text:
Railroad Company v. Koontz Railroad Company

ERROR to the Supreme Court of Appeals of the State of Virginia.

These cases are substantially alike, and present the following facts:--

The Baltimore and Ohio Railroad Company was incorporated by the State of Maryland on the 28th of February, 1827, to build and operate a railroad from Baltimore, in Maryland, to some suitable point on the Ohio River. By the terms of the charter the annual elections of directors were to be held in Baltimore. On the 2d of March following, the State of Virginia granted the company the same rights and privileges in Virginia that had been granted to it in Maryland, except that no lateral road could be built in Virginia without the consent of the legislature, and the road was not to strike the Ohio at a point lower than the mouth of the Little Kanawha. Under this authority from the two States a road was built from Baltimore to Wheeling, in Virginia. When the State of West Virginia was formed, it took from Virginia all the territory occupied by the road in that State, and from that time no part of the original line has been within the present State of Virginia.

On the 20th of August, 1873, under a lease from the Washington City, Virginia Midland, and Great Southern Railroad Company, a Virginia corporation, of all its railroad lying between Strasburg and Harrisonburg, in Virginia, the Baltimore and Ohio company took the exclusive possession of and operated the leased property, using for that purpose the powers and franchises of the Virginia corporation. While so operating the leased road an accident happened to one of the passenger trains, which resulted in the death of several persons, whose administrators, the defendants in error, each of whom was a citizen of Virginia, thereupon brought in a State court of that State, under her statute, these suits to recover of the company damages for such death.

On the 2d of September, 1876, which is conceded to have been in time, the company filed its petitions in the State court for the removal of the cases to the proper Circuit Court of the United States, on the ground that the company was a citizen of Maryland and the several plaintiffs citizens of Virginia. The plaintiffs answered the petition in each case, denying that the company was a citizen of Maryland, and claiming that for all the purposes of these suits it was a citizen of Virginia. After hearing, the court refused to recognize the removal, because, as was held, by leasing and operating the road of the Virginia corporation under the Virginia charter, the company became, for all the purposes of that business, a citizen of Virginia. To this ruling exceptions were taken in due form and made part of the several records.

It nowthere appears that copies of the records of the State court were ever entered in the Circuit Court; but on the 19th of December, 1876, the company asked and obtained from the State court leave to plead, and in due time thereafter pleas of not guilty were put in. One case was tried in the State court on the 6th of April, 1877, another on the 10th of April, 1878, and the other on the 9th of December afterwards. Judgment was given in each case for the plaintiff. The company was represented at the trials, and exceptions of various kinds were taken. The causes were all carried to the Supreme Court of Appeals of the State, where the judgments were affirmed. The record in each case shows distinctly that errors were assigned on the ruling upon the petition for removal, and that the decision was adverse to the company. The cases are now here on writs of error.

For the purpose of suing and being sued, a corporation is a citizen of the State which created it, and it has no legal existence beyond her bounds. The presumption of law is that its members are all citizens of that State, and a suit by or against it is conclusively presumed to be by or against such citizens. No averment or evidence to the contrary is, therefore, admissible in order to defeat the jurisdiction of a court of the United States. It follows that a suit by or against the Baltimore and Ohio Railroad Company must, so far as the question of jurisdiction is involved, be considered as a suit by or against citizens of the State of Maryland. The Louisville, Cincinnati, & Charleston Railroad Co. v. Letson, 2 How. 497; Marshall v. Baltimore & Ohio Railroad Co., 16 id. 314; Ohio & Mississippi Railroad Co. v. Wheeler, 1 Black, 286; Railroad Company v. Harris, 12 Wall. 65; Railway Company v. Whitton, 13 id. 270. That company, by leasing and operating the road of a company incorporated by Virginia, did not become a citizen of that State. Baltimore & Ohio Railroad Co. v. Cary, 28 Ohio St. 208. Its right of removing a suit brought against it cannot be defeated by State enactments nor waived by implication, nor was it in this instance forfeited by the imputed laches of the company in regard to the filing in the Circuit Court of copies of the racord. The laches of which the defendants in error complain are the result of their efforts to defeat the acceptance by the State court of the petitions for removal. Their position is, therefore, inconsistent with their own acts.

A party entitled to removal who, notwithstanding his protests and exceptions, is held for the trial of his case in the State court loses none of his rights by his defence upon the merits. Gordon v. Longest, 16 Pet. 97; Kanouse v. Martin, 15 How. 198; Insurance Company v. Dunn, 19 Wall. 214; Removal Cases, 100 U.S. 457; Railroad Company v. Mississippi, 102 id. 135; Kern v. Huidekoper, 103 id. 485.

The prayer for the removal of these actions was properly denied. The plaintiff in error, by leasing and operating the road and exercising the franchises of a Virginia corporation, became a corporation of that State so far as the duties and responsibilities of the lessor and its liability to suit are concerned. Baltimore & Ohio Railroad Co. v. Gallahue's Adm'rs, 12 Gratt. (Va.) 655.

The doctrine of license and comity places a foreign corporation enjoying the license in a particular State upon substantially the same ground as if it were actually and originally created by such State, and determines its citizenship in respect to its right of removal of a suit pending against it. Lafayette Insurance Co. v. French, 18 How. 404; Bank of Augusta v. Earle, 13 Pet. 519; State v. Northern Central Railway Co., 18 Md. 193; Sprague v. Hartford, & c. Railroad Co., 5 R. I. 233; Pomeroy v. New York & New Haven Railroad Co., 4 Blatchf. 120; Continental Insurance Co. v. Kasey, 27 Gratt. (Va.) 216.

The right to remove these cases, if it ever existed, was lost by the failure of the company to file in the Circuit Court, on the 'first day of its then next session,' a copy of the records. Cobb v. Globe Mutual Insurance Co., 3 Hughes, 452; Removal Cases, 100 U.S. 457; Kern v. Huidekoper, 103 id. 485; Dillon, Removal of Causes, pp. 102-105.

Mr. Hugh W. Sheffey and Mr. E.J.D.Cross for the plaintiffs in error.

Mr. John Randolph Tucker and '',Mr. Moses Walton, contra''.

MR. CHIEF JUSTICE WAITE, after stating the facts, delivered the opinion of the court.


text: Talk:Railroad Company v. Koontz Railroad Company

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text:
Railroad Company v. Koontz Railroad Company/Opinion of the Court

The questions presented for our consideration are: 1. Whether a case for removal was made by the company; and, 2, if it was, whether, as it does not appear affirmatively that copies of the records have been entered in the Circuit Court, the company has lost its right to have the judgments reversed for the original errors in that behalf.

The Court of Appeals in Virginia held, as early as 1855, in Baltimore & Ohio Railroad Co. v. Gallahue's Adm'rs (12 Gratt. (Va.) 655), that the Baltimore and Ohio company could be sued in Virginia, and in the course of the opinion said that the effect of the Enabling Act of Virginia was to make the company a Virginia corporation as to its road within the territory of Virginia. Afterwards, in 1870, this court decided, in Railroad Company v. Harris (12 Wall. 65), that the company could be sued in the District of Columbia, into which a lateral road had been built with the consent of Congress, given through an enabling act much like that of Virginia. In that case we held the company to be a Maryland corporation only, and that no new corporation had been created by the Enabling Act either of Virginia or the District of Columbia. The ruling in the Virginia case was followed by the Supreme Court of Appeals of West Virginia in Goshorn v. Supervisors (1 W. Va. 308) and Baltimore & Ohio Railroad Co. v. Supervisors (3 id. 319), both of which cases were decided before Railroad Company v. Harris, in this court. That question is, however, unimportant here, as it is conceded that the part of the road originally in Virginia is now in West Virginia, and that the company no longer uses in Virginia any of the franchises conferred by the Enabling Act of that State. Neither the Court of Appeals nor counsel here make any claim on account of that legislation. Even conceding that the company was once a Virginia corporation, so far as its original road in that State was concerned, the most that can be said of it now is, that, in common with all citizens of the old State residing on the ceded territory, its citizenship was transferred by the organization of West Virginia from the old State to the new. Consequently, if it was once a corporation of Maryland and Virginia, it is now a corporation of Maryland and West Virginia. Any citizenship it may have had in Virginia has been lost.

It is not contended that this Enabling Act gave the company a right to lease another Virginia road and operate it as a lateral road, nor that in running the leased road the company uses any of the franchises conferred by the original grant. The present claim is that, by using the franchises of another Virginia corporation to run its leased road, it made itself a corporation of Virginia for all the purposes of that business, just as the lessor was and is.

It is well settled that a corporation of one State doing business in another is suable where its business is done, if the laws make provision to that effect. We have so held many times. Lafayette Insurance Co. v. French, 18 How. 404; Railroad Company v. Harris, supra; Ex parte Schollenberger, 96 U.S. 369. This company concedes that it was properly sued in Virginia. What it asks is, that, being sued there, it may avail itself of the privilege it has under an act of Congress, as a corporation of Maryland, and remove into the proper court of the United States exercising jurisdiction within Virginia a suit which has been instituted against it by a citizen of the latter State. The litigation is not to be taken out of Virginia, but only from one court to another within that State. So that the single question presented is, whether, by taking a lease of the road of a Virginia corporation, the Maryland corporation made itself also a corporation of Virginia, for all purposes connected with the use of the leased property.

