text:
Girard v. Philadelphia/Opinion of the Court

Page 2 APPEAL from the Circuit Court for the Eastern District of Pennsylvania; the case as presented by bill and answer being thus:

The city of Philadelphia, as originally laid out in 1683, and as incorporated in 1701, was situated upon a rectangular plot of ground, bounded in one direction by two streets called Vine and South, a mile apart, and in the other by two rivers (the Delaware and Schuylkill), two miles apart;-the corporate title of the city being 'the Mayor, Aldermen, and Citizens of Philadelphia.' Upon the neck of land above described the corporate city continued to be contained until 1854; the inhabitants outside or adjoining it being incorporated at different times, and as their numbers extended, into bodies politic, under different names, by the State legislature, and with the city, forming the county of Philadelphia. In 1798, the Revolution having dissolved the old corporation, the legislature incorporated the city with larger powers; and prior to 1854, nearly twenty acts had been passed altering that law, and forming, the whole of them, what was popularly called the charter of the city; but as already said, from 1683 to 1854, the city limits were the same.

In this state of things Stephen Girard, in 1831, after sundry bequests to his relatives and friends, and to certain specified charities, and after announcing that his great and favorite object was the establishment of a college for the education of poor orphans, and that, together with the object adverted to, he had sincerely at heart the welfare of the city of Philadelphia, and as a part of it, was desirous to improve the neighborhood of the river Delaware, so that the eastern part of the city might be made better to correspond with the interior left by will the real and personal residue of an estate of some millions of dollars, to 'the Mayor, Aldermen and Citizens of Philadelphia,' that is to say, to the city corporation above described, in trust, so far as regarded his real estate in Pennsylvania (this being the important part of his realty), that no part of it should ever be alienated, but should be let on lease, and that after repairing and improving it, the net residue should be applied to the same purposes as the residue of his personal estate, and that as regarded that, it should be held in trust as to $2,000,000, to expend it, or as much as might be necessary, in constructing and furnishing a college and out-buildings for the education and maintenance of not less than three hundred orphans. A lot near Philadelphia, of forty-five acres, was devoted for these structures, and the orphans might come from any part of Pennsylvania (orphans from the city of Philadelphia having a preference over others outside), or from the cities of New York or New Orleans.

After many and very special directions as to the college, followed by a bequest of $500,000 for a city purpose, the will proceeded:

'If the income arising from that part of the said sum of $2,000,000 remaining after the construction and furnishing of the college and out-buildings shall, owing to the increase of the number of orphans applying for admission, or other cause, be inadequate to the construction of new buildings, or the maintenance and education of as many orphans as may apply for admission, then such further sum as may be necessary for the construction of new buildings, and the maintenance and education of such further number of orphans as can be maintained and instructed within such buildings, as the said square of ground shall be adequate to, shall be taken from the final residuary fund hereinafter expressly referred to for the purpose, comprehending the income of my real estate in the city and county of Philadelphia, and the dividends of my stock in the Schuylkill Navigation Company; my design and desire being that the benefits of said institution shall be extended to as great a number of orphans as the limits of the said square and buildings therein can accommodate.'

This final residuary fund was directed to be invested, and the income applied—

'1st. To the further improvement and maintenance of the aforesaid college [as directed in the last quoted paragraph].

'2d. To enable the city to improve its police.

'3d. To enable it to improve the city property, and the general appearance of the city itself, and in effect to diminish the burden of taxation, now most oppressive.'

'To all which objects,' the will proceeded, 'the prosperity of the city, and the health and comfort of its inhabitants, I devote the said fund as aforesaid, and direct the income thereof to be applied yearly and every year forever, after providing for the college as hereinbefore directed as my primary object.'

In conclusion, he directed that if the city should wilfully violate any of the conditions of his will, the remainder of his estate should go to the commonwealth of Pennsylvania for certain purposes, excepting, however, the income from his real estate in the city and county of Philadelphia, which it was to hold for the college; and if the commonwealth failed so to apply it, the remainder should go in the same way to the United States.

The above described city corporation, 'the Mayor, Aldermen, and Citizens of Philadelphia,' having accepted the trust, and built and furnished the college and out-buildings, administered the charity through its organs until 1854. By that time twenty-eight municipal corporations, making the residue of the county, had grown up around the old 'city;' some near, some far off, some populous, some occupied yet by farms. They comprised 'districts,' boroughs, townships, were of various territorial extent, and differed in the details of their respective organizations. In the year named, the legislature of Pennsylvania passed what is known in Philadelphia as the Consolidation Act.

By this act the administration of all concerns of the twenty-nine corporations, including their debts, taxes, property, police, and whatever else pertained to municipal office, and also the government of the county itself, were consolidated into one. All the powers, rights, privileges, and immunities incident to a municipal corporation, and necessary for the proper government of the same, and those of 'the Mayor, Aldermen, and Citizens of Philadelphia,' and 'all the powers, rights, privileges, and immunities, possessed and enjoyed by the other twenty-eight corporate bodies, which, with the old city, made up the county of Philadelphia;' and also 'the board of police of the police district, the commissioners of the county of Philadelphia, the treasurer and auditor thereof, the county board, the commissioners of the sinking fund, and the supervisors of the township,' were, by virtue of the process of consolidation, vested in 'the city of Philadelphia, as established by this act.' A police board was to fix the whole number of policemen 'for the service of the whole city.' The 'right, title, and interest,' of the 'several municipal corporations mentioned in this act, of, in, and to all the lands, tenements, and hereditaments, goods, chattels, moneys, effects, and of, in, and to all other property and estate whatsoever and wheresoever, belonging to any or either of them,' were 'vested in the city of Philadelphia,' and all 'estates and incomes held in trust by the county, present city, and each of the townships, districts, and other municipal corporations, united by this act,' were 'vested in the city of Philadelphia, upon and for the same uses, trusts, limitations, charities, and conditions, as the same are now held by the said corporations respectively.' The act also declared that the new city corporation should be 'vested with all the powers, rights, privileges, and immunities,' of the old one. The 'net debt of the county of Philadelphia, and the several net debts of the guardians for the relief and employment of the poor of the city of Philadelphia,' and of the board of health, 'and of the controllers of the public schools,' and of such of the said twenty-nine municipalities, eighteen being enumerated, as had contracted debts, were consolidated and formed into one debt, to be called the debt of the city of Philadelphia, in lieu of the present separate debts so consolidated. The consolidation was carried into full effect. The act provided that the corporators of the new city, having elected a mayor and councils, the councils should direct the mayor to appoint a day when 'all the powers, rights, privileges, and immunities possessed and enjoyed' by the various corporations, and those also of the old city, should 'cease and terminate;' and the councils did accordingly, by resolution, direct the mayor to 'issue his proclamation forthwith dissolving the different corporations superseded by the act, to take effect on the 30th instant;' and in obedience thereto, the mayor, by public proclamation, dated the 24th June, 1854, proclaimed that 'all the powers, rights, privileges, and immunities possessed and enjoyed' by the now late twenty-eight municipalities, and 'by the present mayor and councilmen' of the city of Philadelphia, from the said 30th day of June, 1854, should 'cease and terminate.'

The old city covered about two square miles; the new one, which covered the whole old county of Philadelphia, about a hundred and twenty-nine. In point of population, however, the old city embraced a fourth or fifth part of all the inhabitants of the new one. In the popular branch of the new city legislature, composed of eighty-five members, the old city enjoyed twenty. In the higher branch it had six members, the residue having eighteen. The debt of the old city had been small, and its credit high. By the consolidation the debt became large.

By the Consolidation Act, it may be well to add, the councils of the city, in laying taxes, were required so to lay them as to show how much was laid for each object supported, respectively, and this exhibition was required by the act to be printed on the tax-bills furnished to the tax-payers, as thus:

'For the relief of the poor, 15 cents in the $100 of the assessed value of said property.

'For public schools, 28 cents in the $100 of the assessed value of said property.

'For lighting the city, 9 cents in the $100 of the assessed value of said property.

'For loan tax, 75 cents in the $100 of the assessed value of said property.

For expenses of police, 22 cents in the $100 of the assessed value of said property, &c., &c., &c.

In the erection and furnishing of the college and outbuildings, the whole fund of $2,000,000 was exhausted, and the whole income of the final residuary fund was now habitually drawn upon for the maintenance and education of the orphans, numbering, at the time when the bill was filed, about three hundred and thirty, and limited to this number, because the income from even the residuary fund was inadequate to the maintenance and education of a greater number. However, a part of Girard's estate consisted of coal lands in Pennsylvania, not yet ripe for being worked, whose value was largely increasing, and from which, when it should be found expedient to work them, the revenue would, perhaps, be very great.

In this state of things certain heirs of Girard filed their bill in the court below, praying an account; and that a master might be appointed to inquire into the gross value, and then present capacity for annual yield of the coal lands, and if such an inquiry showed a capacity for affording income 'immensely' beyond all the wants of the college, and all proper charges on the estate, that then, if the court should be of opinion that the whole residuary estate was applicable to the college (a matter denied by the bill), that it would decree 'such surplus, found to exist beyond and beside all possible and lawful wants of the college,' &c., to the complainants.

