean National Bank of the city of New York. The bank having failed, the notes came into the possession of the plaintiff, as its receiver. The facts are sufficiently stated in the opinion of the court. The defendants obtained judgment, and the plaintiff brought the case here.

Argued by Mr. H. G. Miller for the plaintiff in error, and submitted by Mr. U. P. Smith and Mr. Stephen Sibley for the defendants in error.

Mr. JUSTICE FIELD delivered the opinion of the court.

title: Davis v. Brown


text: Talk:Davis v. Brown

title: Talk:Davis v. Brown


text:
Davis v. Brown/Opinion of the Court

This was an action against the defendants, as second indorsers upon ten promissory notes of one McOmber, made at Saratoga Springs, in the State of New York, in June, 1870, each for $500, and payable to his order in from thirty-two to forty-one months after date.

The defence set up to defeat the action was that the notes in suit were transferred in June, 1871, with other notes of the same party of like amount and date, to the Ocean National Bank by the defendants, in part satisfaction of a note of their own then past due, the balance being paid in cash, and were indorsed by the defendants as a mere matter of form, upon an agreement in writing of the bank that they should not be held liable on their indorsements, or be sued thereon.

On the trial, Harvey Brown, one of the defendants, was called as a witness to prove the matters thus set up as a defence, and was permitted, against the objection of the plaintiff, to testify to the settlement of the note of the defendants, the transfer for that purpose to the Ocean National Bank of the McOmber notes, and their indorsement by the defendants under the agreement of the bank not to hold them liable as indorsers; and that this agreement was in writing, and was destroyed in the great fire at Chicago, in October, 1871.

To meet and repel the defence founded upon this agreement, the plaintiff produced and gave in evidence a record of a judgment, recovered by him against the same defendants upon two other notes of the same party, of like amount and date as those in suit, except that they became due at an earlier day, which were part of the series of notes transferred by the defendants to the bank, and indorsed by them, in settlement of their own note, as already mentioned, and were included in the agreement as part of the same transaction.

The questions presented for our determination relate to the competency of the witness Brown, and the admissibility of the evidence of the alleged agreement of the bank, and to the operation of the judgment mentioned as an estoppel against the defendants setting up any defence founded upon the agreement.

The objection to the w tness arose from his being a party to the notes, and, as such, it is contended that he was incompetent to impeach or discredit the same, or to show that his liability was not such as his indorsement imported. The case of The Bank of the United States v. Dunn, reported in the 6th of Peters, is cited in support of this position. There, the indorser of a note had been permitted by the court below to testify, against the objection of the plaintiff in the action, to a verbal understanding with the cashier and president of the bank which took the note, that he was not to incur any responsibility, or, at least, would not be held liable on the note, until the security pledged for its payment had been exhausted. The admission of the witness this court considered erroneous, holding that no one who was a party to a negotiable note could be permitted by his own testimony to invalidate it, which, in that case, meant that no one could be permitted to show that a note indorsed by him was void in its inception, or that his indorsement did not impose the liability which the law attached to it. The opinion which announces the decision proceeds upon two grounds: 1st, That the evidence would contradict the terms of the instrument, or change their legal import; and, 2d, that it would be against public policy, as tending to destroy the credit of commercial paper, to allow one who had given it the sanction of his name, and thus added value and currency to the instrument, to testify that it was executed orindorsed by him under such circumstances as to impair his obligation upon it.

This last position was supported by reference to the celebrated case of Walton v. Shelley, 1 T. R. 296, decided in 1786, where the indorser of a promissory note was held by the King's Bench to be inadmissible as a witness, on grounds of public policy, to prove the note void for usury in its inception; Lord Mansfield observing, that it was 'of consequence to mankind that no person should hang out false colors to deceive them, by first affixing his signature to a paper, and then afterwards giving testimony to invalidate it.' Aside from the assumed estoppel of the parties from their position on the paper, the maxim of the Roman law, that no one alleging his own turpitude shall be heard (nemo allegans suam turpitudinem est audiendus), was cited to justify the decision. That maxim was plainly misapplied here by the great Chief Justice; for it is not a rule of evidence, but a rule applicable to parties seeking to enforce rights founded upon illegal or criminal considerations. The meaning of the maxim is, that no one shall be heard in a court of justice to allege his own turpitude as a foundation of a claim or right; it does not import that a man shall not be heard who testifies to his own turpitude or criminality, however much his testimony may be discredited by his character.

The doctrine of Walton v. Shelley maintained its position in the courts of England only for a few years. In 1798, it was by the same court overruled in the case of Jordaine v. Lashbrooke, 7 id. 601, Lord Kenyon having succeeded Mansfield as Chief Justice. Since then, the rule has prevailed in the courts of that country, that a party to any instrument, whether negotiable or not, if otherwise qualified, is competent to prove any fact affecting its validity; the objection to the witness, from his connection with the making or circulation of the instrument, only going to his credibility, and not to his competency. In this country, there has been much diversity of opinion upon the point, some of the State courts following the rule of Walton v. Shelley, while others have adopted the later English rule. The general tendency of decisions here is to disregard all objections to the competency of witnesses, and to allow their position and character to affect only their credibility. This diversity of opinion could not have existed, unless there were grave reasons for doubting the soundness of the original decision. Be that as it may, it has led t ose courts which, on considerations of commercial policy, adopted the rule of Walton v. Shelley to qualify the rule, so as to limit its application strictly to cases arising on negotiable bills and notes, and to cases where the transaction affecting the validity of the paper was not between the parties in suit. The holders of commercial paper, who enter into agreements or transactions with the makers or indorsers, affecting its validity or negotiability, cannot not invoke protection against the infirmity which they have aided to create. There are no considerations of commercial policy which can exclude the parties in such cases from testifying to the facts. Thus, in Fox v. Whitney, 16 Mass. 118, the Supreme Court of Massachusetts, which had previously recognized the rule in Walton v. Shelley, held that the rule applied only to a case where a man, by putting his name to a negotiable security, had given currency and credit to it, and did not apply to a case between original parties, where the paper had not been put into circulation, and each of the parties was cognizant of all the facts. This decision meets our concurrence, and, if it qualifies the decision in the case of Bank v. Dunn, we think the qualification a just and proper one.

These considerations dispose of the objection to the competency of the witness Brown. The notes of McOmber were never put into circulation by the Ocean National Bank. No one, therefore, has been misled by the indorsement of the defendants; no false colors have been held out by them. No credit or currency has been given by their name. The receiver has, with reference to the notes, no greater right than the bank has: he stands in its shoes. If the bank could not have enforced a liability upon the defendants against its agreement that they should not be held liable, the receiver cannot enforce it. The agreement itself is not immoral nor illegal. The defendants by their act ran the risk of being charge upon the notes; they would have been liable had the notes been put into circulation. But beyond this risk they were protected by the agreement; upon that they could rely, so long as the bank held the notes.

The objection that the agreement was inadmissible because it tended to vary and destroy the legal effect of the indorsement is not tenable. The agreement, being in writing, is to be taken and considered in connection with the indorsement, and the two are to be construed together. So far as the bank was concerned, the agreement made the indorsement equivalent to one without recourse to the indorsers.