It is not denied that the Maryland company derived all its power, so far as the operation of the Virginia road was concerned, from the Virginia corporation; nor that, in respect of the business of that road, it must do just what was required of the Virginia corporation by the laws of Virginia; but that does not, in our opinion, make it a corporation of Virginia. It may be sued in Virginia, because with the implied assent of that State it does business there; but, as we said substantially in Schollenberger's case, the question of suability and jurisdiction is not so much one of citizenship as of finding. If a citizen of one State is found, for the purposes of the lawful service of judicial process, in another, he may ordinarily be sued there. A citizen of Maine may be sued in California, if he happens to be there in person, and the proper officer serves him personally with the lawful process of a California court. He is still a citizen of Maine, although, in the exercise of one of the privileges of a citizen of the United States, he has been found in California. An individual may, without asking permission of State authorities, do business where he pleases, and, if a citizen of one State, he is entitled to all the privileges and immunities of citizens of the several States. Const., art. 4, sect. 2. Not so with corporations. Their rights outside the State, under the authority of which they were created, depend primarily on their charters. If the charter allows it, they may exercise their chartered privileges and carry on their chartered business in any other State which, by express grant or by implication, permits them to do so. They have no absolute right of recognition in any other State than their own. Paul v. Virginia, 8 Wall. 168. And the State which recognizes them can impose such conditions on its recognition as it chooses, not inconsistent with the Constitution and laws of the United States. If they are recognized and permitted to do business without limitation, express or implied, they carry with them wherever they go all their chartered rights, and may claim all their chartered privileges which can be used away from their legal home. Their charters are the law of their existence, and are taken wherever they go. By doing business away from their legal residence they do not change their citizenship, but simply extend the field of their operations. They reside at home, but do business abroad.

In this case, a Maryland corporation leased the railroad and the franchises of a Virginia corporation. Neither State legislature acted specially on the subject, so far as the record discloses. The Maryland corporation assumed the right to take, and the Virginia corporation to grant, the lease which lies at the foundation of the rights of the parties. Under this lease possession was given and taken without objection from the authorities of either State, and the Maryland corporation actually uses the franchises of that of Virginia. The question, therefore, presented to us is not one of ultra vires. No complaint is made that Maryland has never given its corporation the right to go to Virginia and take a lease, nor that Virginia has never authorized its corporation to grant such a lease. For all the purposes of these cases, we must assume that the Maryland corporation is rightfully using the leased road, and with the consent of both States.

We can hardly believe if an individual, a citizen of a State other than Virginia, went into that State and leased the property of a Virginia corporation, to use as the corporation did, it would be claimed that he made himself thereby a citizen of Virginia, within the meaning of the Constitution and laws of the United States. Citizenship in this connection has a special signification. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States, and of the State wherein they reside. Amend. 14, sect. 1. A corporation may for the purposes of suit be said to be born where by law it is created and organized, and to reside where, by or under the authority of its charter, its principal office is. A corporation, therefore, created by and organized under the laws of a particular State, and having its principal office there, is, under the Constitution and laws, for the purpose of suing and being sued, a citizen of that State possessing all the rights and having all the powers its charter confers. It cannot migrate nor change its residence without the consent, express or implied, of its State; but it may transact business wherever its charter allows, unless prohibited by local laws. Such has been for a long time the settled doctrine of this court. 'It must dwell in the place of its creation, and cannot migrate to another sovereignty;' 'but its residence in one State creates no insuperable objection to its contracting in another.' Bank of Augusta v. Earle, 13 Pet. 519, 520. With a long line of authorities in this court to the same effect before us, we cannot hesitate to say, with all due respect for the Court of Appeals of Virginia, that the Maryland corporation, by taking from the Virginia corporation, with the unconditional assent of Virginia, a lease of a railroad which could only be operated by the use in Virginia of the corporate franchises of the lessor, did not make itself a corporation of Virginia, or part with any of the rights it had under the Constitution and laws of the United States as a corporation of Maryland. The State of Virginia has not granted to it any special powers or privileges, beyond allowing it to transact its corporate business in Virginia. Its powers within the State come from its Maryland charter and the Virginia corporation. That corporation had certain franchises and privileges which it held by grant from its State. These franchises and privileges were a species of property which, we must presume for all the purposes of this case, it had the right to allow the corporation of another State to use. The Virginia authorities have impliedly assented to all that has been done. This assent having been given and the contract entered into between the companies, all Virginia can now require is that the Maryland company, in carrying on its business under the contract and using the franchises of the Virginia company, shall be subject to all obligations which the charter imposes on that corporation. The Maryland corporation simply occupies the position of a company carrying on an authorized business away from its home, with the consent of its own State and of that of the State in which its business is done. For these reasons we must hold that the Court of Appeals erred in deciding that the removal of the suit to the Circuit Court was properly refused, because the company, by taking the lease and using the road in Virginia, became, for all the purposes of that lease, a corporation of Virginia.

The only remaining question is whether the company can now claim a reversal of the judgments below on account of this error, since it does not appear that copies of the records in the State court have been entered in the Circuit Court. The State court of original jurisdiction directly decided, in accordance with the claims of the several defendants in error, that upon the showing made the company was not entitled to a removal, but must remain and defend the suits in that court. It was conceded on the argument that if the judgment had been rendered before the first day of the next term of the Circuit Court of the United States, there could be a reversal if the case was in fact removable. The position of the defendants in error seems to be, that as the company appeared and went on with the causes in the State court after the next term in the Circuit Court, without showing that the copies of the records had been entered in that court, it in effect waived its right to a removal and submitted itself again voluntarily to the jurisdiction of the State court.

We have uniformly held that if a State court wrongfully refuses to give up its jurisdiction on a petition for removal, and forces a party to trial, he loses none of his rights by remaining and contesting the case on its merits. Insurance Company v. Dunn, 19 Wall. 214; Removal Cases, 100 U.S. 457; Railroad Company v. Mississippi, 102, id. 135. It is also a well-settled rule of decision in this court, that, when a sufficient case for removal is made in the State court, the rightful jurisdiction of that court comes to an end, and no further proceedings can properly be had there, unless in some form its jurisdiction is restored. Gordon v. Longest, 16 Pet. 97; Kanouse v. Martin, 15 How. 198; Insurance Company v. Dunn, supra; Railroad Company v. Mississippi, supra. The entering of the copy of the record in the Circuit Court is necessary to enable that court to proceed, but its jurisdiction attaches when, under the law, it becomes the duty of the State court to 'proceed no further.' The provision of the act of 1875 is in this respect substantially the same as that of the twelfth section of the Judiciary Act of 1789, and requires the State court, when the petition and a sufficient bond are presented, to proceed no further with the suit; and the Circuit Court, when the record is entered there, to deal with the cause as if it had been originally commenced in that court. The jurisdiction is changed when the removal is demanded in proper form and a case for removal made. Proceedings in the Circuit Court may begin when the copy is entered. Such is clearly the effect of the cases of Gordon v. Longest and Kanouse v. Martin, where it does not appear that the record was ever entered in the Circuit Court. In Insurance Company v. Dunn and Railrood Company v. Mississippi, the records were entered, but no point was made of this in the opinion. We are aware that in Removal Cases (supra) and Kern v. Huidekoper (103 U.S. 485) it is said, in substance, that after the petition for removal and the entering of the record the jurisdiction of the Circuit Court is complete; but this evidently refers to the right of the Circuit Court to proceed with the cause. The entering of the record is necessary for that, but not for the transfer of jurisdiction. The State court must stop when the petition and security are presented, and the Circuit Court go on when the record is entered there, which is in effect docketing the cause. The question then is, whether, if the State court refuses to let go its jurisdiction and forces the petitioning party to trial, he must, in order to prevent his appearance from operating as a waiver, show to the State court that he is not in default in respect to entering the record and docketing the cause in the Circuit Court on the first day of the next term following the removal.

As has just been seen, when the State court has once lost its jurisdiction it is prohibited from proceeding until in some way jurisdiction has been restored. The right to remove is derived from a law of the United States, and whether a case is made for removal is a Federal question. If, after a case has been made, the State court forces the petitioning party to trial and judgment, and the highest court of the State sustains the judgment, he is entitled to his writ of error to this court if he saves the question on the record. If a reversal is had here on account of that error, the case is sent back to the State court, with instructions to recognize the removal, and proceed no further. Such was, in effect, the order in Gordon v. Longest, supra. The petitioning party has the right to remain in the State court under protest, and rely on this form of remedy if he chooses, or he may enter the record in the Circuit Court and require the adverse party to litigate with him there, even while the State court is going on. This was actually done in Removal Cases. When the suit is docketed in the Circuit Court, the adverse party may move to remand. If his motion is decided against him, he may save his point on the record, and after final judgment bring the case here for review, if the amount involved is sufficient for our jurisdiction. If, in such a case, we think his motion should have been granted, we reverse the judgment of the Circuit Court, and direct that the suit be sent back to the State court to be proceeded with there as if no removal had been had. If the motion to remand is decided by the Circuit Court against the petitioning party, he can at once bring the case here by writ of error or appeal for a review of that decision, without regard to the amount in controversy. Babbitt v. Clark, 103 U.S. 606. If, in such a case, we reverse the order of the Circuit Court to remand, our instructions to that court are, as in Relfe v. Rundle (id. 222), to proceed according to law, as with a pending suit within its jurisdiction by removal. Should the petitioning party neglect to enter the record and docket the cause in the Circuit Court in time, we see no reason why his adversary may not go into the Circuit Court and have the cause remanded on that account. This being done, and no writ of error or appeal to this court taken, the jurisdiction of the State court is restored, and it may rightfully proceed as though no removal had ever been attempted.

