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Rees v. City of Watertown/Opinion of the Court

This case is free from the objections usually made to a recovery upon municipal bonds. It is beyond doubt that the bonds were issued by the authority of an act of the legislature of the State of Wisconsin, and in the manner prescribed by the statute. It is not denied that the railroad, in aid of the construction of which they were issued, has been built, and was put in operation.

Upon a class of the defences interposed in the answer and in the argument it is not necessary to spend much time. The theories upon which they proceed are vicious. They are based upon the idea that a refusal to pay an honest debt is justifiable because it would distress the debtor to pay it. A voluntary refusal to pay an honest debt is a high offence in a commercial community and is just cause of war between nations. So far as the defence rests upon these principles we find no difficulty in overruling it.

There is, however, a grave question of the power of the court to grant the relief asked for.

We are of the opinion that this court has not the power to direct a tax to be levied for the payment of these judgments. This power to impose burdens and raise money is the highest attribute of sovereignty, and is exercised, first, to raise money for public purposes only; and, second, by the power of legislative authority only. It is a power that has not been extended to the judiciary. Especially is it beyond the power of the Federal judiciary to assume the place of a State in the exercise of this authority at once so delicate and so important. The question is not entirely new in this court.

In the case of Supervisors v. Rogers, an order was made by this court appointing the marshal a commissioner, with power to levy a tax upon the taxable property of the county, to pay the principal and interest of certain bonds issued by the county, the payment of which had been refused. That case was like the present, except that it occurred in the State of Iowa, and the proceeding was taken by the express authority of a statute of that State. The court say: 'The next question is as to the appointment of the marshal as a commissioner to levy the tax in satisfaction of the judgment. This depends upon a provision of the code of the State of Iowa. This proceeding is found in a chapter regulating proceedings in the writ of mandamus, and the power is given to the court to appoint a person to discharge the duty enjoined by the peremptory writ which the defendant had refused to perform, and for which refusal he was liable to an attachment, and is express and unqualified. The duty of levying the tax upon the taxable property of the county to pay the principal and interest of these bonds was specially enjoined upon the board of supervisors by the act of the legislature that authorized their issue, and the appointment of the marshal as a commissioner in pursuance of the above section is to provide for the performance of this duty where the board has disobeyed or evaded the law of the State and the peremptory mandate of the court.'

The State of Wisconsin, of which the city of Watertown is a municipal corporation, has passed no such act. The case of Supervisors v. Rogers is, therefore, of no authority in the case before us. The appropriate remedy of the plaintiff was and is a writ of mandamus. This may be repeated as often as the occasion requires. It is a judicial writ, a part of a recognized course of legal proceedings. In the present case it has been thus far unavailing, and the prospect of its future success is, perhaps, not flattering. However this may be, we are aware of no authority in this court to appoint its own officer to execute the duty thus neglected by the city in a case like the present.

In Welch v. St. Genevieve, at a Circuit Court for the district of Missouri, a tax was ordered to be levied by the marshal under similar circumstances. We are not able to recognize the authority of the case. No counsel appeared for the city (Mr. Reynolds as amicus curiae only); no authorities are cited which sustain the position taken by the court; the power of the court to make the order is disposed of in a single paragraph, and the execution of the order suspended for three months to give the corporation an opportunity to select officers and itself to levy and collect the tax, with the reservation of a longer suspension if it should appear advisable. The judge, in delivering the opinion of the court, states that the case is without precedent, and cites in support of its decision no other cases than that of Riggs v. Johnson County, and Lansing v. Treasurer. The first case cited does not touch the present point. The question in that case was whether a mandamus having been issued by a United States court in the regular course of proceedings, its operation could be stayed by an injunction from the State court, and it was held that it could not be. It is probable that the case of Supervisors v. Rogers was the one intended to be cited. This case has already been considered.

The case of Lansing v. Treasurer (also cited), arose within the State of Iowa. It fell within the case of Supervisors v. Rogers, and was rightly decided because authorized by the express statute of the State of Iowa. It offered no precedent for the decision of a case arising in a State where such a statute does not exist.

These are the only authorities upon the power of this court to direct the levy of a tax under the circumstances existing in this case to which our attention has been called.

The plaintiff insists that the court may accomplish the same result under a different name, that it has jurisdiction of the persons and of the property, and may subject the property of the citizens to the payment of the plaintiff's debt without the intervention of State taxing officers, and without regard to tax laws. His theory is that the court should make a decree subjecting the individual property of the citizens of Watertown to the payment of the plaintiff's judgment; direct the marshal to make a list thereof from the assessment rolls or from such other sources of information as he may obtain; report the same to the court, where any objections should be heard; that the amount of the debt should be apportioned upon the several pieces of property owned by individual citizens; that the marshal should be directed to collect such apportioned amount from such persons, or in default thereof to sell the property.

As a part of this theory, the plaintiff argues that the court has authority to direct the amount of the judgment to be wholly made from the property belonging to any inhabitant of the city, leaving the citizens to settle the equities between themselves.

This theory has many difficulties to encounter. In seeking to obtain for the plaintiff his just rights we must be careful not to invade the rights of others. If an inhabitant of the city of Watertown should own a block of buildings of the value of $20,000, upon no principle of law could the whole of the plaintiff's debt be collected from that property. Upon the assumption that individual property is liable for the payment of the corporate debts of the municipality, it is only so liable for its proportionate amount. The inhabitants are not joint and several debtors with the corporation, nor does their property stand in that relation to the corporation or to the creditor. This is not the theory of law, even in regard to taxation. The block of buildings we have supposed is liable to taxation only upon its value in proportion to the value of the entire property, to be ascertained by assessment, and when the proportion is ascertained and paid, it is no longer or further liable. It is discharged. The residue of the tax is to be obtained from other sources. There may be repeated taxes and assessments to make up delinquencies, but the principle and the general rule of law are as we have stated.

In relation to the corporation before us, this objection to the liability of individual property for the payment of a corporate debt is presented in a specific form. It is of a statutory character.

The remedies for the collection of a debt are essential parts of the contract of indebtedness, and those in existence at the time it is incurred must be substantially preserved to the creditor. Thus a statute prohibiting the exercise of its taxing power by the city to raise money for the payment of these bonds would be void. But it is otherwise of statutes which are in existence at the time the debt is contracted. Of these the creditor must take notice, and if all the remedies are preserved to him which were in existence when his debt was contracted he has no cause of complaint.

By section nine of the defendant's charter it is enacted as follows: 'Nor shall any real or personal property of any inhabitant of said city, or any individual or corporation, be levied upon or sold by virtue of any execution issued to satisfy or collect any debt, obligation, or contract of said city.'

If the power of taxation is conceded not to be applicable, and the power of the court is invoked to collect the money as upon an execution to satisfy a contract or obligation of the city, this section is directly applicable and forbids the proceeding. The process or order asked for is in the nature of an execution; the property proposed to be sold is that of an inhabitant of the city; the purpose to which it is to be applied is the satisfaction of a debt of the city. The proposed remedy is in direct violation of a statute in existence when the debt was incurred, and made known to the creditor with the same solemnity as the statute which gave power to contract the debt. All laws in existence when the contract is made are necessarily referred to in it and form a part of the measure of the obligation of the one party, and of the right acquired by the other.

But independently of this statute, upon the general principles of law and of equity jurisprudence, we are of opinion that we cannot grant the relief asked for. The plaintiff invokes the aid of the principle that all legal remedies having failed, the court of chancery must give him a remedy; that there is a wrong which cannot be righted elsewhere, and hence the right must be sustained in chancery. The difficulty arises from too broad an application of a general principle. The great advantage possessed by the court of chancery is not so much in its enlarged jurisdiction as in the extent and adaptability of its remedial powers. Generally its jurisdiction is as well defined and limited as is that of a court of law. It cannot exercise jurisdiction when there is an adequate and complete remedy at law. It cannot assume control over that large class of obligations called imperfect obligations, resting upon conscience and moral duty only, unconnected with legal obligations. Judge Story says, 'There are cases of fraud, of accident, and of trust which neither courts of law nor of equity presume to relieve or to mitigate,' of which he cites many instances. Lord Talbot says, 'There are cases, indeed, in which a court of equity gives remedy where the law gives none, but where a particular remedy is given by law, and that remedy bounded and circumscribed by particular rules, it would be very improper for this court to take it up where the law leaves it, and extend it further than the law allows.'

Generally its jurisdiction depends upon legal obligations, and its decrees can only enforce remedies to the extent and in the mode by law established. With the subjects of fraud, trust, or accident, when properly before it, it can deal more completely than can a court of law. These subjects, however, may arise in courts of law, and there be well disposed of.

A court of equity cannot, by avowing that there is a right but no remedy known to the law, create a remedy in violation of law, or even without the authority of law. It acts upon established principles not only, but through established channels. Thus, assume that the plaintiff is entitled to the payment of his judgment, and that the defendant neglects its duty in refusing to raise the amount by taxation, it does not follow that this court may order the amount to be made from the private estate of one of its citizens. This summary proceeding would involve a violation of the rights of the latter. He has never been heard in court. He has had no opportunity to establish a defence to the debt itself, or if the judgment is valid, to show that his property is not liable to its payment. It is well settled that legislative exemptions from taxation are valid, that such exemptions may be perpetual in their duration, and that they are in some cases beyond legislative interference. The proceeding supposed would violate that fundamental principle contained in chapter twenty-ninth of Magna Charta, and embodied in the Constitution of the United States, that no man shall be deprived of his property without due process of law-that is, he must be served with notice of the proceeding, and have a day in court to make his defence.

