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Moores v. Citizens' National Bank/Opinion of the Court

This is an action against a national bank to recover the value of a certificate of stock therein, which the bank had refused to recognize as valid. The amended petition and other pleadings are stated in the report of the case at a former stage, at which this court, for an erroneous ruling of the circuit court on a question of the statute of limitations, reversed a judgment for the defendant, and ordered a new trial. 104 U.S. 625. A recital of the pleadings is unnecessary to the understanding of the case as now presented. The undisputed facts, as appearing by the admissions in the petition, by the evidence introduced by the plaintiff before the jury at the new trial, and by the defendant's admissions at that trial, were as follows: The defendant was organized in 1864, under the act of Congress on June 3, 1864, c. 106, the twelfth section of which provides that the capital stock shall be 'transferable on the books of the association in such manner as may be prescribed by the by-laws or articles of association.' 13 St. 99, 102. The defendant's by-laws relating to transfers of stock were as follows:

'Sec. 15. The stock of this bank shall be assignable only on the books of the bank, subject to the restrictions and provisions of the act, and a transfer book shall be kept, in which all assignments and transfers of stock shall be made. No transfer of the stock of this association shall be made, without the consent of the board of directors, by any stockholder who shall be liable to the association, either as principal debtor or otherwise; and certificate of stock shall contain upon them notice of this provision. Transfers of stock shall not be suspended preparatory to a declaration of dividends; and, except in cases of agreement to the contrary, expressed in the assignment, dividends shall be paid to the stockholder in whose name the stock shall stand on the day on which the dividends are declared.

'Sec. 16. Certificates of stock signed by the president and cashier may be issued to stockholders, and the certificate shall state upon the face thereof that the stock is transferable only upon the books of the bank; and when stock is transferred, the certificates thereof shall be returned to the bank and canceled, and new certificates issued.'

The defendant's capital stock was 1,000 shares of $100 each, the whole of which was in fact, and was alleged in the petition to have been, taken and paid for, and certificates therefor issued to the stockholders, at the time of its organization in 1864. The president and cashier of the bank were charged with the keeping of its transfer-books and the issuing of certificates of stock, and the books of the bank were always open to the inspection of the directions. On July 15, 1867, G. Volney Dorsey was president and Robert B. Moores was cashier of the bank, and said Moores, who had previously owned 275 shares of the stock, appeared on the books of the bank to be still the owner thereof. He and John B. C. Moores, the plaintiff's husband, were sons of William B. Moores. On that day the plaintiff agreed to lend $9,100 of her own money to Robert and William for use in their private business; they agreed to give her, as security for its repayment, a certificate of 91 shares, which Robert represented to her that he owned, and also the contract of guaranty hereinafter set forth; and Robert sent to the plaintiff's husband, as her agent, the following letter and certificate:

'CITIZENS' NATIONAL BANK OF PIQUA,

'PIQUA, Q., July 15, 1867.

'JOHN: Herewith I hand you the stock transferred to Carrie. I     don't know what day I will be down, and you can keep the      contract there, and I will sign it the first time I am down. I will have to take a receipt for the stock from father, to     file with my papers, to show where the stock is gone to. All     well; may be down any day.

'Y'rs,

R. B. MOORES.'

'THE CITIZENS' NATIONAL BANK OF PIQUA,

'No. 56. STATE OF OHIO. 91 Shares.

'This is to certify that Mrs. Carrie A. Moores is entitiled     to ninety-one shares of one hundred dollars each of the      capital stock of the Citizens' National Bank of Piqua,      transferable only on the books of the bank, in person or by      attorney, on the surrender of this certificate.

'Piqua, O., July 15, 1867.

[Seal.]

'ROB'T B. MOORES, Cashier.

G. VOLNEY DORSEY, President.'

This certificate was in the usual form of printed certificates used by the bank, and bore the genuine seal of the corporation, and the genuine signatures of the president and cashier; and the whole certificate, except the printed part and the president's signature, was in the cashier's handwriting, filled up by him in one of two or three blanks signed by the president and left with him to be used if needed in the president's absence.