It is contended, however, that if the petitioner fails to enter the record and docket the cause in the Circuit Court on the first day of the next term, the jurisdiction of that court is lost, and there can be no entry on a subsequent day. Such we do not understand to be the law. The petitioner must give security that he will enter the record on that day, but there is nothing in the act of Congress which prohibits the court from allowing it to be entered on a subsequent day, if good cause is shown. In Removal Cases (supra) we used this language: 'While the act of Congress requires security that the transcript shall be filed on the first day of the next term, it nowhere appears that the Circuit Court is to be deprived of its jurisdiction if, by accident, the party is delayed until a later day in the term. If the Circuit Court, for good cause shown, accepts the transfer after the day and during the term, its jurisdiction will, as a general rule, be complete and the removal properly effected.' This was as far as it was necessary to go in that case, and in entering, as we did then, on the construction of the act of 1875, it was deemed advisable to confine our decision to the facts we had then before us. Now the question arises whether, if the petitioning party is kept by his adversary, and against his will, in the State court, and forced to a trial there on the merits, he may, after having obtained in the regular course of procedure a reversal of the judgment and an order for the allowance of the removal, enter the cause in the Circuit Court, notwithstanding the term of that court has gone by during which, under other circumstances, the record should have been entered. We have no hesitation in saying that in our opinion he can. As has been already seen, the jurisdiction was changed from one court to the other when the case for removal was actually made in the State court. The entering of the record in the Circuit Court after that was mere procedure, and in its nature not unlike the pleadings which follow service of process, the filing of which is ordinarily regulated by statute or rules of practice. The failure to file pleadings in time does not deprive the court of the jurisdiction it got though the service of process, but inexcusable delay may be good ground for dismissing the cause for want of prosecution. So here, if the petitioning party, without sufficient cause, fails to enter the record and docket the cause, the suit may be properly remanded for want of due prosecution under the removal; but if sufficient cause is shown for the delay, there is nothing in the statute to prevent the court from taking the case after the first day of the term and exercising its jurisdiction. Clearly it is within the judicial discretion of every court, on good cause shown, to set aside a default in filing pleadings on a statutory rule-day, and allow the omission to be supplied. This case seems to be analogous to that. Undoubtedly promptness should be insisted on by the courts of the United States, and no excuse should be accepted for delay in entering a record after removal, unless it amounts to a clear justification or a waiver by the opposite party. It seems to us manifest that if the petitioning party is forced by his adversary to remain in the State court until he can, in a proper way, secure a reversal of the order which keeps him there, the requirement of the law for entering the record in the Circuit Court at any time before the reversal actually takes place must be deemed to have been waived, and that for all the purposes of procedure in that court the time when the State court lets go its jurisdiction may be taken as the time according to which the docketing of the cause is to take place. Certainly the petitioning party ought not to be required to carry on his litigation in two courts at the same time. He may do so if he chooses; but if he elects to go on in the State court after his petition for removal is disregarded, and take his chances of obtaining a reversal of any judgment that may be obtained against him because he was wrongfully kept there, he ought not to be deprived of a trial in the proper jurisdiction because of the unwarranted act of his adversary, or of the State court.

The judgment of the Court of Appeals in each of these cases will be reversed, and the causes remanded to the Supreme Court of Appeals of Virginia with directions to reverse the judgments of the Circuit Court of the county, and transmit the cases to that court with instructions to vacate all orders and judgments made or entered subsequently to the filing of the several petitions for removal and approval of the bonds, and proceed no further therein unless its jurisdiction be restored by the action of the Circuit Court of the United States or this court.

So ordered.


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


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Shanks v. Klein

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

The facts are stated in the opinion of the court.

Mr. William B. Pittman and Mr. J. Z. George for the appellant.

Mr. Edward D. Clark, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Shanks v. Klein


text: Talk:Shanks v. Klein

title: Talk:Shanks v. Klein


text:
Shanks v. Klein/Opinion of the Court

This is a bill in chancery filed by John A. Klein and others against David C. Shanks, executor of the last will and testament of Joseph H. Johnston.

The substance of the bill is, that in the lifetime of Johnston there existed between him and Shepperd Brown a partnership, the style of which was Brown & Johnston; that their principal place of business was at Vicksburg, in the State of Mississippi, where they had a banking-house; that they had branches and connections with other men in business at other places, among which was New Orleans; that they dealt largely in the purchase and sale of real estate, of which they had a large amount in value on hand at the outbreak of the recent civil war; that this real estate was in different parcels and localities, and was bought and paid for by partnership money, and held as partnership property for the general uses of the partnership business; and that early in the war, namely, in 1863, Johnston died in the State of Virginia, where he then resided, leaving a will by which all his property, including his interest in the partnership, became vested in Shanks, who was appointed his executor.

It seems that both Brown and Johnston were absent from Mississippi and from New Orleans during the war,-the one being in Virginia and the other in Georgia. Upon the cessation of hostilities, Brown returned to New Orleans, and visited Vicksburg to look after the business of the firm of Brown & Johnston, and the other firms with which that was connected. Finding that suits had been commenced by creditors of the firm against him as surviving partner, and, in some instances, attachments levied, he became satisfied that unless he adopted some mode of disposing of the partnership property and applying its proceeds to the payment of the debts in their just order, the whole would be wasted or a few active creditors would absorb it all. Under these circumstances, acting by advice of counsel, he executed a deed conveying all the property of the firm of Brown & Johnston to John A. Klein, in trust for the creditors of that partnership, and providing that the surplus, if any, should be for the use of the partners and their heirs or devisees. Klein accepted the trust, and pursuant thereto paid debts with the lands, or with the proceeds of the sale of them.

There is an allegation that Shanks, while acting as executor, and about the time the deed of trust was made, had an interview with Brown, and, being fully informed of the condition of the affairs of the partnership, expressed his approval of what Brown intended to do. This is denied in the answer, and some testimony is taken on the subject. Other questions of bad faith on the part of Brown are raised. But in the view which we take of the case the record establishes that Brown acted in good faith, and did the best that could be done for the creditors of the partnership and for those interested in its property.

It appears that after all this property had been sold to purchasers in good faith, Shanks, as executor of Johnston's will, instituted actions of ejectment against them. They thereupon filed this bill to enjoin him from further prosecuting the actions, and compel him to convey the legal title to the real estate which came to him by the will of his testator. A decree was rendered in conformity with the prayer of the bill, and Shanks appealed.

Being satisfied, as already stated, of the fairness and honesty of the proceedings of Brown and Klein and of the purchasers from them, and waiving as of no consequence, in regard to the principal point in the case, the allegation of Shanks's concurrence in or ratification of Brown's action, we proceed to consider the question as to the power or authority of Brown, the surviving partner, to bind Shanks by the conveyance to Klein, and by the sales thereunder made.

There is no doubt that in the present case all the real estate which is the subject of this controversy is to be treated as partnership property, bought and held for partnership purposes within the rule of equity on that subject. Nor is it denied by the counsel who have so ably argued the case for the appellant that the equity of the creditors of the partnership to have their debts paid out of this property is superior to that of the devisee of Johnston. Their contention is that this right could only be enforced by proceedings in a court of justice, and that no power existed in Brown, the surviving partner, to convey the legal title vested in Shanks by the will of Johnston, nor even to make a contract for the sale of the real estate which a court will enforce against Shanks as the holder of that title.

Counsel for the appellees, while conceding that neither the deed of Brown to Klein, nor of Klein to his vendees, conveyed the legal title of the undivided moiety which was originally in Johnston, maintain that Brown, as surviving partner, had, for the purpose of paying the debts of the partnership, power to sell and transfer the equitable interest or right of the partnership, and of both partners, in the real estate, that the trust deed which he made to Klein was effectual for that purpose, and that by Klein's sales to the other appellees they became invested with this equitable title and the right to compel Shanks to convey the legal title.

One of the learned counsel for the appellant concedes that at the present day the doctrine of the English Court of Chancery 'extends to the treating of the realty as personalty for all purposes, and gives the personal representatives of the deceased partner the land as personalty, to the exclusion of the heir,' and that the principle has 'acquired a firm foothold in English equity jurisprudence, that partnership real estate is in fact in all cases, and to all intents and purposes, personalty.' He maintains, however, that the principle has not been carried so far in the courts of America; that the extent of the doctrine is that the creditors of the partnership and the surviving partner have a lien on the real estate of the partnership for debts due by the firm, and for any balance found due to either partner on a final settlement of the partnership transactions; and that the right of the surviving partner, and of the creditors through him, is no more than a lien, which cannot be asserted by a sale, as if the property were personal, but to the enforcement of which a resort to a court of equity is necessary.

We think that the error which lies at the foundation of this argument is in the assumption that the equitable right of the surviving partner and the creditors is nothing but a lien.

It is not necessary to decide here that it is not a lien in the strict sense of that word, for if it be a lien in any sense it is also something more.

It is an equitable right accompanied by an equitable title. It is an interest in the property which courts of chancery will recognize and support. What is that right? Not only that the court will, when necessary, see that the real estate so situated is appropriated to the satisfaction of the partnership debts, but that for that purpose, and to that extent, it shall be treated as personal property of the partnership, and like other personal property pass under the control of the surviving partner. This control extends to the right to sell it, or so much of it as may be necessary to pay the partnership debts, or to satisfy the just claims of the surviving partner.

It is beyond question that such is the doctrine of the English Court of Chancery, as stated by counsel for appellant. As this result was reached in that court without the aid of any statute, it is authority of very great weight in the inquiry as to the true equity doctrine on the subject.

We think, also, that the preponderance of authority in the American courts is on the same side of the question.