'Due process of law (it is said) undoubtedly means in the due course of legal proceedings, according to those rules and forms which have been established for the protection of private rights.' In the New England States it is held that a judgment obtained against a town may be levied upon and made out of the property of any inhabitant of the town. The suit in those States is brought in form against the inhabitants of the town, naming it; the individual inhabitants, it is said, may and do appear and defend the suit, and hence it is held that the individual inhabitants have their day in court, are each bound by the judgment, and that it may be collected from the property of any one of them. This is local law peculiar to New England. It is not the law of this country generally, or of England. It has never been held to be the law in New York, in New Jersey, in Pennsylvania, nor, as stated by Mr. Cooley, in any of the Western States. So far as it rests upon the rule that these municipalities have no common fund, and that no other mode exists by which demands against them can be enforced, he says that it cannot be considered as applicable to those States where provision is made for compulsory taxation to satisfy judgments against a town or city.

The general principle of law to which we have adverted is not disturbed by these references. It is applicable to the case before us. Whether, in fact, the individual has a defence to the debt, or by way of exemption, or is without defence, is not important. To assume that he has none, and, therefore, that he is entitled to no day in court, is to assume against him the very point he may wish to contest.

Again, in the case of Emeric v. Gilman, before cited, it is said: 'The inhabitants of a county are constantly changing; those who contributed to the debt may be non-residents upon the recovery of the judgment or the levy of the execution. Those who opposed the creation of the liability may be subjected to its payment, while those, by whose fault the burden has been imposed, may be entirely relieved of responsibility. . . . To enforce this right against the inhabitants of a county would lead to such a multiplicity of suits as to render the right valueless.' We do not perceive, if the doctrine contended for is correct, why the money might not be entirely made from property owned by the creditor himself, if he should happen to own property within the limits of the corporation, of sufficient value for that purpose.

The difficulty and the embarrassment arising from an apportionment or contribution among those bound to make the payment we do not regard as a serious objection. Contribution and apportionment are recognized heads of equity jurisdiction, and if it be assumed that process could issue directly against the citizens to collect the debt of the city, a court of equity could make the apportionment more conveniently than could a court of law.

We apprehend, also, that there is some confusion in the plaintiff's proposition, upon which the present jurisdiction is claimed. It is conceded, and the authorities are too abundant to admit a question, that there is no chancery jurisdiction where there is an adequate remedy at law. The writ of mandamus is, no doubt, the regular remedy in a case like the present, and ordinarily it is adequate and its results are satisfactory. The plaintiff alleges, however, in the present case, that he has issued such a writ on three different occasions; that, by means of the aid afforded by the legislature and by the devices and contrivances set forth in the bill, the writs have been fruitless; that, in fact, they afford him no remedy. The remedy is in law and in theory adequate and perfect. The difficulty is in its execution only. The want of a remedy and the inability to obtain the fruits of a remedy are quite distinct, and yet they are confounded in the present proceeding. To illustrate: the writ of habere facias possessionem is the established remedy to obtain the fruits of a judgment for the plaintiff in ejectment. It is a full, adequate, and complete remedy. Not many years since there existed in Central New York combinations of settlers and tenants disguised as Indians, and calling themselves such, who resisted the execution of this process in their counties, and so effectually that for some years no landlord could gain possession of his land. There was a perfect remedy at law, but through fraud, violence, or crime its execution was prevented. It will hardly be argued that this state of things gave authority to invoke the extraordinary aid of a court of chancery. The enforcement of the legal remedies was temporarily suspended by means of illegal violence, but the remedies remained as before. It was the case of a miniature revolution. The courts of law lost no power, the court of chancery gained none. The present case stands upon the same principle. The legal remedy is adequate and complete, and time and the law must perfect its execution.

Entertaining the opinion that the plaintiff has been unreasonably obstructed in the pursuit of his legal remedies, we should be quite willing to give him the aid requested if the law permitted it. We cannot, however, find authority for so doing, and we acquiesce in the conclusion of the court below that the bill must be dismissed.

JUDGMENT AFFIRMED.

Mr. Justice CLIFFORD, with whom concurred Mr. Justice SWAYNE, dissenting:


text: Talk:Rees v. City of Watertown/Opinion of the Court

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Rees v. City of Watertown/Dissent Clifford

Mr. Justice CLIFFORD, with whom concurred Mr. Justice SWAYNE, dissenting:

I dissent from the opinion of the court in this case upon the ground that equity will never suffer a trust to be defeated by the refusal of the trustee to administer the fund, or on account of the misconduct of the trustee, and also because the effect of the decree in the court below, if affirmed by this court, will be to give judicial sanction to a fraudulent repudiation of an honest debt. For which reasons, as it seems to me, the decree of the subordinate court should be reversed.


text: Talk:Rees v. City of Watertown/Dissent Clifford


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The Pennsylvania

APPEAL from the Circuit Court for the Southern District of New York; the case being thus:

An act of Congress for preventing collisions at sea -the act being essentially the same as one enacted by the British Parliament-lays down these Rules governing Fog Signals.

Whenever there is a fog, whether by day or night, the fog signals described below shall be carried and used:

Steamships under way shall use a steam whistle.

Sailing ships under way shall use a foghorn.

Steamships and sailing ships when not under way shall use a bell.

This statute being in force, the Mary Troop, a British bark, was bound from Androssan, in Scotland, to New York, with a cargo of iron, and at ten o'clock on a morning of June, 1869, found herself still on the high seas, about two hundred miles from Sandy Hook. A dense fog was prevailing at the time, so thick that a large vessel could hardly be seen at the distance of fifty feet. The wind was variable, and rather strong from south to southwest. The bark was under way, heading from southeast to south-southeast, and moving at least a mile an hour; her helm lashed three-quarters to port, but on her starboard tack, carrying two close-reefed topsails, foresail, foretopmast and mizzenstay sails; no sail aback. She had a bell, hung to the forestay by a reef-earing to the forestay, and this bell was rung by a lanyard tied to the tongue of the bell, from fifteen to twenty times a minute. She also had a good foghorn. This horn had been used the day before, but was not used on the morning of which we are speaking.

The whistle of a steamer was heard through the fog off the port side. The second mate, who had just at that moment reached the deck, called to the captain and mate, 'Do you hear that foghorn?' The mate replied, 'It is a whistle,' and he and the captain at once ran aft. As they got on the quarter deck, the bows of a large steamer appeared through the fog heading rapidly for the bark, and but a short distance off. The steamer appeared to be then swinging on a starboard helm, but almost instantly changed her course on a port helm and struck the bark stem on, on the port side of the bark by the forerigging. The blow cut the bark in two and she sank instantly. The captain, the second mate, and four of the crew were drowned. The only persons saved were the mate, the cook, and two men who were in the watch below.

The steamer proved to be the British steam propeller Pennsylvania, a vessel of 300 horse-power, 2388 tons, and 341 feet long. Her speed at the time when she thus appeared to the bark and coming down upon her, was seven knots an hour.

There was nothing in the evidence beyond the evidence of her speed-if that was proof of want of precaution-to show any want of efficiency, vigilance, or precaution in the navigation and management of the steamer up to the first intimation of the bark's proximity. She had two lookouts at their stations, 'keeping their eyes and ears open for anything that might come in the way.' They heard the bell of the bark, and reported, 'Ship ahead, a little on the starboard bow.' Order was given to the engineer, 'Full speed astern,' and the order was executed as soon as practicable. The helm was ported; then a call to 'starboard' was heard from some quarter, and she starboarded; then again ported, but in less than half a minute after the report of 'ship ahead' was made, and before the steamer had run her own length, she went head on into the bark with the deplorable result already stated.

When the steamer had got in the port of New York, the owners of the bark libelled her in the District Court there.

There was comparatively little dispute about facts. It was admitted that the steamer's rate was seven knots an hour. Her master was examined, and said:

'The steamer was going seven knots. Her highest rate of speed under the most favorable circumstances, is thirteen and a half knots. The wind, the day of the collision, was south-southwest, strong. The wind had been this way all the morning, and I think all the night. There was a good heavy swell-more than there should have been for the wind there was.

'Question. I with the wind and sea as it was, could you have run your vessel safely at a less rate of speed?

'Answer. I don't consider we could have steered the vessel, going slower; that is, could not have steered her straight.'

Two other masters were examined, and confirmed this view; but they had never, either of them, sailed the Pennsylvania, and each of them had sailed other vessels at a less rate.

On the other hand, one Lovett, a shipmaster for sixteen years, who had happened in 1865-she being then heavily laden-to be a passenger on the Pennsylvania, testified that on the whole day then, her speed, he thought, did not average over four knots an hour, and that he noticed no difficulty in her steerageway.

So, too, while the technical violation of law in ringing a bell instead of blowing a foghorn was not denied, evidence was introduced by the owners of the bark to show that a good bell could be heard further than a foghorn; evidence, however, which was contradicted by witnesses in behalf of the steamer, who swore that if the foghorn was a good one it could be heard further off than could a bell.

The District Court condemned the steamer for the whole loss. On appeal by her to the Circuit Court, that court affirmed the decree, yielding assent, however, with great hesitation, to the view of the District Court, that notwithstanding the conceded violation on the part of the bark, of a plain rule of navigation, the consequences of the disaster were to be visited entirely upon the steamer. From the decree of the Circuit Court thus affirming the decree of the District Court, the present appeal was taken.