Upon receiving the letter and certificate, the plaintiff paid the money to Robert B. Moores; and on July 18th he and William signed and sent to her the following contract:

'For value received, namely, the sum of ninety-one hundred     dollars, Robert B. Moores has assigned and transferred to      Caroline A. Moores ninety-one shares of stock of the      Citizens' National Bank of Piqua, Ohio.

'Now it is agreed that the said Caroline A. Moores shall,     upon demand by Robert B. Moores, or his assigns, reassign to      said R. B. Moores the said stock for the same amount. And it     is also agreed that, whenever the said Caroline A. Moores      shall require it, the said Robert B. Moores shall purchase      said stock at the amount aforesaid, and pay the same to her      in cash. And in the mean time it is agreed, and the said     Robert B. Moores and William B. Moores do hereby guaranty and      assure to said Caroline A. Moores an annual dividend upon      said stock of not less than ten per cent. upon the par value     of said stock, namely, ninety-one hundred dollars, which      guaranty shall be performed and fulfilled at the end of each      year herefrom, or at the time of each dividend declared, if      such dividend shall be declared oftener than once a year, and      all deficiencies in said dividends shall be made good at the      time of such repurchase or transfer to R. B. Moores.

'In witness whereof, the said Caroline A. Moores and J. B. C.     Moores, her husband, and Robert B. Moores and William B.      Moores, hereunto set their hands on this 15th day of July,      1867.

'CAROLINE A. MOORES.

'J. B. C. MOORES.

'robt. b. moores.

'w. b. moores.'

Robert B. Moores surrendered no certificate to the bank, and made no transfer to the plaintiff on its books. The plaintiff had no other knowledge of the rule requiring the surrender of an old certificate of stock before the issue of a new one, or of any fraud on the part of Robert, than was obtained by her reading and possession of the certificate. The value of the stock of the bank at that time was 90 per cent. of its par value. Robert B. Moores was insolvent, and the money lent to him by the plaintiff was never repaid.

The plaintiff put in evidence two letters to her husband from Dorsey, the president of the bank,-one dated June 25, 1872, stating that the writer had just learned that he held a certificate of stock purporting to be issued by the bank, and asking for its number, date, and amount; and the other dated July 5, 1872, the body of which was as follows: 'There is no such certificate as mentioned in yours of June 27th on our books. No. 56 is marked on the stub in our certificate book 'destroyed,' in R. B. Moores' handwriting. Your wife's name was never entered among our stockholders, and the certificate is a fraud. We never heard of this certificate until you mentioned it to Dr. Parker, who first informed me of it.'

Robert B. Moores and Dorsey, being called as witnesses for the defendant, testified that it had no interest in the transaction of July 15, 1867. Moores testified that at that date he had pledged to Jason Evans and other persons all the stock he had previously owned, and did not own any stock; and that he issued the certificate to the plaintiff without any autority from the bank, or any knowledge of the other officers. Dorsey testified that he had no knowledge of the issue of the certificate until June 25, 1872, and that the bank never paid any dividends upon it; and he produced the certificate book of the bank, which showed the stub of a certificate, in its regular order, corresponding in number with that produced by the plaintiff, and having the word 'destroyed' upon it in the handwriting of Robert B. Moores.

