text:
Head Money Cases (112 U.S. 580)/Opinion of the Court

These cases all involve the same questions of law, and have been argued before this court together. The case at the head of the list presents all the facts in the form of an agreed statement signed by counsel, and it therefore brings the questions before us very fully. The other two were decided by the circuit court on demurrer to the declaration. They will be disposed of here in one opinion, which will have reference to the case as made by the record in Edye et al. v. Robertson. The suit is brought to recover from Robertson the sum of money received by him, as collector of the port of New York, from plaintiffs, on account of their landing in that port passengers from foreign ports, not citizens of the United States, at the rate of 50 cents for each of such passengers, under the act of congress of August 3, 1882, entitled 'An act to regulate immigration.' The petition of plaintiffs and the agreed facts, which are also made the finding of the court to which the case was submitted without a jury, are the same with regard to each of many arrivals of vessels of the plaintiffs, except as to the name of the vessel and the number and age of the passengers. The statement as to the arrival first named, which is here given, will be sufficient for them all, for the purposes of this opinion.

The following are admitted to be the facts in this action: '(1) That the plaintiffs are partners in trade in the city of New York under the firm name of Funch, Edye & Co., and carry on the business of transporting passengers and freight upon the high seas between Holland and the United States of America as consignees and agents. That on the second day of October, 1882, there arrived, consigned to the plaintiffs, the Dutch ship Leerdam, owned by certain citizens or subjects of the kingdom of Holland, and belonging to the nationality of Holland, at the port of New York. She had sailed from the foreign port of Rotterdam, in Holland, bound to New York, and carried 382 persons not citizens of the United States. That among said 382 persons 20 were severally under the age of one year and 59 were severally between the ages of one year and eight years. That upon the arrival of said steam-ship Leerdam within the collection district of New York, the master thereof gave, in pursuance to section 9 of the passenger act of 1882, and delivered to the custom-house officer, who first came on board the vessel and made demand therefor, a correct list, signed by the master, of all the passengers taken on board of said Leerdam at said Rotterdam, specifying separately the names of the cabin passengers, their age, sex, calling, and the country of which they are citizens, and also the name, age, sex, calling, and native country of each emigrant passenger or passengers other than cabin passengers, and their intended destination or location, and in all other respects complying with said ninth section, and a duplicate of the aforesaid list of passengers, verified by the oath of the master, was, with the manifest of the cargo, delivered by the master to the defendant as collector of customs of the port of New York on the entry of said vessel. That it appears from the said list of passengers and duplicate that the said 382 persons were each and every one subjects of Holland or other foreign powers in treaty of peace, amity, and commerce with the United States. That the said passenger manifest also states the total number of passengers, and shows that 20 of them were under one year of age, and 59 between the ages of one year and eight years. That said collector, before allowing complete entry of said vessel, as collector decided, on the twelfth day of October, 1882, that the plaintiffs must pay a duty of one hundred and ninety-one dollars for said passengers, being fifty cents for each of said 382 passengers. That by the regulations of the treasury department the non-payment of said 191 dollars would have permitted the defendant to refuse the complete entry of the vessel, or to refuse to give her a clearance from the port of New York to her home port, and such imposition would have created an apparent lien on said vessel for said sum of 191 dollars. On the defendants making such demand the plaintiffs paid the same and protested against the payment thereof. That a copy of the protest in regard to said Leerdam is annexed to the complaint, marked 'No. 1,' and is a correct copy of the protest. That on the same day the plaintiffs duly appealed to the secretary of treasury from such decision of the collector, and that the paper marked 'Appeal No. 2,' annexed to the complaint, is a copy of said appeal. On the eighteenth October, 1882, the secretary of the treasury sustained the action of the defendant, and this action is brought within ninety days after the rendering of such decision. That the payment set forth in the complaint herein was levied and collected by defendant, and the same was paid under and in pursuance of an act of congress entitled 'An act to regulate emigration,' approved August 3, 1882.' On the facts as thus agreed and as found by the circuit court, a judgment was rendered in favor of defendant, which we are called upon to review. There is no complaint by plaintiffs that the defendant violated this act in any respect but one, namely, that it did not authorize him to demand anything for the 20 children under one year old, and for the 59 who were between the ages of one year and eight years. The supposed exception of this class of passengers does not arise out of any language found in this act to regulate immigration, nor any policy on which it is founded, but it is based by counsel on a provision of an act approved one day earlier than this, entitled 'An act to regulate the carriage of passengers by sea.' This provision limits the number of passengers which the vessel may carry by the number of cubic feet of space in which they are to be carried, and it declares that, in making this calculation, children of the ages mentioned need not be counted. In reference to the space they will occupy this principle is reasonable. But, as regards the purpose of the immigration act to raise a fund for the sick, the poor, and the helpless immigrant, children are as likely to require its aid as adults, probably more so. They are certainly within the definition of the word 'passenger,' when otherwise within the purview of the act. This branch of the case requires no further consideration.

The other errors assigned, however numerous or in whatever language presented, all rest on the proposition that the act of congress requiring the collector to demand and receive from the master, owner, or consignee of each vessel arriving from a foreign port, 50 cents for every passenger whom he brings into a port of the United States who is not a citizen, is without warrant in the constitution and is void. The substance of the act is found in its first section, namely:

'AN ACT TO REGULATE IMMIGRATION.

'Be it enacted by the Senate and House of Representatives of     the United States of America in Congress assembled, that      there shall be levied, collected, and paid a duty of fifty      cents for each and every passenger, not a citizen of the United      States, who shall come by steam or sail vessel from a foreign      port to any port within the United States. The said duty     shall be paid to the collector of customs of the port to      which such passenger shall come, or if there be no collector      at such port, then to the collector of customs nearest      thereto, by the master, owner, agent, or consignee of every      such vessel, within twenty-four hours after the entry thereof      into such port. The money thus collected shall be paid into     the United States treasury, and shall constitute a fund to be      called the immigrant fund, and shall be used, under the      direction of the secretary of the treasury, to defray the      expenses of regulating immigration under this act, and for      the care of immigrants arriving in the United States, for the      relief of such as are in distress, and for the general      purposes and expenses of carrying this act into effect.'

The act further authorizes the secretary to use the aid of any state organization or officer for carrying into effect the beneficent objects of this law, by distributing the fund in accordance with the purpose for which it was raised, not exceeding in any port the sum received from it, under rules and regulations to be prescribed by him. It directs that such officers shall go on board vessels arriving from abroad, and if, on examination, they shall find any convict, lunatic, idiot, or any person unable to take care of himself or herself, without becoming a public charge, they shall report to the collector, and such person shall not be permitted to land. It is also enacted that convicts, except for political offenses, shall be returned to the nations to which they belong. And the secretary is directed to prepare rules for the protection of the immigrant who needs it, and for the return of those who are not permitted to land. This act of congress is similar, in its essential features, to many statutes enacted by states of the Union for the protection of their own citizens, and for the good of the immigrants who land at sea-ports within their borders. That the purpose of these statutes is humane, is highly beneficial to the poor and helpless immigrant, and is essential to the protection of the people in whose midst they are deposited by the steam-ships, is beyond dispute. That the power to pass such laws should exist in some legislative body in this country is equally clear. This court has decided distinctly and frequently, and always after a full hearing from able counsel, that it does not belong to the states. That decision did not rest in any case on the ground that the state and its people were not deeply interested in the existence and enforcement of such laws, and were not capable of enforcing them if they had the power to enact them, but on the ground that the constitution, in the division of powers which it declares between the states and the general government, has conferred this power on the latter to the exclusion of the former. We are now asked to decide that it does not exist in congress, which is to hold that it does not exist at all; that the framers of the constitution have so worded that remarkable instrument that the ships of all nations, including our own, can, without restraint or regulation, deposit here, if they find it to their interest to do so, the entire European population of criminals, paupers, and diseased persons, without making any provision to preserve them from sharvation, and its concomitant sufferings, even for the first few days after they have left the vessel. This court is not only asked to decide this, but is asked to overrule its decision, several times made with unanimity, that the power does reside in congress, is conferred upon that body by the express language of the constitution, and the attention of congress called to the duty which arises from that language to pass the very law which is here in question. That these statutes are regulations of commerce,-of commerce with foreign nations,-is conceded in the argument in this case, and that they constitute a regulation of that class which belongs exclusively to congress is held in all the cases in this court. It is upon these propositions that the court has decided in all these cases that the state laws are void. Let us examine those decisions for a moment.