The court below dismissed the bill, which action of it was the ground of the appeal.

Mr. C. Ingersoll, for the heirs, admitting that the validity of the trusts of Girard's will had been settled by this court in Vidal v. Girard, and stating that the present case turned upon the supposed intention of the testator, contended:

1. That the final residuary fund, applicable to the support of the college, was only that described as 'my real estate in the city and county of Philadelphia, and the dividends of my stock in the Schuylkill Navigation Company,' and that of the coal lands, and other remaining property, Girard had died intestate.

2. That if this were not so, yet, that with the complete annihilation of the old city corporation, and its absorption or merger into the immense body politic created by the Consolidation Act, and whole object of the testator, beyond the college, fell to the ground; that

(i.) The new city became incompetent to act as a trustee, and

(ii.) That if it still were competent, the trusts themselves, beyond the college, were now incapable of execution.

The old city-'the city'-was, after the college, the sole object of Girard's bounty. The suburbs were absolutely excluded from it. He wished to improve, finish, and adorn municipal work already far advanced; an object practicable when the city was but two miles square, and mostly built on; impracticable when an immense county-with swamps to be drained, hills to be levelled, and valleys to be raised; farm land largely, a suburb sempiternal was converted by name, but not in fact, into a city. The whole city legislature was changed. To disunite the control from the beneficial interest, and give the command to those who are not citizens, is to violate the will. Yet those who, by the will, would now have the control of the Girard estates, were a feeble minority, incapable of protecting it against those who had an interest immediately opposed to its going to the limited space which the testator designed, and an interest directly in favor of appropriating it to themselves. The devise was to municipal discretion; the discretion of the late city; a discretion controllable by its own citizens. The testator having excluded all parts but that known to him as the city, the new city could not hold the estates for itself; that is to say, for the region of the twenty-nine municipalities, twenty-eight of which were not devised to, but excluded from devise. Having had a right, as he had, to devise as he did, to one municipality exclusively of the others, no legislature could make over his property to the excluded districts, contrary to his will. Conceding that perhaps the franchises of the old city might have been extended over more territory, and its capacities enlarged, yet the annexation of twenty-eight municipalities, and the addition of sixty-four times more territory, with room for sixty-four times more population, and the consolidation and merger of them with the city, and a complete fusion and recast of the whole-this was a different thing. The old city had, moreover, been, in form, dissolved; and, if it had not been, yet the body now pretending to be the devisee, was a body unknown to the testator; one composed of elements foreign to his devise; in fact, not his devisee. The devise had so lapsed. The new city was thus unfit and incapable of being trustee, even if the trusts, after and beyond the college, were longer capable of being executed. But

2. These trusts could not now, either administratively or arithmetically, be executed.

In Soohan v. The City, decided after the Consolidation Act, it was held that orphans, born in the limits of the old city, were entitled to the same preference as they had previously enjoyed; in other words, that orphans born beyond the limits of the old city were not, in the sense of the will, orphans born in the city; in fact, that the old city and new city were not the same thing. How was the police of the old city since the consolidation to be improved? In the first place the old city no longer existed. Moreover, the testator could not endow one part of the police; for the force is not divided into parts. There is no police for the old city apart from the remaining region which with it makes the new city. The police is one. The policemen are by the terms of the act to be 'for the whole city.' It spreads undivided, and everywhere alike.

Or how apply the income, easily applied to beautify the ancient city, to improve the 'general appearance' of a region a hundred and twenty-nine miles square, far the larger part of which was no city, but on the contrary, farms?

Or how apply it to diminish taxation in the old city, taxes being of necessity now laid uniformly throughout the whole vastly greater region alike?

The doctrine of cy-pres, illustrated in Richard Baxter's well-known case, was inapplicable to our States, where there was no established religion, and did not help the matter. The surplus income beyond the wants of the college thus went, the learned counsel contended, to the heirs.

1. The college is the object to which all others are subservient. And if the trusts for municipal purposes cannot be executed by any one, then the whole trust estate must be applied for the purposes of the college. Public trusts and charitable trusts may be considered as synonymous.

2. The trust for municipal purposes was to have effect only if there was a surplus beyond the wants of the college. There is no such surplus. There can be, therefore, no question now. And with forty-five acres of ground to be covered by college buildings, and the whole State of Pennsylvania with the cities of New York and New Orleans as a field from which to bring fatherless children, it is not likely that any surplus will ever arise. Coal dug from coal lands is not income from those lands. It is the land itself. When the coal is exhausted, as by mining it will be, the land has little value. The proceeds of the coal must be invested as capital, and income from it alone used.

3. The Consolidation Act by express terms declared that trusts held by any of the old corporations should remain inviolate in the new. Independently of which, the change of name or enlargement of franchises does not destroy the identity of a municipal corporation.

4. The devise for municipal purposes-if it be a devise in trust and not a gift to the mayor, aldermen, &c., absolutely (in which latter case clearly the heirs have no right to an account) can be executed if ever a surplus shall exist. Our answer to the bill illustrates some of the modes. It says:

'The defendants can apply such surplus to the cost of main taining the police in that part of the new city which formerly made the old one, and reduce the rate of taxation for the support of the police, on the property situated within these limits, to the difference between the sum applicable from the residuary for that purpose, and the sum assessed on property outside of the said limits; and if the sum applicable from the said residuary for the expenses of the police, will amount to the whole sum necessary for such expenses within the said limits, they may levy no tax upon property within the said limits for such expenses. If such surplus will exceed the amount needed for the police expenses within the said limits, they will be enabled to improve the corporate property within the said limits, or apply it to improve the appearance of that portion of the city without resort to taxation for that purpose. And if it will be within the terms of the trust to disregard the specific objects mentioned, then they may and can pay such purplus, beyond that which is needed for the necessities of the college, directly into the city treasury in aid of the tax fund, and levy and assess upon the property within the said limits a sum less the amount so paid in aid of that fund.'

5. If the trust for municipal purposes has been forfeited by the acts of the trustees, then by the terms of the will, it is forfeited to the commonwealth. But if it cannot be executed, and if the college is not entitled to take the income, who is entitled to the funds? The commonwealth, as parens patriae. If the devise had been to A. and his heirs, and A. had died without heirs, the estate would not go to the heirs of the testator, but would escheat. There is no reason why, in the case of a devise in trust for a charity, which has vested and taken effect and fails, a different rule should exist.

Mr. Justice GRIER delivered the opinion of the court, and after observing that the attempt to restrain the alienation of the realty, being inoperative, could not affect the validity of the devise, and that the income of the whole residuary was devoted to the three objects stated by the testator, the college being the 'primary object,' and that so long as any portion of this residuary fund should be found necessary for 'its improvement and maintenance,' on the plan and to the extent declared in the will, the second and third objects could claim nothing-proceeded as follows:

The bill admits this to be a valid charity, and claims only the residue after that is satisfied. Now, it is admitted (for it has been so decided), that till February, 1854, the corporation was vested with a complete title to the whole residue of the estate of Stephen Girard, subject to these charitable trusts, and consequently, at that date, his heirs at law had no right, title, or interest whatsoever in the same. But the bill alleges that the act of the legislature of that date (commonly called the 'Consolidation Act'), which purports to be a supplement to the original act incorporating the city, has either dissolved or destroyed the identity of the original corporation, and it is consequently unable any longer to administer the trust. Now, if this were true, the only consequence would be, not that the charities or trust should fail, but that the chancellor should substitute another trustee.

It is not insisted that the mere change or abbreviation of the name has destroyed the identity of the corporation. The bill even admits that a small addition to its territory and jurisdiction might not have that effect, but that the annexation of twenty-nine boroughs and townships has smothered it to death, or rendered it utterly incapable of administering trusts or charities committed to it when its boundaries were Vine and South Streets, and the two rivers. There is nothing to be found in the letter or spirit of this act which shows any intention in the legislature to destroy the original corporation, either by changing its name, enlarging its territory, or increasing the number of its corporators. On the contrary, 'all its powers, rights, privileges and immunities, &c., are continued in full vigor and effect.' It provides, also, that 'all the estates, &c.,' held by any of the corporations united by the act, shall be held 'upon and for the same uses, trusts, limitations, charities, and conditions, as the same were then held.'

By the act of 4th of April, 1852, the corporation was 'authorized to exercise all such jurisdiction, to enact all such ordinances, and to do and execute all such acts and things whatsoever, as may be necessary for the full and entire acceptance, execution, and prosecution of any and all the devises, bequests, trusts, and provisions contained in said will.' It may also 'provide, by ordinance or otherwise, for the election and appointment of such officers and agents as they may deem essential to the due execution of the duties and trusts enjoined and created by the will of the late Stephen Girard.'

Now, it cannot be pretended that the legislature had not the power to appoint another trustee if the act had dissolved the corporation, or to continue the rights, duties, trusts, &c., in the enlarged corporation. It has done so, and has given the widest powers to the trustee to administer the trusts and charities, according to the intent of the testator, as declared in his will.