The next question for determination relates to the operation of the judgment recovered by the plaintiff against the defendants, as an estoppel against their setting up the defence founded upon the agreement. The action in which that judgment was recovered was brought in the same court as the present action, against the defendants as second indorsers upon two notes, which were part of the series of McOmber notes, transferred to the bank of the defendants in settlement of their own note; and their indorsement was embraced in its agreement. The defendants pleaded the general issue; but the court finds that, by the advice of counsel learned in the law, they defended the action in good faith solely upon the ground that their liability had not been fixed as indorsers by due prosecution of the makers of the notes, as required by the laws of Illinois; and that this defence was not sustained, for the reason that it appeared that the makers of the notes resided in the State of New York, and that the indorsement was made there. The agreement of the bank not to hold them liable as indorsers was not pleaded nor relied upon; yet it is contended by counsel, that, inasmuch as it might have been thus pleaded and relied upon, therefore the judgment is an estoppel against the setting up of that agreement as a defence in a subsequent action between the same parties upon other notes, equally as if its validity and efficacy had been litigated and det rmined.

In taking this position, counsel have confounded the operation of a judgment upon the demand involved in the action, in which the judgment was rendered, with its operation as an estoppel in another action between the parties upon a different demand. So far as the demand involved in the action is concerned, the judgment has closed all controversy; its validity is no longer open to contestation, whatever might have been said or proved at the trial for or against it. The judgment is not only conclusive as to what was actually determined respecting such demand, but as to every matter which might have been brought forward and determined respecting it; and that is all that the language means which is quoted by counsel from opinions in adjudged cases, in seeming consonance with his position.

When a judgment is offered in evidence in a subsequent action between the same parties upon a different demand, it operates as an estoppel only upon the matter actually at issue and determined in the original action; and such matter, when not disclosed by the pleadings, must be shown by extrinsic evidence. We have recently had occasion, in the case of Cromwell v. County of Sac, supra, p. 351, to go over this ground and point out the distinction mentioned; and it is unnecessary to repeat what we there said. See Bigelow on Estoppel; Note to the case of the Duchess of Kingston, in Smith's Lead. Cas.; and Robinson's Practice, vol. vii. The position of counsel is clearly untenable.

As to the objection of want of authority in the president of the bank to make the agreement with the defendants, the finding of the court is conclusive. His authority was a fact to be determined by the court, under the stipulation waiving a jury, and we do not sit in review of questions of fact.

Judgment affirmed.

MR. JUSTICE CLIFFORD dissented.

title: Davis v. Brown/Opinion of the Court


text: Talk:Davis v. Brown/Opinion of the Court


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McClure v. Township of Oxford

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

This was an action by the plaintiff to recover upon twenty overdue interest coupons, detached from bonds held by him and issued by the defendant.

The following is a copy of one of the bonds and coupons, all of which were set forth in the declaration:--

'No.___.] OXFORD TOWNSHIP BRIDGE BOND. [$500.

'The township of Oxford, in the county of Sumner and State of Kansas, hereby promises to pay to _____ _____, or bearer, the sum of $500, on the fifteenth day of April, A.D. 1882, with interest thereon at the rate of ten per cent per annum, payable semiannually on the fifteenth day of October and April of each year, upon the presentation of the coupons therefor hereto attached. Both principal and interest payable at the American Exchange National Bank, in the city of New York. This bond is one of an issue of $10,000, made for the purpose of aiding in the building of a bridge across the Arkansas River at the town of Oxford, in the county of Sumner and State of Kansas, and in pursuance of an act of the legislature of the State of Kansas, entitled 'An Act authorizing the trustee, treasurer, and clerk, or any two of them, of the township of Oxford, in the county of Sumner and State of Kansas, to subscribe for stock in the Oxford Bridge Company to the amount of $10,000, to aid in the construction of a bridge across the Arkansas River at Oxford, in said county and State, and to issue the bonds of said township in payment therefor,' approved March 1, 1872, and in pursuance of a vote of the qualified electors of said township, had at an election held therein, on the eighth day of April, A.D. 1872, which said election resulted in a majority of 112 in favor of issuing said bonds in a total vote of 140.

'The faith of said township and the receipts for toll of said bridge are pledged to the payment of this bond and interest.

'In testimony whereof the township trustee, clerk, and treasurer of said township have caused this bond to be issued, duly certified, attested, an countersigned, this fifteenth day of April, A.D. 1872.

'GEORGE T. WALTON, Trustee.

'Attest: JOHN H. FOLKS, Clerk.

'Countersigned: T. E. CLARK, Treasurer.'

'I, A. Thoman, auditor of the State of Kansas, do hereby certify that this bond has been regularly and legally issued; that the signatures thereto are genuine; and that such bond has been duly registered in my office, in accordance with an act of the legislature, entitled 'An Act to authorize counties, incorporated cities, and municipal townships to issue bonds for the purpose of building bridges, aiding in the construction of railroads, or other works of internal improvements, and providing for the registration of other bonds, and the repealing of all laws in conflict therewith,' approved March 2, 1872.

'Witness my hand and official seal, this twenty-fifth day of April, 1872.

'A. THOMAN, Auditor of State.

{SEAL OF AUDITOR OF STATE. KANSAS, April 25, 1873.'}

'$25.] Oxford Township.

'On the fifteenth day of April, 1875, the treasurer of the town ship of Oxford, in the county of Sumner and State of Kansas, will pay to bearer to sum of $25, at the American Exchange National Bank in the city of New York, being the semiannual interest due on bond No. 1, issued April 15, A.D. 1872.

'GEORGE T. WALTON, Trustee.

'Attest: JOHN H. FOLKS, Clerk.'

The fifth and seventh sections of the act under which the bonds were issued are as follows:--

'SECT. 5. Before any of the bonds hereinbefore mentioned shall be issued, the question of issuing said bonds shall be submitted to the legal voters of said township, at an election to be held for that purpose, which said election shall be conducted in all respects in conformity with the general election laws of this State. The time and place of holding said election shall be designated by the said trustee, treasurer, and clerk, or any two of them, by giving at least thirty days' notice by posting written or printed notices thereof in three of the most public places in said township. The ballots to be used at said election shall be written or printed, 'For the bridge and bonds,' or, 'Against the bridge and bonds;' and if at said election a majority of said votes shall be for the bridge and bonds, the said bonds shall be issued, and not otherwise.'

'SECT. 7. This act shall take efect from and after its publication in the 'Kansas Weekly Commonwealth."

'Approved March 1, 1872.'

Annexed to the act is the following certificate:--

'I hereby certify that the foregoing is a true and correct copy of the original enrolled bill now on file in my office, and that the same was published in the 'Kansas Weekly Commonwealth,' March 21, 1872.

'W. H. SMALLWOOD, Secretary of State.'

The defendant demurred to the declaration, on the ground that it did not set forth a good cause of action. The demurrer was sustained, and judgment rendered for the defendant. The plaintiff sued out this writ of error.

Mr. Alfred Ennis for the plaintiff in error.

Mr. A. L. Williams, contra.

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

title: McClure v. Township of Oxford


text: Talk:McClure v. Township of Oxford

title: Talk:McClure v. Township of Oxford


text:
McClure v. Township of Oxford/Opinion of the Court

A municipality must have legislative authority to subscribe to the capital stock of a bridge company before its officers can bind the body politic to the payment of bonds purporting to be issued on that account. Municipal officers cannot rightfully dispense with any of the essential forms of proceeding which the legislature has prescribed for the purpose of investing them with power to act in the matter of such a subscription. If they do, the bonds they issue will be invalid in the hands of all that cannot claim protection as bona fide holders.