In The Passenger Cases, so called, the report of which occupies the pages of 7 Howard from page 283 to 573, mostly with opinions of the judges, the order of the court is that 'it is the opinion of the court that the statute of New York, by which the health commissioner of the city of New York is declared entitled to demand and receive from the master of every vessel from a foreign port that shall arrive in the port of that city the sum of one dollar for each steerage passenger brought in such vessel, is repugnant to the constitution and laws of the United States, and therefore void.' An examination of the opinions of the judges shows that if the majority agreed upon any one reason for this order, it was because the law was a regulation of commerce, the power over which that constitution had placed exclusively in congress. The same examination will show that several judges denied this, because they held that this power belonged to the class which the states might exercise until it was assumed by congress. It is very clear that if any such act of congress had existed then as the one now before us, the decision of the court would have been nearer to unanimity.

In the case of Henderson v. Mayor of New York, 92 U.S. 259, the whole subject is reviewed, and, in the light of the division in this court in The Passenger Cases, it is considered, on principle, as if for the first time. In that case, after the statute of New York had been modified in such a manner as was supposed to remove the objections held good against it in The Passenger Cases, the question of its constitutional validity was again brought before this court, when it was held void by the unanimous judgment of all its members. And this was upon the distinct ground that it was a regulation of commerce solely within the power of congress. 'As already indicated,' says the court, 'the provision of the constitution of the United States, on which the principal reliance is placed, is that which gives to congress the right 'to regulate commerce with foreign nations." The court then, referring to the transportation of passengers from European ports to those of the United States, says: 'It has become a part of our commerce with foreign nations, of vast interest to this country as well as to the immigrants who come among us, to find a welcome and a home within our borders.' 'Is the regulation of this great system a regulation of commerce? Can it be doubted that a law which prescribes the terms on which vessels shall engage in it is a law regulating this branch of commerce?' The court adds: 'We are of opinion that this whole subject has been confided to congress by the constitution; that congress can more appropriately and with more acceptance exercise it than any other body known to our law, state or national; that by providing a system of laws in these matters, applicable to all ports and to all vessels, a serious question which has long been matter of contest and complaint may be effectually and satisfactorily settled.' And for this reason the statute of New York was held void.

In the case of Commissioners of Immigration v. North German Lloyd, 92 U.S. 259, a similar statute of Louisiana was held void for the same reason. And in the case of Chy Lung v. Freeman, decided at the same term,-92 U.S. 275, the statute of California, on the same subject, was also held void, because, in the language of the head-note to the report, 'it invades the right of congress to regulate commerce with foreign nations.'

In the case of People v. Compagnie Generale Transatlantique, 107 U.S. 59, S.C.. 2 SUP. CT. REP. 87, where the state of New York, having again modified her statute, it was again held void, the court said: 'It has been so repeatedly decided by this court that such a tax is a regulation of commerce with foreign nations, confided by the constitution to the exclusive control of congress,' (referring to the cases just cited,) 'that there is little to say beyond affirming the judgment of the circuit court, which was based on those decisions.'

It cannot be said that these cases do not govern the present, though there was not then before us any act of congress whose validity was in question, for the decisions rest upon the ground that the state statutes were void only because congress, and not the states, was authorized by the constitution to pass them, and for the reason that congress could enact such laws, and for that reason alone, were the acts of the state held void. It was, therefore, of the essence of the decision which held the state statutes invalid, that a similar statute by congress would be valid. We are not disposed to reconsider those cases, or to resort to other reasons for holding that they were well decided. Nor do we feel that further argument in support of them is needed. But counsel for plaintiffs, assuming that congress, in the enactment of this law, is exercising the taxing power conferred by the first clause of section 8, art. 1, Const., and can derive no aid in support of its action from any other grant of power in that instrument, argues that all the restraints and qualifications found there in regard to any form of taxation are limitations upon the exercise of the power in this case. The clause is in the following language: 'The congress shall have power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and the general welfare of the United States; but all duties, imposts, and excises shall be uniform throughout the United States.'

In this view it is objected that the tax is not levied to provide for the common defense and general welfare of the United States, and that it is not uniform throughout the United States. The uniformity here prescribed has reference to the various localities in which the tax is intended to operate. 'It shall be uniform throughout the United States.' Is the tax on tobacco void because in many of the state no tobacco is raised or manufactured? Is the tax on distilled spirits void because a few states pay three-fourths of the revenue arising from it? The tax is uniform when it operates with the same force and effect in every place where the subject of it is found. The tax in this case, which, as far as it can be called a tax, is an excise duty on the business of bringing passengers from foreign countries into this by ocean navigation, is uniform and operates precisely alike in every port of the United States where such passengers can be landed. It is said that the statute violates the rule of uniformity and the provision of the constitution that 'no preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another,' because it does not apply to passengers arriving in this country by railroad or other inland mode of conveyance. But the law applies to all ports alike, and evidently gives no preference to one over another, but is uniform in its operation in all ports of the United States. It may be added that the evil to be remedied by this legislation has no existence on our inland borders, and immigration in that quarter needed no such regulation. Perfect uniformity and perfect equality of taxation, in all the aspects in which the human mind can view it, is a baseless dream, as this court has said more than once. State Railroad Tax Cases, 92 U.S. 612. Here there is substantial uniformity within the meaning and purpose of the constitution.

If it were necessary to prove that the imposition of this contribution on owners of ships is made for the general welfare of the United States, it would not be difficult to show that it is so, and particularly that it is among the means which congress may deem necessary and proper for that purpose, and beyond this we are not permitted to inquire. But the true answer to all these objections is that the power exercised in this instance is not the taxing power. The burden imposed on the ship-owner by this statute is the mere incident of the regulation of commerce-of that branch of foreign commerce which is involved in immigration. The title of the act, 'An act to regulate immigration,' is well chosen. It describes, as well as any short sentence can describe it, the real purpose and effect of the statute. Its provisions, from beginning to end, relate to the subject of immigration, and they are aptly designed to mitigate the evils inherent in the business of bringing foreigners to this country, as those evils affect both the immigrant and the people among whom he is suddenly brought and left to his own resources.

It is true, not much is said about protecting the ship-owner. But he is the man who reaps the profit from the transaction, who has the means to protect himself, and knows well how to do it, and whose obligations in the premises need the aid of the statute for their enforcement. The sum demanded of him is not, therefore, strictly speaking, a tax or duty within the meaning of the constitution. The money thus raised, though paid into the treasury, is appropriated in advance to the uses of the statute, and does not go to the general support of the government. It constitutes a fund raised from those who are engaged in the transportation of these passengers, and who make profit out of it, for the temporary care of the passengers whom they bring among us, and for the protection of the citizens among whom they are landed. It this is an expedient regulation of commerce by congress, and the end to be attained is one falling within that power, the act is not void because, within a loose and more extended sense than was used in the constitution, it is called a tax. In the case of Veazie Bank v. Fenno, 8 Wall. 549, the enormous tax of 8 per cent. per annum on the circulation of state banks, which was designed, and did have the effect, to drive all such circulation out of existence, was upheld because it was a means properly adopted by congress to protect the currency which it had created; namely, the legal-tender notes and the notes of the national banks. It was not subject, therefore, to the rules which would invalidate an ordinary tax pure and simple. So, also, in the case of Packet Co. v. Keokuk, 95 U.S. 80, the city of Keokuk having by ordinance imposed a wharfage fee or tax, for the use of a wharf owned by the city, the amount of which was regulated by the tonnage of the vessel, this was held not to be a tonnage tax within the meaning of the constitutional provision that 'no state shall, without the consent of congress, lay any duty of tonnage.' The reason of this is that, though it was a burden or tax in some sense, and measured by the tonnage of the vessel, it was but a charge for services rendered, or for conveniences furnished by the city, and was not a tonnage tax within the meaning of the constitution. This principle was reaffirmed in the case of Same Plaintiff v. City of St. Louis, 100 U.S. 423.