In the case of Dyer v. Clark (5 Metc. (Mass.) 562), that eminent jurist, Chief Justice Shaw, while using the word 'lien' in reference to the rights now in controversy, asks, 'What are the true equitable rights of the partners as resulting from their presumed intentions in such real estate? Is not the share of each pledged to the other, and has not each an equitable lien on the estate, requiring that it shall be held and appropriated, first, to pay the joint debts, then to repay the partner who advanced the capital, before it shall be applied to the separate use of either of the partners? The creditors have an interest indirectly in the same appropriation; not because they have any lien, legal or equitable (2 Story, Eq., sect. 1253), upon the property itself; but on the equitable principle that the real estate so held shall be deemed to constitute a part of the fund from which their debts are to be paid before it can be legally or honestly diverted to the private use of the parties. Suppose this trust is not implied, what would be the condition of the parties?' &c. 'But treating it as a trust, the rights of all the parties will be preserved.' It is clear that in the view thus announced the right of the creditors is something more than an ordinary lien.

In Delmonico v. Guillaume (2 Sandf. (N. Y.) Ch. 366), where the precise question arose which we have in the present case, the Vice-Chancellor held that 'Peter A. Delmonico, as the surviving partner, became entitled to the Brooklyn farm, and as between himself and the heir of John he had an absolute right to dispose of it, for the payment of the debts of the firm, in the same manner as if it had been personal estate.'

In so deciding he followed the English authorities, and cited Fereday v. Wightwick, 1 Russ. & M. 45; Phillips v. Phillips, 1 Myl. & K. 649; Brown v. Brown, 3 id. 443; Cookson v. Cookson, 8 Sim. 529; Townshend v. Devaynes, 11 id. 498, note.

In Andrews's Heirs v. Brown's Adm'r (21 Ala. 437), the Supreme Court said that, 'inasmuch as the real estate is considered as personal for the purpose of paying the debts of the firm, and the surviving partner is charged with the duty of paying these debts, it must of necessity follow that he has the right in equity to dispose of the real estate for this purpose, for it would never do to charge him with the duty of paying the debts and at the same time take from him the means of doing it. Therefore, although he cannot by his deed pass the legal title which descended to the heir of the deceased partner, yet as the heir holds the title in trust to pay the debts and the survivor is charged with this duty, his deed will convey the equity to the purchaser, and through it he may call on the heir for the legal title and compel him to convey it.'

In Dupuy v. Leavenworth (17 Cal. 262), Chief Justice Field, in the name of the court, said: 'In the view of equity it is immaterial in whose name the legal title of the property stands, whether in the individual name of the copartner, or in the joint names of all; it is first subject to the payment of the partnership debts, and is then to be distributed among the copartners according to their respective rights. The possessor of the legal title in such case holds the property in trust for the purposes of the copartnership. Each partner has an equitable interest in the property until such purposes are accomplished. Upon dissolution of the copartnership by the death of one of its members, the surviving partner, who is charged with the duty of paying the debts, can dispose of this equitable interest, and the purchaser can compel the heirs-at-law of the deceased partner to perfect the purchase by conveyance of the legal title.'

If the case could be held to be one which should be governed by the decisions of the courts of Mississippi, because the principle is to be regarded as a rule of property, which we neither admit nor deny, the result would still be the same.

In one of the earliest cases on that subject in the High Court of Errors and Appeals of that State, Markham v. Merritt (8 Miss. 437), Chief Justice Sharkey, in delivering the opinion of the court, concurs in the general doctrine that 'when land is held by a firm, and is essential to the purposes and objects of the partnership, then it is regarded as a part of the joint stock, all will be regarded in equity as a chattel.' A careful examination of the Mississippi cases cited by counsel has disclosed nothing in contravention of this doctrine, or in denial of the authority of the surviving partner to dispose of such property for the payment of the debts of the partnership.

We are of opinion, therefore, that the purchasers from Klein acquired the equitable title of the real estate conveyed to him by Brown, that they had a right to the aid of a court of chancery to compel Shanks to convey the legal title to the undivided half of the land, vested in him by the will of Johnston.

Decree affirmed.

title: Shanks v. Klein/Opinion of the Court


text: Talk:Shanks v. Klein/Opinion of the Court


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Smith v. McCullough (104 U.S. 25)

APPEAL from the Circuit Court of the United States for the Western District of Missouri.

The case here presented is an outgrowth of a suit instituted in the court below for the foreclosure of a mortgage executed on the first day of April, 1872, to the Farmers' Loan and Trust Company, by the Burlington and Southwestern Railway Company, to secure the payment of certain bonds issued by the latter. A decree of foreclosure having passed, Elijah Smith, the receiver in that suit, filed his petition therein (to which Warren McCullough and other persons were made defendants), asserting his right, as such receiver, to certain county bonds of the par value of $40,000 (or their proceeds), constituting the last instalment of an issue of $200,000 by Sullivan County, Missouri, in payment of its subscription made in 1871 in aid of the construction of the Linneus Branch of the Burlington and Southwestern Railway. The entire issue, conformably to the contract of subscription, was originally deposited in the hands of McCullough, as trustee for the county and the railway company, with authority to deliver them in instalments of $40,000, as the work of construction progressed. By the terms of that contract the railway company was entitled to receive the last instalment when the branch road, with the iron and rolling-stock thereon, was completed and paid for by the company. Prior to Smith's appointment as receiver, all the bonds had been delivered except $40,000, which the railway company had not earned, and which, by reason of its insolvency, it had, as is now claimed, become unable to earn.

It appears that in the year 1874 sundry creditors of the railway company, in order to recover the amount of their respective claims, commenced actions against it in the courts of the State, and sued out attachments, which were served upon McCullough, who was summoned in each action as a garnishee. The attaching creditors, in 1876, obtained final judgments for the sale of those bonds, and for the application of the proceeds to satisfy their respective judgments. In some of the cases the garnishee proceedings were brought to a conclusion the day before Smith filed his petition in the foreclosure suit asserting a claim to the bonds as against the creditors of the company. And it may be remarked as to all of those actions that he, although not made a party thereto, was informed of the proceedings by garnishment. But he did not appear in the State courts, although the order appointing him receiver authorized him 'to prosecute and defend all suits, in law or in equity, in which the interests of the property or parties were involved.'

The case made in his pleadings and proofs proceeds mainly upon these grounds: 1. That the mortgage of the railroad company embraced the bonds in question, and that consequently the claims of the creditors of the mortgagor were subordinate to the rights of the mortgagee. 2. That after the railway company had forfeited all right to the remaining bonds, by reason of its failure to complete the branch road within the time prescribed by the contract of subscription, he made an arrangement with the County Court of Sullivan County, whereby, in consideration of the completion by him of the branch road, he, as receiver, became entitled to the $40,000 of bonds remaining in the hands of McCullough. 3. That all the proceedings in the courts of the State under which the bonds were sold were without validity or binding force as against him.

Smith's bill was dismissed, and he thereupon appealed.

Mr. L. T. Hatfield for the appellant.

Mr. John P. Butler and Mr. A. W. Mullins, contra.

MR. JUSTICE HARLAN, after stating the case, delivered the opinion of the court.

title: Smith v. McCullough (104 U.S. 25)


text: Talk:Smith v. McCullough (104 U.S. 25)

title: Talk:Smith v. McCullough (104 U.S. 25)


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Smith v. McCullough (104 U.S. 25)/Opinion of the Court

Waiving any inquiry as to whether such property as that in question could have been conveyed by mortgage in any other way than by estoppel against the mortgagor, we will consider whether the bonds issued by Sullivan County are embraced, or were intended to be embraced, by the mortgage to the Farmers' Loan and Trust Company. That question is within a very narrow compass. It must be solved so as to give effect to the intention of the parties, to be collected as well from the words of the instrument as from the circumstances attending its execution.

The contention of the appellant is that the bonds in question are embraced by the following language, describing the premises and property conveyed: 'All the present and in future to be acquired property of, or in any manner pertaining to, the Linneus Branch of the Burlington and Southwestern Railway Company, and all the right, title, and interest and equity of redemption therein, whether of said company or the stockholders in said branch or leased premises, that is to say, all the branch railroad, including the premises leased as aforesaid of the Lexington, Lake, and Gulf Railroad Company, now made and to be constructed, extending from the main line of said Burlington and Southwestern Railway at or near Unionville, in the county of Putnam, in the State of Missouri, by way of, &c., including the right of way therefor, road-bed, superstructure, iron, ties, chairs, splices, bolts, nuts, spikes, and all the lands and depot grounds, station-houses, depots, viaducts, bridges, timber, and materials and property, purchased or to be purchased, or otherwise acquired, for the construction and maintenance of said branch railroad, and all the engines, tenders, cars, and machinery, and all kinds of rollingstock, now owned or hereafter purchased by said party of the first part for and on account of said branch railroad, all the revenue and income of said Linneus Branch, and all the rights, privileges, and franchises relating thereto, and property acquired by virtue thereof, now in possession or hereafter to be acquired, including machine-shops, tools, implements, and personal property used therein or along the line of said branch railroad, together with all the property of every kind acquired by said party of the first part by virtue of said lease of said Lexington, Lake, and Gulf Railroad,' &c.