To be a bona fide holder, one must be himself a purchaser for value without notice, or the successor of one who was. Every man is chargeable with notice of that which the law requires him to know, and of that which, after being put upon inquiry, he might have ascertained by the exercise of reasonable diligence. Every dealer in mu icipal bonds, which upon their face refer to the statute under which they were issued, is bound to take notice of the statute and of all its requirements.

The statute under which the bonds now in question were issued, and which is referred to in the bonds, though passed and approved March 1, 1872, was not by its terms to go into effect until after its publication in the 'Kansas Weekly Commonwealth.' Of this every purchaser of the bonds had notice, because it was part of the statute he was bound to take notice of. A purchaser would, therefore, be put upon inquiry as to the time of the publication, and by reasonable diligence could have ascertained that this did not take place until March 21. This being the case, the law charges him with knowledge that the statute did not go into effect until that date.

The statute further provided that no bonds could be issued under its authority, until the question of their issue had been submitted to the legal voters of the town at an election, of which thirty days' notice had been given, and at which a majority of the votes should be in favor of the measure. These bonds bore date April 15, 1872, and, pursuant to the express requirements of the act, contained a statement of the purpose for which they were issued, a reference to the act under which they were issued, and the result of the vote of the inhabitants on the question of their issuance, which is stated to have been taken April 8, 1872. No valid notice of an election could be given until the act went into effect, because until then no officer of the township had authority to designate the time or place of holding it. These bonds, therefore, carried upon their face unmistakable evidence that the forms of the law under which they purported to have been issued had not been complied with, because thirty days had not elapsed between the time the law took effect and the date of the election. If a purchaser may be, as he sometimes is, protected by false recitals in municipal bonds, the municipality ought to have the benefit of those that are true.

This suit was brought upon coupons detached from the bonds purchased by the plaintiff in error before maturity, but upon their face they refer to the bonds, and purport to be for the semiannual interest accruing thereon. This puts the purchaser upon inquiry for the bonds, and charges him with notice of all they contain.

This disposes of the case. As the declaration sets out a copy of the bonds with all the recitals, and the recitals show that the bonds were irregularly issued and not binding upon the township, it follows that the declaration does not set forth a good cause of action against the defendant, and that the demurrer was properly sustained. This is in accordance with the decision of the Supreme Court of Kansas, in George v. Oxford Township, 16 Kan. 72. Under these circumstances it is unnecessary to consider any other of the questions which have been certified here.

Judgment affirmed.


text: Talk:McClure v. Township of Oxford/Opinion of the Court


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Stewart v. Salamon (94 U.S. 434)

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

Mr. Alexander H. Stephens for the appellants.

Mr. P. Phillips and Mr. W. H. Phillips, contra.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Stewart v. Salamon (94 U.S. 434)


text: Talk:Stewart v. Salamon (94 U.S. 434)

title: Talk:Stewart v. Salamon (94 U.S. 434)


text:
Stewart v. Salamon (94 U.S. 434)/Opinion of the Court

This was an original suit in the Circuit Court of the United States, and was not transferred from the State court. The bill does, it is true, refer to two suits in the State court,-one at law, commenced by Mordecai, to foreclose, under the statute of Georgia, the same mortgage in controversy here; and the other in equity, commenced by Stewart against Mordecai,-both of which were transferred to the Federal court; but all that the bill asks with respect to them is, that the parties may be enjoined from their further prosecution, and be required to litigate with the complainants here. So far, then, as the present case is concerned, it does not matter whether the transfer from the State court of the two uits was before a trial or hearing was had in them, or after the judgments rendered had been reversed. There is no plea of other suits pending, nor any action asked with respect to the two suits mentioned, except as stated.

This case is brought to foreclose a mortgage executed by one James Stewart, now deceased, upon certain real property situated in the State of Georgia, to secure his promissory note for $44,000, and for the sale of the mortgaged premises to pay the amount due thereon. It does not differ from ordinary suits of foreclosure in equity, except in making tenants of the property parties, to prevent them, pending the litigation, from paying over rents to the administrator, or to the heirs of the deceased, among whom, it is alleged, the administrator has unlawfully partitioned the premises. The note of Stewart bears date on the 8th of January, 1863, and is payable to the order of Allen S.C.utts, in twelve months after date, with interest. It was made for the accommodation of Cutts, who indorsed it to Mordecai, to whom also the mortgage was executed, upon the purchase of certain bonds of the Georgia and Pensacola Railroad Company. In March, 1866, $15,325 were credited upon the note. Subsequently, the note and mortgage were assigned to the complainants. The point of contention is, whether the note was originally solvable in Confederate currency, or in the legal currency of the United States. The Circuit Court must have held that it was solvable in legal currency, and was so intended by the parties, for its decree is for the full amount claimed. In its ruling in this respect, we think the court erred. It seems to us that the evidence abundantly justifies the conclusion that the transaction, for which the note was in part given, was in Confederate currency. At the time the railroad bonds were purchased, Jan. 6, 1863, the treasury notes of the Confederate government constituted the principal currency of Georgia, in which business transactions were conducted. It was to them that reference was always made when dollars were mentioned, unless coin was specified. This condition of things appearing, the presumption is, that, in the purchase of the railroad bonds, the parties had those notes in contemplation. Thorington v. Smith, 8 Wall. 1; The Confederate Note Case, 19 id. 548; Wilmington & Weldon Railroad Co. v. King, 91 U.S. 3. And the testimony of Cutts, and of others cognizant of the transaction, except Mordecai, is positive that such was the case. The conceded facts respecting the transaction lead to the same conclusion. The value of the bonds was estimated at the time in Confederate currency; they were sold for eighty cents on the dollar in that currency. The cash payment of over $12,000 was in the same currency. The $50,000 note given at the time was paid a few months afterwards in that currency. It is highly improbable that an exceptional distinction was made with reference to the balance for which the note of Stewart was executed. Certainly, the presumption is strong the other way. The transaction and testimony together leave no doubt in our minds on the subject.

The sum, therefore, in actual money, which the note of Stewart represented, and which he promised to pay, must be determined by the value in coin or legal currency of the United States, at the time the note was made, and at the place where it was made, of Confederate treasury notes, equal in nominal amount to the number of dollars specified. And as the payment is indorsed on the note in the same monetary terms which are used in the note itself, the presumption is, that the payment was intended to be credited in the same scale of values. If the parties intended otherwise, some proof on the subject should have been presented. The credit was made without any explanation; and there is no evidence that the value of the dollars mentioned in the receipt was different from the value of the dollars mentioned in the note. As the matter is presented to us, the principal designated on the face of the note is only reduced by the amount specified in the receipt. The true rule, therefore, for ascertaining the rights of the parties in the case, is to calculate the interest on the principal of the note up to the time of the payment, and, having then deducted the payment, to treat the balance as the debt then due; the amount in money to be determined by the value in Georgia of Confederate notes in coin or the legal currency of the United States at the time the note was made. Interest should be calculated on this balance to the date of the decree. The note, with interest, amounted, when the payment was made, to $53,787; the credit of $15,325 reduced it to $38,462. This amount, scaled by the value of Confederate currency in Georgia at the date of the note,-three to one,-would make a balance due in lawful money, March 17, 1866, of $12,820. This amount, with interest, will constitute the sum which should be adjudged due, and for its payment the proceeds of the mortgaged premises when sold should be applied.