We are clearly of opinion that, in the exercise of its power to regulate immigration, and in the very act of exercising that power, it was competent for congress to impose this contribution on the ship-owner engaged in that business. Another objection to the validity of this act of congress is that it violates provisions contained in numerous treaties of our government with friendly nations. And several of the articles of these treaties are annexed to the careful brief of counsel. We are not satisfied that this act of congress violates any of these treaties, on any just construction of them. Though laws similar to this have long been enforced by the state of New York in the great metropolis of foreign trade, where four-fifths of these passengers have been landed, no complaint has been made by any foreign nation to ours of the violation of treaty obligations by the enforcement of those laws. But we do not place the defense of the act of congress against this objection upon that suggestion. We are of opinion that, so far as the provisions in that act may be found to be in conflict with any treaty with a foreign nation, they must prevail in all the judicial courts of this country. We had supposed that the question here raised was set at rest in this court by the decision in the case of The Cherokee Tobacco, 11 Wall. 616. It is true, as suggested by counsel, that three judges of the court did not sit in the case, and two others dissented. But six judges took part in the decision, and the two who dissented placed that dissent upon the ground that congress did not intend that the tax on tobacco should extend to the Cherokee tribe. They referred to the existence of the treaty which would be violated if the statute was so construed as persuasive against such a construction, but they nowhere intimated that, if the statute was correctly construed by the court, it was void because it conflicted with the treaty, which they would have done if they had held that view. On the point now in controversy it was therefore the opinion of all the judges who heard the case. See U.S. v. McBratney, 104 U.S. 621-623.

The precise question involved here, namely, a supposed conflict between an act of congress imposing a customs duty, and a treaty with Russia on that subject, in force when the act was passed, came before the circuit court for the district of Massachusetts in 1855. It received the consideration of that eminent jurist, Mr. Justice CURTIS, of this court, who in a very learned opinion exhausted the sources of argument on the subject, holding that if there were such conflict the act of congress must prevail in a judicial forum. Taylor v. Morton, 2 Curt. C. C. 454. And Mr. Justice FIELD, in a very recent case in the Ninth circuit, that of In re Ah Lung, on a writ of habeas corpus, has delivered an opinion sustaining the same doctrine in reference to a statute regulating the immigration of Chinamen into this country. 18 Fed. Rep. 28. In the Clinton Bridge Case, Woolw. 156, the writer of this opinion expressed the same views as did Judge WOODRUFF, on full consideration, in Ropes v. Clinch, 8 Blatchf. 304, and Judge WALLACE, in the same circuit, in Bartram v. Robertson, 15 Fed. Rep. 212.

It is very difficult to understand how any different doctrine can be sustained. A treaty is primarily a compact between independent nations. It depends for the enforcement of its provisions on the interest and the honor of the governments which are parties to it. If these fail, its infraction becomes the subject of international negotiations and reclamations, so far as the injured party chooses to seek redress, which may in the end be enforced by actual war. It is obvious that with all this the judicial courts have nothing to do and can give no redress. But a treaty may also contain provisions which confer certain rights upon the citizens or subjects of one of the nations residing in the territorial limits of the other, which partake of the nature of municipal law, and which are capable of enforcement as between private parties in the courts of the country. An illustration of this character is found in treaties, which regulate the mutual rights of citizens and subjects of the contracting nations in regard to rights of property by descent or inheritance, when the individuals concerned are aliens. The constitution of the United States places such provisions as these in the same category as other laws of congress by its declaration that 'this constitution and the laws made in pursuance thereof, and all treaties made or which shall be made under authority of the United States, shall be the supreme law of the land.' A treaty, then, is a law of the land as an act of congress is, whenever its provisions prescribe a rule by which the rights of the private citizen or subject may be determined. And when such rights are of a nature to be enforced in a court of justice, that court resorts to the treaty for a rule of decision for the case before it as it would to a statute. But even in this aspect of the case there is nothing in this law which makes it irrepealable or unchangeable. The constitution gives it no superiority over an act of congress in this respect, which may be repealed or modified by an act of a later date. Nor is there anything in its essential character, or in the branches of the government by which the treaty is made, which gives it this superior sanctity. A treaty is made by the president and the senate. Statutes are made by the president, the senate, and the house of representatives. The addition of the latter body to the other two in making a law certainly does not render it less entitled to respect in the matter of its repeal or modification than a treaty made by the other two. If there be any difference in this regard, it would seem to be in favor of an act in which all three of the bodies participate. And such is, in fact, the case in a declaration of war, which must be made by congress, and which, when made, usually suspends or destroys existing treaties between the nations thus at war. In short, we are of opinion that, so far as a treaty made by the United States with any foreign nation can become the subject of judicial cognizance in the courts of this country, it is subject to such acts as congress may pass for its enforcement, modification, or repeal.

Other objections are made to this statute. Some of these relate, not to the power of congress to pass the act, but to the measure, of which congress, and not the courts, measure, f which congress, and not the courts, are the sole judges-such as its unequal operation on persons not paupers or criminals, and its effect in compelling the ultimate payment of the sum demanded for each passenger by that passenger himself. Also, that the money is to be drawn from the treasury without an appropriation by congress. The act itself makes the appropriation, and even if this be not warranted by the constitution, it does not make void the demand for contribution, which may yet be appropriated by congress, if that be necessary, by another statute. It is enough to say that, congress having the power to pass a law regulating immigration as a part of the commerce of this country with foreign nations, we see nothing in the statute by which it has here exercised that power forbidden by any other part of the constitution. The judgment of the circuit court in all the cases is affirmed.


text: Talk:Head Money Cases (112 U.S. 580)/Opinion of the Court

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


text:
Matthews v. Warner (112 U.S. 600)

W. A. Abbott, for appellant.

C. R. Hoar and ''Jos. B. Warner'', for appellees.

MILLER, J.

title: Matthews v. Warner (112 U.S. 600)


text: Talk:Matthews v. Warner (112 U.S. 600)

title: Talk:Matthews v. Warner (112 U.S. 600)


text:
Matthews v. Warner (112 U.S. 600)/Opinion of the Court

This is an appeal from the circuit court for the district of Massachusetts, dismissing the bill of appellant, who was plaintiff below. The bill alleges that the plaintiff is the owner of 150 bonds of $1,000 each of the Memphis & Little Rock Railroad Company, and 50 similar bonds of the South Carolina Central Railroad Company, which have wrongfully come to the possession of defendants; that these bonds are negotiable by delivery, and that defendants are about to sell them at public auction, or otherwise, and she prays an injunction to prevent this sale and for other equitable relief. Defendants deny any ownership or interest of plaintiff in the bonds, and allege that they are holders of them for a valuable consideration, and set out the transaction by which they obtained the bonds. This answer raises several questions which we do not think necessary to consider, and a large volume of testimony is found in the case which, for the same reason, we do not propose to review here.