It is quite true, as argued by learned counsel for appellant, that the word 'property' is sufficiently broad and comprehensive to include every kind of possession or right. In its literal acceptation it might include such rights, whether legal or equitable, absolute or contingent, as the railway company acquired, under or by virtue of the subscription made by Sullivan County, to the bonds placed in the hands of McCullough. But we are all of opinion that such a construction of the mortgage is not imperatively demanded by the terms employed in describing the property mortgaged, nor would it, we think, be consistent with the intention of the parties. Had the draughtsman of the instrument stopped in his description of the mortgaged property with the general words, 'all the present and in future to be acquired property of, or in any manner pertaining to, the Linneus Branch,. . . and all the right, title, and interest. . . therein,' there would be more force in the position taken by the appellant. But the rules established for the interpretation of written intruments will not justify us in detaching these general words from those of an explanatory character which immediately follow in the same sentence. The subsequent phrase, 'that is to say,' followed by a detailed description of the different kinds of property which are embraced by the general words quoted, indicates that the mortgage was not intended to embrace every conceivable possession and right belonging to the railway company, but only the road and its adjuncts and appurtenances. It specifies different kinds of property, some of which would enter into the construction of the branch road, and some of which would necessarily be employed in its maintenance after completion. The 'rights, privileges, and franchises' mortgaged were, it seems to us, only such as had direct connection with the management and operation of the road after it was constructed and put in use as a public highway. There was no purpose, we think, to pass to the mortgagee any interest whatever in municipal subscriptions which had been previously obtained and accepted by the company for the purpose of raising money to build the road. The bonds which Sullivan County placed in the hands of McCullough for delivery to the company as the work progressed were certainly more valuable, and could have been more readily utilized for purposes of construction, than a like number of bonds issued by the railway company. We ought not to presume, from the general language used, that the railway company intended to cripple itself in the use of salable municipal securities in order to place upon the market its own bonds of less value. Our conclusion is that the mortgage was not intended to deprive the mortgagor of the privilege of using, in any way it desired, bonds or other securities to which it had an absolute or contingent right, and which it had obtained for the purpose of being used in building and equipping the road.

What has been said renders it unnecessary to consider the claim of the appellant based upon the alleged arrangement with the county court, further than to say that his action, in that regard, was outside of his functions as receiver. Notwithstanding the broad terms of the order appointing him, we are satisfied that the court had no purpose to appoint him receiver of any property except that covered by the mortgage. He was given express authority to borrow the sum of $200,000 upon receiver's certificates of indebtedness, to be expended under the directions of the court, or of a special master, in building, completing, and equipping the unfinished portion of the Linneus Branch. But he obtained no authority from the court appointing him to contract for municipal aid in the construction by him, as receiver, of the unfinished portion of the branch road. His action, in that regard, was never approved or ratified by the court from which he derived his authority. He can, therefore, take nothing by his unauthorized contract with the county court.

But there is another view, of some force, upon this branch of the case. The original contract of subscription by the county prescribes, as one of the conditions precedent to the delivery of the bonds, that the work of construction shall have been paid for. The arrangement which the receiver made with the county was, by its terms, subject to the terms and conditions of that contract. It is not, therefore, at all clear that the equities of the case are with the receiver as against the judgment creditors whose debts were for the construction of the road.

Nor, in view of the construction which we have placed upon the mortgage, is it at all essential, on this appeal, to examine into the regularity or validity, as to the receiver, of the proceedings in the State courts. If, as we have ruled, the mortgage did not cover the bonds in question, it is of no interest to the receiver, in this case and upon the issues made by him, to inquire whether the State courts transcended their jurisdiction by subjecting the bonds in the hands of McCullough to the satisfaction of the judgment creditors of the railway company.

In one of the printed briefs before us some argument is made to show that the county of Sullivan has been injuriously affected by the decree below, but inasmuch as the county has not appealed therefrom, we need not consider any suggestion made in its behalf.

Decree affirmed.


text: Talk:Smith v. McCullough (104 U.S. 25)/Opinion of the Court


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Martin v. Cole

ERROR to the Supreme Court of the Territory of Colorado.

The facts are stated in the opinion of the court.

Mr. Henry M. Teller for the plaintiff in error.

No counsel appeared for the defendant in error.

MR. JUSTICE MATTHEWS delivered the opinion of the court.

title: Martin v. Cole


text: Talk:Martin v. Cole

title: Talk:Martin v. Cole


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Martin v. Cole/Opinion of the Court

The defendant in error was plaintiff below, and brought his action of assumpsit against the plaintiff in error, as indorser of a promissory note, in the District Court of the First Judicial District of Colorado Territory, for the county of Arapahoe, the plaintiff below being the immediate indorsee.

A copy of the note sued on, with the indorsements, filed with the declaration, is as follows:-- '$1,414.15. GEORGETOWN, C. T., July 17, 1868.

'On or before eighteen months after date, I promise to pay to     John H. Martin, or order, the sum of fourteen hundred and      fourteen 15/100 dollars, for value received, at George I.      Clark & Co.'s bank at Georgetown, with interest at the rate      of three per cent per month from date until paid.

(Signed) 'JOHN WEBB.'

[Indorsed on back.]

'Pay to the order of Luther A. Cole. Value received.

(Signed) 'JOHN H. MARTIN.'

The declaration, besides the common money counts, contained five special counts.

In the first of them it is averred that the note sued on being unpaid, on Feb. 5, 1870, the plaintiff instituted suit thereon against the maker, at the first term of the court in the county of his residence after the maturity thereof, and at the same term, on April 7, 1870, recovered judgment thereon against him for $2,284, together with costs; that upon said judgment he afterwards, on May 9, 1870, caused to be issued, and placed in the hands of the sheriff, an execution, which, on June 6, 1870, he made return of, showing that on May 9, 1870, he had levied the same on certain mining claims of the defendant, which, on June 1, 1870, he had sold according to law for the sum of $5, besides the costs of the suit, amounting to $45.75; and it is also in the same count further averred that, from the time of the rendition of the judgment against Webb, the maker of the note, he had no other property, either real or personal, subject to execution, out of which the balance of the judgment or any part of it could have been made, and that the keeping of the execution in the hands of the sheriff for the period of ninety days from its date, or the issuing of a pluries or other execution to collect the balance of said judgment, would have been wholly unavailing. There is also the further averment in the same count that the plaintiff used all due diligence to collect said note from the maker.

The second count of the declaration contains the averment that 'at the time the said note became due and payable, and from that time up to the time of the commencement of this suit, and up to the present time, the said John Webb ever has been, and still is, insolvent and unable to pay said note, and that the institution of a suit against the said John Webb at the time the said note became due, or at any time from the maturity of the said note until the present time, would have been, and was, and would be, entirely unavailing,' &c.

These averments appear to have been made with a view to meet the requirements of sect. 7 of an act, then in force, of the Territory of Colorado, relating to bonds, bills, and promissory notes, which is referred to in the brief of one of the counsel as found on page 85 of the Revised Statutes of Colorado of 1868, but which, in disregard of the rules of this court, is not set out either in the record of the case or in the brief of counsel. The volume referred to not being accessible, we find what we assume to be republication of the same provision in the General Laws of the State of Colorado, published by authority in the year 1877. It is as follows:--

'SECT. 7. Every assignor, or his heirs, executors, or     administrators, of every such note, bond, bill, or other      instrument in writing, shall be liable to the action of the      assignee thereof, or his executors or administrators, if such      assignee shall have acted with diligence, by the institution      and prosecution of a suit against the maker of such assigned      note, bond, bill, or other instrument of writing, or against      his heirs, executors, or administrators, for the recovery of      the money or property due thereon, or damages in lieu      thereof: Provided, that if the institution of such suit would      have been unavailing, or if the maker had absconded or left      the State, when such assigned note, bond, bill, or other      instrument in writing became due, such assignee, or his      executors or administrators, may recover against the      assignor, or against his executors or administrators, as if      due diligence by suit had been used.'

The plaintiff in error, in addition to the general issue, filed a special plea to the first and second counts of the declaration, the substance of which is as follows:--

'And the said defendant avers that he made the said indorsement when it was so made, in blank, that is to say, by writing his name across the back of said promissory note, and that he made said indorsement with the express agreement by and between him and the said plaintiff, the said Luther A. Cole, that the said indorsement should never be filled up so as to make this defendant liable in any manner upon the said indorsement, but only to enable the said plaintiff to sue the said note in his own name, if suit thereon should become necessary. And this defendant avers that, relying upon the assurance of the said plaintiff that his indorsement should not be filled up so as to render him liable as indorsee thereon, he signed his name upon the back of said note, which without said assurance he would not have done.'

To this plea there was filed a general demurrer, which was sustained.

Afterwards, on June 6, 1874, the cause was submitted, by counsent of parties, without the intervention of a jury, when the court found the issues in favor of the plaintiff, and rendered judgment against the defendant for $2,478.17 damages and costs.

A bill of exceptions was taken, which sets out all the evidence given and offered in the trial of the case. From that it appears that the defendant below, Martin, being on the stand as a witness in his own behalf, was asked to state under what circumstances the note in suit was transferred by him to the plaintiff, Cole. Objection being interposed, the defendant then stated to the court that he offered to prove in defence a parol promise contemporaneous with the indorsement of the note; that he proposed to prove by the witness that the parol agreement set forth and stated in the defendant's second plea was made by the parties. The court sustained the objection, and the defendant excepted.

Thereupon the defendant offered to prove that at the time the note was transferred by Martin to Cole it was expressly agreed between them that Martin should indorse his name on the note in blank to enable Cole to collect it in his own name, and that Cole agreed then, in consideration of what he had given for the note, that he (Martin) was never to be called upon as indorser or guarantor of its payment in the event he failed to collect it from the maker of the note; to which offer an objection, interposed by the plaintiff, was sustained, and the defendant excepted.

The defendant had previously testified that his name on the back of the note was written by him, but that the words 'Pay to the order of Luther A. Cole, value rec'd,' were not written at the time of the indorsement and delivery of the note, nor by him at any time.

The plaintiff below read in evidence the depositions of William L. Campbell, Levi H. Shepperd, and John T. Harris, tending to prove the insolvency of Webb, the maker of the note, at and after its maturity. Objections were made to their depositions, and overruled; to which an exception was taken. The objections, however, do not appear to be of sufficient importance to require further notice.