Before the case came here, and on the steamer's return to England, the owners of the cargo of the bark libelled her in the British admiralty. The case was heard there on evidence much less full than that upon which it was heard in New York, especially less full on the part of the steamer. The admiralty, admitting the violation of law by the bark in not sounding a foghorn, condemned, nevertheless, the steamer for the whole loss; considering that it was attributable to the improper rate of speed of the steamer in a fog so thick as here existed, and this decree was affirmed by the judicial committee of the Privy Council.

Messrs. William Allen Butler and John Chetwood, for the appellants:

1. The presence of the bark was discovered by the steamer's lookouts at the earliest possible moment, and the steamer was, therefore, without fault in respect to that point. And the steamer was equally without fault in respect to every act done after the presence of the bark in her neighborhood was first indicated.

2. The bark was clearly in fault in not complying with the rule which required the use of a foghorn while she was under way. The rule is imperative:

'Sailing ships, when under way, shall use a foghorn.'

3. The steamer was not to blame on account of her rate of speed at the time of the collision. Lovett's evidence as to the speed five years before the collision, when she was very heavily loaded, is irrelative to the present case.

The law prescribes no rate of speed, and in the absence of controlling evidence that seven knots is an unsafe rate of speed for a steamer under the circumstances shown in this case, the court cannot say that it is evidence of negligence when all the testimony shows that in every other respect the utmost care and vigilance were exercised to navigate the steamer safely. The weight of evidence shows that it was the lowest rate of speed at which this steamer could go in the then state of the wind, consistently with safety. A steamer has a right to go as fast as she can, provided that it is not so fast as to prevent her from avoiding vessels under way or at anchor which are complying with the law. Had the bark been properly blowing a horn, or even regularly and loudly ringing a bell, it could have been heard, with the wind blowing as it was from the boat toward the steamer, at such a distance that the steamer might, and the court's bound to assume in this case would, have avoided the bark. Any other rule would impose upon ocean steamers the alternative of reducing their rate of speed, so as to render them much less serviceable by prolonging their voyage, or of taking the risk of being punished for every collision with a sailing vessel, however carelessly or illegally navigated. It would virtually announce to sailing vessels that in every case of collision with a steamer, the court would punish the steamer, even though innocent, and indemnify the sailing vessel, even though guilty.

4. The court below erred in attempting to speculate upon the question whether the established negligence and violation of law, on the part of the bark, was or was not the cause of the disaster. The fact of such violation without excuse being proved, and the extent to which it operated as a proximate cause of the collision not being ascertained, it was error to impose the burden of the disaster upon a vessel which was complying with the law in all respects.

The decree below should be wholly reversed.

Mr. R. D. Benedict, contra:

The decree below is right.

The Pennsylvania was in fault in the contradictory orders which were given as to her helm. It was first ported, then starboarded, and then again ported. This shows that there was confusion on the part of the steamer. Such confusion is a fault. There was abundance of time for the steamer to have avoided the bark after her presence was known, by either starboarding or porting, if the steamer had been properly managed.

The fact that the bark was ringing a bell instead of blowing a foghorn, if a fault at all under the circumstances, was only a technical, not a substantial fault, and did not in any way contribute to the collision.

The bark was lying-to under close-reefed sails, with her helm lashed three-quarters to port. She was making lee-way, heading from southeast to south-southeast, but going east by south, and making a speed of one mile per hour on that course, practically drifting helpless; as the opinion of the British Privy Council says, 'forging ahead very softly.' Although the foghorn was the signal which the law requires for a vessel under way, yet the bell gave the louder signal, and could be heard farther. The fact that this master and mate, having a good foghorn on board, hung this bell on the stay to use as a fog signal, is conclusive. Their property and their lives were at stake, and it would require very strong evidence to induce any court to believe that they deliberately chose that one of the two signals, which carried with it the smaller measure of protection.

If it is to be held that this bark was 'under way,' still she was barely under way. And the case then is one in which the vessel being barely under way, used the signal for a vessel not under way, which was in fact a louder signal than the law required, and gave the notice required by the rule, viz., that the vessel was helpless, as was the fact. If that was a fault it was already said not a substantial fault. To visit it upon these owners with the loss of their vessel, would be a hard measure. If it was clearly made to appear that the steamer had been misled by it, the case would be a very different one. But the steamer was not misled in the slightest. It is not even suggested by opposing counsel that she was. And it is clear that she could not have been, because she don't pretend to have heard the bell at all; but acted confessedly on the call, 'Ship ahead.' If a horn had been blown, therefore, instead of a bell being rung, the movements of the steamer would have been the same. The collision then was absolutely unaffected by the substitution of the bell for the horn.

It is urged that the courts below should not have considered the question whether or not the ringing of the bell contributed to the collision. Doubtless it would simplify the trial of collision cases, if the courts were only called upon to inquire whether each vessel had complied with all the requirements of the law, and not to inquire whether any failure to comply with them had anything to do with the collision. But that would be an unheard of mode of disposing of these cases. The question always is: 'Did the vessel commit a fault which contributed to the collision?' As Judge Phillimore puts it in this very case, 'not which vessel was to blame, but which was to blame for this collision,' is to be considered. And a fault which did not contribute to it, has never been held a reason for refusing to a libellant his full damages.

In The Farragut, the absence of a special lookout was charged as a fault, and this court said:

'It is perfectly evident that the absence of a special lookout had nothing to do with the happening of the accident, and therefore it can have nothing to do with fixing the liability of the parties.'

In addition to concurring decrees in the District and Circuit Court, which when they exist this court will not lightly disturb, we have on our side the high authority of the judicial committee of the British Privy Council, affirming the decree of the British admiralty. This court will not readily disturb the concurring decrees of so many tribunals.

Mr. Justice STRONG delivered the opinion of the court.

title: The Pennsylvania


text: Talk:The Pennsylvania

title: Talk:The Pennsylvania


text:
The Pennsylvania/Opinion of the Court

It may be that when the bark was discovered by those on board the steamer it was too late to avoid a collision. The two vessels were then not more than three or four hundred feet apart, and the steamer had the bark almost across her bow. Yet it is possible that if her helm had been put to starboard instead of to port when the lookout announced, 'Bell on the starboard bow,' and had been kept starboarded, the collision might either have been avoided or have been much less disastrous. By porting her helm she was turned toward the point where the bell indicated the bark was, and this apparently increased the danger of a collision.

But if this is not to be attributed to her as a fault, there is no excuse to be found in the evidence for the high rate of speed at which she was sailing during so dense a fog as prevailed when the vessels came together. The concurrent testimony of witnesses is that objects could not be seen at any considerable distance, probably not farther than the length of the steamer, and yet she was sailing at the rate of at least seven knots an hour, thus precipitating herself into a position where avoidance of a collision with the bark was difficult, if not impossible, and would have been, even if the bark had been stationary. And she ought to have apprehended danger of meeting or overtaking vessels in her path. She was only two hundred miles from Sandy Hook, in the track of outward and inward bound vessels, and where their presence might reasonably have been expected. It was, therefore, her duty to exercise the utmost caution. Our rules of navigation, as well as the British rules, require every steamship, when in a fog, 'to go at a moderate speed.' What is such speed may not be precisely definable. It must depend upon the circumstances of each case. That may be moderate and reasonable in some circumstances which would be quite immoderate in others. But the purpose of the requirement being to guard against danger of collisions, very plainly the speed should be reduced as the risk of meeting vessels is increased. In the case of The Europa, it was said by the Privy Council: 'This may be safely laid down as a rule on all occasions, fog or clear, light or dark, that no steamer has a right to navigate at such a rate that it is impossible for her to prevent damage, taking all precaution at the moment she sees danger to be possible, and if she cannot do that without going less than five knots an hour, then she is bound to go at less than five knots an hour.' And we do not think the evidence shows any necessity for such a rate of speed as the steamer maintained. It is true her master, while admitting she was going seven knots, states that he don't consider she could have been steered going slower-could not have been steered straight. And two other witnesses testify that, in their opinion, she could not have been navigated with safety and kept under command at a less rate of speed than seven miles an hour. These, however, are but expressions of opinions based upon no facts. They are of little worth. And even if it were true that such a rate was necessary for safe steerage, it would not justify driving the steamer through so dense a fog along a route so much frequented, and when the probability of encountering other vessels was so great. It would rather have been her duty to lay to. But there is the evidence of one who had been a shipmaster, and who once crossed the Atlantic as a passenger in this steamer. He states that on the passage she did not, to the best of his knowledge, average over four knots during twenty-four hours, and that he noticed no difficulty in her steerageway at that low rate of speed. As he was in the habit of going to sea he would probably have noticed difficulty if there had been any. This is a fact of more weight than any mere opinions unsupported by observation or trial. We think, therefore, it must be concluded that the steamer was going at an undue rate of speed, and that it was her fault that she came into a position from which she could not, or certainly did not, escape without colliding with the bark.