The defendants are trustees under an assignment made by Thomas Upham for the benefit of his creditors. There passed to them by the assignment a bond for $250,000, made by Edward Matthews, the husband of plaintiff, and a mortgage on valuable real estate in the city of New York, to secure it. These were made payable to Nathan Matthews, brother of Edward, and by him assigned to Upham as security for a loan or loans made by Upham to Nathan Matthews. It seems to be clear that this assignment was made by the consent of Edward, or by his directions. This was in May, 1875. Some time prior to March, 1877, Edward Matthews, who had become embarrassed, desired to take up this mortgage, and entered into negotiations for that purpose with defendants, who agreed to an exchange of the bond and mortgage for the railroad bonds which are the subject of this suit. They accordingly sent Joseph B. Warner, their legal adviser, from Boston, where they resided, with the bond and mortgage, and the exchange was made by him as their agent, receiving the bonds in question at Mr. Matthews' office in the city of New York. This exchange took place on the sixth day of March, 1877. It appears that the 150 Memphis & Little Rock Company bonds were on that day, and had been for some time previous, in possession of Morton, Bliss & Co., bankers, as collateral security for the debt of Edward Matthews, who had placed them there. From the very vague and unsatisfactory testimony of Mr. Brander Matthews, son of plaintiff, and of her husband, Edward Matthews, it appears that at some time prior to the date of this transaction, but whether a month or a year he cannot say, Brander Matthews went with his mother to the office of the Safe Deposit Company, and secured a box for his mother's use, of which she took one key and he another. On this sixth day of March, without consulting his mother, he went to this box and took out 200 bonds of the South Carolina Central Railroad Company, and, going from thence to the office of Morton, Bliss & Co., he exchanged 150 of these bonds for the Memphis & Little Rock Company's bonds, and brought them, with the remaining 50 bonds of the South Carolina Company, to his father's office, and in his presence delivered them to Mr. Warner. An instrument in writing was here drawn up, showing the terms of the exchange and the purpose for which the bonds were pledged. This instrument is signed Caleb H. Warner and Charles F. Smith, by Joseph B. Warner, their attorney; Nathan Matthews, by W. H. Williams, his attorney, and by Edward Matthews.

Mr. Brander Matthews testifies that he had no authority from his mother for the use he made of the bonds, nor does he believe she knew anything about it. Mr. Edward Matthews supports him in this. It is, however, apparent that in regard to these bonds, and to others placed in the box and removed from it from time to time, that the mother was rarely, if ever, consulted. Mr. Edward Matthews testifies that these bonds had at one time been his bonds, and he says they became his wife's property by virtue of assignments which he had made of them to Watson Matthews, his brother, in trust for Mrs. Matthews. Two papers are produced which purport to assign to Watson Matthews the equity of redemption and right and interest of Edward Matthews to a large list of bonds and other securities held by parties to whom Edward Matthews had pledged them for his own debts. One of them is dated April 22, 1876, and the other May 13, 1876. There is no satisfactory evidence of the delivery of either of these papers to Mrs. Matthews or to Watson Matthews. Edward Matthews says they were placed with other papers in Mrs. Matthews' box in the safe deposit vault. There is no evidence that Mrs. Matthews ever had either of these papers, or any of the bonds described in them, in her manual possession. No evidence that she ever went to the box or opened it herself to put anything in it or take anything out. The instruments speak of the assignments as security for a debt owing by Edward Matthews to his wife. No evidence is given of the origin of this debt; nor that Mrs. Matthews ever had any separate estate of her own, or anything to loan her husband. They must have been married a long time, as Brander Matthews, the son, was over 23 years old at the time of these transactions.

It also appears that Watson Matthews was the brother of Edward Matthews, and both he and Brander Matthews occupied as offices the same rooms in which Edward Matthews did business. It is significant, also, that the bill in this case is sworn to by one of the solicitors on his behalf, and her name is signed by them and not by herself. The only act which she is ever said to have done or performed in person, asserting a claim to these bonds, is a notice to which her name is appended, to the defendants, some six months after the exchange of the bond and mortgage for the railroad bonds, in which she says they are her bonds, and forbids them to sell them. A witness, the clerk of Matthews, says the signature, he thinks, was written by Mr. Matthews; and it is admitted that the letter was dictated by him and written in his office. The plaintiff, who, if she had any just claim to these bonds, could best have explained how that claim originated, who could have told what money or property she loaned her husband, or how he became her debtor, is not sworn as a witness in the case. It looks very much to us as if the box at the safe deposit vault, with a key in the possession of the son, who occupied the same office with the father, and in the light of other evidence in the case, was a contrivance by which the husband could use the bonds as his own when he desired, and assert them to be the property of the wife when that was more desirable. We are of opinion that plaintiff never had any real ownership or actual control, or any lawful right, to the bonds in suit. The decree of the circuit court dismissing the bill is affirmed for this reason, without examining other grounds of defense to the suit.


text: Talk:Matthews v. Warner (112 U.S. 600)/Opinion of the Court


text:
Bond v. Dustin

A. Stirling, Jr., and Nicholas P. Bond, for plaintiffs in error.

H. S. Greene, for defendant in error.

GRAY, J.

title: Bond v. Dustin


text: Talk:Bond v. Dustin

title: Talk:Bond v. Dustin


text:
Bond v. Dustin/Opinion of the Court

This was a writ of error to reverse a judgment of the circuit court of the United States for the Southern district of Illinois, for the defendant in error, in an action of assumpsit brought by him against the plaintiffs in error, and tried by that court without a jury. The declaration contained two special counts on bills of exchange, the one for $2,500 and the other for $4,000, drawn upon the defendants by one Falconer, their agent, at their instance and for their benefit, and indorsed by the payees to the plaintiff; as well as common counts in the sum of $10,000 for money lent, money paid, money had and received, interest for the use of money due, and upon an account stated. The defendants pleaded non assumpsit, and denied the signatures of the instruments set forth in the first two counts. The record stated that the parties came by their attorneys, 'and the issue joined by consent is tried by the court, a jury being waived;' and that the court, having heard the evidence and arguments, 'finds the issue for the plaintiff, and assesses his damages at the sum of $7,173.42; whereupon the defendants enter their motion for a new trial and in arrest of judgment, which, being heard by the court, is overruled,' and judgment rendered for the plaintiff for that sum and costs.

The court allowed a bill of exceptions, which began with the recital, 'the above cause coming on for trial, by agreement of parties, by the court, without the intervention of a jury,' and which stated all the evidence introduced by either party; the objections taken by the defendants to the admission of some of the evidence introduced by the plaintiff; the finding and judgment of the court; a motion of the defendants for a new trial because the court heard incompetent testimony against the defendants' objection, and because the judgment was against the law and the evidence; the overruling of that motion; the subsequent making and overruling of a motion in arrest of judgment; and that the defendants excepted to the admission of the evidence objected to, and to the overruling of the two motions. The errors assigned and argued were to the admission of evidence at the trial; to the overruling of the motion in arrest of judgment; and to 'giving judgment against the plaintiff in error upon the contracts alleged and proved, because, upon the pleadings and evidence, it did not appear that the court had jurisdiction to hear and determine an action brought by the defendant in error on said contracts, or any of the same.'

The first question to be determined is how far this court upon this record has authority to consider the alleged errors. By the act of March 3, 1865, c. 86, § 4, re-enacted in the Revised Statutes, it is provided that issues of fact in civil cases may be tried and determined by the circuit court without the intervention of a jury, whenever the parties, or their attorneys of record, file a stipulation in writing with the clerk of the court waiving a jury; that the finding of the court upon the facts shall have the same effect as the verdict of a jury; and that its rulings in the progress of the trial, when excepted to at the time, and presented by bill of exceptions, may be reviewed by this court upon error or appeal. 13 St. 501; Rev. St. §§ 649, 700.