The plaintiff offered in evidence, and the court declined to admit, the record of a meeting of the board of directors of the bank, on August 9, 1869, containing the following entry: 'On motion, the following resolution was adopted and ordered to be placed upon the minutes: Whereas, Robert B. Moores, who was the owner of 275 shares of the capital stock of this bank,-evidenced by certificate No. forty-seven (47) for fifty shares, dated May 2, 1867; certificate No. forty-eight (48) for fifty shares, dated May 2, 1867; certificate No. forty-nine (49) for sixty-five shares, dated May 2, 1867; certificate No. 53(53) for seventy shares, dated June 11, 1867; and certificate No. fifty-four (54) for forty shares, dated June 11, 1867-became indebted to this bank in the sum of thirty-seven thousand two hundred and forty-seven 29-100 dollars, ($37,247.29,) and did, on the sixteenth day of January, 1868, transfer one hundred and eighty-five shares of said stock, and on the fifteenth day of May, 1869, did transfer ten shares of said stock, on the books of this bank, to G. Volney Dorsey, in consideration that said G. Volney Dorsey pay to this bank the sum of nineteen thousand five hundred dollars of said indebtedness; and whereas, Jason Evans, who became the holder of seventy shares of said stock, issued as aforesaid, and transferred to him by the said R. B. Moores on the books of this bank, September 4, 1867, as per certificate No. 59, did, on the twentieth day of February, 1869, transfer to G. Volney Dorsey, on the books of this bank, by his power of attorney, all his right, title, and interest in the same: therefore, said transfers, as hereinbefore stated, are approved and affirmed by the directors of this bank.'

The plaintiff also offered evidence that there were one or two other instances in which stock was issued by the cashier without any certificate being surrendered. But as she offered no evidence, other than the directors' record of August 9, 1869, that the other officers of the bank had any knowledge at the time of such transactions, or subsequently recognized them, the court excluded the evidence. The plaintiff offered to prove that there was an arrangement between Robert and her husband, by which interest, equal to 10 per cent. on $9,100, on a debt due from the latter to his father, was to be treated as dividends upon this stock. But the court excluded the evidence as immaterial.

The court instructed the jury that the plaintiff, having knowledge of the fact that Robert B. Moores, upon whom she relied to have the stock transferred to her, was acting for himself as well as in his capacity of cashier, in reference to the matter of issuing this certificate, she was not an innocent holder of the stock, and as the certificate was issued without authority, in fraud of the rights of the bank, they should return a verdict for the defendant. A verdict was returned accordingly, and judgment rendered thereon, and the plaintiff excepted to the exclusion of evidence and to this instruction, and sued out this writ of error.

Mr. John W. Warrington and Mr. E. W. Kittredge for plaintiff.

[Argument of Counsel from pages 162-163 intentionally omitted]

Mr. William M. Ramsey and Mr. E. M. Johnson for defendant.

djq Mr. JUSTICE GRAY delivered the opinion of the court.

The petition alleges that the false and fraudulent representations made by Robert B. Moores, and relied on by the plaintiff, that he had assigned and transferred the stock in question to her on the books of the bank, were made by him both as cashier and as stockholder; that the bank afterwards fraudulently permitted and procured him to transfer all the stock owned by him, or standing in his name, to its president, for its benefit; that the bank, through its cashier, fraudulently concealed from her the facts that no transfer had been made to her on its books at the time of the issue and delivery of the certificate to her; that the certificate was not authorized or recognized as valid by the bank; and that the stock standing in his name had been transferred on its books to its president; and concludes by alleging that by reason of such fraudulent conduct and acts of the bank the certificate was invalid and worthless in her hands. But the evidence offered at the trial does not support the allegations of fraudulent conduct on the part of the bank.

The petition alleges 'that the plaintiff relied upon the representations of said Robert B. Moores, as cashier and officer of the defendant, that the said certificate was duly issued, and that the stock had been duly transferred by said Robert B. Moores to the plaintiff on the books of said bank; and said plaintiff relied upon said certificate of stock which she received as genuine and valid for what it purported to be.' And at the trial the plaintiff relied upon the representations made to her by Robert B. Moores, orally and in the letter inclosing the certificate, and in his contract of guaranty, as well as upon those arising out of the certificate itself. The two may be conveniently considered separately.

His representations outside of the certificate may be first disposed of. The plaintiff dealt with Robert B. Moores, and not with the bank. Her agreement was with him personally, and she lent her money to him for his private use. His representations to her that he owned stock in the bank, and that such stock had been transferred to her, were representations made by him personally, and not as cashier; and there is no evidence that the plaintiff understood, or had any reason to understand, that those representations were made by him in behalf of the bank. The duty of transferring his stock to the plaintiff before taking out a new certificate in her name, was a duty that he, and not the bank, owed to the plaintiff. The making of such a transfer was an act to be done by him in his own behalf as between him and the plaintiff, and in the plaintiff's behalf as between her and the bank. There is nothing, therefore, in his extrinsic representations for which the bank is responsible.