It is next to be considered whether any fault of the bark contributed to the collision. That she was in fault is beyond controversy. She was in plain violation of the rules of navigation, which required her to blow a foghorn. Both our own and the British shipping acts enact that sailing ships, when under way, shall use a foghorn, and, when not under way, shall use a bell. The British merchants' shipping acts expressly declare that owners and masters of ships shall use no other fog signals than such as are required by the regulations, and that if in any case of collision it appears to the court before which the case is tried that such collision was occasioned by the non-observance of any regulation made by the act, or in pursuance thereof, the ship by which the regulation has been infringed shall be deemed to be in fault, unless it is shown to the satisfaction of the court that the circumstances of the case made a departure from the regulation necessary. Our own statute does not contain this provision expressed, but its meaning is the same. The bark in this case was a British ship, as was the steamer. She was under way, moving slowly, indeed little, if any, more than a mile an hour, with her helm lashed three-quarters to port, but on her starboard tack, carrying two close-reefed top-sails, foresail, foretopmast and mizzen staysails, and with no sails aback, so far as it appears. She was constantly changing her position. It was her duty, therefore, to blow a foghorn, and not to ring a bell. By ringing a bell, as she did, she gave a false signal, and, so far as she could, assured all approaching vessels that she was not under way. There is some evidence that a bell can be heard as far as can a foghorn, and some that it can be heard farther. On the other hand there is evidence that a foghorn can be heard farthest. However this may be the bark had no right to substitute any equivalent for the signal required by the navigation rules. In the case of The Emperor, it was said, 'It is not advisable to allow these important regulations to be satisfied by equivalents, or by anything less than a close and literal adherence to what they prescribe.' In addition to this it may be remarked that a bell can never be an equivalent for a foghorn. It gives different information. Both may notify an approaching vessel that the signalling ship is in the neighborhood, but the one gives notice that the ship is moving, and the other that the ship is stationary.

Concluding then, as we must, that the bark was in fault, it still remains to inquire whether the fault contributed to the collision, whether in any degree it was the cause of the vessels coming into a dangerous position. It must be conceded that if it clearly appears the fault could have had nothing to do with the disaster, it may be dismissed from consideration. The liability for damages is upon the ship or ships whose fault caused the injury. But when, as in this case, a ship at the time of a collision is in actual violation of a statutory rule intended to prevent collisions, it is no more than a reasonable presumption that the fault, if not the sole cause, was at least a contributory cause of the disaster. In such a case the burden rests upon the ship of showing not merely that her fault might not have been one of the causes, or that it probably was not, but that it could not have been. Such a rule is necessary to enforce obedience to the mandate of the statute. In the case of The Fenham, the Lords of the Privy Council said, 'It is of the greatest possible importance, having regard to the admiralty regulations, and to the necessity of enforcing obedience to them, to lay down this rule: that if it is proved that any vessel has not shown lights, the burden lies on her to show that her non-compliance with the regulations was not the cause of the collision.' In some cases it is possible to show this with entire certainty. In others it cannot be. The evidence in the present case leaves it uncertain whether if a foghorn had been blown on the bark, it would not have been heard sooner than the bell was heard, and thus earlier warning have been given to the steamer-seasonable warning to have enabled her to keep out of the way. It was not without reason that the statute required a foghorn for ships under way, and a bell for those not under way. The legislature must have known it was important ships should have the earliest possible notice of the proximity of other moving vessels. They might be approaching each other. If so, they would come together sooner than they could if one of them was not under way. It may be assumed, therefore, that the legislature acted under the conviction that a foghorn could be heard at a greater distance than a bell, and required the use of one rather than that of the other for that reason. To go into the inquiry whether the legislature was not in error-whether in fact a bell did not give notice to the steamer that the bark was where she was as soon as a foghorn would have done-is out of place. It would be substituting our judgment for the judgment of the law-making power. It would be admitting the validity of an equivalent for that which the statute has made a positive requirement. Then how can it be shown on the part of the bark that the failure to use a foghorn certainly contributed in no degree to the collision? How can it be proved that if a foghorn had been blown those on board the steamer would not have heard it in season to have enabled them to check their speed or change their course, and thus avoid any collision? Though there were two lookouts on the steamer, each in his proper place, the bark's bell was not heard until the vessels were close upon each other. Who can say the proximity of the vessels would not have been discovered sooner if the bark had obeyed the navy regulations? If it be said this is speculation, it may be admitted, but it is speculation rendered necessary by a certain fault of the bark. It is equally speculative to conclude that the collision would have taken place if a foghorn had been used instead of a bell, and infer therefrom that the fault of the bark had no relation to the disaster. The truth is the case is one in which, while the presumption is that the failure to blow a foghorn was a contributory cause of the collision, and while the burden of showing that it was in no degree occasioned by that failure rests upon the bark, it is impossible to rebut the presumption. It is a well-known fact that in some states of the atmosphere a foghorn can be heard at much greater distances than in others. How far it could have been heard when this collision occurred can never be known. Nor can it be known what precautions the steamer would have adopted if the true and proper signal had been given her. Hence, it appears to us the bark has not proved that her failure to obey the shipping regulations was not a concurrent cause of the injury she received; and, consequently, as both vessels were in fault, the damages, according to the admiralty rule, should be divided.

We have not overlooked the fact that in a libel by the owners of the cargo of the bark against the steamer for damages resulting from the same collision, it was held by the judicial committee of the Privy Council in England, that the disaster was chargeable to the steamer alone. But with great respect for the tribunal that thus decided, we do not feel at liberty to surrender our judgment, especially in view of the fact that the case is now more fully presented and the evidence is more complete than it was in the British court.

DECREE REVERSED, and the cause remanded with instructions to enter a decree

IN ACCORDANCE WITH THIS OPINION.

title: The Pennsylvania/Opinion of the Court


text: Talk:The Pennsylvania/Opinion of the Court


text:
Carpenter v. Rannels

ERROR to the Supreme Court of the State of Missouri.

Carpenter brought ejectment against Rannels in one of the Circuit Courts of Missouri to recover possession of two hundred arpents or acres of land in the county of St. Louis, located under a New Madrid certificate of relocation, No. 511, which was issued under an act of Congress of February 17th, 1815, and acts supplementary thereto, in lieu of lands in New Madrid County, which had been injured by earthquakes, and upon which certificate a patent issued, dated March 30th, 1833, to 'John Butler or his legal representatives.'

The plaintiff claimed, under the confirmation and patent, directly through the heirs of this John Butler.

The defendant claimed also through the confirmation and patent to Butler, but asserted that the same had in law passed the equitable title to one James Bankston, hereinafter mentioned, and whom he asserted to be the 'legal representative' of the said Butler, and he gave evidence tending to show derivative title under Bankston.

The cause was submitted to the court without the intervention of a jury. The court found and gave judgment for the defendant, and that judgment being affirmed in the Supreme Court of the State, the plaintiff brought the case here for review.

Mr. B. A. Hill, for the plaintiff in error; Messrs. Glover and Shepley, contra.

Mr. Justice SWAYNE stated the case, and delivered the opinion of the court.

title: Carpenter v. Rannels


text: Talk:Carpenter v. Rannels

title: Talk:Carpenter v. Rannels


text:
Carpenter v. Rannels/Opinion of the Court

John Butler had an incloate title derived from the Spanish government, acting through its authorized agents. Upon this subject there is no controversy between the parties. It is the common source of the derivative titles upon which they severally rely.

On the 23d of July, 1801, Butler entered into an agreement with James Bankston to the following effect:

Butler leased the land to Bankston for three years from the date of the contract. Bankston agreed, 'during the three years, to erect on said tract all the improvements and establishments-to break up the ground, and to make the Royal road and other improvements required by law; to be enabled at the and of three years from the petition for said land to obtain the title of proprietorship from the government of the province.' Butler acknowledged the payment of forty piasters by Bankston. On condition that Bankston, at the end of the three years, should have made the improvements stipulated for, the land was to 'belong to him in full proprietorship,' and Butler bound himself, his heirs and assigns, 'to solicit the title from the government, and to make a regular transfer of said land to the said James Bankston, without any further cost on his part, except the expenses of the necessary deed,' and 'Bankston. . . promised to fulfil and execute all the said clauses and conditions, under penalty of the forfeiture of the advantages which might result in his favor.'

This instrument shows that so far as Butler was concerned the entire consideration of the transaction had been paid. What remained for Bankston to do was wholly for his own benefit, and not for Butler's. If he fulfilled, a perfect title was to be acquired from the government; not for Butler, but for himself. It was implied that the title was to emanate in Butler's name. He stipulated to apply for it and to convey it to Bankston without expense to the latter except for the necessary conveyances.

The State of Missouri is a part of a larger territory which belonged to France, then to Spain, and again to France. France ceded it to the United States in 1803. The United States stipulated that the inhabitants of the ceded territory should be protected in the free enjoyment of their property. The law of nations would have given this guaranty if the treaty had been silent upon the subject, and the result would have been the same if the territory had been acquired by conquest and not by cession. The new government took the place of that which passed away, and was clothed with the same duties and obligations as to all rights of property subsisting when the dominion of the latter was withdrawn.

Congress, by the act of March 2d, 1805, provided for the examination and adjustment of claims of title like the one here in question, and created a board of commissioners for that purpose. Other acts were passed relating to the subject, but it is not necessary particularly to advert to them. This title came before the commissioners in the year 1811, and the result of their action is the hinge of the controversy between these parties. The question to be determined is whether it was confirmed to Butler or to Bankston. This renders it necessary to examine that part of the record which relates to the subject. It consists of a transcript of the proceedings of the commissioners and of the evidence before them. We shall itemize as we proceed.

(1.) 'John Butler claims two hundred arpents of land in the district of New Madrid, under the second section of the act of Congress made and provided.'

(2.) An order, dated April 16th, 1801, from Peyroux to Story, to survey two hundred arpents of land for Butler. This was before the date of the contract between Butler and Bankston.