The legislature may alter, modify, or even annul the franchises of a public municipal corporation, although it may not impose burdens on it without its consent. In this case the corporation has assented to accept the changes, assume the burdens, and perform the duties imposed upon it; and it is difficult to conceive how they can have forfeited their right to the charities which the law makes it their duty to administer. The objects of the testator's charity remain the same, while the city, large or small, exists; the trust is an existing and valid one, the trustee is vested by law with the estate, and the fullest power and authority to execute the trust.

Whatever the fears or fancy of the complainants may be, as to the moral ability of this overgrown corporation, there is no necessary or natural inability which prohibits it from administering this charity as faithfully as it could before its increase. In fact, it is a matter in which the complainants have no concern whatever, or any right to intervene. If the trust be not rightly administered, the cestui que trust, or the sovereign may require the courts to compel a proper execution.

In the case of Vidal, the Supreme Court say, that 'if the trusts were in themselves valid in point of law, it is plain that neither the heirs of the testator, or any other private person, would have any right to inquire into or contest the right of the corporation to take the property or execute the trust; this would exclusively belong to the State in its sovereign capacity, and as parens patriae, and its sole discretion.'

This is not an assertion that the legislature, as parens patriae, may interfere, by retrospective acts, to exercise the cy-pres power, which has become so odious from its application in England to what were called superstitious uses. Baxter's case, and other similar ones, cannot be precedents where there is no established church which treats all dissent as superstition. But it cannot admit of a doubt that, where there is a valid devise to a corporation, in trust for charitable purposes, unaffected by any question as to its validity because of superstition, the sovereign may interfere to enforce the execution of the trusts, either by changing the administrator, if the corporation be dissolved, or, if not, by modifying or enlarging its franchises, provided the trust be not perverted, and no wrong done to the beneficiaries. Where the trustee is a corporation, no modification of its franchises, or change in its name, while its identity remains, can affect its rights to hold property devised to it for any purpose. Nor can a valid vested estate, in trust, lapse or become forfeited by any misconduct in the trustee, or inability in the corporation to execute it, if such existed. Charity never fails; and it is the right, as well as the duty of the sovereign, by its courts and public officers, as also by legislation (if needed), to have the charities properly administered.

Now, there is no complaint here that the charity, so far as regards the primary and great object of the testator, is not properly administered; and it does not appear that there now is, or ever will be, any residue to apply to the secondary objects. If that time should ever arrive, the question, whether the charity shall be so applied as to have the 'effect to diminish the burden of taxation' on all the corporation, or only those within the former boundaries of the city, will have to be decided. The case of Soohan v. The City, does not decide it; nor is this court bound to decide it. The answer shows how it may be done, and the corporation has ample power conferred on it to execute the trust according to either hypothesis; and, if further powers were necessary, the legislature, executing the sovereign power, can certainly grant them. In the meantime the heirs at law of the testator have no concern in the matter, or any right to interfere by a bill quia timet. Their anticipations of the future perversion of the charity by the corruption or folly of the enlarged corporation, and the moral impossibility of its just administration, are not sufficient reasons for the interference of this court to seize upon the fund, or any part of it, and to deliver it up to the complainants, who never had, and by the will of Stephen Girard, were not intended to have any right, title, or claim whatsoever to the property.

In fine, the bill was rightly dismissed, because:

1st. The residue of the estate of Stephen Girard, at the time of his death, was, by his will, vested in the corporation on valid legal trusts, which it was fully competent to execute.

2d. By the supplement to the act incorporating the city (commonly called the 'Consolidation Act'), the identity of the corporation is not destroyed; nor can the change in its name, the enlargement of its area, or increase in the number of its corporators, affect its title to properly held at the time of such change.

3d. The corporation, under its amended charter, has every capacity to hold, and every power and authority necessary to execute the trusts of the will.

4th. That the difficulties anticipated by the bill, as to the execution of the secondary trusts, are imaginary. They have not arisen, and most probably never will.

5th. And if they should, it is a matter, whether probable or improbable, with which the complainants have no concern, and cannot have on any possible contingency.

DECREE AFFIRMED WITH COSTS.


text: Talk:Girard v. Philadelphia/Opinion of the Court

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


text:
The Banks v. Mayor of New York City

THESE were three cases in error to the Court of Appeals of New York, in which the people of that State, at the relation of different banks there, were plaintiffs in error, and the mayor and controller of the city of New York were defendants. Each presented, under somewhat different forms, the same question, namely: 'Are the obligations of the United States, known as certificates of indebtedness, liable to be taxed by State legislation?'

The certificates referred to were issued under authority of Congress, empowering the Secretary of the Treasury to issue them to any public creditor who might be disirous of receiving them. They were payable in one year or earlier, at the option of the government, and bore six per cent. interest. In the present cases, they had been issued to creditors for supplies necessary to carrying on the war for the suppression of the late rebellion.

The three cases were argued and considered together. The more immediate case in each was thus: In 1863 and in 1864, the proper officers of the State, acting under the laws of New York, assessed certain taxes upon the capital stock of the several banking associations in that State. Some of these banking associations resisted the collection of the tax on the ground that, though nominally imposed upon their respective capitals, it was, in fact, imposed upon the bonds and obligations of the United States, in which a large proportion of these capitals was invested, and which, under the Constitution and laws of the United States, were exempt from State taxation.

This question was brought before the Court of Appeals, which sustained the assessments, and disallowed the claim of the banking associations.

From this decision an appeal was taken to this court, upon the hearing of which, at the December Term, 1864, it was adiudged that the taxes imposed upon the capitals of the as sociations were a tax upon the national bonds and obligations in which they were invested, and, therefore, so far, contrary to the Constitution of the United States.

A mandate in conformity with this decision was sent to the Court of Appeals of New York, which court thereupon reversed its judgment, and entered a judgment agreeably to the mandate.

Afterwards, on the 30th of April, 1866, the legislature of New York provided by law for refunding to the banking associations, and other corporations in like condition, the taxes of 1863 and 1864, collected upon that part of their capitals invested in securities of the United States exempt by law from taxation. The board of supervisors of the county of New York was charged with the duty of auditing and allowing, with the approval of the mayor of the city and the corporation counsel, the amount collected from each corporation for taxes on the exempt portion of its capital, together with costs, damages, and interest. Upon such auditing and allowance, the sums awarded were to be paid to the corporations severally entitled, by the issue to each of New York County seven per cent. bonds of equal amounts. These bonds were to be signed by the controller of the city of New York, countersigned by the mayor, and sealed with the seal of the board of supervisors, and attested by the clerk of the board.

Under this act the board of supervisors audited, and allowed to the several institutions represented in the three cases under consideration, their several claims for taxes collected upon the national securities held by them, including in this allowance the taxes paid on certificates of indebtedness, which the corporations asserted to be securities of the United States exempt from taxation. But the controller, mayor, and clerk refused to sign, countersign, seal, and attest the requisite amount of bonds for payment, insisting that certificates of indebtedness were not exempt from taxation. A writ of mandamus was thereupon sued out of the Supreme Court of New York, for the purpose of compelling these officers to perform their alleged duties in this respect. An answer was filed, and the court by its judgment sustained the refusal. An appeal was taken to the Court of Appeals of New York, by which the judgment of the Supreme Court was affirmed. Writs of error, under the 25th section of the Judiciary Act, brought these judgments here for revision; the section which gives such writ, where is drawn in question the validity of a statute of, or authority exercised under any State, on the ground of their being repugnant to the Constitution or laws of the United States, and the decision is in favor of such validity; or where is drawn in question the construction of any clause of the Constitution or statute of the United States, and the decision is against the title, right, privilege, or exemption specially set up, &c.;-a paragraph, this last, re-enacted by act of February 5th, 1867, with additional words, as 'where any title, right, privilege, or immunity is claimed under the Constitution, or any statute of or authority exercised under the United States, and the decision is against the title, right, privilege, or immunity specially set up, &c.'

Messrs. O'Connor and O'Gorman in support of the judgment below:

1. The judgment below is not subject to review here. The banks having voluntarily paid the tax, had no right to recover it, even in a regular action at law or suit in equity. There was no color of a claim enforceable by mandamus, except such as might have arisen under the State act of April 30th, 1866. The reimbursement contemplated by that act was a favor to a certain class of claimants upon its liberality. By the voluntary payment, the banks waived any exemption that might have existed. When they appeared in the State court they had no title, right, or privilege, save such as may have been conferred by the State act. The construction, import, and effect of the Constitution and laws of the United State in respect to taxation by States, were only incidentally brought under consideration in the State court; not immediately 'drawn in question,' within the meaning of the Judiciary Act.

2. The exemption set up on the other side, can rest only upon the power of Congress 'to borrow money on the credit of the United States.' The organs whereby the Federal government carries on its operations are, we admit, exempt. But a certificate or statement of a past indebtedness-a mere chose-property in the hands of a citizen-is not a necessary instrumentality of the government. There is no particular virtue in the certificate. It affords ready proof of the debt, but does not alter its character.

Is, then, issuing a certificate acknowledging a pre-existing debt, arising from the purchase of supplies or procuring of service, 'borrowing money?' According to ordinary understanding it certainly is not. The term in use at the time, which would have come nearest to a description of these certificates, is 'bills of credit.' With these the Convention was familiar, and prohibited their issue by the States. It did not confer upon Congress power to issue them. The modes of raising means to support the government are pointed out by the Constitution. First, taxes, &c. Secondly, borrowing money. Buying on credit is not sanctioned, and was not necessary to be sanctioned. The other means were adequate so long as there was money at home or credit abroad. If the relators cannot stand upon an implication from the principles of the Constitution they must fail.