The certificate which he delivered to the plaintiff was not in his name, but in hers, stating that she was entitled to so much stock, and showed, upon its face, that no certificate could be lawfully issued without the surrender of a former certificate, and a transfer thereof upon the books of the bank. The by-laws, passed under the authority expressly conferred by the act of congress, under which the bank was organized, containing a corresponding provision, designed for the security of the bank, as well as of persons taking legal transfers of stock without notice of any prior equitable title therein. Union Bank v. Laird, 2 Wheat. 390; Black v. Zacharie, 3 How. 483, 513. The very form of the certificate was such as to put her upon her guard. She was not applying to the bank to take stock, as an original subscriber or other wise; but she was bargaining with Robert B. Moores for stock which she supposed him to hold as his own. She knew that she had not held or surrendered any certificate, and she never asked to see his certificate, or a transfer thereof to her; and he, in fact, made no surrender to the bank or transfer on its books. She relied on his personal representation, as the party with whom she was dealing, that he had such stock; and she trusted him as her agent to see the proper transfer thereof made on the books of the bank. Having distinct notice that the surrender and transfer of a former certificate were prerequisites to the lawful issue of a new one, and having accepted a certificate that she owned stock, without taking any steps to assure herself that the legal prerequisites to the validity of her certificate, which were to be fulfilled by the former owner and not by the bank, had been complied with, she does not, as against the bank, stand in the position of one who receives a certificate of stock from the proper officers without notice of any facts impairing its validity.

Of the great number of cases referred to in the thorough and elaborate arguments at the bar, we shall notice only some of the most important. None of those cited by the learned counsel for the plaintiff affirm a broader proposition than this: A certificate of stock in a corporation, under the corporate seal, and signed by the officers authorized to issue certificates, estops the corporation to deny its validity, as against one who takes it for value and with no knowledge or notice of any fact tending to show that it has been irregularly issued.

When a corporation, upon the delivery to it of a certificate of stock with a forged power of attorney purporting to be executed by the rightful owner, issues a new certificate to the present holder, who sells it in the market to one who pays value for it, with no knowledge or notice of the forgery, the corporation is doubtless not relieved from its obligation to the original owner, out must still recognize him as a stockholder, because he cannot be deprived of his property without any consent or negligence of his. Midland Ry. v. Taylor, 8 H. L. Cas. 751; Bank v. Lanier, 11 Wall. 369; Telegraph Co. v. Davenport, 97 U.S. 369; Pratt v. Taunton Copper Co. 123 Mass. 110; Pratt v. Boston & A. R. R. 126 Mass. 443. And the corporation is obliged, if not to recognize the last purchaser as a stockholder also, at least to respond to him in damages for the value of the stock, because he has taken it for value without notice of any defect, and on the faith of the new certificate issued by the corporation. In re Bahia & S. F. Ry. L. R. 3 Q. B. 584. Whether, before the last sale has taken place, the corporation is liable to the holder of the new certificate, is a question upon which there appears to have been a difference of opinion in England. According to the decision of Lord NORTHINGTON in Ashby v. Blackwell, 2 Eden, 299, S.C.. Ambler, 503, it would seem that the corporation would be liable. According to the decisions of Sir JOSEPH JEKYLL in Hildyard v. South Sea Co. 2 P. Wms. 76, and of the court of appeal Simm v. Anglo-American Tel. Co. 5 Q. B. Div. 188, it would seem that it would not, because the holder of the new certificate takes it, not on the faith of that or any other certificate of the corporation, but on the faith of the forged power of attorney. However that may be, it is clear that the corporation is not liable to any one taking with notice of the forgery in the transfer, or of any other fact tending to show that the new certificate has been irregularly issued, unless the corporation has ratified or received some benefit from the transaction.