(3.) A plat of the survey made by Story and a certificate by him that he made it at the request of Butler, who claimed the land by virtue of a grant from Peyroux while commandant of the district of New Madrid, and in virtue of the second section of the act of March 2d, 1805. This certificate is dated February 2d, 1806.

(4.) The contract between Butler and Bankston already adverted to.

(5.) 'Friday, April 12th, 1811.-Board met: Present, John B. C. Lucas, Clement B. Penrose, and Frederick Bates, commissioners.

'James Bankston, assignee of John Butler, claiming two hundred arpents of land, situate in Cypress Swamp, district of New Madrid, produced to the board an order of survey dated 16th April, 1801, a certified copy of a conditional transfer from Butler to claimant, dated 23d July, 1801, and a plat of survey dated 2d February, 1806.

'The board grant to John Butler, or his legal representatives, two hundred arpents of land, and order that the same be surveyed as nearly in a square as may be, and so as to include his improvements.

'Board adjourned till Monday next, nine o'clock A.M.' Signed by the commissioners. 'See Board Minute-Book, No. 5, pages 145, 148, and 149.'

(6.) 'Thursday, June 20th, 1811.-Board met: Present, Clement B. Penrose, Frederick Bates, commissioners. John B. C. Lucas, commissioner, appeared at the board and took his seat.

'Cert. No. 1103, John Butler's legal representatives, Book 5, page 148.

'Survey at expense of the United States. Board adjourned till to-morrow, eight o'clock A.M.' Signed by the commissioners. 'See Board Minute-Book, No. 5, page 187, 188, and 193.'

(7.) 'Louisiana Commissioners' Certificate No. 1103, June 20th, 1811.

'We, the undersigned, commissioners for ascertaining and adjusting the titles and claims to lands in the Territory of Louisiana, have decided that the legal representatives of John Butler, original claimant, are entitled to a patent under the provisions of the second section of an act of Congress of the United States, entitled 'An act for ascertaining and adjusting the titles and claims to land within the Territory of Orleans, and the District of Louisiana, passed the 2d day of March, one thousand eight hundred and five,' for two hundred arpents of land, situate in the district of New Madrid, Cypress Swamp, and order that the same be surveyed as nearly in a square as may be, and so as to include his improvements, by virtue of a permission from the proper Spanish officer, and also of actual inhabitation and cultivation prior to, and on, the 20th day of December, one thousand eight hundred and three.' Signed by the commissioners. 'See certificate on file.'

So far as the name of Butler appears in these documents, as the claimant, it is to be borne in mind that he was bound by his contract with Bankston to procure the emanation of the final title for the benefit of the latter. It is shown that Bankston produced to the commissioners a copy of his contract with Butler; that the board granted to Butler, or his legal representatives, the land claimed; that it was ordered to be surveyed in the name of 'John Butler's legal representatives;' that there were improvements made by permission of the proper Spanish officer, and 'actual inhabitation and cultivation on and prior to the 20th of December, 1803;' and finally, that the board 'decided that the legal representatives of John Butler, original claimant, are entitled to a patent under the second section of the act of March 2d, 1805.' There is no evidence that Butler or any one else questioned the claim of Bankston before the commissioners.

The act of Congress of February 17th, 1815, declared that any person owning lands in the county of New Madrid, in Missouri Territory, which land had been injured by earthquakes, might 'locate the like quantity of land on any of the public lands of said Territory the sale of which is authorized by law.' In the event of such location being made, the title of the owner to the lands injured was to revert to the United States. In the proceedings under this act the following testimony is found in the record:

(1.) A, a line in a tabulated statement, showing that Butler claimed that the land in question was injured, and had relinquished the title to the United States.

(2.) A, in line in a like statement that Butler was the claimant, and that a certificate of injury had been delivered to James Evans.

(3.) A, a line in a like statement that Butler, or his legal representatives, claimed, and that a patent certificate was prepared accordingly by the recorder of land titles under the act of 1815 and the supplementary acts, and that it was delivered to William Smith, of St. Louis.

The only other testimony in the record necessary to be adverted to is:

(1.) A power of attorney from Butler to James Evans, dated February 9th, 1819, authorizing him, as the attorney of Butler, to sell 'a certificate of location for two hundred arpents obtained from the recorder of land titles for the Territory of Missouri, or to locate the same as he should think proper.'

(2.) A deed from Evans, as such attorney, dated January 1st, 1819, whereby he assigned the certificate to Henry Waddle. It is described as 'a New Madrid certificate, issued by Frederick Bates, recorder of land titles for the Territory of Missouri, No. 511, dated December 31st, 1818, whereby it is certified, among other things, that John Butler, or his legal representatives, is entitled to locate two hundred arpents of land.'

(3.) A patent from the United States to John Butler, or his legal representatives, dated March 30th, 1863. It recites that, in pursuance of the act of February 17th, 1815, there had been located 'for John Butler, or his legal representatives, a certain tract of land, described,' &c. A full description is then given. The habendum is, 'to the said John Butler, or his legal representatives, and to his or their heirs and assigns forever.'

This is the land in controversy in this case.

In the opinion of the court in Hogan v. Page, it is said that at an early period there was difficulty as to the form of patent certificates and of patents, arising out of applications to have them issued in the name of the assignee or present claimant, thus imposing upon the office the burden of deciding as to the validity of the derivative title. The same difficulty, it is said, existed in respect to the boards of commissioners appointed to adjust French and Spanish claims. The result, after consulting the Attorney-General, was that the Commissioner of the Land Office recommended that in such cases the patent certificate or the patent should be issued to the original grantee, or his legal representatives, and that this suggestion was adopted by the several boards of commissioners. It is added: 'This formula, 'or his legal representatives,' embraces the representatives of the original grantee of the land by contract, such as assignees or grantees, as well as by operation of law, and leaves the question open to inquiry in a court of justice as to whom the certificate, patent, or confirmation should enure.'

This is decisive of the case before us. There it was argued that 'the confirmation to the representatives of Auguste Cond e' enured to his heirs. In the case before us, Butler was living at the time of the confirmation. He and Bankston were before the commissioners. Bankston produced his contract. It does not appear that Butler made any objection to his claim, and the commissioners adjudged in his favor. The omission of Butler's name in the patent certificate, under the circumstances, closed the door finally against any claim thereafter on his part touching the property by virtue of his original title. The commissioners must have found that Bankston had done all that he was bound to do by his contract. An act done by a public offcer which presupposes another act is presumptive proof of the latter.

The certificate issued by the recorder of land titles under the act of 1815, the location of that certificate and the patent, enured to Bankston and his legal representatives. No other representative of Butler, whether hereditary or by contract, has any right, legal or equitable, to the premises. The testimony in the record is conclusive upon the subject.

JUDGMENT AFFIRMED.


text: Talk:Carpenter v. Rannels/Opinion of the Court


text: Sawyer v. Prickett

title: Sawyer v. Prickett


text: Talk:Sawyer v. Prickett

title: Talk:Sawyer v. Prickett


text:
Sawyer v. Prickett/Opinion of the Court

Appeal from the Circuit Court for the Northern District of Illinois.

Ephraim Sawyer filed a bill in the court below against Henry Prickett and wife, to foreclose a mortgage given by them, on the 1st of September, 1857, to the Fox River Valley Railroad Company, to secure the payment of a note for $2000 at ten years from its date, and by the company assigned to him, the complainant. The answer set up as a defence, that at the date mentioned Prickett gave the note described to secure the payment of a subscription to the stock of the railroad company mentioned, and that this subscription was obtained by fraud and deceit; and so that the note and the mortgage were void.

The fraud and deceit alleged consisted in the following matters which the answer stated, to wit, that two persons, one Conover and a certain W. G. Parsons, of Milwaukee, in Wisconsin, as agents of the company, and John Sibley and W. A. McConnell, residents of Richmond, in Illinois, caused it to be understood that a railroad had been incorporated to extend from Richmond to Milwaukee aforesaid, and 'that the said parties above named, for the purpose of inducing the property-owners in Richmond and its vicinity to take an interest in the road, and to subscribe for the stock of the company, resorted to fraudulent and deceitful artifices and representations; that they caused a subscription-book for the taking of subscriptions to the stock to be prepared and opened at Richmond; that they caused McConnell, a man of large means, and one in whom the citizens of Richmond and its vicinity had confidence as a man of integrity and good judgment, and of prudent and sagacious management of business, to head such subscription list, as a subscriber to the stock, to the amount of $1500; that for the same fraudulent purpose they caused one John Woodell, a citizen of Richmond, and a man at that time of considerable means and of good business reputation, to appear in the subscription list as a subscriber to the stock to the amount of $1000, and, also for the same purpose, caused it to be represented and believed among the residents of Richmond and its vicinity that the said John Sibley (already mentioned), a person at that time of means and large influence in that community, and of integrity, had subscribed largely to the stock; and further, that the railroad, when constructed, would greatly enhance the real estate and other property in Richmond and its vicinity by furnishing a market in Milwaukee for the farm products raised in the vicinity of Richmond, and that the said market, especially for the sale of wheat, would be much more advantageous to the farming community of Richmond than the market which they now had at Chicago.

That the said parties publicly represented, and caused it to be believed by the residents and property-owners of Richmond and its vicinity, that the company would pay large dividends upon its stock; that farmers and parties owning real estate could become the owners of so much of the stock as they should subscribe for, by giving their notes for the amount so subscribed to the company on long time and drawing interest at 8 per cent. per annum, and securing the notes by mortgage upon their farms or other real estate; that the company would promptly pay all the interest upon said notes so given, as the same should mature, out of the dividends that would from time to time be declared upon the stock of the company, and that the balance of the dividends, after the payment of the interest, would be amply sufficient to pay the principal of the notes when the same should become due.