The decree of the Circuit Court must, therefore, be reversed, and the cause be remanded for further proceedings in accordance with this opinion; and it is.

So ordered.


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National Bank of the Commonwealth v. Mechanics' National Bank

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

Mr. Solicitor-General Phillips for the plaintiff in error.

Mr. William S. Opdyke, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.


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National Bank of the Commonwealth v. Mechanics' National Bank/Opinion of the Court

This suit was brought by the defendant in error as an original claimant, and as the assignee of other parties.

All the claims have a common origin, and involve the same principle.

On the 22d of November, 1873, the Bank of the Commonwealth refused to pay its circulating notes on demand, and became in default. The comptroller of the currency appointed a receiver, and the bank has since been in his hands. The Mechanics' Bank and its assignors had funds on deposit. On the 24th of September, 1873, all the parties demanded payment. Nothing was paid. Instalments on account of the principal debts were subsequently paid from time to time to each of the parties. On the 20th of November, 1874, the last instalment was paid in each case, and the principal debts were thereby extinguished. At each payment, interest from the 24th of September, 1873, on the amount so paid, was demanded and refused. The other parties assigned to the defendant in error their claims respectively for such interest. The Mechanics' Bank instituted this suit. The declaration demands the payment of this interest in all the cases, with interest upon the aggregate amount from the 20th of November, 1874. The Bank of the Commonwealth demurred. Judgment was given against it, and this writ of error was thereupon prosecuted.

Two errors are assigned.

1. That the plaintiff below was not entitled to recover any interest.

2. If interest was recoverable, as demanded, on each instalment when paid, the plaintiff was not entitled to interest on the gross amount of such interest from the 20th of November, 1874, the time when the last instalments of the principal were paid.

There is but one demurrer, and that is to the whole declaration. The point is, therefore, well taken by the counsel for the defendant in error, that if any part of the declaration be good, and divisible in its nature from the residue, the demurrer must be overruled. 1 Chitty's Plead. 664. But the view which we take of the case renders it unnecessary to apply this rule.

By the common law, interest could in no case be recovered. As early as the reign of King Alfred, in the ninth century, it was held in detestation. Churchmen and laymen alike denounced it. Glanville, Fleta, and Bracton all speak of it in terms of abhorrence. The first English statute upon the subject was the 37 Hen. VIII. c. 9.

This statute fixed the lawful rate of interest at ten per cent per annum, and visited receiving mor with forfeiture and imprisonment. Other statutes regulating the subject were passed in later reigns from time to time, until finally an act of Parliament in 1854, 17 & 18 Vict. c. 90, swept all the usury laws in the English statute-books out of existence, and established 'free trade in money.' The first impulse to public opinion in this direction was given by Bentham, near the close of the last century. The final result was doubtless largely due to his labors.

The fiftieth section of the National Banking Act, 13 Stat. 113, requires the comptroller of the currency to apply the moneys paid over to him by the receiver 'on all such claims as may have been proved to his satisfaction, or adjudicated in a court of competent jurisdiction.' The act is silent as to interest upon the claims before or after proof or judgment. Can it be doubted that a judgment, if taken, would include interest down to the time of its rendition? Sect. 996 of the Rev. Stat. p. 182, declares that all judgments in the courts of the United States shall bear the same rate of interest as judgments in the courts of the States respectively where they are rendered. Interest is allowed by the law of New York upon judgments from the time they are perfected. Rev. Code of N. Y. (ed. 1859), vol. iii. p. 637.

If these claims had been put in judgment, whether in a court of the United States or in a State court of that State, the result as to interest upon the judgment would have been the same. It was unnecessary to reduce them to judgment, because they were proved to the satisfaction of the comptroller. After they were so proved, they were of the same efficacy as judgments, and occupied the same legal ground. Hence, they are within the equity, if not the letter, of these statutes, and bear interest as judgments would have done. Sedgw. on Constr. 311, 315. This is conclusive upon the first assignment of error.

The rule settled by this court as to the application of payment is, that the debtor or party paying the money may, if he chooses to do so, direct its appropriation; if he fail, the right devolves upon the creditor; if he fail, the law will make the application according to its own notions of justice. Neither of the parties can make it after a controversy upon the subject has arisen between them, and a fortiori not at the trial. United States v. Kirkpatrick, 9 Wheat. 720; United States v. January, 7 Cranch, 572; Field v. Holland, 6 id. 8. In the present case, the appropriation was made unequivocally by the party from whom the money was received. How it would have been applied by the law if neither of the parties had given any direction is a question which we need not, therefore, consider.

The interest lawfully accruing upon each of the claims was as much a part of it as the original debt. The creditor had the same right to the payment of the one as of the other. If there had been a judgment, and the full amount due upon it had not been paid, an action of debt might have been brought upon it to recover the balance. 1 Chitty's Plead. 111.

Such balance would have been adjudged to the plaintiff with interest in the shape of damages for the detention of the debt. If, in that case, the judgment debtor had chosen to pay only the principal of the judgment, leaving the interest unsatisfied, and the suit had been for the balance, consisting of interest only, the same result would have followed.

We have shown that the claims, when proved to the satisfaction of the comptroller, were upon the same footing as if they had been in judgment. The amount in arrear was liquidated, and as certain as if it consisted wholly of principal instead of interest. This action was, therefore, well brought. If it had been in debt, damages would have been awarded for the detention of the debt sued for. The action not being in debt, the same amount was properly included in the mass of the damages for which the judgment was rendered.

The compounding of interest, so far as it has occurred, was due entirely to the faul of the agent of the plaintiff in error. The principle of estoppel in pais applies. No exception can be taken upon that ground.

The plaintiff in this action was entitled, ex equo et bono, to the money sought to be recovered. Where the right to recover exists in this class of cases, it includes interest as well as principal, unless there is something which would render the payment of the former inequitable.

Kent, C. J., said upon this subject: 'Each case will depend upon the justice and equity arising out of its peculiar circumstances, to be disclosed at the trial. Pearce v. Barbour, 3 Caines, 265. See also Robinson v. Bland, 2 Burr. 1087.

In the latter case, Lord Mansfield said: 'The interest is an accessory to the principal; and the plaintiff cannot bring a new action for any interest grown due between the commencement of his action and the judgment in it. . . . I don't know of any court in any country (and I have looked into the matter) which don't carry interest down to the last act by which the sum is liquidated.' The treasury authority fell into an error. There should have been no discrimination between principal and interest in making the payments. The creditor had the same right with respect to both as if he had been pursuing the defaulting debtor under other circumstances. The Comptroller should have done just what the law would have done if the case had not come under his cognizance.

Numerous cases, both English and American, are to be found in which compound interest, under special circumstances, was recovered. It is sufficient to refer to a few of them. Ex parte Beavans, 9 Ves. Jr. 223; Coliot v. Walker, 2 Anstr. 495; Hamilton v. Le Grange, 2 H. Black. 145; Kellog v. Hickock, 1 Wend. (N. Y.) 521; Tyler v. Yates, 3 Barb. (N. Y.) 222; Aurora City v. West, 7 Wall. 82; Town of Genoa v. Woodruff et al., 92 U.S. 502.

The demand for the interest was properly made upon the plaintiff in error.

Judgment affirmed.


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Conro v. Crane (94 U.S. 441)

MOTION to dismiss an appeal from the Circuit Court of the United States for the Northern District of Illinois.