In Hart v. Frontino Mining Co. L. R. 5 Exch. 111, the plaintiff, a bona fide purchaser of the shares, had paid assessments thereon to the company upon the faith of the certificate issued by it to him after his purchase. In Barwick v. English Joint-stock Bank, L. R. 2 Exch. 259, and in Mackay v. com. Bank, fraud of its agent, and was held liable upon that ground. The decision in Swift v. Winterbotham, L. R. 8 Q. B. 244, that a bank was liable upon its official manager's representation to one of its customers that the credit of a certain person was good, was reversed in the exchequer chamber. Swift v. Jewsbury, L. R. 9 Q. B. 301. The decision in the exchequer chamber in The Queen v. Shropshire Ry. L. R. 8 Q. B. 420, that a railway company, owning shares of its own stock, the legal title of which was registered in the name of one of its directors as trustee for the corporation, should transfer them to a person who, believing the director to be the absolute owner of the shares, had lent him money on the deposit of the certificate as security, was contrary to the judgment of the court of queen's bench, and was reversed in the house of lords. L. R. 7 H. L. 496.

The American cases on which the plaintiff principally relies are decisions in the courts of Connecticut, New York, Pennsylvania, and Maryland, the soundness of some of which we are not prepared to affirm, but all of which are distinguishable from the case at bar.

The leading cases in Connecticut and New York arose out of what have been known as the Schuyler frauds. Robert Schuyler, the president and general transfer agent of the New York & New Haven Railroad Company, issued, beyond the capital limited by its charter, but in the form prescribed by its by-laws, purporting to be transferable on its books on surrender of the certificates, a large amount of certificates of stock, annexed to which were printed forms of assignment and power of attorney.

In Bridgeport Bank v. New York & N. H. R. R. 30 Conn. 231, a bank which had received, as collateral security for money lent to a firm of which Schuyler was a member, certificates of stock so issued by him, was held entitled to maintain an action against the corporation for the value of these certificates, upon the single ground that it was admitted that when the plaintiff took these certificates the firm held more than an equal amount of genuine certificates.

In New York & N. H. R. R. v. Schuyler, 34 N. Y. 30, it appeared that Schuyler had issued, in one and the same form, large numbers of genuine as well as of false certificates, and had raised on both indiscriminately large amounts of money, which had been applied for the benefit of the corporation; that all his transations appeared on its books; and that the directors had for years been guilty of negligence, in not making any examination of the books, or of the conduct of the transfer office; and none of the purchasers of the false certificates, for the value of which the corporation was held to be liable, had any notice, or means of knowing, that they were not such as Schuyler was authorized to issue.

In Titus v. Great Western Turnpike, 61 N. Y. 237, the certificates upon which the corporation was held liable stated the stock to be owned by the person who, as officer of the corporation, issued them, not by the person to whom they were issued, and the latter had no notice of any fraud or irregularity in the issue.

In the other New York cases cited for the plaintiff the certificates had been purchased in good faith in the market. Bruff v. Mali, 36 N. Y. 200; McNeil v. ''Tenth Nat. Bank, 46 N. Y. 325; Moore v. Metropolitan Bank, 55 N. Y. 41; Holbrook v. New Jersey Zinc Co.'' 57 N. Y. 616. See Merchants' Bank v. Livingston, 74 N. Y. 223.

In Kentucky Bank v. Schuylkill Bank, 1 Pars. 180, the certificates upon which the corporation was held to be liable were in the hands of innocent purchasers without notice. The opinion in People's Bank v. Kurtz, 99 Pa. St. 344, 349, goes no further. On the other hand, in Wright's Appeal, 99 Pa. St. 425, where the president of a bank, having no authority to borrow money in its behalf, induced his aunt, a stockholder therein, to surrender to him her certificates of shares with blank powers of attorney, by means of false and fraudulent representations that they were needed to aid the bank; gave her his own note therefor, sold the stock, and applied the proceeds to his own use; and afterwards, by a fraudulent combination with the other officers of the bank, issued stock in excess of the lawful limit, and gave her new certificates for those that he had obtained from her,-it was held that he was her agent in the original transaction, and that, as she gave no value to the bank for the new certificates, the loss must fall upon her, and not upon the bank.