That, in this manner and by these means, the said parties aroused and caused a great interest and unusual excitement among the citizens, residents, and property-holders of Richmond and its vicinity regarding the railroad, and that large numbers of them, relying upon the flattering representations made, as aforesaid, were prevailed upon to subscribe to the stock of the company; that the defendant was among those who, by the means, in the manner, and upon the representations made, as aforesaid, became and was interested in said railroad project; and that after he had thus become informed thereof, and of the general features of the railroad project, as hereinbefore set forth, and had become greatly excited on account thereof, a short time prior to the said 1st of September, A. D. 1857, the said Conover and Sibley represented to him that the company was duly incorporated and fully organized, and that it would construct and equip the road and have the same in full and complete operation within one year from the date last aforesaid; that the railroad, when constructed, would greatly enhance the value of the defendant's real estate, by furnishing better market facilities, as hereinbefore stated; that the defendant would not be required to pay any money for the stock so subscribed for by him, but that the company would take in lieu of such money his note, payable in ten years from date, with interest thereon at 8 per cent. per annum, secured by a mortgage of the land owned by him; that the railroad would earn large dividends, and that the company would pay the interest upon the note as it should mature, and that, with the excess of dividends, the company would be amply able to pay the principal of the note when it should become due.

The answer averred also that the defendant reposed confidence in these flattering statements, and relying upon the promise given, subscribed for $2000 of the capital stock of the said company, and gave the note and mortgage in suit to secure the payment of the same.

It further averred that the Fox River Valley Railroad Company was never incorporated; that no part of it had ever been built; that it had been given up and abandoned; that McConnell, Woodell, and Sibley were not subscribers for stock as was represented, or that their subscriptions were upon a secret agreement that they should stand upon the books for larger sums than were actually subscribed by them; that McConnell, appearing as a subscriber for $1500, should only be bound for $500; and that Woodell appearing as a subscriber for $1000 should only be bound for $500; and that Sibley never subscribed for any amount of stock, and never gave his note and mortgage as was represented.

It further averred that these misrepresentations were made with an intent to defraud; that the complainant was not a bon a fide holder of the note and mortgage, but was himself one of the projectors and managers of the fraudulent contrivance, and well knew all of the facts alleged before he became the owner of the instruments.

Replication being made, testimony was taken. Sawyer, Prickett, McConnell, Sibley, and Woodell were all examined as witnesses.

From the testimony the facts of the case appeared to be thus:

The town of Richmond was a small place, close to the north line of Illinois, and between Milwaukee on the north of it (about fifty miles off), and Chicago, on its south, at a greater distance. It had a railroad connection, through the railroad of the Fox River Railroad Company of Illinois, with Chicago, but none with Milwaukee.

In this state of things the Fox River Railroad Company of Wisconsin was incoporated in Wisconsin, to connect by a prolongation of the Illinois road Richmond and Milwaukee; Milwaukee being the place where the organization of the latter company was had and the place from which its affairs were managed.

The charter being obtained and the company organized as early at least as 1854, efforts were put in action to bild the road. Prior to 1856, the subscriptions to the capital stock coming in slowly, ready funds were short. In 1855 or 1856, Sawyer, then a director with other directors, lent the road money. The work was still going on. And in the autumn of 1857-there being still stock unsubscribed for-a committee, on which was Conover, then a director and lately before president of the company, and Parsons, at one time its secretary but now its 'stock agent,' were appointed to go to different villages along the line of the projected road to procure subscriptions for the stock yet untaken. Among other places to which they went was Richmond. Here they got up meetings, got speakers to come and address the citizens, and publicly and privately represented the great benefit that it would be to the farming community to have the road; that the Milwaukee market would give five cents a bushel for wheat more than the Chicago; that stock in the road would probably pay thirty per cent. dividend, and be a fine investment for the farmers to make; that if they would take stock they could take it by giving a mortgage running ten years at eight per cent. interest, payable annually; that the company was willing to pay the interest; that the person giving the mortgage would not be called upon for the interest; and that if they would let the dividends of the road remain in the company's hand, in ten years, or before, the dividends would pay for the stock and perhaps more, and then that the farmer would have his stock clear.

The matter was thus summed up by McConnell, one witness in the case:

'They made some very fine speeches, and told what they would do for us if we would sign for stock; and told us a great many things, and those statements induced the people to subscribe.'

At one of these town meetings in Richmond, a committee composed of McConnell, Sibley, and some other persons, was appointed to solicit subscriptions.

McConnell, who was regarded as one of the most judicious men of Richmond, headed the list with a subscription for $1500 of the stock; but he did not actually give a mortgage on his property, though he was bound to do so when called on by the company to do it.

McConnell, Sibley, and other citizens of Richmond, then went about at different times for a few days, while Conover and Parsons remained at Richmond to get subscriptions.

Among the farmers in the neighborhood of Richmond was Prickett; he had already met Conover in the town. Prickett's own account of the matter was thus:

'I own the real estate described in the bill of complaint, and have owned it for twenty-one years; it is now occupied by me as the residence of myself and family, and has been so occupied by me as a residence and homestead for twenty years, and during that time I have worked the farm.

'The first that I saw of Conover was in the village of Richmond. He and a number of citizens were together; they thought the property would be enhanced by having a railroad; they came to me and wanted me to subscribe. The first time that they came to me, I told them I would not have anything to do with it. Afterwards I did sign I would not have anything they represented to me that I should never have anything to pay; that they would pay the interest, and that the dividends upon the road would pay the principal; that at the time the mortgage ran out, I should be ahead. A short time after that they came to my house, Mr. Parsons with the squire, to acknowledge the mortgage, and my wife held out about signing it half an hour, I should think. They talked to her and told her it would be an everlasting benefit to her to sign it, and that the railroad would probably make thirty per cent., and it would give her and her family $600 a year always. Mr. Sibley and this Conover were the two principal agents in getting subscriptions, and when they came to get the mortgage this Mr. Parsons came with the squire, in order to induce us farmers to subscribe to the subscription list. Conover said the rolling stock would be on in eighteen months. They got Mr. McConnell, a leading citizen, to sign. They used every means they could to induce persons to become subscribers to the stock. They represented that the road would be a good thing; that it would bring us a better price for our produce, enhance the value of our property, and that we should never have anything to pay for it-the dividends would pay the interest, and they would pay the principal; they held meetings and got up a great excitement. The influence was principally exerted by some of our own citizens-Mr. McConnell, Mr. Sibley, and some others in whom we had the utmost confidence. We thought that if they took stock we could take it too. Mr. Sibley, a citizen in whom we placed the utmost confidence, said he had mortgaged his house and lot, and that it would be a good thing; induced me in every way to sign, and others; it is not necessary to mention their names. Dr. Stone, Dr. Bennett, and some others. I did not attend any of the meetings held for the purpose of obtaining subscriptions.'

The following question was asked of the complainant on his examination as a witness:

'Would you have become a subscriber to the capital stock of this company except from the fact that Mr. McConnell became a subscriber thereto, and the other parties you have named?

'If they had not represented as they did, and if McConnell and other leading citizens of the town had not subscribed, I certainly should not; but the representation was an inducement to make farmers subscribe, 'See here, you put in $2000 and you get $600 for life. Is not that enough?"

'Question. You say in your direct examination 'the influence was principally exerted by some of our own citizens, Mr. McConnell, Mr. Sibley, and some others in whom we had the utmost confidence.' Do you mean by that that you were influenced by Mr. McConnell and Mr. Sibley to subscribe for this stock?

'Answer. By Mr. Sibley, more particularly. He pictured it out so nice to me that he had a great influence on me to take stock.

'Question. Did you see Mr. Sibley on the day on which you subscribed for this stock?

'Answer. No. It was some time before that; almost every day he was exerting himself in the matter.'

Parsons, it appeared, was a witness to the mortgage; the wife executing it by a cross or mark.

McConnell testified that in the autumn of 1857 he subscribed for $1500 worth of stock, agreeing to give a mortgage at ten years, on the plan already mentioned; but that in the spring of 1858 the intended subscription by mortgage was converted into a cash subscription of $1200, 'a square trade,' he receiving only twelve shares of stock; that he was never an agent for the company, nor received a cent from it.

Sibley testified that at the solicitation of the town meeting of the citizens, and not at all of the company-he had gone out, as a private citizen, for about a day and a half, having then leisure, and solicited subscriptions; that at other times when going backwards and forwards, to and from the village, which was seldom, if he met a man who he thought was interested, he would ask him to take stock; that he dropped the whole matter within three weeks; that he had never asked Prickett to subscribe or even knew that he had subscribed; that he had never himself subscribed for any stock in the Fox River Railroad Company, incorporated by Wisconsin; and had never represented to Prickett or to any one that he had; that he told to different people (as the fact was) that he had taken $500 worth of stock in the Fox River Railroad Company incorporated by Illinois; and that 'it was fair for them to subscribe for stock in the Wisconsin road, as this was a continuation of the Illinois road.'