Messrs. Peckham and Burrill, with whom was Rodman, contra, submitting that the jurisdiction of this court was sufficiently plain, and reiterating, enlarging, and enforcing the arguments made in recent previous cases denying the right of States to tax Federal securities held by banks, contended that the credit of the United States, independently of the form in which it is used, was the matter meant to be protected, and that whatever securities or contracts were issued upon that credit were exempt from State taxation.

The certificates were given to creditors having debts due; such as the creditors were entitled to have paid. Suppose them to be paid, and the creditors then immediately to lend the money to the United States on these certificates of indebtedness; that would confessedly be a loan, and not taxable. Now the certificates are issued simply to avoid this roundabout operation, and to creditors desirous of receiving them. They extend the time of payment and bear interest. Without them the debt would be payable immediately and without interest. It is thus, in substance, a new contract and a loan.

The government does not want money itself, but commodities and the services of men. It borrows only because it is easier to use the medium of exchange in its transactions than it is directly to secure commodities, services, &c., in kind. In essence, a borrowing of money and a purchase of commodities on credit are the same thing. Now, cases decide that the government's contract for the loan of money, or for the services of men, is exempt. Can any reason be shown why a contract for the purchase of commodities with an issue of a certificate of debt for them, should not be in the same position? The object in each case is the same, and the obstacles to the completion of the transaction desired by the government would be as detrimental to the public interest in one case as in the other.

In all registered loans of the government, the certificates of stock are in the form of certificates of indebtedness; that is to say, they import that the United States are indebted to the persons therein named in a sum therein expressed, which is to be paid at a specified time and place, with a specified rate of interest.

Some, indeed, are called by one name and some by another; but the different securities are so styled for convenience only, and not because of any difference in the essence of the obligation. They are all 'securities' of the United States; or, as Mr. Justice Bouvier defines that term, 'instruments which render certain the performance of a contract.'

The CHIEF JUSTICE delivered the opinion of the court in all the cases.

title: The Banks v. Mayor of New York City


text: Talk:The Banks v. Mayor of New York City


text:
The Banks v. Mayor of New York City/Opinion of the Court

The first question to be considered is one of jurisdiction. It is insisted, in behalf of the defendants in error, that the judgment of the New York Court of Appeals is not subject to review in this court.

But is it not plain, that under the act of the legislature of New York the banking associations were entitled to reimbursement by bonds of the taxes illegally collected from them in 1863 and 1864?

No objection was made in the State court to the process by which the associations sought to enforce the issue of the bonds to which they asserted their right. Mandamus to the officers charged with the execution of the State law seems to have been regarded on all hands as the appropriate remedy.

But it was objected on the part of those officers, that the particular description of obligations, of the tax on which the associations claimed reimbursement, were not exempt from taxation. The associations, on the other hand, insisted that these obligations were exempt under the Constitution and laws of the United States. If they were so exempt, the associations were entitled to the relief which they sought. The judgment of the Court of Appeals denied the relief upon the ground that certificates of indebtedness were not entitled to exemption. Is it not clear that, in the case before the State court, a right, privilege, or immunity was claimed under the Constitution or a statute of the United States, and that the decision was against the right, privilege, or immunity claimed? And, therefore, that the jurisdiction of this court to review that decision is within the express words of the amendatory act of February 5th, 1867? There can be but one answer to this question. We can find no ground for doubt on the point of jurisdiction.

The general question upon the merits is this:

Were the obligations of the United States, known as certificates of indebtedness, liable to State taxation?

If this question can be affirmatively answered, the judgments of the Court of Appeals must be affirmed; if not, they must be reversed.

Evidences of the indebtedness of the United States, held by individuals or corporations, and sometimes called stock or stocks, but recently better known as bonds or obligations, have uniformly been held by this court not to be liable to taxation under State legislation.

The authority to borrow money on the credit of the United States is, in the enumeration of the powers expressly granted by the Constitution, second in place, and only second in importance to the authority to lay and collect taxes. Both are given as means to the exercise of the functions of government under the Constitution; and both, if neither had been expressly conferred, would be necessarily implied from other powers. For no one will assert that without them the great powers-mentioning no others-to raise and support armies, to provide and maintain a navy, and to carry on war, could be exercised at all; or, if at all, with adequate efficiency.

And no one affirms that the power of the government to borrow, or the action of the government in borrowing, is subject to taxation by the States.

There are those, however, who assert that, although the States cannot tax the exercise of the powers of the government, as for example in the conveyance of the mails, the transportation of troops, or the borrowing of money, they may tax the indebtedness of the government when it assumes the form of obligations held by individuals, and so becomes in a certain sense private property.

This court, however, has constantly held otherwise.

Forty years ago, in the case of Weston v. The City of Charleston, this court, speaking through Chief Justice Marshall, said:

'The American people have conferred the power of borrowing money upon their government, and by making that government supreme have shielded its action in the exercise of that power from the action of the local governments. The grant of the power is incompatible with a restraining or controlling power, and the declaration of supremacy is a declaration that no such restraining or controlling power shall be exercised.'

And applying these principles the court proceeded to say:

'The right to tax the contract to any extent, when made, must operate on the power to borrow before it is exercised, and have a sensible influence on the contract. The extent of this influence depends on the will of a distinct government. To any extent, however inconsiderable, it is a burden upon the operations of the government. It may be carried to an extent which shall arrest them entirely.'

'A tax on government stock is thought by this court to be a tax on the contract, a tax on the power to borrow money on the credit of the United States, and consequently repugnant to the Constitution.'

Nothing need be added to this, except that in no case decided since have these propositions been retracted or qualified. The last cases in which the power of the States to tax the obligations of the government came directly in question were those of the Bank of Commerce v. The City of New York, in 1862, and the Bank Tax Case, in 1865, in both of which the power was denied.

An attempt was made at the bar to establish a distinction between the bonds of the government expressed for loans of money and the certificates of indebtedness for which the exemption was claimed. The argument was ingenious, but failed to convince us that such a distinction can be maintained. It may be admitted that these certificates were issued in payment of supplies and in satisfaction of demands of public creditors. But we fail to perceive either that there is a solid distinction between certificates of indebtedness issued for money borrowed and given to creditors, and certificates of indebtedness issued directly to creditors in payment of their demands; or that such certificates, issued as a means of executing constitutional powers of the government other than of borrowing money, are not as much beyond control and limitation by the States through taxation, as bonds or other obligations issued for loans of money.

The principle of exemption is, that the States cannot control the national government within the sphere of its constitutional powers-for there it is supreme-and cannot tax its obligations for payment of money issued for purposes within that range of powers, because such taxation necessarily implies the assertion of the right to exercise such control.

The certificates of indebtedness, in the case before us, are completely within the protection of this principle. For the public history of the country and the acts of Congress show that they were issued to creditors for supplies necessary to the government in carrying on the recent war for the integrity of the Union and the preservation of our republican institutions. They were received instead of money at a time when full money payment for supplies was impossible, and according to the principles of the cases to which we have referred, are as much beyond the taxing power of the States as the operations themselves in furtherance of which they were issued.

It results that the several judgments of the Court of Appeals must be.

REVERSED.

NOTE.-At the same time with the cases just disposed of was decided another, from the same court, involving the same question of the right to tax as they did, but differing from them in certain respects. It is here reported:


text: Talk:The Banks v. Mayor of New York City/Opinion of the Court


text:
Bank of New York v. Supervisors

THIS case-brought here by the Bank of New York-differed from the preceding in two particulars: (1) That the board of supervisors, which in the other cases allowed and audited the claims of the banking associations, refused to allow the claim made in this case; and (2) That the exemption from State taxation claimed in this case, was of United States notes, declared by act of Congress to be a legal tender for all debts, public and private, except duties on imports and interest on the public debt, while in the other cases it was of certificates of indebtedness. These United States notes, as is sufficiently known at the present, had become part of the currency of the country. Their form (with certain necessary variations for different denominations, place of payment, &c.) was thus: The mandamus in the State court was directed, in the case now before the court, to the board of supervisors, instead of to the officers authorized to issue bonds, as in the cases just preceding.

The judgment in the Court of Appeals sustained the action of the board refusing to allow the exemption set up, and the case was brought here by writ of error to that court.

Messrs. O'Connor and O'Gorman, in support of the judgment below:

1. The exemption of the public debt of the United States from taxation by State authority, rests only upon that clause of the Constitution which authorizes Congress 'to borrow money on the credit of the United States.'

2. The purpose and effect of the acts authorizing the notes in question was to create a new kind of money in the United States paper money-which was to be a substitute for a metallic currency. The issuing of these notes was neither more nor less than the creation, by right or without it, of a conventional money. The notes were intended to be money, and in practice have become the only lawful money in use.