Before the passage of this statute, it had been settled by repeated decisions that in any action at law in which the parties waived a trial by jury and submitted the facts to the determination of the circuit court upon the evidence, its judgment was valid; but that this court had no authority to revise its opinion upon the admission or rejection of testimony, or upon any other question of law growing out of the evidence, and therefore, when no other error appeared on the record, must affirm the judgment. Guild v. Frontin, 18 How. 135; Kelsey v. Forsyth, 12 How. 85; Compbell v. Boyreau, Id. 223. The reason for this, as stated by Chief Justice TANEY in Campbell v. Boyreau, was that, 'by the established and familiar rules and principles which govern common-law proceedings, no question of law can be reviewed and reexamined in an appellate court upon writ of error, (except only where it arises upon the process, pleadings, or judgment in the cause,) unless the facts are found by a jury, by a general or special verdict, or are admitted by the parties upon a case stated in the nature of a special verdict, stating the facts and referring the questions of law to the court.' 21 How. 226. Even in actions duly referred by rule of court to an arbitrator, only rulings and decisions in matter of law after the return of the award were reviewable. Thornton v. Carson, 7 Cranch, 596, 601; Alexandria Canal Co. v. Swann, 5 How. 83; York & C. R. Co. v. Myers, 18 How, 246; Heckers v. Fowler, 2 Wall. 123. Since the passage of this statute, it is equally well settled by a series of decisions that this court cannot consider the correctness of rulings at the trial of an action by the circuit court without a jury, unless the record shows such a waiver of a jury as the statute requires, by stipulation in writing, signed by the parties or their attorneys, and filed with the clerk. Flanders v. Tweed, 9 Wall. 425; Kearney v. Case, 12 Wall. 275; Gilman v. Illinois & M. T. Co. 91 U.S. 603, 614; Madison Co. v. Warren, 106 U.S. 622; S.C.. 2 SUP. CT. REP. 86; Alexander Co. v. Kimball, 106 U.S. 623; S.C.. 2 SUP. CT. REP. 86, note. In Flanders v. Tweed, Mr. Justice NELSON quoted the passage just cited from the opinion of Chief Justice TANEY in Campbell v. Boyreau, and said that when a trial by jury had been waived, but there was no stipulation in writing, no finding of the facts, and no question upon the pleadings, the judgment must, according to the course of proceeding in previous cases, be affirmed, unless under very special circumstances this court otherwise ordered. 9 Wall. 429, 431.

The most appropriate evidence of a compliance with the statute is a copy of the stipulation in writing filed with the clerk. But the existence of the condition upon which a review is allowed is sufficiently shown by a statement, in the finding of facts by the court, or in the bill of exceptions, or in the record of the judgment entry, such a stipulation was made in writing. Kearney v. Case, 12 Wall. 283, 284; Dickinson v. Planters' Bank. 16 Wall. 250. So it has been held that a written consent of the parties, after a trial by jury has begun, to withdraw a juror and refer the case to a referee, in accordance with a statute of the state authorizing this course, is a sufficient stipulation in writing waiving a jury; and that when the court has authority to refer a case upon consent in writing only, an order expressed to be made 'by consent of parties,' that the case be referred, necessarily implies that such consent was in writing. Boogher v. Insurance Co. 103 U.S. 90. See, also, U.S. v. Harris, 106 U.S. 629, 634, 635; S.C.. 1 SUP. CT. REP. 601. And since the statute, as before, a judgment upon an agreed statement of facts or case stated, signed by the parties or their counsel, and entered of record, leaving no question of fact to be tried, and presenting nothing but a question of law, may be reviewed on error. Supervisors v. Kennicott, 103 U.S. 554; U.S. v. Eliason, 16 Pet. 291; Burr v. Des Moines Co. 1 Wall. 99; Campbell v. Boyreau, above cited.

The record before us contains nothing to show that there was any stipulation in writing waiving a jury. The circuit court had authority to try and determine the case, whether the waiver was written or oral. In the finding of facts and in the judgment there is no statement upon the subject. The only evidence of a waiver of a jury is in the statement in the record that when the case came on for trial 'the issue joined by consent is tried by the court, a jury being waived;' and in the recital at the beginning of the bill of exceptions, 'the above cause coming on for trial, by agreement of parties, by the court, without the intervention of a jury.' The case cannot be distinguished, in any particular favorable to the plaintiffs in error, from those of Madison Co. v. Warren, and Alexander Co. v. Kimball, above cited, the latest adjudications upon the subject, both of which came up from the same court as the present case. In one of those cases, the statement in the record was 'the parties having stipulated to submit the case for trial by the court without the intervention of a jury;' and, in the bill of exceptions, 'said cause being tried by the court without a jury, by agreement of parties.' In the other case, the statement in the record was in the very same words as in the case at bar; and in the bill of exceptions was in these words: 'upon the trial of this cause before the Hon. S. H. TREAT, sitting as circuit judge, a jury being waived by both parties.' The necessary conclusion is that this court has no authority to consider the exceptions to the admission of evidence at the trial. The attempt to sustain the motion in arrest of judgment, by an argument that the evidence was insufficient to warrant a recovery in this action, fails for the same reason, as well as because a motion in arrest of judgment can only be maintained for a defect apparent upon the face of the record, and the evidence is no part of the record for this purpose. Carter v. Bennett, 15 How. 354.

The plaintiffs in error further contend that neither of the special counts sets forth any cause of action, and that the finding and judgment, being general, and not limited to the common counts, should therefore be set aside. This objection, so far as it touches the sufficiency of the declaration to support the judgment, is fairly presented for the determination of this court, within the rule laid down by Chief Justice TANEY in Campbell v. Boyreau, and by Mr. Justice NELSON in Flanders v. Tweed, as already stated. But, by the law applicable to this case, the objection cannot be sustained. By the common law, indeed, a general verdict and judgment upon several counts in a civil action must be reversed on writ of error, if only one of the counts was bad. But Lord MANSFIELD 'exceedingly lamented that ever so inconvenient and ill-founded a rule should have been established,' and added, 'what makes this rule appear more absurd is that it does not hold in the case of criminal prosecutions.' Grant v. Astle, 2 Doug. 722, 730; Snyder v. U.S. 112 U.S. 216; S.C.. 5 SUP. CT. REP. 118. In Illinois it has been changed by statute, providing that 'whenever an entire verdict shall be given on several counts, the same shall not be set aside or reversed on the ground of any defective count, if one or more of the counts in the declaration shall be sufficient to sustain the verdict.' Ill. Rev. St. 1874, c. 110, § 58. That statute governs proceedings in cases tried in the federal courts within that state. Rev. St. § 914; Townsend v. Jemison, 7 How. 706, 722; Sawin v. Kenny, 93 U.S. 289. And the rule thereby established must be applied to judgments lawfully rendered without a verdict. As the common counts in this declaration are indisputably good, the sufficiency of the special counts need not be considered. Judgment affirmed.

title: Bond v. Dustin/Opinion of the Court


text: Talk:Bond v. Dustin/Opinion of the Court


text:
Memphis & Little Rock Railroad Co. v. Railroad Commissioners

A statute exempting a corporation from taxation confers the privilege only on the corporation specially referred to, and the right will not pass to its successor unless the intent of the statute to that effect is clear and express. [p610] Morgan v. Louisiana, 93 U.S. 217; Wilson v. Gaines, 103 U.S. 417; and Louisville & Nashville Railroad Company v. Palmes, 109 U.S. 244, affirmed.

The franchise to be a corporation is not a subject of sale and transfer, unless made so by a statute, which provides a mode for exercising it.

A franchise to be a corporation is distinct from a franchise, as a corporation, to maintain and operate a railway: the latter may be mortgaged, without the former, and may pass to a purchaser at a foreclosure sale.

A mortgage of the charter of a corporation, made in the exercise of a power given by statute, confers no right upon purchasers at a foreclosure sale to exist as the same corporation: if it confers any right of corporate existence upon them, it is only a right to reorganize as a corporation, subject to laws, constitutional and otherwise, existing at the time of the reorganization.

This is a bill in equity filed in the chancery court of Pulaski county, Arkansas, seeking to enjoin the board of railroad commissioners of the state from appraising, for the purposes of taxation, any part of the property of the plaintiff in error, on the ground that it is exempted from taxation by a contract with the state contained in its charter of incorporation. The supreme court of the state, on appeal, affirmed the decree of the chancery court dismissing the bill. That decree of the supreme court is brought here by writ of error, for review, on the allegation that it enforced a law of the state impairing the obligation of a contract, in violation of the rights of the plaintiff in error under the constitution of the United States.