Sawyer testified that he was director of the road in 1855 and 1856, but not after the last year; that after that time he 'had been kind of out one side, and proposed to keep away;' that in the summer of 1854 he had solicited subscriptions, and had for one day been with the agents of the company, and saw how they got them; that 'there was an understanding that the company would pay the interest so long as it kept the mortgages, but if transferred it would be no defence after they passed into a third person's hands;' that he was a subscriber to the stock, $500 cash, $5000 mortgage, which last he cashed at eighty per cent. In addition to this, that in 1855 or 1856-while he, Sawyer, was a director-the company getting into straits for money, he, 'with some of the other directors,' had lent to it their individual notes, which they had themselves to take up; that they had taken them up, he, Sawyer, to the amount of $10,000; that he and the other lenders then sent their attorney up to see what securities he could get, to do the best he could, and that he got for all parties in common, certain mortgages, which, like that of Prickett's, had been given for stock; and that that of Prickett's had fallen to his, Sawyer's, lot in the division, the claims on the company being released.

Woodell, who it was alleged in the bill had subscribed for $1000 worth of stock, with an understanding that he should really be bound to take but $500 worth, was not examined. He had left Richmond, and was said to live in Iowa. One witness said that Woodell had told him this, but there the matter rested.

The railroad company had undoubtedly been incorporated both in Illinois and Wisconsin. About $150,000, raised partly from cash subscriptions, but much more largely by farm mortgages, passed off to contractors at par, or sold to others at eighty per cent. and like great rates of discount, had been expended on the road. It had been graded, but by 1859 the company formed to make it found itself so entirely without money that it could do nothing more then, and in that year the further construction was stopped, though the project was not entirely abandoned as desperate.

At the time when Prickett gave the mortgage, Parsons, the stock agent, gave to him two papers, thus:

'Whereas, Henry Prickett, obligor, has executed a note and mortgage in favor of the Fox River Valley Railroad Company, a body corporate, created by the laws of the State of Wisconsin, bearing date on the first day of September, A.D. 1857, payable in ten years from the first day of September, A.D. 1857, for the sum of $2000, with interest annually at the rate of 8 per centum per annum, from and after the said first day of September, A.D. 1857. And whereas said note and mortgage have been received in payment of twenty shares of the capital stock in said company. Now, therefore, in consideration of the relinquishment and assignment, by the said obligor to the said company, of so much of the dividends on said stock which he may become entitled to as shall be sufficient to pay the interest on said note, the said company agree not to demand said interest from him, and in case said note and mortgage shall be negotiated by said company, then said company agree to save him harmless from said interest. And the said obligor hereby assigns to the said company so much of any dividend to which he may become entitled on said shares as shall be sufficient to pay off said interest, and agree to pay said principal sum when the same shall become due.

'And it is further understood that this agreement of the said company to relinquish said interest, or to secure the said obligor harmless therefrom, shall not be a defence on his part against the payment of such interset, if said note and mortgage shall be in the hands of a third party as security or otherwise. Nevertheless said company will at all times punctually pay and discharge the same.

'In witness whereof the board of directors of said company have caused these presents to be signed by their duly constituted secretary, and the said obligor has also set his hand and seal, on this first day of September, A. D. 1857.

'C. H. MILLER, Secretary.

[SEAL.] 'HENRY PRICKETT.'

'STOCK CERTIFICATE.

'To the Secretary of the Fox River Valley Railroad Company of Wisconsin.

'SIR: This is to certify that Mr. Henry Prickett, of McHenry County, Illinois, is entitled to a certificate of twenty shares of the capital stock of the Fox River Valley Railroad Company, he having executed a mortgage for the same to this company, provided the property described in said mortgage is free from other incumbrances.

'W. G. PARSONS, Stock Agent.

'September 1st, 1857.'

The court below dismissed the bill for foreclosure, and the complainant brought the case here.

Mr. M. H. Carpenter, for the appellant, contended that none of the material allegations of the answer were proved, and that most of them were disproved.

That as to what was said at public meetings, or even the flattering prospects held out at any time, however, improper they might have been, prudentially considered, to have been made, they constituted no bar to the foreclosure prayed for; that many of them were not made in the hearing of Prickett; that many were not made by agents of the company; that those which were made to him and by agents of the company were representations of the parties' opinions, or belief, or expectations-or mere predictions-as to the increase of everybody's property about Richmond, in case the road should be made; matters, therefore, not in the nature of representations of existing facts, but matters of speculation and matters about which Prickett could form his own judgment independently of the parties expressing their anticipations.

That, however, the case might stand as between Prickett and the road, it was plain that Sawyer was an assignee bon a fide and for value of the mortgage, and that by a formal instrument, executed in writing at the same time when the mortgage was given, Prickett had bound himself to pay it to any such holder.

1. We concede that in an ordinary case-a case where a man having no knowledge of facts more than another with whom he deals standing in no position of superiority or confidence to him expresses simply his anticipations-merely prophecies-in such case the failure of the anticipations, the error of the prophecies, cannot be set up by the other party to relieve himself of the consequences of a contract by him fairly and deliberately entered into.

But that is not this case. Here directors of a road, greatly embarrassed-for before 1857 Sawyer, with other directors, had been compelled to advance their private credit to the road-these directors send out persons as their agents to farms and country villages to get subscriptions. A 'stock agent' attends the party. All of the persons sent know perfectly well that the road had been organized long before, and that it had no money, but was insolvent. With this knowledge they go among poor farmers; they conceal its real condition; they intentionally produce upon the minds of the parties of whom they solicit subscriptions and mortgages to build the road, the false impression that the company was able soon to build and would soon build the road, and that soon it would be in full operation. This fact they must have known was false.

Then it must be constantly kept in remembrance that the men making these representations were sharp, intelligent men of business, coming from Milwaukee, the seat of knowledge, thoroughly informed about everything, dealing with a poor and confiding farmer and his wife, representing to him and her that which they knew that neither of them could, in the nature of things, have any information about.

The relation in which such men as Conover, and Parsons, and the other persons coming from Milwaukee stood in relation to such people as Prickett and his wife, was a confidential relation, as every relation is when a person ignorant of facts, not highly intelligent, and in a walk of life where everything like suspicion is disarmed, is approached by an imposing, practiced man of business, from a city, thoroughly conversant with the matter on which he is bent. In the hands of such men as came after them from Milwaukee, Prickett and his wife were in the view of equity not much better than children. She, it seems, could not write. She signed the mortgage by a mark.

Sibley denies that he made the representations which Prickett swears that he did make. The matter is unimportant. Parsons is a witness to the mortgage. He may have made them. If so, the company is more immediately connected with them, for he was its 'stock agent.' That the representations were made is not doubted; that they operated to decoy and to deceive is certain. The company was the causa causans, the cause causative, of them all. It sent its agents to Richmond. Those agents got up the meetings, and those agents originated, directed, and carried on, directly or through instruments, all that was done.

In short, the entire scheme of obtaining these subscriptions and mortgages was an immoral proceeding, and one which equity must look at with disgust. The concealment of the real facts in the case, and the real condition of the company, and of the real purpose for which the mortgages were obtained, and the representations made (necessarily implying the sound fiscal condition of the company and its ability to soon complete the road, and exciting by fraudulent means unfounded hopes in the minds of the subscribers of large pecuniary benefits to accrue from their subscriptions), present a case of fraud practiced upon unwitting victims, entirely ignorant of the real truth of the matter and of the real purpose and design of these directors; one which, had the subscribers known it, would have prevented these subscriptions from being taken and the mortgages from being executed.

2. The complainant is not an innocent holder. He had been a long time intimately connected with the road as a director, a creditor, and an agent. He had himself solicited subscriptions; he knew how these farm mortgages were got and what was the expectation of the farmers giving them; he knew it not only by what was notorious in the whole region, but by his own direct communication, observation, and knowledge. After 1856, indeed, he kept a kind of out' of the directorship-'one side'-and proposed to keep away.' No doubt he did. He was now a large creditor and vitally interested. He made others his instruments. He was careful not to be a director in form; while obviously one in reality. Finally, when the other directors have got the mortgages, a division is made, contractors get some, and the money-lenders the rest. What is it to the purpose that Sawyer did not solicit this mortgage? and that it was got after he had stopped his solicitations. He took what other directors got, and they doubtless took what he got. That which is to the purpose is, that in 1855 and 1856 the road was greatly embarrassed; that Sawyer and other directors lent it money; that soon afterwards these mortgages were taken, and that now they are found in the hands of Sawyer and these directors, Sawyer seeking to foreclose the one which came to him. The whole case is one-we repeat it-on which a chancellor will look with reprobation.

3. There was an entire failure of consideration for which the note and mortgage in question were executed.

The actual consideration for which the note and mortgage were given was in the circumstances and upon the representations that accompanied their execution-a railroad from Richmond to Milwaukee, to be very soon fully completed and equipped, and in running order, giving increased value to the lands of the subscribers, and bringing in a large annual revenue upon their stock, and reimbursing them to the full extent of their subscriptions. Instead of this they received absolutely nothing for the subscriptions. No road was ever built, nor was any road really expected to be built by the parties procuring the subscriptions. As soon as the mortgages were got in, little or no further work was done upon the road. The entire enterprise was abandoned from that time forward. The company was all the time hopelessly insolvent.

Mr. Justice HUNT delivered the opinion of the court.

The law gives a different effect to a representation of existing facts, from that given to a representation of facts to come into existence. To make a false representation the subject of an indictment, or of an action, two things are generally necessary, viz., that it should be a statement likely to impose upon one exercising common prudence and caution, and that it should be the statement of an existing fact. A promissory statement is not, ordinarily, the subject either of an indictment or of an action. The law also gives a different effect to those promissory statements based upon general knowledge, information, and judgment, and those representations which, from knowledge peculiarly his own, a party may certainly know, will prove to be true or false. It becomes necessary to classify, to some extent, the representations alleged to have been made in the present case.