3. The government did not, really and in fact, contract by these notes to pay the bearer on demand or at any time. The notes were made by the act a legal tender in payment of all debts, including (with a small exemption) the government's own, and of course when presented for payment, similar notes being a legal tender in discharge of them, the debt would be discharged by a delivery of new notes of the same kind. The notes were promises to make other promises, to be renewed ad infinitum. There is really no debtor nor creditor in respect of them. There is no loan or evidence of loan.

As far as the credit of the United States was involved in the issue of these notes, no greater responsibility was assumed than is assumed by any government in coining or otherwise affixing a stamp to metal, and affixing to it a certain nominal value; although by mixing or debasing the metal, its real value, in use or exchange, may have been totally destroyed. The acts in question did but endeavor to confer a prescribed value on certain stamped paper, which they compelled the citizens of the United States to take in payment of all debts due, or to become due by the government to them, or by them to the government, or to one another.

By this means, instead of borrowing money, Congress made money, and rendered borrowing unnecessary.

The protection from State interference accorded by the Constitution to the exercise by the government of the power of borrowing cannot be invoked in such a case.

4. The acts of Congress relating to the financial operations of the government during the civil war, afford evidence that Congress did not intend that the notes in question should be exempt from State taxation.

Messrs. Peckham and Burrill, contra.

The CHIEF JUSTICE delivered the opinion of the court.

title: Bank of New York v. Supervisors


text: Talk:Bank of New York v. Supervisors

title: Talk:Bank of New York v. Supervisors


text:
Bank of New York v. Supervisors/Opinion of the Court

The general question requiring consideration is whether United States notes come under another rule in respect of taxation than that which applies to certificates of indebtedness.

The issues of United States notes were authorized by three successive acts. The first was the act of February 25, 1862; the second, the act of July 11, 1862; and the third, that of March 3, 1863.

Before either of these acts received the sanction of Congress the Secretary of the Treasury had been authorized by the act of July 17, 1861, to issue treasury notes not bearing interest, but payable on demand by the assistant treasurers at New York, Philadelphia, or Boston; and about three weeks later these notes, by the act of August 5, 1861, had been made receivable generally for public dues. The amount of notes to be issued of this description was originally limited to fifty millions, but was afterwards, by the act of February 12, 1862, increased to sixty millions.

These notes, made payable on demand, and receivable for all public dues, including duties on imports always payable in coin, were, practically, equivalent to coin; and all public disbursements, until after the date of the act last mentioned, were made in coin or these notes.

In December, 1861, the State banks (and no others then existed) suspended payment in coin; and it became necessary to provide by law for the use of State bank notes, or to authorize the issue of notes for circulation under the authority of the national government. The latter alternative was preferred, and in the necessity thus recognized originated the legislation providing at first for the emission of United States notes, and at a later period for the issue of the national bank currency.

Under the exigencies of the times it seems to have been thought inexpedient to attempt any provision for the redemption of the United States notes in coin. The law, therefore, directed that they should be made payable to bearer at the treasury of the United States, but did not provide for payment on demand. The period of payment was left to be determined by the public exigencies. In the meantime the notes were receivable in payment of all loans, and were, until after the close of our civil war, always practically convertible into bonds of the funded debt, bearing not less than five per cent. interest, payable in coin.

The act of February 25, 1862, provided for the issue of these notes to the amount of one hundred and fifty millions of dollars. The act of July 11, 1862, added another hundred and fifty millions of dollars to the circulation, reserving, however, fifty millions for the redemption of temporary loan, to be issued and used only when necessary for that purpose. Under the act of March 3, 1863, another issue of one hundred and fifty millions was authorized, making the whole amount authorized four hundred and fifty millions, and contemplating a permanent circulation, until resumption of payment in coin, of four hundred millions of dollars.

It is unnecessary here to go further into the history of these notes, or to examine their relation to the national bank currency. That history belongs to another place, and the quality of these notes, as legal tenders, belongs to another discussion. It has been thought proper only to advert to the legislation by which these notes were authorized, in order that their true character may be clearly perceived.

That these notes were issued under the authority of the United States, and as a means to ends entirely within the constitutional power of the government, was not seriously questioned upon the argument.

But it was insisted that they were issued as money; that their controlling quality was that of money, and that therefore they were subject to taxation in the same manner, and to the same extent, as coin issued under like authority.

And there is certainly much force in the argument. It is clear that these notes were intended to circulate as money, and, with the national bank notes, to constitute the credit currency of the country.

Nor is it easy to see that taxation of these notes, used as money, and held by individual owners, can control or embarrass the power of the government in issuing them for circulation, more than like taxation embarrasses its power in coining and issuing gold and silver money for circulation.

Apart from the quality of legal tender impressed upon them by acts of Congress, of which we now say nothing, their circulation as currency depends on the extent to which they are received in payment, on the quantity in circulation, and on the credit given to the promises they bear. In these respects they resemble the bank notes formerly issued as currency.

But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States; a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. No other dollars had before been recognized by the legislation of the national government as lawful money.

Would, then, their usefulness and value as means to the exercise of the functions of government, be injuriously affected by State taxation?

It cannot be said, as we have already intimated, that the same inconveniences as would arise from the taxation of bonds and other interest-bearing obligations of the government, would attend the taxation of notes issued for circulation as money. But we cannot say that no embarrassment would arise from such taxation. And we think it clearly within the discretion of Congress to determine whether, in view of all the circumstances attending the issue of the notes, their usefulness, as a means of carrying on the government, would be enhanced by exemption from taxation; and within the constitutional power of Congress, having resolved the question of usefulness affirmatively, to provide by law for such exemption.

There remains, then, only this question, Has Congress exercised the power of exemption?

A careful examination of the acts under which they were issued, has left no doubt in our minds upon that point.

The act of February, 1862, declares that 'all United States bonds, and other securities of the United States, held by individuals, associations, or corporations, within the United States, shall be exempt from taxation by or under State authority.'

We have already said that these notes are obligations. They bind the national faith. They are, therefore, strictly securities. They secure the payment stipulated to the holders, by the pledge of the national faith, the only ultimate security of all national obligations, whatever form they may assume.

And this provision is re-enacted in application to the second issue of United States notes by the act of July 11, 1862.

And, as if to remove every possible doubt from the intention of Congress, the act of March 3, 1863, which provides for the last issue of these notes, omits, in its exemption clause, the word 'stocks,' and substitutes for 'other securities,' the words 'Treasury notes or United States notes issued under the provisions of this act.'

It was insisted at the bar, that a measure of exemption in respect to the notes issued under this-different from that provided in the former acts, in respect to the notes authorized by them-was intended; but we cannot yield our assent to this view. The rule established in the last act is in no respect inconsistent with that previously established. It must be regarded, therefore, as explanatory. It makes specific what was before expressed in general terms.

Our conclusion is, that United States notes are exempt; and, at the time the New York statutes were enacted, were exempt from taxation by or under State authority. The judgment of the Court of Appeals must therefore be.

REVERSED.


text: Talk:Bank of New York v. Supervisors/Opinion of the Court


text:
Page:The Confidence Man.djvu/226

212 gun, and throw your bearskins in a sailor's hornpipe—I holding your watch. What do you say?" At this proposition the other was himself again, all raccoon.

"Look you," thumping down his rifle, "are you Jeremy Diddler No. 3?"

"Jeremy Diddler? I have have heard of Jeremy the prophet, and Jeremy Taylor the divine, but your other Jeremy is a gentleman I am unacquainted with."

"You are his confidential clerk, ain't you?"

"Whose, pray? Not that I think myself unworthy of being confided in, but I don't understand."

"You are another of them. Somehow I meet with the most extraordinary metaphysical scamps to-day. Sort of visitation of them. And yet that herb-doctor Diddler somehow takes off the raw edge of the Diddlers that come after him."

"Herb-doctor? who is he?"

"Like you another—of them."

"Who?" Then drawing near, as if for a good long explanatory chat, his left hand spread, and his pipe-stem coming crosswise down upon it like a ferule, "You think amiss of me. Now to undeceive you, I will just enter into a little argument and—"

"No you don't. No more little arguments for me. Had too many little arguments to-day."