The question arises, and is to be determined, upon the following case: The Memphis & Little Rock Railroad Company was chartered by an act of the general assembly of the state of Arkansas, approved January 11, 1853. This act authorized the formation of a company to be a body corporate for the purpose of establishing communication by railroad between the city of Memphis, in Tennessee, and Little Rock, in Arkansas, and commissioners were named therein to open books for subscriptions to its capital stock. This was fixed for the purpose of organization at $400,000, to be increased to $2,000,000, at the pleasure of the company. When the necessary amount of capital stock had been subscribed, the subscribers were authorized [p611] to organize by the election of a board of directors. The ninth section of the act is as follows:

"Sec. 9. The said company may at any time increase its capital to a sum sufficient to complete the said road, and stock it with anything sufficient to give it full operation and effect, either by opening books for new stock or by selling such new stock, or by borrowing money on the credit of the company, and on the mortgage of its charter and works; and the manner in which the same shall be done shall be prescribed by the stockholders at a general meeting," &c. Laws of Arkansas, 1852–3, 132–3.

It also contains the following:

"Sec. 28. The capital stock of said company shall be exempt from taxation until the road pays a dividend of six per cent., and the road, with all its fixtures and appurtenances, including workshops, warehouses, and vehicles of transportation, shall be exempt from taxation for the period of twenty years from and after the completion of said road." Ib. 136.

The company was organized under this act, and afterwards, in order to borrow money for the prosecution of the enterprise, issued its bonds to the amount of $1,300,000, dated May 1, 1860, having 30 years to run, with interest at 8 per cent. per annum, and, to secure the payment of the same, executed and delivered a mortgage to Tate, Brinkley, and Watkins, as trustees for the bondholders, whereby it conveyed to them, in trust, the Memphis & Little Rock Railroad, its road-bed, right of way, and all works and rolling-stock of or belonging to the company, "together with the charter by which said company was incorporated and under which it is organized, and all the rights and privileges and franchises thereof," and also all the lands, etc., belonging to said company.

Subject thereto a second mortgage was made by the company on March 1, 1871, conveying all its property and franchises to Henry F. Vail, in trust for the holders of bonds secured thereby, amounting to $1,000,000. Default having been made by the company in the payment of interest on this loan, Vail, the trustee, in execution of the power conferred in the mortgage, sold and conveyed the mortgaged property, the [p612] title to which became vested in Stillman Witt and his associate bondholders, who organized the Memphis & Little Rock Railway Company, to which, on November 17, 1873, the said property was conveyed. This railway company, on December 1, 1873, issued its bonds to the amount of $2,600,000, and, to secure the same, by a deed of that date, conveyed all the franchises, privileges, and property so acquired by it to trustees, of whom Pierson, Matthews, and Dow became successors, in trust for the bondholders. The Memphis & Little Rock Railroad Company, the original corporation, made default in the payment of interest accruing upon the bonds secured by the mortgage of May 1, 1860, and its successor, the Memphis & Little Rock Railway Company, also made default in the payment of interest maturing on the bonds secured by the deed of December 1, 1873. Afterwards, on November 12, 1876, a bill in chancery was filed in the Circuit Court of the United States for the Eastern District of Arkansas, by the trustees against the two companies, to foreclose those mortgages, in which suit a final decree was rendered ordering a sale of the property described in the same, embracing the property and franchises of the said companies, and the charter of the Memphis & Little Rock Railroad Company; and a sale thereof was made and confirmed, and a conveyance of the same executed to Pierson, Matthews, and Dow, in trust for the holders of the bonds of the Memphis & Little Rock Railway Company, secured by the deed of trust executed by that company. On April 28, 1877, the holders of these bonds executed certain articles of association, by which, after reciting the premises, they organized themselves into a company, claiming to become a corporation under the name of "The Memphis & Little Rock Railroad Company as re-organized," under and by virtue of the provisions of the act of January 11, 1853, for the incorporation of the original company; and afterwards, on April 30, 1877, Pierson, Matthews, and Dow conveyed to said company the property and franchises, including the charter of January 11, 1853; and thereupon the bill proceeds:

"Complainant submits that, having thus duly purchased said charter of the Memphis & Little Rock Railroad Company [p613] under the power therein contained, and having organized thereunder, it is the owner and holder thereof, and that it has and is entitled to all the privileges and benefits in said act of the general assembly mentioned and set forth, among others to the contract contained in said section 28, by which the road, with all the franchises and appurtenances, including work-shops, warehouses, and vehicles of transportation, shall be exempt from taxation for the period of twenty years from and after the date of the completion of said road. Complainant further states that said road was not completed till the fifteenth day of November, 1874, and that the time of the exemption thereafter from taxation has not expired. It further states that the defendant herein first mentioned, acting as a board of railroad commissioners for this state, have demanded from the complainant a detailed inventory of all the rolling stock belonging to the company, and the valuation thereof, as provided in section 48 of an act of the general assembly of the state or Arkansas, approved March 31, 1883, entitled, 'An act to revise and amend the revenue laws of the state of Arkansas,' and have also demanded from the complainant a statement or schedule, showing the length of the main and all the side tracks, switches, and turn-outs in each county in which the road is located, and the value of all improvements, stations, and structures, including the railroad track, as provided in section 46 of the same act.

"Complainant being willing, so far as it may without injury to itself, to comply with the laws of this said state, has, in compliance with the demand made upon it, made and returned said schedule to the said board, accompanying the same with a protest against any of the property in said schedule contained being assessed for taxation, in which protest complainant stated the grounds upon which said property was exempt from taxation.

"Complainant states and submits that all this property contained in the said schedules, [copies] of which it here with files, marked 'I' and 'J,' and all the property described in said sections 46 and 48 of said act, are the identical property which is exempt from taxation by the contract in said charter contained."

[p614] On December 9, 1874, an act was passed by the general assembly of Arkansas whereby the purchasers of a railroad of any corporation of the state and their associates acquiring title thereto by virtue of a judicial sale, or of a sale under a power contained in a mortgage or deed of trust were authorized to organize themselves into a body corporate, vested wiht all the corporate rights, liberties, privileges, immunities, powers, and franchises of and concerning the railroad so sold, not in conflict with the provisions of the constitution of the state as fully as the same were held, exercised, and enjoyed by the corporation before such sale. A certificate of such organization was required to be filed in the office of the secretary of state within six months, specifying certain particulars. Laws Ark. 1874–75, p. 57. Prior to the passage of that act there seems to have been no statute authorizing the formation of such corporations, or prescribing a mode for their organization.

In 1853, when the Memphis & Little Rock Railroad Company was chartered and organized as a corporation, the constitution of Arkansas, then in force, permitted the enactment of special acts of incorporation, and without any restriction upon the power to exempt corporations and their property from taxation. In 1868 a new constitution was adopted by the people of the state, which provided (art. 5, sec. 48) that "the general assembly shall pass no special act conferring corporate powers. Corporations may be formed under general laws, but all such laws may from time to time be altered or repealed The property of corporations, now existing or hereafter created, shall forever be subject to taxation the same as the property of individuals," and in art. 10, sec. 2, that "laws shall be passed taxing by a uniform rate all moneys, credits, investment in bonds, joint stock companies, or otherwise; and also all real and personal property, according to its true value in money."

It was decided by the supreme court of Arkansas, in the case of Oliver v. Memphis and Little Rock Railroad Co., 30 Ark. 128, that the 28th section of the act of January 11, 1853, incorporating that company, already quoted, was a contract be- [p615] tween it and the state, which could not be impaired by these provisions of the state constitution, because it was protected by the constitution of the United States.