Fox & Howard were adjudged bankrupts by the District Court for the Northern District of Illinois, June 5, 1875. Bradford Hancock was appointed provisional assignee, June 16; and, June 19, an order was entered in the bankruptcy proceedings, directing him to receive bids for the purchase of certain personal property belonging to the estate of the bankrupts, which had come into his possession. Under this order, bids were tendered by various persons, and, among others, one by Jefferson Hodgkins, for $40,000. All were reported by Hancock to the District Court, July 2, with the recommendation that the one of Hodgkins be accepted; and thereupon an order was made that all persons interested show cause by July 9 why this recommendation should not be complied with. Notice of this order was given by mail and publication; and, on the day named, the bid was accepted, the sale approved, and Hancock anthorized, on the receipt of the purchase-money, to execute an appropriate bill of sale, and deliver possession of the property. Hancock again reported, July 12, that, although demanded, the purchase-money had not been paid, and that he had received another bid from Conro & Carkin, the present appellants, for $40,500. He thereupon asked that the order of confirmation to Hodgkins be set aside, the sale revoked, and that he be authorized to sell and deliver the property to Conro & Carkin, at their bid. An order was made to this effect on the same day; and Hancock at once received the purchasemoney, executed a bill of sale, and delivered the property to Conro & Carkin.

On the 18th of August, Hodgkins and Charles S.C.rane, for whom, as is alleged, Hodgkins acted as agent in the purchase, filed their petition in the bankrupt court, asking that the order of July 12 be set aside, and Conro & Carkin, Hanc ck, and the bankrupts be directed to deliver the property to them, and account for the moneys realized by its use. Upon the filing of this petition, a rule was entered, requiring Hancock, Conro & Carkin, and the bankrupts to show cause by Aug. 27 why the order asked for should not be granted. Hancock and Conro & Carkin appeared in obedience to this rule, and answered. The matter was then referred to one of the registers in bankruptcy to take testimony; and, on the 6th of March, the District Court, upon full hearing, dismissed the petition. On the same day, Hodgkins and Crane presented to the circuit judge of the circuit their petition, under sect. 4986, Rev. Stat., for 'the revision and reversal of the action of the District Court sitting as a court of bankruptcy.' The Circuit Court, April 24, after hearing, reversed the order of July 12, and continued that of July 9 in force. The District Court was also directed to order the assignee to execute and deliver to Hodgkins the necessary papers to show title, and to cause the property to be delivered to Hodgkins or Crane. The District Court was also ordered to return to Conro & Carkin, subject to certain specified conditions, the purchase-money paid by them.

From this order an appeal by Conro & Carkin was allowed to this court, which Hodgkins and Crane moved to dismiss for want of jurisdiction.

Mr. P. Phillips and Mr. John S.C.ooper in support of the motion.

Mr. F. H. Kales in opposition thereto.

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

title: Conro v. Crane (94 U.S. 441)


text: Talk:Conro v. Crane (94 U.S. 441)

title: Talk:Conro v. Crane (94 U.S. 441)


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Conro v. Crane (94 U.S. 441)/Opinion of the Court

It must now be considered as settled that appeals do not lie to this court from the decisions of the circuit courts in the exercise of their supervisory jurisdiction under the bankrupt law. In Wiswall et al. v. Campbell et al., 93 U.S. 347, we held that 'a proceeding in bankruptcy, from its commencement to its close upon the final settlement of the estate, is but one suit. The several motions made and acts done in the bankrupt court in the progress of the cause are. . . but parts of the suit in bankruptcy, from which they cannot be separated.' And again: 'Every person submitting himself to the jurisdiction of the bankrupt court in the progress of the cause, for the purpose of having his rights in the estate determined, makes himself a party to the suit, and is bound by what is judicially determined in the legitimate course of the proceeding.' And in Sandusky v. National Bank, 23 Wall. 293, it was decided, that 'any order made in the progress of the cause may be subsequently set aside and vacated, upon proper showing made, provided rights have not become vested under it which will be disturbed by the vacation.'

These principles are decisive of this case. The rights of the parties grow out of a sale made by the court under the authority of sect. 5065, Rev. Stat. The bids were received by the provisional assignee; but the court determined which should be accepted, and gave directions as to the transfer of title. Clearly, then, what was done both as to the first and second sale was in the course of the bankruptcy proceeding, and part of that suit. As such, it was subject to revision in the Circuit Court under its supervisory jurisdiction.

Both Hodgkins and Conro & Carkin submitted themselves to the jurisdiction of the court to the extent that was necessary for the completion of their respective purchases. Conro & Carkin were parties to the proceeding by which the sale to Hodgkins was set aside, and that to them made. Having been in court when the order under which their claim was made, they can properly be brought in to answer a motion to set it aside. Such a motion would not be a new suit, but a new proceeding in the old suit in bankruptcy, and therefore not subject to revision here upon appeal.

This was evidently the understanding of the parties at the time; for the original petition of Hodgkins and Crane was filed in the District Court sitting in bankruptcy, and the petition for review purports, on its face, to be filed under sect. 4986, Rev. Stat., which confers the supervisory jurisdiction.

Appeal dismissed.


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Ex parte Smith

PETITION for a mandamus to the Circuit Court of the United States for the Western District of Tennessee.

Mr. S. P. Walker and Mr. Thomas H. Sneed, for the petitioners.

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

title: Ex parte Smith


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Ex parte Smith/Opinion of the Court

The relators, citizens of the State of Tennessee, sued Lewis Anderson, also a citizen of that State, Dec. 31, 1873, in the Circuit Court of the United States for the Western District of Tennessee, to recover possession of certain lands in that district to which they claimed title in fee through a certificate of the United States direct tax commissioners, under the 'Act for the collection of direct taxes in insurrectionary districts within the United States, and for other purposes,' approved June 7, 1862, 12 Stat. 422. The declaration is as follows:--

'The plaintiff sues the defendant to recover the following tract of land, lying in Shelby County, district No. ___, and bounded as follows: Lots Nos. two (2), three (3), four (4), and sixteen (16), Cannovan's subdivision, sixty by one hundred and sixty (60 by 160) feet, assessed to W. H. Bowers in 1860, containing _____, of which the plaintiff was possessed, claiming in fee, through a certificate of the United States direct tax commissioners, Jno. B. Rodgers, E. P. Ferry, and Delino F. Smith, _____, under an act of Congress entitled an act for the collection of direct taxes in insurrectionary districts within the United States, and for other purposes, and the acts amending the same, on the 1st of January, 1865; and after such possession accrued, the defendant, on the first day of December, 1865, entered thereupon, and unlawfully withholds and detains the same, together with $5,000 due for detention thereof.'

Summons was served April 24, 1874, and, June 12, Anderson moved to dismiss the suit for want of jurisdiction, as the parties were all citizens of Tennessee. This motion was granted March 1, 1877; and the value of the property in dispute being, as is alleged, less than $5,000, Smith and Hurst now ask for a mandamus requiring the Circuit Court to take jurisdiction, and hear and determine the cause upon its merits.

Jurisdiction is claimed for the Circuit Court under sect. 2 of 'An Act further to provide for the collection of duties on imports,' approved March 2, 1833, 4 Stat. 632, which provides 'that the jurisdiction of the circuit courts of the United States shall extend to all cases, in law or equity, arising under the revenue laws of the United States, for which other provisions are not already made by law.'