"But put a case. Can you deny—I dare you to deny—that the man leading a solitary life is peculiarly exposed to the sorriest misconceptions touching strangers?"

title: Page:The Confidence Man.djvu/226


text:
The Georgia

APPEAL from the District Court for Massachusetts, condemning as prize the steamship Georgia, captured during the late rebellion. The case, as derived from the evidence of all kinds taken in the proceedings, was thus:

The vessel had been built, as it appeared, in the years 1862-3, at Greenock, on the Clyde, as a war vessel, for the Confederate government, and called the Japan; or if not thus built, certainly passed into the hands of that government early in the spring of 1863. On the 2d of April of that year, under the guise of a trial trip, she steamed to an obscure French port near Cherbourg, where she was joined by a small steamer with armaments and a crew from Liverpool. This armament and crew were immediately transferred to the Japan, upon which the Confederate Flag was hoisted, under the orders of Captain Maury, who had on board a full complement of officers. Her name was then changed to the Georgia, and she set out from port on a cruise against the commerce of the United States. After being thus employed for more than a year-having in the meantime captured and burnt many vessels belonging to citizens of the United States-she returned and entered the port of Liverpool on the 2d of May, 1864, a Confederate vessel of war, with all her armament and complement of officers and crew on board. At the time she thus entered the port of Liverpool, the United States vessels of war, Kearsarge, Nigara, and Sacramento, were cruising off the British and French coasts in search of her, the Alabama, and other vessels of the rebel confederation. It was resolved at Liverpool that she should be sold. It appeared that Captain Bulloch, an agent of the Confederacy at the port, at first thought of selling her at private sale, together with her full armament; but failing in that, she was advertised for public sale the latter part of May and the first of June. A certain Edward Bates, a British subject and a merchant of Liverpool, dealing not unfrequently in vessels, attracted by the advertisements, entered into treaty about her. The broker concerned in making a sale of her, testified that 'Bates was desirous of knowing what would buy the ship, but he wished the armament excluded, as he did not want that.' According to the statement of Bates himself, it had occurred to him that with her armament on board he might have difficulty in procuring a registry at the customs. All the guns, armament, and stores of that description, were taken out at Birkenhead, her dock when she first entered the port at Liverpool. The vesel had been originally strongly built, her deck especially; and this was strengthened by supports and stanchions. Though now dismantled, the deck remained as it was; the traces of pivot guns originally there still remaining. The adaptation of the vessel to her new service cost, it seemed, about 3000. How long she remained in port before she was dismantled was not distinctly in proof, though probably but a few weeks. The sale to Bates was perfected on the 11th June, 1864, by his payment of 15,000, and a bill of sale of the vessel from Bulloch, the agent of the Confederacy. He afterwards fitted her up for the merchant service, and chartered her to the government of Portugal for a voyage to Lisbon, and thence to the Portuguese settlements on the African coast. The testimony failed to show any complicity whatever of Bates with the Confederate purposes. But he had a general knowledge of the Georgia's career and history, testifying in his examination 'that he knew from common report that she had been employed as a Confederate cruiser, but thought that if the United States government had any objection to the sale, they or their officers would have given some public intimation of it, as the sale was advertised in the most public manner.'

The American minister at the court of London, Mr. Adams, who was cognizant of the vessel's history from the beginning, and had kept himself informed of all her movements and changes of ownership, having, on the 14th March, 1863, called the attention of Earl Russell, the British Secretary for Foreign Affairs, to the rule of public law, affirmed by the courts of Great Britain, which rendered invalid the sale of belligerent armed ships to neutrals in time of war, and insisting on its observance during the war of the rebellion, and having remonstrated, on the 9th of May, 1864, against the use made by the Georgia of her Majesty's port of Liverpool, informed him, on the 7th of June following, and just before the completion of the transfer to Bates, that the Federal government declined 'to recognize the validity of the sale of this armed vessel, heretofore engaged in carrying on war against the people of the United States, in a neutral port, and claimed the right of seizing it wherever it may be found on the high seas.' Simultaneously with this note Mr. Adams addressed a circular to the commanders of the different war vessels of the United States, cruising on seas over which the Georgia was likely to pass in going to Lisbon, informing them that in his opinion 'she might be made lawful prize whenever and under whatever colors she should be found.' Leaving Liverpool on the 8th August, 1864, the vessel was accordingly captured by the United States ship of war Niagara, off the coast of Portugal, on the 15th following, and sent into New Bedford, Massachusetts, for condemnation. A claim was interposed by Bates, who afterwards, on the 31st January, 1865, filed a test affidavit averring that he was the sole owner of the vessel, was a merchant in Liverpool, and a large owner of vessels, that he had fitted out the Georgia at Liverpool for sea, and chartered her to the Portuguese government for a voyage to Lisbon, and thence to the Portuguese settlements on the coast of Africa, and that while on her voyage to Lisbon in a peaceable manner, she was captured, as already stated.

The proofs in the case were not confined to the documentary evidence found on board the prize, and to the answers to the standing interrogatories in preparatorio, but the case was heard before the court below without restriction, and without any objection in it upon additional depositions and testimony, although, so far as the printed transcript of the record before the court showed, no order for further proof had been made. The counsel of both government and claimant, however, had joined in taking the additional testimony, and among the witnesses was Bates himself, whose deposition with its exhibits occupied fifty-six pages out of the one hundred and forty-seven which made the transcript.

The court below condemned the vessel.

Mr. Marvin, for the claimant, appellant in this case:

It was the duty of the court below, and it is the duty of this court now, to hear the case upon the documents found on the vessel, and the depositions in preparatorio, as there was no order for further proof, or no other evidence. This is not a mere matter of practice, but it is the very essence of prize law. The case not having been so heard in the court below, and no order for further proof having been granted by the court, all the other depositions should be disregarded by this court. If they are so disregarded, the captors have, we assume it to be plain, no case.

But waiving this, and taking the case as presented on the whole testimony, this question arises: 'Does a neutral, who purchases from one of two belligerents, in good faith and for commercial purposes, in his own home port, a vessel lying there, which had been used by such belligerent as a vessel of war, but which had been disarmed, take a good title as against the right of capture of the other belligerent?'

We think that he does. No principle of international law prohibits a neutral, in his home port, from buying from or selling to any person, any and every species of property. In a home neutral port there is no room for the operation of international interdicts; nor does international law invalidate any sales made in such port. Indeed, sound policy requires that the enemy should be allowed and even encouraged to sell his naval vessels. They cannot be blockaded in a neutral port, and can escape out of such port when they will. The right to the chances of capturing them on the ocean is of much less value to a belligerent than their absence from the ocean would be.

The validity of the purchase of the enemy's merchant ships by a neutral, even where the purchase and transfer have been effected in the enemy's port, under blockade, has been fully recognized. Can this case be distinguished in principle? We think that it cannot.

Mr. Evarts, Attorney-General, and Mr. Ashton, Assistant Attorney-General, contra:

1. This court is entitled to look into all the proofs found in the record. The depositions, by way of further proof, were obviously taken and introduced into the cause by the agreement and consent of the parties.

2. When a neutral deals with belligerent privates about private property, his dealings are generally lawful; but when he deals with a belligerent sovereign, when the subject of dealing are public vessels, public funds, public property of any kind, it is unlawful. While neutrals have rights, so too they have obligations; obligations founded on the rights of belligerents. Thus neutrals cannot give assistance to one belligerent when reduced by the other to distress. Hence it is that a neutral may be captured and condemned if attempting to run a blockade, or if carrying contraband; and hence, too, that articles not otherwise contraband of war become so when sent to aid an enemy reduced to distress. This is the principle which we seek to apply. Suppose an armed vessel driven into a neutral port by cruisers who lie outside, and who would capture her the moment she came out. In such a case any truly neutral government would refuse to have its ports used as places of refuge. The vessel would have to sail out, and would sail of course into the jaws of capture. But if the hard-pressed enemy can dismantle and sell, how is neutrality maintained? The purchase-money can be taken at once and applied to other warlike purposes; to the purchase or building of new ships in new places. The law of nations cannot be charged with the inconsistency of prohibiting a neutral from permitting the use of his territory by a belligerent as an asylum for his vessels of war, and on the other, of suffering the sale of such vessels within neutral protection, by which the same advantage may be gained by the belligerent as if he had an absolute right to employ the neutral territory as a place of safe resort from his successful enemy. A title may indeed pass in a case of sale like this, but it passes subject to the right of capture.

The Minerva, decided by Sir W. Scott, covers our ground. There was, indeed, some evidence of collusion in that case, but Sir W. Scott undoubtedly intended to say, and did say in that case, that an enemy's vessel of war, lying in a neutral port, was not an object fairly within the range of commercial speculation, and he unquestionably intended to place his judgment of condemnation as well upon this principle, as upon the independent view that, upon the special facts of that case, the purchase was collusive, and had been made with the intent to convey the vessel into the possession of the former belligerent owner. The principle was lately acted upon by that able jurist, Field, J., of the District Court of New Jersey, in the unreported case of The Etta, under circumstances much the same as those of the Georgia.

Reply:

The Minerva was unlike the present case in many important particulars. It was the case of a pretended purchase of a ship of war, with eighteen guns and ammunition, captured while on her way ostensibly to the port of the purchaser, but really to a port of the enemy; fourteen guns and ammunition having been taken out for the mere convenience of conveyance. Though the vessel lay at a neutral port, the negotiations for the purchase were carried on at the enemy's port, and an enemy crew and captain were hired there and sent to bring home the ship. She was captured in possession of an enemy master and crew, and while sailing close into the enemy's coast. In fact the vessel was going, under color of purchase and sale, right back again into the enemy's navy. The vessel had not been dismantled, except in part for the convenience of transportation, the purchaser buying guns and ammunition with the vessel. There was no proof in the case that the purchaser had paid for the vessel, or that he had bought her for commercial purposes only. It was the case of a mere colorable purchase. It is true that Sir W. Scott assumes to place the decision of the case on the ground of the illegality of the purchase. But he does so unnecessarily.