1st. The facts alleged to have been represented as actually existing, but which it is said did not exist, are the following, viz., that the Fox River Railroad Company was an organized incorporation; that McConnell appeared as a subscriber for stock to the amount of $1500, when, by secret agreement with the company, he was a subscriber for $500 only; that one Woodell stood in the same position, giving the amounts; that one Sibley had become a subscriber for stock, and given his note and mortgage for the same, the amount not being specified; and that Conover represented himself as one of the officers of the company.

2d. The promissory representations, as might be expected, cover a larger space. Thus it is said to have been represented, that the farms and lands of the contributors would be greatly enhanced in value; that the wheat market of Milwaukee was a better market than that of Chicago, and that they would be able to command five cents more per bushel for their wheat after the road should be built; also that the road should be constructed and equipped within one year; also that the company would pay large dividends upon its capital stock; that where farmers and others became subscribers for stock, and gave their mortgages for the same on long time, drawing eight per cent. interest, that the company, from its dividends, would pay the interest on such notes, and that the balance of the dividends, after paying the interest, would be sufficient to pay the principal of the said notes when the same should become payable; and the defendant testifies that it was represented to his wife that it would be an everlasting benefit to her to sign the mortgage; that the railroad would probably make thirty per cent., and that it would give her and her family six hundred dollars a year always.

It is scarcely credible that Prickett should have believed that the persons making representations like these, intended to bind themselves to their fulfilment. That Prickett may have believed the prophecies, is possible; that he may have understood the makers to believe them is possible, as it is possible the makers did believe them. But that Prickett believed the makers to have undertaken for the accomplishment of the results promised, is not to be believed. It is contradicted by all the facts in the case. A man of common intelligence, or of ordinary prudence and caution could not have so believed.

He did not ask that they should enter into such engagements. He did not stipulate that his obligation to pay his note and mortgage should depend upon the realization of the rich promises made to him. On the contrary he made his subscription, gave his note and mortgage to secure its payment, and relied upon the success of the enterprise to indemnify and to enrich him. If there were dividends to pay the interest, he would not be required to pay it. If there were dividends applicable to the payment of the principal, the principal would also be discharged. If there were no dividends, or dividends to pay a portion only of his obligation, he must have known and understood that he had pledged his farm to the payment of the residue. If his present theory is correct, instead of giving security to them, Prickett should have required a bond and mortgage from the company, as the actual responsibility for results would rest on the company alone. We are satisfied that such representations, if made, were not relied upon by Prickett; that they did not form the inducement and consideration of his subscription.

This view is sustained by the additional writing made at the time the note and mortgage were executed. That paper recites the execution of the note and mortgage and their receipt in payment of the stock subscription; it stipulates that so much of the dividends of the stock as shall be sufficient to pay the interest on the note and mortgage is relinquished to the company, the company agreeing not to demand the interest, but to save Prickett harmless from the same. This would be well enough except for the two agreements immediately following in the same paper, viz., that Prickett undertakes in any event to pay the principal when it matures, and that the provision in relation to interest shall not be a defence on the part of Prickett to the payment of the interest, if the note or mortgage shall be in the hands of a third party, either as security or otherwise. So long as he bound himself, at all hazards, to pay the principal, and to pay the interest if the company should transfer the note, it is impossible to credit the theory that he relied upon the alleged promises and expectations as statements which the makers bound themselves to make good to him.

It is alleged that the representation was made that the road should be constructed and equipped, and in full operation, within one year from the date of the giving of the note and mortgage. Such a promise by parties having the means of knowledge of its falsity, from their position as managers and directors of a railroad, might in law stand upon a different basis. We do not examine this point, as there is no evidence of such statement by any one professing to have knowledge, or that there was knowledge of its falsity, if made. Prickett testifies that Conover stated that the rolling stock would be on in eighteen months. His allegation in his answer and his evidence do not agree. It is not proved that Conover was authorized to make the statement, or that he did not believe it to be true.

It is difficult to see how an action or a defence can be based upon promissory representations of the character we have considered, and we are of the opinion that they were the expressions of hopes, expectations, and beliefs, and that neither party understood, or had the right to understand, that they were to be received as statements of facts which any one was bound to make good, or upon which the validity of the subscription should depend.

The alleged representation of existing facts requires consideration.

1st. It is stated that it was represented that the railroad in question was duly incorporated and fully organized. The statement, if made, is sustained by the evidence. It appears that the company had a regular charter; that it was organized by the election of directors, the choice of a president and secretary; and that it had expended considerable amounts of money in grading its road and in purchasing materials for its construction.

2d. It is said that the defendants were influenced by, and were deceived and defrauded by, a pretended subscription for $1500 of the capital stock of the road, made by McConnell, a man of wealth, of prudence, and caution, in whose judgment and discretion great confidence was placed, while in truth, by some secret agreement with the company he was a subscriber for $500 of stock only. The attempted proof of this allegation is a failure. It is proved on the other hand by the officers of the company, and by McConnell himself, that McConnell made a subscription for $1500; that it was a valid, bon a fide subscription; that there was no condition, limitation, or qualification of it by any agreement, secret, or otherwise, and that he settled and arranged it as a subscription for $1500.

3d. It is alleged that one John Woodell subscribed $1000 upon a similar understanding or agreement. There is no proof to sustain the allegation. Prickett says that he has so heard, but that he has no knowledge on the subject.

4th. It is said that the persons obtaining the subscription caused it to be represented that John Sibley, a man of wealth, of integrity, and of influence, had subscribed largely to the capital stock of the company. Prickett testifies that Sibley told him he had mortgaged his house and lot for stock, and that it would be a good thing, and that he and others induced him to sign. In answer to a question by his own counsel, 'Would you have become a subscriber to the capital stock of this company, except from the fact that McConnell became a subscriber and the other parties you have named?' he says: 'If they had not represented as they did, and if McConnell and other leading citizens of the town had not subscribed, I certainly should not; but the representation was an inducement to make the farmers subscribe.' 'See here, you put in $2000, and you get $600 for life. Is not that enough?' In effect, he says that he should not have subscribed except that McConnell and the others did so, but it is apparent that the controlling influence was the idea that if he subscribed for $2000 of the stock he should get a return of $600 for life.

To make this alleged representation a defence to the mortgage we must believe, first, that it was actually made. Prickett says that it was made. Sibley testifies positively that he never made it, that he had subscribed for $500 of stock in a road of Illinois having the same name, with which this was intended to connect, that he told Prickett of that subscription, but that he had never subscribed to stock in this road, and had never so stated to Prickett or to any one. If any statement was made it was more likely to have been made as to the road where he did own stock than to this one.

It must be believed, secondly, that Sibley was the agent of the company by whose acts or declarations they would be bound. Sibley denies any agency or authority, in fact or assumed, and there is no reasonable evidence to the contrary. He states that as a citizen, and one desirous to have the road built, he solicited subscriptions, and that he acted in this capacity only.

And lastly, it must be believed that Prickett relied upon the statement, that it was an inducement to him to become a subscriber. This has been sufficiently illustrated by what has already been said. These are all the allegations of misrepresentations in regard to existing facts. The evidence to sustain them is too weak to justify the decree.

The counsel for the defendants insists further that there has been a failure of consideration, and that a defence on that ground arises. We do not so understand it. The defendant received what he bargained for, to wit, a certificate that he was entitled to twenty shares of the capital stock of the company. He can, so far as the case shows, obtain his formal shares upon presentation of his certificate. The fact that the road is unprofitable, or that it has never been completed, does not entitle one who has paid in his subscription to the capital stock to recover it back, nor does it furnish a justification for a refusal to pay when the subscription has not, in fact, been paid. Moneys so paid or subscribed belong to the creditors of the corporation.

Nor does a defence arise from the separate paper in relation to the non-payment of interest, which has been before referred to. The paper expressly provides that it shall furnish no defence to the payment of interest if the note and mortgage shall be transferred to another party. It is the personal, separate undertaking of the company to save him (Prickett) harmless from the ultimate payment of interest, leaving Prickett to pay the interest if the security shall be transferred, and to resort to the company for reimbursement. The paper does not require that there should be an absolute transfer of the interest and title to the mortgage to cut off the defence. A transfer conditionally, or as security, is sufficient.

We see no reason, however, to doubt that the plaintiff is a bon a fide holder. He paid a portion of the amount of the mortgage in money, and cancelled a valid debt against the company for the residue. He had no notice of any defence to the note, and received the note before its maturity. Under the rulings of this court it is not necessary to constitute a bon a fide holding that the value should have been paid at the time of receiving the security. A past consideration is sufficient.

We have recently decided that the rule of bon a fide holding applies to a case where the proceeding is to foreclose a mortgage accompanying a note, with the same force as when the suit is brought upon the note itself.

The plaintiff had not been a director for some time previously to the taking of this mortgage, and had no part in getting up this or the other mortgages. The proof shows a large expenditure in grading and preparing, and in the purchase of materials, after the giving of this mortgage. For what reason the enterprise failed does not appear. There is no evidence of fraud or bad faith.

The defendant's position is an unfortunate one, but we do not discover any principle upon which he can justly avoid the payment of his mortgage.

REMANDED FOR FURTHER PROCEEDINGS.

title: Sawyer v. Prickett/Opinion of the Court