The facts upon which the jurisdiction of the courts of the United States rests must, in some form, appear in the record of all suits prosecuted before them. To this rule there are no exceptions.

In this case, the jurisdiction is claimed on account of the subject-matter of the action, and not on account of the citizenship of the parties. It was incumbent on the relators, therefore, to show, in their pleadings or otherwise, that this action arose under the revenue laws of the United States. This they failed to do. They do show that they claimed title through such laws, but not that their title in that respect is disputed. For all that appears, Anderson may admit their title, and still contest their right to possession as against him. He may be their tenant, or he may be their grantee. There are no presumptions in favor of the jurisdiction of the courts of the United States.

The suit was therefore properly dismissed, and we cannot compel the Circuit Court to take jurisdiction.

Petition dismissed.

title: Ex parte Smith/Opinion of the Court


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Connecticut Mutual Life Insurance Company v. Schaefer

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

The facts are set forth in the opinion of the court.

Mr. Edgar M. Johnson for the plaintiff in error.

Mr. J. D. Brannan, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.


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Connecticut Mutual Life Insurance Company v. Schaefer/Opinion of the Court

This was an action on a policy of life assurance issued July 25, 1868, on the joint lives of George F. and Franzisca Schaefer, then husband and wife, payable to the survivor on the death of either. In January, 1870, they were divorced, and alimony was decreed and paid to the wife. There was never any issue of the marriage. They both subsequently married again, after which, in February, 1871, George F. Schaefer died. This action was brought by Franzisca, the survivor.

On the trial of the cause, several exceptions were taken by the defendant to the rulings and charge of the court, and this writ of error is brought to reverse the judgment for alleged error in said rulings and charge.

The first exception was for overruling certain testimony offered by the defendant. The plaintiff, having offered herself as a witness, on her cross-examination admitted that she had employed one Harris as her attorney to file her petition for divorce; and being questioned whether she had not stated to him, to be embodied in the petition, that Schaefer had been a habitual drunkard for a period of more than three years prior to the date of filing the petition, denied that she had so stated to him. (Had such been the fact, it would have falsified the statement made in the application for insurance.) The defendant called Harris, and asked him whether the plaintiff had not so stated to him on that occasion. The question was objected to and overruled, as calling for confidential communications between attorney and client. The defendant alleges that herein the court erred, because, by the law of Ohio, such communications are not privileged. An examination of the Ohio statutes renders it doubtful whether the law is as the defendant contends. But if it were, the court did right to exclude the testimony. The laws of the State are only to be regarded as rules of decision in the courts of the United States where the Constitution, treaties, or statutes of the United States have not otherwise provided. When the latter speak, they are controlling; that is to say, on all subjects on which it is competent for them to speak. There can be no doubt that it is competent for Congress to declare the rules of evidence which shall prevail in the courts of the United States, not affecting rights of property; and where Congress has declared the rule, the State law is silent. Now, the competency of parties as witnesses in the Federal courts depends on the act of Congress in that behalf, passed in 1864, amended in 1865, and codified in the Revised Statutes, sect. 858. It is not derived from the statute of Ohio, and is not subject to the conditions and qualifications imposed thereby. The only conditions and qualifications which Congress deemed necessary are expressed in the act of Congress; and the admission in evidence of previous communications to counsel is not one of them. And it is to be hoped that it will not soon be made such. The protection of confidential communications made to professional advisers is dictated by a wise and liberal policy. If a person cannot consult his legal adviser without being liable to have the interview made public the next day by an examination enforced by the courts, the law would be little short of despotic. It would be a prohibition upon professional advice and assistance.

The other exceptions were to the charge of the court, and relate to two points: first, to the forbearance note given for a portion of the last renewa premium; and, secondly, to the alleged failure of interest of the plaintiff in the policy, caused by the divorce of the insured parties.

First, as to the forbearance note. Only one half of the annual premium was required to be paid in cash; the insured, if they chose, could have a credit for the other half. This credit was given upon the assured's signing an acknowledgment in the following form: 'I hereby acknowledge a credit or forbearance of _____ dollars of the premium on my policy No. ___, which amount shall be a lien on said policy at six per cent per annum until paid or adjusted by return of surplus premium.' It was not a note promising to pay money, but a form of acknowledgment by which the assured consented to a deduction from the policy for non-payment of a portion of the premium. As long as George F. Schaefer took any interest in the policy, he signed this acknowledgment for himself and wife, 'George F. and Franz. Schaefer;' or for himself alone. One premium became due after the divorce, and Franzisca Schaefer herself attended to the payment of it,-paying the cash portion, and authorizing her son by a former marriage to sign the forbearance note, as it is called. He did so in the name of both parties insured, thus: 'Geo. F. & F. Schaefer.' The company accepted it. On what valid ground they can now object to the transaction, it is difficult to see. A joint act was to be done. Only one of the parties could physically do it. Either had a right to do it. This act was, to pay or settle the annual premium. The plaintiff, as one of the joint parties, performed what was necessary to be done. George F. Schaefer could not complain; for it was done in his interest, keeping the policy alive for his benefit as well as Franzisca's. The company could not complain; for they accepted both the money and the acknowledgment in the form in which they were given. There is no pretence that any deception was practised upon them.

This point is really frivolous.

The other point, relating to the alleged cessation of insurable interest by reason of the divorce of the parties, is entitled to more serious consideration, although we have very little difficulty in disposing of it.

It will be proper, in the first place, to ascertain what is an insurable interest. It is generally agreed that mere wager policies-that is, policies in which the insured party has no interest whatever in the matter insured, but only an interest in its loss or destruction-are void, as against public policy. This was the law of England prior to the Revolution of 1688. But after that period, a course of decisions grew up sustaining wager policies. The legislature finally interposed, and prohibited such insurance: first, with regard to marine risks, by statute of 19 Geo. II. c. 37; and next, with regard to lives, by the statute of 14 Geo. III. c. 48. In this country, statutes to the same effect have been passed in some of the States; but where they have not been, in most cases either the English statutes have been considered as operative, or the older common law has been followed. But precisely what interest is necessary, in order to take a policy out of the category of mere wager, has been the subject of much discussion. In marine and fire insurance the difficulty is not so great, because there insurance is considered as strictly an indemnity. But in life insurance the loss can seldom be measured by pecuniary values. Still, an interest of some sort in the insured life must exist. A man cannot take out insurance on the life of a total stanger, nor on that of one who is not so connected with him as to make the continuance of the life a matter of some real interest to him.

It is well settled that a man has an insurable interest in his own life, and in that of his wife and children; a woman in the life of her husband; and the creditor in the life of his debtor. Indeed, it may be said generally that any reasonable expectation of pecuniary benefit or advantage from the continued life of another creates an insurable inte est in such life. And there is no doubt that a man may effect an insurance on his own life for the benefit of a relative or friend; or two or more persons, on their joint lives, for the benefit of the survivor or survivors. The old tontines were based substantially on this principle, and their validity has never been called in question.