Mr. Justice NELSON delivered the opinion of the court.

title: The Georgia


text: Talk:The Georgia

title: Talk:The Georgia


text:
The Georgia/Opinion of the Court

It is insisted by the learned counsel for the claimant, that all the depositions in the record, except those in preparatorio, should be stricken out, or disregarded by the court on the appeal, for the reason that it does not appear that any order had been granted on behalf of either party to take further proofs. But the obvious answer to the objection is that it comes too late. It should have been made in the court below. As both parties have taken further proofs, very much at large, bearing upon the legality of the capture, without objection, the inference is unavoidable that there must have been an order for the same, or, if not, that the depositions were taken by mutual consent. They were taken on interrogatories and cross-interrogatories, in which the counsel of both parties joined, and, among other witnesses examined, is the claimant himself, whose deposition, with the papers accompanying it, fill more than one-third of the record.

As respects the vessel, we are satisfied, upon the proofs, that the claimant purchased the Georgia without any purpose of permitting her to be again armed and equipped for the Confederate service, and for the purpose, as avowed at the time, of converting her into a merchant vessel. He had, however, full knowledge of her antecedent character, of her armament and equipment as a vessel of war of the Confederate navy, and of her depredations on the commerce of the United States, and that, after having been thus employed by the enemies of this government upwards of a year, she had suddenly entered the port of Liverpool with all her armament and complement of officers and crew on board. He was not only aware of all this, but, according to his own statement, it had occurred to him that this condition of the vessel might afford an objection to her registry at the customs; and before he perfected the sale, he sought and obtained information from some of the officials that no objection would be interposed. He did not apply to the government on the subject.

The claimant states 'that he knew from common report she (the Georgia), had been employed as a Confederate cruiser, but I thought,' he says, 'if the United States government had any objection to the sale, they or their officers would have given some public intimation of it, as the sale was advertised in the most public manner.' If, instead of applying to an officer of the customs for information, the claimant had applied to his government, he would have learned that as early as March 14th, 1863, Mr. Adams, our minister in England, had called the attention of Lord Russell, the foreign secretary, to the rule of public law, as administered by the highest judicial authorities of his government, which forbid the purchase of ships of war, belonging to the enemy, by neutrals in time of war, and had insisted that the rule should be observed and enforced in the war then pending between this government and the insurgent States. And also that he had addressed a remonstrance to the British government on the 9th of May, but a few days after the Georgia had entered the port of Liverpool, against her being permitted to remain longer in that port than the period specified in her Majesty's proclamation. His own government could have advised him of the responsibilities he assumed in making the purchase. Mr. Adams, after receiving information of the purchase by the claimant, in accordance with his views of public law, above stated, communicated with the commanders of our vessels cruising in the Channel, and expressed to them the opinion that, notwithstanding the purchase, the Georgia might be made lawful prize whenever and under whatever colors she should be found sailing on the high seas.

The principle here assumed by Mr. Adams as a correct one, was first adjudged by Sir William Scott in the case of The Minerva, in the year 1807. The head note of the case is: 'Purchase of a ship of war from an enemy whilst lying in a neutral port, to which it had fled for refuge, is invalid.' It was stated in that case by counsel for the claimant, that it was a transaction which could not be shown to fall under any principle that had led to condemnation in that court or in the Court of Appeal. And Sir William Scott observed, in delivering his opinion, that he was not aware of any case in his court, or in the Court of Appeal, in which the legality of such a purchase had been recognized. He admitted there had been cases of merchant vessels driven into ports out of which they could not escape, and there sold, in which, after much discussion and some hesitation of opinion, the validity of the purchase had been sustained. But 'whether the purchase of a vessel of this description, built for war and employed as such, and now rendered incapable of acting as a ship of war, by the arms of the other belligerent, and driven into a neutral port for shelter-whether the purchase of such a ship can be allowed, which shall enable the enemy, so far to secure himself from the disadvantage into which he has fallen, as to have the value at least restored to him by a neutral purchaser,' he said, 'was a question on which he would wait for the authority of the superior court, before he would admit the validity of the transfer.' He denied that a vessel under these circumstances could come fairly within the range of commercial speculation.

It has been insisted in the argument here, by the counsel for the claimant, that there were facts and circumstances in the case of The Minerva, which went strongly to show that the sale was collusive, and that, at the time of the capture, she was on her way back to the enemy's port. This may be admitted. But the decision was placed, mainly and distinctly, upon the illegality of the purchase. And such has been the understanding of the profession and of text-writers, both in England and in this country; and as still higher evidence of the rule in England, it has since been recognized as settled law by the judicial committee of her Majesty's privy council. In the recent learned and most valuable commentaries of Mr. Phillimore (now Sir Robert Phillimore, Judge of the High Court of Admiralty of England), on international law, he observes, after stating the principles that govern the sale of enemies' ships, during war, to neutrals: 'But the right of purchase by neutrals extends only to merchant ships of enemies, for the purchase of ships of war belonging to enemies is held invalid.' And Mr. T. Pemberton Leigh, in delivering judgment of the judicial committee and lords of the privy council, in the case of The Baltica, observes: 'A neutral, while war is imminent, or after it has commenced, is at liberty to purchase either goods or ships (not being ships of war), from either belligerent, and the purchase is valid, whether the subject of it be lying in a neutral port or in an enemy's port.' Mr. Justice Story lays down the same distinction in his 'Notes on the Principles and Practice of Prize Courts,' -a work that has been selected by the British government for the use of its naval officers, as the best code of instruction in the prize law. The same principle is found in Wildman on International Rights in Time of War, a valuable English work published in 1850, and in a still more recent work, Hosack on the Rights of British and Neutral Commerce, published in London in 1854, this question is referred to in connection with sales of several Russian ships of war, which it was said had been sold in the ports of the Mediterranean to neutral purchasers, for the supposed purpose of defeating the belligerent rights of her enemies in the Crimean war, and he very naturally concludes, from the case of The Minerva, that no doubt could exist as to what would be the decision in case of a seizure. This work was published before the judgment of the privy council in the case of The Baltica, which was a Russian vessel, sold imminente bello; being, however, a merchant ship, the purchase was upheld; but, as we have seen from the opinion in that case, if it had been a ship of war it would have been condemned.

It has been suggested that, admitting the rule of law as above stated, the purchase should still be upheld, as the Georgia, in her then condition, was not a vessel of war, but had been dismantled, and all guns and munitions of war removed; that she was purchased as a merchant vessel, and fitted up, bon a fide, for the merchant service. But the answer to the suggestion is, that if this change in the equipment in the neutral port, and in the contemplated employment in future of the vessel, could have the effect to take her out of the rule, and justify the purchase, it would always be in the power of the belligerent to evade it, and render futile the reasons on which it is founded. The rule is founded on the propriety and justice of taking away from the belligerent, not only the power of rescuing his vessel from pressure and impending peril of capture, by escaping into a neutral port, but also to take away the facility which would otherwise exist, by a collusive or even actual sale, of again rejoining the naval force of the enemy. The removed armament of a vessel, built for war, can be readily replaced, and so can every other change be made, or equipment furnished for effective and immediate service. The Georgia may be instanced in part illustration of this truth. Her deck remained the same, from which the pivot guns and others had been taken; it had been built originally strong, in order to sustain the war armament, and further strengthened by uprights and stanchions beneath. The claimant states that the alterations, repairs, and outfit of the vessel for the merchant service, cost some 3000. Probably an equal sum would have again fitted her for the replacement of her original armament as a man of war.

The distinction between the purchase of vessels of war from the belligerent, in time of war, by neutrals, in a neutral port, and of merchant vessels, is founded on reason and justice. It prevents the abuse of the neutral by partiality towards either belligerent, when the vessels of the one are under pressure from the vessels of the others, and removes the temptation to collusive or even actual sales, under the cover of which they may find their way back again into the service of the enemy.

That the Georgia, in the present case, entered the port of Liverpool to escape from the vessels of the United States in pursuit, is manifest. The steam frigates Kearsarge, Niagara, and Sacramento were cruising off the coast of France and in the British Channel, in search of this vessel and others that had become notorious for their depredations on American commerce. It was but a few days after the purchase of the Georgia by the claimant, the Alabama was captured in the Channel, after a short and brilliant action, by the Kearsarge. The Georgia was watched from the time she entered the port of Liverpool, and was seized as soon as she left it.

The question in this case cannot arise under the French code, as, according to that law, sales even of merchant vessels to a neutral, flagrante bello, are forbidden. And it is understood that the same rule prevails in Russia. Their law, in this respect, differs from the established English and American adjudications on this subject.

It may not be inappropriate to remark, that Lord Russell advised Mr. Adams, on the day the Georgia left Liverpool under the charter-party to the Portuguese government, August 8th, 1864, her Majesty's government had given directions that, 'In future, no ship of war, of either belligerent, shall be allowed to be brought into any of her Majesty's ports for the purpose of being dismantled or sold.'

DECREE AFFIRMED.

title: The Georgia/Opinion of the Court


text: Talk:The Georgia/Opinion of the Court

title: Talk:The Georgia/Opinion of the Court


text:
Page:Haiti- Her History and Her Detractors.djvu/45

Rh themselves far above the Creoles, i. e., those who were born in the colony. Notwithstanding these distinctions prompted by their unbearable vanity, all of them—the whites from Europe, Creoles, wealthy planters, and "petits blancs"—made common cause in the matter of taking advantage of the colonial régime which allowed them to trample upon the slaves, and to heap humiliations upon the "affranchis." However, the wealthy planters, who formed the aristocracy of the island, could not disguise their displeasure at the despotic and military government of Saint-Domingue.