On October 13, 1874, the present constitution of Arkansas was adopted and took effect. Among its provisions are these: That the general assembly shall pass no special act conferring corporate powers (art. 12, sec. 2); that corporations may be formed under general laws, which laws may, from time to time, be altered or repealed (art. 12, sec. 6); that all property subject to taxation shall be taxed according to its value; that the following property shall be exempt from taxation: public property used exclusively for public purposes, churches used as such, cemeteries used exclusively as such, school buildings and apparatus, libraries and grounds used exclusively for school purposes, and buildings and grounds and materials used exclusively for public charity (art. 16, sec. 5); that all laws exempting property from taxation, other than as above provided, shall be void (art. 16, sec. 6); that the power to tax corporations and corporate property shall not be surrendered or suspended by any contract or grant to which the state may be a party (art. 16, sec. 7); and that the general assembly shall not remit the forfeiture of the charter of any corporation then existing, or alter or amend the same, or pass any general or special law for the benefit of such corporation, except upon condition that such corporation should thereafter hold its charter subject to the provisions of the constitution (art. 17, sec. 8).

It was in April, 1877, that the plaintiff in error was organized as a corporation, deriving its authority for that purpose, as it claims, under the special act of January 11, 1853, but without power to do so, as is claimed on behalf of the defendant in error, except as enabled by the act of December 9, 1874.

Mr. B. C. Brown for plaintiff in error.—Under the statutes of Arkansas the pleadings amount to an admission that the original charter contained an exemption from taxation, that there was authority to mortgage that charter, that it was mortgaged, that the mortgage was foreclosed, and that the mortgaged [p616] charter was acquired by the plaintiff in error under the foreclosure sale. We admit that a corporation takes only so much as is granted in express words, or by fair implication; that on exemption from taxation is not to be presumed; that the party claiming the exemption must show his right. But there is another proposition—which the court overlooked—that a status or right shown to have been once established or existing is presumed to continue, and it is for him who alleges that it has ended or changed to show when and how the end or change occurred. It is conceded that the property held by plaintiff and now sought to be taxed was at one time exempt. This was established by the Supreme Court of the State itself, in The State v. Oliver, 30 Ark. 129. Before this cause was instituted, both the Supreme Court of Arkansas and this court had held that "a State can no more impair the obligation of a contract by adopting a Constitution than by passing a law." Jacoway, v. Denton, 25 Ark. 625; White v. Hart, 13 Wall. 646. The contract here was that the company created by the act of 1853 might "mortgage its charter." Not mortgage the "franchise." Not mortgage the "right to build and operate a railroad." Not mortgage the "exemption from taxation," but mortgage the charter. The words "charter," and "act of incorporation" are used "convertibly," and mean the same thing. Humphrey v. Pegues, 16 Wall. 244. The grant of a power grants everything necessary to give it beneficial effect; United States v. Fisher, 2 Cranch, 358; McCulloch v. Maryland, 4 Wheat. 316, 428; Fletcher v. Oliver, 5 Ark. 289, 299; N.W. Fertilizing Co. v. Hyde Park, 70 Ill. 634. The power to pledge the franchises and rights of a corporation implies, as incident thereto, the power to pledge everything that may be necessary to the enjoyment of the franchise, and upon which its real value depends. Phillips v. Winslow, 18 B. Mon. 431. Either the whole charter passed or nothing. There is no middle ground. The exemption from taxation was not separable from the body of the charter. This court has held that, with legislative permission, any privilege or immunity may pass. Humphrey v. Pegues, cited above; Tomlinson v. Branch, 15 Wall. 460; Pacific Railroad Co. v. McGuire, 20 Wall. 36. In [p617] the cases of Morgan v. Louisiana, 93 U.S. 217, and Louisville & Nashville Railroad Co. v. Palmes, 109 U.S. 244, relied upon by the other side, there was no such permission.

Mr. U. M. Rose, for defendants in error.

Mr. Justice Matthews delivered the opinion of the court.


text: Talk:Memphis & Little Rock Railroad Co. v. Railroad Commissioners


text:
Memphis & Little Rock Railroad Co. v. Railroad Commissioners/Opinion of the Court

Mr. Justice Matthews delivered the opinion of the court. He recited the facts as above stated, and continued:

The case of the plaintiff in error rests entirely upon the words of the ninth section of the act of incorporation of the Memphis & Little Rock Railroad Company of January 11, 1853, by which it was empowered to borrow money "on the credit of the company and on the mortgage of its charter and works." It is argued that these words confer power upon the company to convey to its bondholders, by way of mortgage and on foreclosure, to purchasers absolutely, all the property of the company, and all its franchises, including the franchise of becoming and being a corporation, in the sense of acquiring the right to organize as such under the act as successor to, and substitute for, the original company, precisely as if the act had named them as corporators and endowed them with the corporate faculty. And this being assumed, it is thence inferred that the exemption contained in section 28 of the act applies to the substituted corporation as though no change of corporate existence had taken place; and thus, it is insisted, the case is taken out of the rule of decision established in Morgan v. Louisiana, 93 U.S. 217; Wilson v. Gaines, 103 U.S. 417; and Louisville & Nashville Railroad Company v. Palmes, 109 U.S. 244. According to the principle of those decisions, the exemption from taxation must be construed to have been the personal privilge of the very corporation specifically referred to, and to have perished with that, unless the express and clear intention of the law requires the exemption to pass as a continuing franchise to a successor. This salutary rule of interpretation is founded upon an obvious public policy which regards such exemptions as in derogation of the sovereign authority and of common right, and therefore not to be extended beyond the [p618] exact and express requirement of the grants, construed strictissimmi juris.

It is not claimed that the assignment of the charter, by way of mortgage and subsequent judicial sale, constituted the purchasers to be the identical corporation that the mortgagor had been, for that would involve an assumption of its obligations and debts as well as an acquisition of its privileges and exemptions; but it is insisted that it resulted in another corporation in lieu of the original one, entitled to all the provisions of the charter, by relation to its date, as though it had been originally organized under it.

But such a construction of the words authorizing a mortgage of the charter and works of the company is, in our opinion, beyond the intention of the law, and altogether inadmissible.

There is no express grant of corporate existence to any new body. At the time when this charter was granted, in 1853, there was no general law in existence in Arkansas authorizing the formation of corporations. All such grants were by special act. Neither was there any law authorizing the purchasers of railroads at judical sale under mortgages of the property and franchises of the company, to organize themselves into corporate bodies, such as was first passed in 1874. There is not in the act of January 11, 1853, for the incorporation of the Memphis & Little Rock Railroad Company, any reference to such a right, as vested in the mortgage bondholders or other purchasers at a sale under a foreclosure of the mortgage, nor is there any mode or machinery prescribed in the act for such an organization. The desired conclusion rests entirely on the inference deduced from the mortgage of the charter, and is an attempt to create a corporation by a judicial implication. But, as was said by this court in Central Railroad and Banking Co. v. Georgia, 92 U.S. 665, 670, "it is an unbending rule that a grant of corporate existence is never implied. In the construction of statute every presumption is against it."

The application of this rule is not avoided by the claim that the present is not the case of an original creation of a corporate body, but the transfer, by assignment of a previously existing charter, and of the right to exist as a corporation under it. [p619] The difference is one of words merely. The franchise of becoming and being a corporation, in its nature, is incommunicable by the act of the parties and incapable of passing by assignment. "The franchise to be a corporation," said Hoar, J., in Commonwealth v. Smith, 10 Allen, 448, 455, "clearly cannot be transferred by any corporate body of its own will. Such a franchise is not, in its own nature, transmissible." In Hall v. Sullivan Railroad Co., 21 Law Reporter, 138 (2 Redfield's Am. Railway Cases, 621; 1 Brunner's Collected Cases, 613), Mr. Justice Curtis said: "The franchise to be a corporation is therefore not a subject of sale and transfer, unless the law, by some positive provision, has made it so, and pointed out the modes in which such sale and transfer may be effected." No such positive provision is contained in the act under consideration, and no mode for effecting the organization of a series of corporations under it is pointed out, either in the act itself or in any other statute prior to that of December 9, 1874.