The essential thing is, that the policy shall be obtained in good faith, and not for the purpose of speculating upon the hazard of a life in which the insured has no interest. On this point, the remarks of Chief Justice Shaw, in a case which arose in Connecticut (in which State the present policy originated), seem to us characterized by great good sense. He says:--

'In discussing the question in this Commonwealth (Massachusetts), we are to consider it solely as a question of common law, unaffected by the statute of 14 Geo. III., passed about the time of the commencement of the Revolution, and never adopted in this State. All, therefore, which it seems necessary to show, in order to take the case out of the objection of being a wager policy, is, that the insured has some interest in the cestui que vie; that his temporal affairs, his just hopes and well-grounded expectations of support, of patronage, and advantage in life, will be impaired; so that the real purpose is not a wager, but to secure such advantages, supposed to depend on the life of another; such, we suppose, would be sufficient to prevent it from being regarded as a mere wager. Whatever may be the nature of such interest, and whatever the amount insured, it can work no injury to the insurers, because the premium is proportioned to the amount; and whether the insurance be a large or small amount, the premium is computed to be a precise equivalent for the risk taken. We cannot doubt,' he continues, 'that a parent has an interest in the life of a child, and, vice versa, a child in the life of a parent; not merely on the ground of a provision of law that parents and grandparents are bound to support their lineal kindred when they may stand in need of relief, but upon considerations of strong morals, and the force of natural affection between near kindred, operating often more efficaciously than those of positive law.' Loomis v. Eagle Life Insurance Co., 6 Gray, 399.

We concur in these views, and deem it unnecessary to cite further authorities, all those of importance being collected and arranged in the recent treatises on the subject. See May on Insurance, sects. 102-111; Bliss on Life Insurance, sects. 20-31.

The policy in question might, in our opinion, be sustained as a joint insurance, without reference to any other interest, or to the question whether the cessation of interest avoids a policy good at its inception. We do not hesitate to say, however, that a policy taken out in good faith, and valid at its inception, is not avoided by the cessation of the insurable interest, unless such be the necessary effect of the provisions of the policy itself. Of course, a colorable or merely temporary interest would present circumstances from which want of good faith and an intent to evade the rule might be inferred. And in cases where the insurance is effected merely by way of indemnity, as where a creditor insures the life of his debtor, for the purpose of securing his debt, the amount of insurable interest is the amount of the debt.

But supposing a fair and proper insurable interest, of whatever kind, to exist at the time of taking out the policy, and that it be taken out in good faith, the object and purpose of the rule which condemns wager policies is sufficiently attained; and there is then no good reason why the contract should not be carried out according to its terms. This is more manifest where the consideration is liquidated by a single premium paid in advance, than where it is distributed in annual payments during the insured life. But, in any case, it would be very difficult, after the policy had continued for any considerable time, for the courts, without the ai of legislation, to attempt an adjustment of equities arising from a cessation of interest in the insured life. A right to receive the equitable value of the policy would probably come as near to a proper adjustment as any that could be devised. But if the parties themselves do not provide for the contingency, the courts cannot do it for them.

In England, by the operation of the statute of 14 Geo. III., as construed by the courts, the law has assumed a very definite form. In a lucid judgment delivered by Baron Parke in the Exchequer Chamber, in the case of Dalby v. Life Insurance Company, decided in 1854, 15 C. B. 365, it was held that the true meaning of the statute is, that there must be an interest at the time the insurance is effected, but that it need not continue until death; the words of the statute being, 'that no insurance shall be made on a life or lives wherein the assured shall have no interest, or by way of gaming or wagering,' and 'that in all cases where the insured hath interest in such life, &c., no greater sum shall be recovered than the amount or value of the interest.' The word 'hath' was construed as necessarily referring to the time of effecting the insurance, and not to the time of the death; that being the only construction which would subserve the object of the statute to discourage wagering, render the contract uniform and certain, and preserve a fixed relation between the premiums and the amount insured, as required by the principles of life assurance. This case overruled the previous case of Goodsall v. Boldero, 9 East, 72, decided by Lord Ellenborough, in which, proceeding upon the idea that life insurance is a mere contract of indemnity, it was held that the interest must continue until death, and even until the bringing of the action. Baron Parke, in commenting upon this case, very justly says:--

'Upon considering this case, it is certain that Lord Ellenborough decided it upon the assumption that a life policy was in its nature a mere contract of indemnity, as policies on marine risks, and against fire, undoubtedly are; and that the action was, in point of law, founded on the supposed damnification, occasioned by the death of the debtor, existing at the time of the action brought; and his lordship relied upon the decision of Lord Mansfield in Hamilton v. Mendes, 2 Burr. 1270, that the plaintiff's demand was for an indemnity only. Lord Mansfield was speaking of a policy against marine risks, which is, in its terms, a contract for indemnity only. But that is not the nature of what is termed an assurance for life: it really is what it is on the face of it,-a contract to pay a certain sum in the event of death. It is valid at common law; and, if it is made by a person having an interest in the duration of the life, it is not prohibited by the statute.'

As thus interpreted, we might almost regard the English statute as declaratory of the original common law, and as indicating the proper rule to be observed in this country where that law furnishes the only rule of decision.

Be this, however, as it may, in our judgment a life policy, originally valid, does not cease to be so by the cessation of the assured party's interest in the life insured.

Judgment affirmed.


text: Talk:Connecticut Mutual Life Insurance Company v. Schaefer/Opinion of the Court


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Howell v. Western Railroad Company

APPEAL from the Circuit Court of the United States for the Eastern District of North Carolina.

Mr. A. S. Merrimon for the appellant.

Mr. W. N. H. Smith, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Howell v. Western Railroad Company


text: Talk:Howell v. Western Railroad Company

title: Talk:Howell v. Western Railroad Company


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Howell v. Western Railroad Company/Opinion of the Court

The appellant in this suit is the owner of five bonds of $1,000 each, issued by the defendant corporation, and he seeks the foreclosure of a mortgage on the railroad and its appurtenances given to secure their payment. These are part of an issue of like bonds to the amount of $900,000, made at the same time, to wit, Oct. 31, 1870, payable thirty years after date, with coupons for interest attached, at the rate of eight per cent er annum.

Very few of these bonds were ever sold or put into circulation. All that have been, except these held by plaintiff, have either been taken up or are under the control of the company. The face of each bond contained a provision, that, on the failure to pay any coupon when presented at the place of payment, and continued default thereon for six months, the whole sum mentioned in said bond became due and payable, and the mortgage deed contained a provision that a like failure as to any one coupon of any single bond should make all the bonds become due and payable.

On the back of each bond was printed the act of the legislature of North Carolina, which authorized the corporation to make these mortgage bonds, which declares that 'said president and directors are hereby authorized and empowered to issue the mortgage bonds of said company in sums of not less than $100 each, and not exceeding in amount $900,000, and to be negotiated at not less than par, and not to mature at an earlier period than thirty years,' &c.

Many issues are raised by the pleadings, which are not necessary to be considered here. We shall confine ourselves to two questions, which are all that we deem appropriate to our purpose. The first of these is, whether the plaintiff is a bona fide holder for value of the bonds on which he sues. There is some reason to infer that Rogers, who was one of the trustees of the mortgage, and the banker who was expected to negotiate the bonds, and with whom they were deposited, was not a rightful holder of them, though it is asserted that they were paid to him for services to be performed as trustee in the mortgage. He, however, never performed any services, no bonds were ever negotiated, and the arrangement by which he held these bonds as his own does not appear to have been authorized or approved by the board of directors of the company.

This, however, is immaterial; for, from the testimony before us, we are compelled to hold that Howell, the complainant, was a bona fide purchaser of them for value of Rogers, without notice of any defect in his title. The only evidence on this subject found in the record is his own deposition, in which he states unequivocally that, on a settlement made by him with Bayne & Co., who were his bankers, he took these bonds in absolute payment of money due him, at the rate of seventy-five cents on the dollar, and had no notice of any thing wrong in the title of Rogers. This testimony is uncontradicted and conclusive.