The plaintiff also read in evidence the transcript of the record, judgment, and proceedings in the action of Luther A. Cole against John Webb, the maker of the note, together with the execution, levy, and return, being the same referred to in the first count of the declaration. From that it appears that the execution was issued on May 9, 1870, returnable in ninety days from date, and actually returned on June 7, 1870, showing the levy and sale referred to in the pleadings.

There was other testimony, also, tending to prove the insolvency of Webb, the maker of the note, at and after its maturity, and at the time of the bringing of this action.

An appeal was taken from the judgment of the District Court of the First Judicial District of the County of Arapahoe to the Supreme Court of Colorado Territory, in which, at the February Term, 1875, errors were assigned, and the judgment was affirmed in that court on March 28, 1876.

To reverse that judgment is the object of the present writ of error.

The agreement set out and relied on in the plea was that 'the said indorsement should never be filled up so as to make this defendant liable in any manner upon the said indorsement, but only to enable the said plaintiff to sue the said note in his own name, if suit thereon should become necessary.' And the defendant averred that 'he, relying upon the assurance of the said plaintiff that his indorsement would not be filled up so as to render him liable as indorser thereon, signed his name upon the back of said note, which without said assurance he would not have done.' As the indorsement in blank, admitted by the defendant to have been made by him, without being filled up by the plaintiff at all, rendered him liable for the payment of the note as an indorser, the breach by the plaintiff of the alleged agreement was inconsequential, and could not, in law, result in any actionable injury; for filing up the blank indorsement in the manner in which it was done neither added to nor subtracted from the liability which the defendant assumed by merely writing his name on the back of the note.

The defendant below, however, further offered at the trial to prove that at the time the note was transferred by Martin to Cole it was expressly agreed between them that Martin should indorse his name on the note in blank, to enable Cole to collect it in his own name, and that Cole agreed them, in consideration of what he had given for the note, that he (Martin) was never to be called upon as indorser or guarantor of its payment in the event he failed to collect it from the maker of the note. No question was made at the time, nor has been raised since, as to the admissibility of such proof under a plea of the general issue; and waiving any objection on that account, the rejection by the court below of this offer fairly raises the issue intended to have been made by the special plea, whether it is competent, in an action against an indorser by his immediate indorsee, upon an indorsement made in blank of a negotiable promissory note, to prove, as a defence, that as part of the transaction it was agreed between the parties, but not in writing, that it should merely have the legal effect of an indorsement expressed to be without recourse.

It has never contended that such a defence, based on dealings between prior parties, could be maintained to defeat the title of a bona fide holder for value of negotiable paper, acquired before maturity, in the usual course of business, and without notice; for the protection of such a title is of the essence of the policy of the law merchant, and inheres in the very definition of negotiability. Hence, in that case, a collateral but contemporaneous written agreement between two prior parties to a bill or note would not affect its validity in the hands of the holder, more than if the agreement were unwritten. Whereas, between the immediate parties, if the agreement relied on were in writing, its terms would fix and determine their rights and obligations, as was decided by this court in Davis v. Brown, 94 U.S. 427. The question is between them alone; and is, whether the same effect will be given to such an agreement, not reduced to writing.

The ground of decision must be found in some other principle or policy of the law than that which protects the title of a remote innocent holder of negotiable paper.

Accordingly, Mr. Justice Washington, in Susquehanna Bridge & Bank Co. v. Evans (4 Wash. 480), after admitting proof of such an agreement, in an action by the holder of a promissory note against his immediate indorser, said, in his charge to the jury:--

'The reasons which forbid the admission of parol evidence to alter or explain written agreements and other instruments do not apply to those contracts implied by operation of law, such as that which the law implies in respect to the indorser of a note of hand. The evidence of the agreement made between the plaintiffs and defendants, whereby the latter were to be discharged on the happening of a particular event, was, therefore, properly admitted.'

It is upon this distinction between contracts express and implied that those judicial tribunals have proceeded, in which such proof is held to be admissible. It is declared, for example, by the Supreme Court of Pennsylvania, in Ross v. Espy (66 Pa. St. 481, 483), that 'the contract of indorsement is one implied by the law from the blank indorsement, and can be qualified by express proof of a different agreement between the parties, and is not subject to the rule which excludes the proof to later or vary the terms of an express agreement.'

So in an early case in New Jersey, Johnson v. Martinus (9 N. J. L. 144), it was held by the Supreme Court of that State that parol evidence was competent to overcome the implied contract which results from a blank indorsement, on the ground that such indorsement is an inchoate or imperfect contract and not a written instrument, nor entitled to its effect, protection, or immunity.

This case, however, was expressly overruled by the same court in Chaddock v. Vanness (35 id. 517), in which it is plainly indicated that the distinction attempted to be made, in some of the cases, between indorsements in full and those which are in blank, is untenable.

The contract created by the indorsement and delivery of a negotiable note, even between the immediate parties to it, is a commercial contract, and is not in any proper sense a contract implied by the law, much less an inchoate or imperfect contract. It is an express contract, and is in writing, some of the terms of which, according to the custom of merchants and for the convenience of commerce, are usually omitted, but not the less on that account perfectly understood. All its terms are certain, fixed, and definite, and, when necessary, supplied by that common knowledge, based on universal custom, which has made it both safe and convenient to rest the rights and obligations of parties to such instruments upon an abbreviation. So that the mere name of the indorser, signed upon the back of a negotiable instrument, conveys and expresses his meaning and intention as fully and completely as if he had written out the customary obligation of his contract in full.

It is spoken of by Wharton (Law of Evidence, &c., sect. 1059) as a contract at short-hand. The same view is taken in Daniels on Negotiable Instruments, sect. 718, where the author states, as a resulting conclusion that embodies the true principle applicable to the subject, that, 'in an action by immediate indorsee against an indorser, no evidence is admissible that would not be admissible in a suit by a party in privity with the drawer, against him.' If the commercial contract of indorsement is treated as a contract in writing, this conclusion is undoubtedly correct. If it is not, we have the anomaly of applying one rule between maker and payee, and a different one between payee becoming indorser and his immediate indorsee, without any difference to justify it, in the relation of the parties to each other in the two cases.

The rule is tersely stated in Benjamin's Chalmer's Digest of the Law of Bills of Exchange, &c., art. 56, p. 63.

'The contracts on a bill, as interpreted by the law merchant, are contracts in writing. Extrinsic evidence is not admissible to contradict or vary their effect.' Citing Abrey v. crux, 5 Law Rep. C. P. 37.

The rule as declared by Mr. Jstice Washington in the case cited was expressly rejected by this court in Bank of the United States v. Dunn (6 Pet. 51), one distinct ground of its opinion being that parol evidence is not admissible to vary a written agreement; citing the language of the court in Renner v. Bank of Columbia, 9 Wheat. 581, 587: 'For there is no rule of law better settled or more salutary in its application to contracts, than that which precludes the admission of parol evidence to contradict or substantially vary the legal import of a written agreement.'

The authority of this case on this point has never been questioned in this court, the explanation and qualification in Davis v. Brown (supra) having reference only to the rule as to the competency of an indorser as a witness to impeach the validity of a negotiable instrument to which he is a party. In the case last referred to, the agreement relied on to qualify the instrument was admitted because it was in writing and part of the transaction.

The case of Bank of the United States v. Dunn (supra) is cited as an authority upon the point in Phillips v. Preston (5 How. 278, 291), 'because, in an action on a note, parol testimony is not competent to vary its written terms, and probably not to vary a blank indorsement by the payee from what the law imports.'

It is also referred to in terms and followed in Brown v. Wiley, 20 id. 442. In delivering the opinion of the court in that case Mr. Justice Grier used this language:--

'When the operation of a contract is clearly settled by general principles of law, it is taken to be the true sense of the contracting parties. This is not only a positive rule of the common law, but it is a general principle in the construction of contracts. Some precedents to the contrary may be found in some of our States, originating in hard cases; but they are generally overruled by the same tribunals from which they emanated, on experience of the evil consequences flowing from a relaxation of the rule. There is no ambiguity arising in this case which needs explanation. By the face of the bill the owner of it had a right to demand acceptance immediately, and to protest it for non-acceptance. The proof of a parol contract, that it should not be presentable till a distant, uncertain, or undefined period, tended to alter and vary, in a very material degree, its operation and effect. See Thompson v. Ketchum, 8 Johns. 192.'

The action in this case, it is true, was between the payee and drawer, upon a bill of exchange; but the obligation on which it was founded, that the drawer would pay in the event of non-acceptance by the drawee, notice of dishonor and protest, is one not actually expressed in terms in the bill itself, but imported by construction of law, as constituting the operation and effect of the contract.

In Specht v. Howard (16 Wall. 564), Mr. Justice Swayne, delivering the opinion of the court, quotes from Parsons on Notes and Bills, 501, that 'It is a firmly settled principle that parol evidence of an oral agreement alleged to have been made at the time of the drawing, making, or indorsing of a bill or note, cannot be permitted to vary, qualify, or contradict, to add to or subtract from, the absolute terms of the written contract.'

The same quotation forms part of the opinion in Forsythe v. Kimball (91 U.S. 291), with the addition that, in the absence of fraud, accident, or mistake, the rule is the same in equity as at law.

The same principle, upon the authority of these cases, was affirmed by this court in Brown v. Spofford (95 id. 474), and is assumed to be the law in Cox v. National Bank (100 id. 704), and Brent's Ex'rs v. Bank of the Metropolis, 1 Pet. 89.