The Governor-General had usurped supreme power. He interfered with everything, even in the administration of justice, thus usurping the duties of a special agent or "intendant" who was there for that purpose. His word was supreme law. The wealthy planters thought that the surest way for their party to become the ruling power was by shaking off his authority. Hence a bitter rivalry, and an underhand war began between them and the Governor-General.

While undermining the position of the agents appointed by the King of France, the planters did nothing to gain the sympathy of the "petits blancs"; and their contempt for the "affranchis" was too great to allow them even to think of them as allies. The "affranchis" formed the intermediary class between the colonist and the slave, and consisted of the blacks and mulattoes who had been able to obtain or to buy their freedom. Through personal efforts and hard work they began to rise gradually from the low condition they had occupied from their birth. They acquired urban and rural property; they appreciated


text:
Mutual Insurance Company v. Tweed

TWEED brought suit in the Circuit Court for the Eastern District of Louisiana against the Mutual Insurance Company, on a policy of insurance against fire, which covered certain bales of cotton in a building in Mobile, known as the Alabama Warehouse. The policy contained a proviso that the insurers should not be liable to make good any loss or damage by fire which might happen or take place 'by means of any invasion, insurrection, riot, or civil commotion, or any military or usurped power, explosion, earthquake, or hurricane.'

During the time covered by the policy an explosion took place in another building, the Marshall Warehouse, situated directly across a street, which threw down the walls of the Alabama Warehouse, and scattered combustible materials in the street, and resulted in an extensive conflagration, embracing several squares of buildings, among which the Alabama Warehouse, and the cotton stored in it, were wholly destroyed.

It is to be understood, however, that the fire was not communicated directly from the Marshall Warehouse, in which the explosion occurred, to the Alabama Warehouse, but that it came more immediately from a third building-the Eagle Mill-which was itself fired by the explosion. The wind (with what force did not appear) was blowing in a direction from the Eagle Mill to the Alabama Warehouse. But the whole fire was a continuous affair from the explosion, and under full headway in about half an hour.

Upon this state of facts the court below held that the principle, 'Causa proxima, non remota, spectatur,' applied; and that accordingly the fire which consumed this cotton did not 'happen or take place by means of an explosion.' It, therefore, gave judgment for the plaintiff below. The correctness of this view was the question now to be decided here on error.

The case was tried by the court below without a jury. There was no bill of exceptions, nor any ruling on any proposition of law raised by the pleadings. The evidence seemed to have been copied into the transcript, but whether it was all the testimony, or how it came to be there, there was nothing to show. However, in the court's opinion (or, as it was styled, 'reasons for judgment'), the learned judge below quoted considerable portions of the evidence, in order to show the grounds for the conclusion which he had reached. And the counsel in this court agreed to certain parts of the opinion so given as presenting a correct statement of the case.

Mr. Evarts, for the insurers, plaintiffs in error:

I. A general solution of the problems of difficulty which the variety of the actual circumstances of insurance risks has raised for judicial decision has been thought to have been reached in the mixim, 'Causa proxima, non remota, spectatur.' But this rule has itself been proved to cover some fallacies which lurk under every generality. The most celebrated judges have given a contrary application of the maxim upon identical states of fact.

The controversy, whether nearness of time or closeness of efficiency in the competing causes satisfied the maxim, and the still larger controversy, as to what secondary and subordinate agencies were to be treated as swallowed up in a predominating cause, have resulted in closer practical definitions, which may be trusted as the rule of the law in the premises. They are thus stated by the judicious commentator, Mr. Phillips.

'In case of the concurrence of different causes, to one of which it is necessary to attribute the loss, it is to be attributed to the efficient predominating peril, whether it is or is not in activity at the consummation of the disaster.'

II. The contract in this case shows a circumspect attention to the true description of the risks excepted:

1. In the words used to accomplish the desired discrimination, so that the sense, to the apprehension of practical men, is neither obscure, equivocal, nor incomplete.

2. In the comprehension of, and attention to, the legal distinctions and criticisms which judicial decisions have applied to the subject with which the contract deals.

3. In the association in which the excepted cause of fire by means of explosion is found; for these other causes of fire are, indisputably, in their nature and mode of operation, neither direct nor immediate processes of ignition or combustion; but are either moral or physical agencies, in the progressive operation of which fire may be lighted or propagated.

Whatever difficulty, then, can arise to disappoint the intent of the parties in their contract must be referred to some strange or obscure state of facts, which has eluded all their forecast. But the facts make neither doubt, difficulty, obscurity, or uncertainty, as to the relation of the primary cause and the subordinate means by which the property insured was destroyed by fire:

1. The security against fire of the property insured is first invaded by the explosion in close proximity, which itself and instantly denudes the combustible property insured of the protecting walls of the building within which the terms of the insurance require it to be, and exposes it, naturally and probably, to fire, if fire shall happen.

2. The explosion, itself and instantly, lights the fire which, as a single, progressive, uninterrupted, and irresistible conflagration, consumes the property insured.

3. No new cause, influence, or means is interposed between (1) the explosion and the lighting of the fire which it caused, or (2) the lighting of the fire and the destruction by its flames of the property insured, to which any efficiency towards or any responsibility for the loss can be imputed.

The suggestion which will be made on the other side, that the propagation of the flames, by the course of the wind, or the intermediate combustible matter, introduced a new cause or means of loss, is only important as indicating the absence of any efficient cause, in the sense of insurance law, to relieve the explosion from being the predominating cause and the effectual means of the destroying fire.

The authorities show that within any accepted interpretation of the rule of 'causa proxima, non remota, spectatur,' the loss was by 'fire which happened or took place by means of explosion.' A leading case is St. John v. Insurance Company, considered in the Superior Court of New York, and in the Court of Appeals. The syllabus in the report of the Superior Court is thus:

'When it is provided by the conditions annexed to a policy of insurance against fire, that the company shall not be 'liable for any loss occasioned by the explosion of a steam-boiler, or explosions arising from any other cause, unless specially specified in the policy,' although fire may be the proximate cause of the loss that is claimed, the company is not liable when it appears that the fire was directly and wholly occasioned by an explosion.'

Numerous other cases give a similar view of the rule.

Mr. Billings, contra:

To exempt the insurers the explosion must have been the direct cause of the fire. But contrary to what is maintained by opposite counsel, the facts show that while the explosion was remotely tributary to the loss, as were many other circumstances, it was far removed from the agency applying it. This is the order of events: an explosion takes place, by force of which a fire is kindled in the Eagle Mill; more than half an hour afterwards, the wind, aided by inflammable substances in the street, and at a distance on the opposite side of the street, kindles a fire which consumes the cotton.

The first fire in the Eagle Mill was, if we concede to direct causation its broadest sense, caused by an explosion; the second, by the wind; for, had the wind blown in the opposite direction, the cotton would have remained unharmed. With the kindling of the first fire the explosion was entirely spent and had, as a cause, a full interruption and end.

The rule of law, of which opposite counsel would dispose by the statement,-hardly, we should hope, for the honor of juridical science, warranted in fact,-that 'the most celebrated judges have given a contrary application of the maxim upon identical states of fact,' has been handed down to us in the apothegmatic form which it enjoys by a no less personage than Lord Chancellor Bacon. And he shows the weighty reasons of it also. 'It were infinite,' he says, 'for the law to consider the causes of causes, and their impulsions one of another; therefore it contenteth itself with the immediate cause, and judgeth of acts by that without looking to any further degree.'

The authorities, we apprehend, do but illustrate the maxim.

In Livie v. Janson, a ship was insured against the perils of the sea, but not against capture, and met with sea damage, which checked her rate of sailing, in consequence of which she was captured. The loss was ascribed to the capture, and not to the sea damage.

In Hodgson v. Malcolm, where the crew who were sent ashore, were imprisoned by a press-gang, and thereby prevented from casting off a rope, and in consequence the ship went ashore and was lost, it was held a loss by the perils of the sea.

In Redman v. Wilson, a vessel insured against perils of the sea, in consequence of unskilful lading, became leaky, and having been pronounced unseaworthy, to save the cargo, was run ashore. Held, that the insurers were liable, the immediate cause of the loss being the perils of the sea.

And so more recent English cases. American authorities equally assert the distinction maintained in Bacon's maxim.

[In reply to some remarks by the bench as to the irregular and defective character of the record, tested by the rules of the common law, and as to the absence of any certain case on which judgment could be given, Mr. Billings observed that the record, he believed, was in the frequent form of those from Louisiana, and that the opinion of the court presented a sufficient finding of the fact. By consent of counsel, at any rate, in this court, certain parts of the opinion (the parts given as the case in the reporter's statement, supra, p. 45), were to be received as containing the material facts.]

Mr. Justice MILLER delivered the opinion of the court.

title: Mutual Insurance Company v. Tweed


text: Talk:Mutual Insurance Company v. Tweed

title: Talk:Mutual Insurance Company v. Tweed