The other question relates to the validity of the bonds as affected by the provision of the statute, that they should not mature at an earlier period than thirty years, whereas the bonds provide that on failure to pay a single interest coupon they shall mature in six months thereafter, if it is still unpaid. The provision was, as we have said, printed on the back of the bond, and imparted to every purchaser or holder of it the fullest notice of its nature.

The provision, in our opinion, differs widely from a mere direction as to the length of the time the bonds should run or the period when they should be made payable.

Such a direction or provision in an act authorizing a corporation to issue bonds is not in general inconsistent with a contract that, if the interest is not paid as agreed, the holder may treat the whole sum as due. The language of this statute is not that these bonds are to be made payable in thirty years, or payable at a given time, and there is no direction as to the terms in which that is to be expressed. They may be made to run fifty or a hundred years; but however worded or expressed, they are 'not to mature at an earlier period than thirty years.' We construe this as an express enactment that they shall not mature earlier. No matter what device the parties interested may resort to, nor what form of language may be inserted in the bond, the principal sum of the bond shall not become due until the expiration of that period. The legislature had an undoubted right to annex to the power which it conferred of making these mortgage bonds this absolute condition, and they have used language which we can construe in no other way.

We do not see how a condition of the contract by which the bonds can be made to mature in one year can be valid, when the only authority to make the contract at all is the statute we have cited. But while this condition is invalid, it does not avoid the remainder of the contract, which is complete without it, and the agreement to pay interest semiannually is specifically authorized by the statute.

The company, therefore, had a right to mortgage their property for the payment of these instalments of interest as well as principal, and to make it one of the provisions of the mortgage, that it might be foreclosed if these instalments were not paid as they fell due. There can, in fact, be but one decree of foreclosure of the same mortgage on the same property, and it is a necessity of that foreclosure, under the principles of the Court of Chancery, that all the sums secured by that mortgage must be protected according to their priority of lien.

We are of opinion, then, that there is due from the railroad company to plaintiff the amount of his overdue and unpaid coupons.

For this sum, whatever it may be, he has a right to a decree nisi, according to the chancery practice,-a decree which will ascertain the sum so due, and give the company a reasonable time to pay it, say ninety days or six months, or until the next term of the court, in the discretion of that court. If this sum is not paid, the court must then order a sale of the mortgaged property, with a foreclosure of all rights subordinate to the mortgage, with directions to bring the purchase-money into court. If the case proceeds thus far, the plaintiff will have a lien on the money thus paid into court, not only for his overdue coupons, but for his principal debt, and it must be provided for in the order distributing the proceeds of the sale. If, however, the company shall pay the sum found due in the decree nisi, no further proceeding can be had until another default of interest or of the principal.

In this manner full justice will be done the appellant, and no wrong to the appellees.

Decree reversed, and the case remanded with directions to proceed in conformity to this opinion.


text: Talk:Howell v. Western Railroad Company/Opinion of the Court


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Hinckley v. Gilman Clinton and Springfield Railroad Company

MOTION to dismiss an appeal from the Circuit Court of the United States for the Southern District of Illinois.

In the progress of a suit for the foreclosure of a mortgage executed by the Gilman, Clinton, and Springfield Railroad Company, Francis E. Hinckley was appointed receiver. On the 8th of April, 1876, a final decree was rendered, under which, on the 10th of June, the mortgaged property was sold, and subsequently conveyed to the purchasers. Upon a settlement of the accounts of the receiver, a balance was found due from him of $18,776.25, for which a decree was entered Sept. 27, directing its payment into court on or before Oct. 10. On the 9th of October he prayed this appeal 'from the decree against him,' which was granted. The complainants now move to dismiss, for the reason that he was not a party to the suit.

Mr. R. Biddle Roberts in support of the motion.

The appellant is not a party to the suit, and cannot be. Being merely the officer or representative of the court, without any personal interest whatever in the litigation, the right to discharge him rests with the court, at any stage of the controversy; and from the exercise of this right he cannot appeal. High on Receivers, 536; In re Colvin, 3 Md. Ch. 300; Ellicott v. Warford, 4 Md. 80. Only those who are parties to the record can sue out a writ of error. Phillips's Practice, p. 64, and cases there cited. The same rule applies to appeals. Id. p. 65. On the eighth day of April, the final decree was entered, from which an appeal was not prayed, nor could it, in the ollowing October, be taken, much more than sixty days having then elapsed. Kitchen v. Randolph, 93 U.S. 86. The decree of Sept. 27, requiring the payment of money into court, was merely interlocutory, transferring the possession of property in litigation. The rule of finality cannot apply to it. Forgay v. Conrad, 6 How. 201. This doctrine is sustained by Thomson v. Dean, 7 Wall. 342; Railroad Company v. Bradley, 7 id. 577; Stowall v. Banks, 10 id. 583; and it would seem to be the settled law in this court.

Mr. H. Crawford and Mr. S. P. McConnell, contra.

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


text: Talk:Hinckley v. Gilman Clinton and Springfield Railroad Company


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Hinckley v. Gilman Clinton and Springfield Railroad Company/Opinion of the Court

The motion to dismiss cannot be sustained.

In Blossom v. Railroad Company, 1 Wall. 655, a bidder at a foreclosure sale was allowed to appeal, and in delivering the opinion of the court Mr. Justice Miller said:--

'It is certainly true that he cannot appeal from the original decree of foreclosure, nor from any other order or decree of the court made prior to his bid. It, however, seems to be well settled, that, after a decree adjudicating certain rights between the parties to a suit, other persons having no previous interest in the litigation may become connected with the case in the course of the subsequent proceedings, in such a manner as to subject them to the jurisdiction of the court, and render them liable to its orders; and that they may in like manner acquire rights in regard to the subject-matter of the litigation, which the court is bound to protect.' This seems to us to be decisive of this motion. The receiver cannot and does not attempt to appeal from the decree of foreclosure, or from any order or decree of the court, except such as relates to the settlement of his accounts. To that extent he has been subjected to the jurisdiction of the court, and made liable to its orders and decrees. He has, therefore, the corresponding right to contend against all claims made against him. For this purpose he occupies the position of a party to the suit, although an officer of the court, and after the final decree below has the right to his appeal here. In this case, the final decree has been given, and the case is properly here upon the appeal as prayed and allowed. This will not keep any thing in litigation but the receiver's accounts. The title to the property and the possession under the sale cannot be in any manner affected. Every thing can be closed up in the court below, in accordance with the decree which has been entered in the cause, except the distribution of the money claimed from the receiver.

It will be time enough to consider whether more of the record has been brought here than is necessary to the hearing of the questions presented by the appeal when the cause is reached, or when application is made to us in that behalf.

Motion to dismiss denied.


text: Talk:Hinckley v. Gilman Clinton and Springfield Railroad Company/Opinion of the Court


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Milwaukee and Saint Paul Railway Company v. Kellogg

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

The facts are stated in the opinion of the court.

Mr. John W. Cary for the plaintiff in error.

Mr. Myron H. Beach, contra.

MR. JUSTICE STRONG delivered the opinion of the court.


text: Talk:Milwaukee and Saint Paul Railway Company v. Kellogg