In view of this line of decisions, the question, as it arises in this case, cannot now be considered an open one in this court.

It coincides with the rule adopted and applied in most of the States, but the cases are too numerous for citation. They will be found collected, however, in Bigelow, Bills and Notes, 168; Byles, Bills (6th Am. ed.), Sharswood's note, 157; 1 Daniel, Negotiable Instruments, sects. 80, 717 et seq.; 2 Wharton, Evidence, sect. 1058 et seq.; Benjamin's Chalmer's Digest of the Law of Bills of Exchange, art. 56, p. 63.

Of course there are many distinctions which, upon the circumstances of cases, determine the applicability of the rule, and classes of cases which form apparent exceptions to it. It is not necessary to refer to them here, further than to say that the limitations of the rule are perfectly consistent with it, and its application in this, as in other proper cases, will not be considered as encroaching upon them.

The opinion of the Supreme Court of Colorado Territory, affirming the judgment of the District Court, expressly declines to pass upon the question whether the evidence showed that the property of Webb, the maker of the note, was exhausted or not, because no exception was taken to the finding and judgment of the court. Our attention is called by counsel to a stipulation, filed in the Supreme Court of Colorado, by which the omission to insert the exception agreed to have been taken at the time, in the bill of exceptions, was intended to be cured; which, it seems, could not have come to the knowledge of that court. But the consideration of the exception does not avail the plaintiff in error. The record shows abundant evidence to sustain the finding complained of. Even if the point made were well taken, that where, under the statute of Colorado requiring a prosecution of the maker to the end of an execution, it is necessary that the execution should be kept in force for the full period given by law for its return, in order to establish due diligence, nevertheless, in the present record, there is shown, in our opinion, evidence to justify a finding in favor of the plaintiff below, even although no execution had been issued against the maker of the note. It clearly appears that it would have been unavailing on account of his insolvency. In Wills v. Claflin (92 U.S. 135), under a statute of Illinois, containing a provision identical with that in the Colorado statute, from which, indeed, the latter is said to have been copied, it was held that if the maker of the note was insolvent, so that a suit against him would be unavailing, the failure to institute it would furnish no defence to the indorser. That, indeed, is the plain language of the law itself.

We find no error in the record.

Judgment affirmed.

title: Martin v. Cole/Opinion of the Court


text: Talk:Martin v. Cole/Opinion of the Court


text:
United States v. Jackson

 * United States v. Jackson (104 U.S. 41), (  ?? L.Ed.    ??? ), (  ?? S.Ct.  ??? )
 * United States v. Jackson (280 U.S. 183), ( ?? L.Ed.    ??? ), (  ?? S.Ct.  ??? )
 * United States v. Jackson (302 U.S. 628), ( ?? L.Ed.    ??? ), (  ?? S.Ct.  ??? )
 * United States v. Jackson (??? U.S. ???), ( ?? L.Ed.    ??? ), (  ?? S.Ct.  ??? )

 * listing incomplete

 * See Similar:
 * Jackson v. United States (Disambiguation)

title: United States v. Jackson


text: Talk:United States v. Jackson (104 U.S. 41)


text:
United States v. Jackson (104 U.S. 41)/Opinion of the Court

The action in this case was brought by the United States against Jackson and the other defendants, on a bond in which he was principal, and they were his sureties. Judgment was rendered for the defendants on a demurrer to the declaration, which sets out the substance of the obligatory part of the bond, namely, the acknowledgment of an indebtedness to the United States in the sum of $50,000; to which it adds, there was annexed the following condition: 'Whereas the President of the United States hath, pursuant to law, appointed the said George W. Jackson collector of taxes, under an act entitled 'An Act to provide internal revenue to support the government, to pay interest on the public debt, and for other purposes:'

'Now, therefore, if the said George W. Jackson shall truly and faithfully execute and discharge all the duties of the said office, according to law, and shall justly and faithfully account for and pay over to the United States, in compliance with the regulations of the Secretary of the Treasury, all public moneys which may come into his hands or possession, and if each and every deputy collector appointed by said collector shall truly and faithfully execute and discharge all the duties of such deputy collector according to law, then the above obligation to be void and of no effect; otherwise it shall remain and abide in full force and virtue.'

The Circuit Court was of opinion that the bond was absolutely void, because it did not state for what particular collection district Jackson was collector of taxes, and for the proper discharge of the duties of which the defendants undertook to be responsible.

It is a matter of which this court will take judicial notice, that, by law, the country is divided into collection districts for internal revenue purposes, and in some States there are several of these districts, with defined geographical boundaries. A collector is appointed for each district, and his duties relate to the collection of internal revenue within it. Because, therefore, the bond did not bind the parties on its face for Jackson's performance of the duties of any particular district, the Circuit Court was of opinion that it was void.

But it does bind the signers for the faithful performance of the duties of collector of taxes by George W. Jackson, according to law, and it avers that he had been duly appointed collector of taxes under the internal revenue act. The duties for the performance of which these parties bound themselves were well defined. The person who was to perform them, and for whose default they consented to become liable, was named in the obligation, and the only matter of importance omitted was the place or district within which those duties were to be performed. He was collector for but one district. It is fairly to be presumed that the obligors knew for what district he had been appointed, since they say he had already been appointed by the President when they signed the bond.

This appointment was a matter of public record. The evidence of it was the commission of Jackson signed by the President and duly sealed. The district, therefore, for which he was appointed was known to the obligors, and was a matter of public record, and we do not see how such a bond can be held to be void. In any issue that could arise as to the district for which Jackson was appointed, and for the duties of which they became liable, it could be made certain by the production of his commission or the record of it in the proper department.

It would not depend on any parol proof. The production of the bond and commission makes complete the obligation of the defendants. That is certain in law which can be rendered certain.

If, therefore, there had been an averment in the declaration of the district for which Jackson was appointed, we do not see why the declaration and the bond, taken together, would not have been good, when it was further averred that, in regard to the duties of that district, he had been guilty of a default covered by the terms of the bond. If to such a declaration non est factum or nil debet had been pleaded, the production of the bond and commission would have been a sufficient answer, because the commission would have shown by matter of record that Jackson bad been appointed internal revenue collector for that district, and the undertaking of the defendants in his behalf would have been held to apply to his duties under that commission.

But there is no averment in the declaration anywhere that he was or had ever been appointed collector of any particular district. There is, therefore, no foundation for proof of that fact by the production of the commission or by any other evidence. On a judgment by default no such commission could be introduced, nor proof of non-performance in any district. No issue could be taken on the declaration as to his appointment or his obligation to perform the duties of any district, because there is no averment of any such obligation. The declaration affords no opportunity to render more specific the obligation of defendants by introducing the commission. It does not aver that this obligation for Jackson as revenue collector related to the duties of any particular district, so as to enable the court to apply the covenant of the defendants to those duties.

We are of opinion, therefore, that, regarding the demurrer (as we must) as referring to the declaration and to the bond set out on oyer, it was well decided that they were insufficient to sustain the action.

Judgment affirmed.


text: Talk:United States v. Jackson (104 U.S. 41)/Opinion of the Court


text:
King v. Worthington

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Horace F. Waite for the appellants.

Mr. Henry G. Miller, contra.

MR. JUSTICE WOODS delivered the opinion of the court.

title: King v. Worthington


text: Talk:King v. Worthington

title: Talk:King v. Worthington


text:
King v. Worthington/Opinion of the Court

This was a suit in equity, brought originally in the Superior Court of Cook County, in the State of Illinois, on July 22, 1870, by George W. Worthington and John T. Avery, citizens of the State of Ohio, against Emily A. King, widow of John B. King, deceased, and Vere Bates King, his only child, a minor, and the said Emily A. King as guardian of said minor, the said defendants being citizens of the State of Illinois. During the progress of the case George W. Worthington died, and his legal representatives, who were also citizens of Ohio, were made parties complainant in his stead. The purpose of the bill was to remove a could from the title to certain real estate in that county, of which the original complainants alleged themselves to be the owners in fee, by a decree setting aside and avoiding a deed therefor, made to the said John B. King in his lifetime by one Heman Scott.

The bill averred that on and prior to June 1, 1843, Scott was the owner in fee of the lands in question, to wit, the west half of the southwest quarter of section 20, township 38, range 13, and that he conveyed them by deed of that date to one Isaac Bishop.

The bill then tracted the title by successive conveyances from Bishop through Porter L. Hinckley, John R. Bartholomew, Corydon Weeks, and others, to the original complainants, and averred that, long before the commencement of the suit, they, by means of said conveyances, became and still were seised in fee-the said Avery of the north, and the said Worthington of the south half-of the lands in question.

The bill further averred that on June 21, 1861, Scott executed and delivered to the said John B. King a quitclaim deed purporting to convey to him all the right and title which Scott then had in any lands in Cook County, Illinois, which by its terms included the lands above mentioned.

It was further averred that on Oct. 2, 1864, said John B. King died, leaving the defendant Emily A. King, his widow, and the defendant Vere Bates King, who was a minor, his only child, of whom the said Emily had become the duly appointed guardan, and that the deed executed to John B. King by Scott had created a cloud upon complainant's title, in consequence of which they were unable to sell or dispose of said land.

The answer of Emily A. King, in her own right and as guardian, consisted of a general denial of the allegations of the bill, excepting the allegation of the conveyance from Scott to John B. King.

Among others, the depositions of Scott, Bartholomew, Hinckley, and Weeks were taken. These witnesses severally testified to their ownership of the property in dispute, and to the execution of the deeds of conveyance charged in the bill to have been executed by them respectively, and that all of said deeds contained full covenants of warranty.