The franchise of being a corporation need not be implied as necessary to secure to the mortgage bondholders, or the purchasers at a foreclosure sale, the substantial rights intended to be secured. They acquire the ownership of the railroad and the property incident to it, and the franchise of maintaining and operating it as such; and the corporate existence is not essential to its use and enjoyment. All the franchises necessary or important to the beneficial use of the railroad could as well be exercised by natural persons. The essential properties of corporate existence are quite distinct from the franchises of the corporation. The franchise of being a corporation belongs to the corporators; while the powers and privileges, vested in and to be exercised by the corporate body as such, are the franchises of the corporation. The latter has no power to dispose of the franchise of its members, which may survive in the mere fact of corporate existence after the corporation has parted with all its property and all its franchises. If, in the present instance, we suppose that a mortgage and sale of the charter of the railroad company created a new corporation, what becomes of the old one? If it abides for the purpose of responding to obligations not satisfied by the [p620] sale, or of owning property not covered by the mortgage nor embraced in the sale, as it may well do, and as it must if such debts or property exist, then there will be two corporations co-existing under the same charter. For, "after an act of disposition which separates the franchise to maintain a railroad and make profit from its use, from the franchise of being a corporation, though a judgment of dissolution may be authorized, yet, until there be such judgment, the rights of the corporators and of third persons may require that the corporation be considered as still existing." Coe v. Columbus, Piqua & Indiana Railroad Co., 10 Ohio St. 372, 386, per Gholson, J.

If, as required by the argument for the plaintiff in error, we regard and treat the franchise of being a corporation as an incorporeal hereditament, and an estate, capable of passing between parties by deed, or of being charged by way of mortgage, and of being sold under a power or by virtue of judicial process, the logical consequences will be found to involve insuperable difficulties and contradictions. In the present case, for example, after the execution of the first mortgage, we should have the railroad company continuing as a corporation in esse, and the trustees for the bondholders, or their beneficiaries or assigns, a corporation in posse; and, after condition broken, the company would hold the title to its own existence as a mere equity of redemption. That equity it makes the subject of a second mortgage, and, in default, the beneficiaries, under the power of sale, became purchasers of the franchise, and organize themselves, by virtue of it, into the Memphis & Little Rock Railway company. The latter can hardly claim the status of a corporation at law, as the legal title to the franchise of being a corporation had never passed to it, on the supposition that it might pass by a private grant; and, if a corporation at all, it could only be regarded as the creature of equity, according to the analogy of equitable estates, a nondescript class hitherto unknown in any system of law relating to the subject. It finally was displaced by the judicial sale, under which the plaintiff in error organized as successor to both. In the mean time the original corporation has never been dissolved, and, for all purposes not covered by the mort- [p621] gage, still maintains an existence as a corporate body, capable of contracting, and of suing and being sued. A conception which leads to such incongruities must be essentially erroneous.

If we concede to the argument for the plaintiff in error the position that the language used, which authorizes the mortgage of the charter, may be taken in a literal sense, still the assignment would transfer it in the very state in which it might be at the date of the transfer. But at that date the only corporation which the charter provided for had already been organized. The only powers conferred upon corporators to that end had already been exercised and exhausted. The bondholders under the mortgage and their assignees, the purchasers at the sale, therefore took, and could take, nothing else than the charter, so far as it remained unexecuted, with such franchises and powers as were capable of future enjoyment and activity, and not such as, having already spent their force by having been fully exerted, could not be revived by a conveyance. This would include, by the necessity of the case, the franchise to organize a corporation which can only be exerted once for all; for the simple act of organization exhausts the authority, and having once been effected, is legally incapable of repetition.

It is mistake, however, to suppose that the mortgage and sale of a charter by a corporation, in any proper sense which can be legally imputed to the words, necessarily conveys every power and authority conferred by it, so far, it least, as to vest a title in them, as franchises, irrevocable by reason of the obligation of a contract. In many, if not in most, acts of incorporation, however special in their nature, there are various provisions which are matters of general law and not of contract, and are, therefore, subject to modification or repeal.

Such, in our opinion, would be the character of the right in the mortgage bondholders, or the purchasers at the sale under the mortgage, to organize as a corporation, after acquiring title to the mortgaged property, by sale under the mortgage, if in the charter under consideration it had been conferred in express terms, and particular provision had been made as to the mode of procedure to effect the purpose. It would be matter [p622] of law, and not of contract. At least it would be construed as conferring only a right to organize as a corporation, according to such laws as might be in force at the time when the actual organization should take place, and subject to such limitations as they might impose. It cannot, we think, be admitted that a statutory provision for becoming a corporation in futuro can become a contract, in the sense of that clause of the constitution of the United States which prohibits state legislation impairing its obligation until it has become vested as a right by an actual organization under it; and then it takes effect as of that date, and subject to such laws as may then be in force. Such a contract, so far as it seems to assume that form, is a provision merely that, at the time, or on the happening of the event specified, the parties designated may become a corporation according to the laws that may then be actually in force. The stipulation, whatever be its form, must be construed as subject and subordinate to the paramount policy of the state and to the sovereign prerogative of deciding in the mean time what shall constitute the essential characteristics of corporate existence. The state does not part with the franchise until it passes to the organized corporation; and when it is thus imparted it must be what the government is then authorized to grant and does actually confer.

It is immaterial that the form of the transaction is that of a mortgage, sale, or other transfer inter partes of the franchise to be a corporation. "The real transaction, in all such cases of transfer, sale, or conveyance," as was said by the Supreme Court of Ohio in the case of State v. Sherman, 22 Ohio St. 411, 428, "in legal effect, is nothing more or less, and nothing other, than a surrender or abandonment of the old charter by the corporators, and a grant de novo of similar charter to the so-called transferees or purchasers. To look upon it in any other light, and to regard the transaction as a literal transfer or sale of the charter, is to be deceived, we think, by a mere figure or form of speech. The vital part of the transaction, and that without which it would be a nullity, is the law under which the transfer is made. The statute authorizing the transfer and declaring its effect is the grant of a new charter [p623] couched in few words, and to take effect upon condition of the surrender or abandonment of the old charter; and the deed of transfer is to be regarded as mere evidence of the surrender or abandonment."

It is, of course, the law in force at the time the transaction is consummated and made effectual that must be looked to as determining its validity and effect. This is the principle on which this court proceeded in deciding the case of Railroad Co. v. Georgia, 98 U.S. 359. The franchise to be a corporation remained in and was exercised by the old corporation, notwithstanding the mortgage of its charter, until the new corporation was formed and organized; it was then surrendered to the state, and by a new grant then made passed to the corporators of the new corporation, and was held and exercised by them under the constitutional restrictions then existing.

Our conclusions, then, are that the exemption from taxation contained in the 28th section of the act of January 11, 1853, was intended to apply only to the Memphis & Little Rock Railroad Company as the original corporation organized under it; that it did not pass by the mortgage of its charter and works, as included in the transfer of the franchise to be a corporation, to the mortgagees or purchasers at the judicial sale; that the franchises embraced in that conveyance were limited to those which had been granted as appropriate to the construction, maintenance, operation, and use of the railroad as a public highway and the right to make profit therefrom; and that the appellants, not having become a corporate body until after the restrictions in the constitution of 1874 took effect, was thereby incapable in law of having or enjoying the privilege of holding its property exempt from taxation.

The decree of the supreme court of Arkansas is accordingly

Affirmed.


text: Talk:Memphis & Little Rock Railroad Co. v. Railroad Commissioners/Opinion of the Court


text:
Union Metallio Cartridge Company v. United States Cartridge Company

Causten Browne and Edmund Wetmore, for Union Metallic Cartridge Co. B. F. Butler and F. P. Fish, for United States Cartridge Co.

BLATCRFORD, J.


text: Talk:Union Metallio Cartridge Company v. United States Cartridge Company