Upon final hearing a decree was made by the Superior Court of Cook County in favor of the complainants. The defendants took the case by appeal to the Supreme Court of the State. The decree was reversed, because the testimony of Weeks, Hinckley, and Bartholomew had been received by the Superior Court against the objection of defendants.

This decision was based on a construction of the statute of Illinois, which declares: 'No person shall be disqualified as a witness in any civil action, suit, or proceeding, except as hereinafter stated, by reason of his or her interest is as follows: thereof, as a party or otherwise.' The exception is as follows: 'No party to any civil action, suit, or proceeding, or person directly interested in the event thereof, shall be allowed to testify therein of his own motion or on his own behalf, by virtue of the foregoing section, when any adverse party sues or defends as. . . heir. . . of any deceased person, or as guardian. . . of any such heir.'

The Supreme Court held that by reason of the fact that Scott, Weeks, Hinckley, and Bartholomew had each conveyed the lands in question with covenants of warranty, they were interested in the event of the suit, and as it was defended both by the heir and his guardian, the persons above named were incompetent to testify in the case.

The opinion of the Supreme Court was filed, and its decree remanding the cause was made, Oct. 11, 1875.

Sects. 84 and 85, c. 110, of the Revised Statutes of Illinois provide, that 'when a cause or proceeding is remanded by the Suprme Court or Appellate Court, upon a transcript of the order of the court remanding the same being filed in the court from which the cause or proceeding was removed, or in which the cause originated, as the case may require, and not less than ten days' notice thereof being given to the adverse party or his attorney, the cause or proceeding shall be reinstated therein.

'If neither party shall file such transcript within two years from the time of making the final order of the Supreme Court or Appellate Court, as the case may be, reversing any judgment or proceeding, the cause shall be considered as abandoned, and no further action shall be had therein.'

In this case the mandate of the Supreme Court was filed in the Superior Court, Nov. 11, 1875, and the cause was re-docketed in the latter court, Nov. 23, 1875. The statute of Illinois (Hurd, p. 331, sect. 54) prescribes that the terms of the Superior Court of Cook County shall begin on the first Monday of every month.

On Dec. 4, 1875, the last day of the November Term, a petition and bond for the removal of the cause to the Circuit Court of the United States for the Northern District of Illinois were filed in the Superior Court by the complainants. The petition alleged that the then current term of the court was the first term at which said cause could have been tried since the date of docketing said cause in the Superior Court, as aforesaid, and since the passage of the act of Congress under which the petition was filed.

On December 14, against the objection of defendants, an order was made for the removal of the cause. The record was filed in the United States Circuit Court, Dec. 20, 1875.

Upon the final hearing of the case in the Circuit Court, among others, the depositions of Scott, Weeks, Hinckley, and Bartholomew, who had been declared by the Supreme Court incompetent witnesses under the State law above recited, were admitted in evidence, and the Circuit Court made a final decree in favor of complainants, in accordance with the prayer of their bill.

The act of Congress regulating the competency of witnesses, by virtue of which the Circuit Court admitted the depositions of the persons above named, is as follows:--

'In the courts of the United States no witness shall be     excluded in any action on account of color, or in any civil      action because he is a party to or interested in the issue      tried: Provided, that in actions by or against executors,      administrators, or guardians, in which judgment may be      rendered for or against them, neither party shall be allowed      to testify against the other, as to any transaction with, or      statement by, the testator, intestate, or ward, unless called      to testify thereto by the opposite party, or required to      testify thereto by the court. In all other respects the laws     of the State in which the court is held shall be the rules of      decision as to the competency of witnesses in the courts of      the United States in trials at common law and in equity and      admiralty.' Rev. Stat., sect. 858.

The defendants in the Circuit Court have appealed from the decree of that court, and as appellants in this court have assigned the following errors:--

First, That the cause was not removable under the act of Congress. The petition was not filed at the term at which said cause could be first tried, and before the trial thereof, and the petition is insufficient for its removal.

Second, That the court erred in deciding that Heman Scott, Corydon Weeks, John R. Bartholomew, and Robert Hinckley were competent to testify in this case; also, in deciding that the decision of the Supreme Court of the State of Illinois holding them incompetent was not res judicata; also, in admitting improper evidence on the hearing.

The act of March 3, 1875, c. 137 (18 Stat., pt. 3, p. 470), under which the appellees claim that the cause was removed to the Federal court, declares that the petition for removal must be filed 'before or at the term at which said cause could be first tried and before the trial thereof.'

At the date of the passage of the act this suit was pending in the Supreme Court of Illinois. The decree was subsequently reversed and the cause remanded. This court has construed the clause of the act of 1875, just quoted, to allow the removal of a cause pending at the date of the passage of the act, if the application therefor was made before trial and at the term of the court, after the passage of the act, at which the cause could be first tried (Removal Cases, 100 U.S. 457); in other words, that the fact that the first term of the court in which the cause could have been first tried had already passed when the act went into effect, was not of itself an obstacle to the removal.

In the case just cited, it was further held that the fact that a final decree upon the default of defendants had been entered in the cause before the passage of the act of 1875, did not prevent a removal of the cause under the act, after such decree had been set aside and a rehearing granted.

In this case the parties complainant and defendant were citizens of different States. The petition and bond for removal were in due form, and the bond was sufficient.

The only ground, therefore, on which it can be urged that the attempt to remove the cause to the Circuit Court was unwarranted by law, and, therefore, ineffectual, is that the petition therefor was not filed before or at the term, after the passage of the act of 1875, at which the cause could be first tried.

The appellee asserts that the decision of the Supreme Court of Illinois, reversing the decree of the Superior Court, having been made on October 11, while the October Term of the Superior Court was current, the cause might have been redocketed and tried during that term of the Superior Court, and that the re-docketing of the cause at the following November Term, and the filing of the petition for its removal during that term, came too late.

The answer to this position is obvious. The cause could not have been tried in the Superior Court until the transcript of the order of the Supreme Court remanding it had been filed therein.

Under the statute of Illinois both parties were allowed two years within which to file the transcript. Either party might file it, and no laches or default could be charged against either, if it were filed within two years. It follows that when the appellees delayed the filing of the transcript from October 11 until November 23 they were exercising a privilege which the law gave them, and lost none of their rights thereby.

Therefore, where the transcript of the Supreme Court was filed within two years after the order remanding the case had been made, a petition for removal filed at the same term must be held to have been filed at the term at which the cause could have been first tried, and to have been filed in due season.

If the decision of the State Supreme Court had finally disposed of the case, there could, of course, have been no removal of the cause to the Federal court after such decision.

But according to the practice and jurisprudence of the State of Illinois, where the decision of the Supreme Court, reversing and remanding a cause in equity, does not involve the merits, the case, upon the filing of the transcript in the court below, stands for rehearing in that court. Chickering v. Failes, 26 Ill. 508; s. c. 29 id. 294; Wadhams v. Gay, 73 id. 415; s. c. 83 id. 250; Pettilon v. Noble, 7 Biss. 450.

This cause was reversed by the State Supreme Court solely on the ground of the error of the Superior Court in admitting incompetent evidence. When, therefore, the cause was remanded, it stood for rehearing as soon as it was re-docketed in the Superior Court.

We are of opinion, therefore, that the case was properly removed from the Superior Court of Cook County to the Circuit Court of the United States.

The next ground of error assigned is that the Circuit Court admitted in evidence the depositions of Scott, Weeks, Bartholomew, and Hinckley.

It is perfectly clear that, under the act of Congress (Rev. Stat., sect. 858), the persons named were competent witnesses in that court. This point has been expressly ruled by this court in the case of Potter v. National Bank (102 U.S. 163), brought up on error from the Northern District of Illinois. It was also held, in the same case, that, where there was a conflict between the act of Congress and the law of the State in regard to the competency of witnesses, the United States court was bound to follow the act of Congress. The question is, therefore, reduced to this: Does the fact, that while the case was pending in the State court these witnesses were held by that court to be incompetent under the State law, preclude them from testifying in the case after its removal to the United States court? We think this question must be answered in the negative.

The Federal court was bound to administer the law of evidence as prescribed by act of Congress, unless what had transpired in the State court presented an insuperable obstacle to that course. This the appellants claim was the fact. They say that the transfer of a case from the State to a Federal court does not vacate what has been done in the State court previously to removal; that what has been decided in the State court is res judicata and cannot be re-examined. In support of this position Duncan v. Gegan (101 U.S. 810) and other cases are cited. The law as settled by this court is correctly stated by appellants.

But the rulings of the Circuit Court in the progress of the cause after its removal did not reverse or vacate anything which had previously been adjudicated by the State court. The decision of the latter court was that, under the State law, certain witnesses were incompetent in the State court. The Federal court decided that, under the laws of the United States, the same witnesses were competent when offered in a United States court. Here is no conflict of opinion, and no unsettling of any matter which had been adjudged by the State court. The Federal court was bound to deal with the case according to the rules of practice and evidence prescribed by the acts of Congress. If the case is properly removed, the party removing it is entitled to any advantage which the practice and jurisprudence of the Federal court give him.

In this instance the court below followed the law of evidence as prescribed by Congress.

In doing so it did not reverse any ruling of the State court, and, we think, committed no error.

No other evidence admitted by the Circuit Court is complained of by the appellants as incompetent.

The counsel of both parties have discussed in their briefs the question whether the evidence set out in the record is sufficient to support the decree of the Circuit Court. No error has been assigned on the ground that the testimony was insufficient. It is, therefore, unnecessary to discuss this point. We may remark, however, that in our opinion the evidence amply justifies the decree.

There is no error in the record.

Decree affirmed.