In Tome v. Parkersburg R. R. 39 Md. 36, there was no by-law requiring a surrender and transfer of old certificates before the issue of new ones, and no limit of the amount of stock to be issued; and it was not contended that there had been any overissue, or that the plaintiff had any notice of fraud or want of authority in the officers of the corporation.

In Western Maryland R. R. v. Franklin Bank, 60 Md. 36, the certificates were not issued to the plaintiff, but bought in the market, without any notice of their having been fraudulently or illegally issued.

In Hackensack Water Co. v. De Kay, to which the plaintiff has referred us, the court of errors of New Jersey said: 'Indeed, as is apparent from all the cases cited, the doctrine which vaidates securities within the apparent powers of the corporation, but improperly, and therefore illegally, issued, applies only in favor of bona fide holders for vaiue. A person hwo takes such a security with knowledge that the conditions on which alone the security was authorized were not fulfilled, is not protected, and in his hands the security is invalid, though the imperfection is in some matter relating to the internal affairs of the corporation, which would be unavailable against a bona fide holder of the same security.' 9 Stew. (N. J.) 548, 565.

The general doctrine was stated with like limitations by this court in the case of Merchants' Bank v. State Bank: 'Where a party deals with a corporation in good faith, the transaction is not ultra vires, and he is unaware of any defect of authority or other irregularity on the part of those acting for the corporation, and there is nothing to excite suspicion of such defect or irregularity, the corporation is bound by the contract, although such defect or irregularity in fact exists.' 10 Wall. 604, 644.

This review of the cases shows that there is no precedent for holding that the plaintiff, having dealt with the cashier individually, and lent money to him for his private use, and received from him a certificate in her own name, which stated that shares were transferable only on the books of the bank and on surrender of former certificates, and no certificate having been surrendered by him or by her, and there being no evidence of the bank having ratified or received any benefit from the transaction, can recover from the bank the value of the certificate delivered to her by its cashier.

The exceptions to the exclusion of evidence cannot be sustained. The evidence that in one or two other instances stock was issued by the cashier without the surrender of old certificates, and that the directors of the bank approved certain transfers to its president of shares once belonging to the cashier, was quite insufficient to prove that the bank ratified or received any benefit from the issue of the certificate to the plaintiff, or was guilty of any fraud towards her. The action of the directors was adapted to the single purpose of securing payment of a debt due from the cashier to the bank. The evidence introduced and offered being insufficient to support a verdict for the plaintiff, the circuit court rightly directed the jury to return a verdict for the defendant. Randall v. Baltimore & O. R. R. 109 U.S. 478; S.C.. 3 SUP. CT. REP. 322.

Judgment affirmed.

Mr. Justice BRADLEY dissented.

Mr. Justice MATTHEWS, having been of counsel, did not sit in this case, or take any part in its decision.


text: Talk:Moores v. Citizens' National Bank/Opinion of the Court

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Ware v. Galveston City Company (111 U.S. 170)

Walter Gresham, for appellants.

W. H. Goddard, for appellee.

MATTHEWS, J.


text: Talk:Ware v. Galveston City Company (111 U.S. 170)


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Ware v. Galveston City Company (111 U.S. 170)/Opinion of the Court

This is an appeal from a decree dismissing a bill in chancery, upon general demurrer for want of equity. The complainants, also appellants, are the heirs at law of David White, deceased, citizens, respectively, of Alabama and Florida; the defendant, the appellee, is alleged to be a corporation, incorporated by an act of the congress of the republic of Texas, and a citizen of that state. It is alleged in the bill, which was filed October 11, 1880, that the republic of Texas, on January 25, 1838, issued a patent to Michael B. Menard, in consideration of $50,000, for one league and labor of land on and including the east end of Galveston island; that David White, the ancestor of the complainants, advanced and paid that sum for Menard, to secure repayment of which the latter executed and delivered his mortgage on the land to White. Menard at the time had associates, jointly interested with him in the purchase, and others became so subsequently, and the association was a partnership, with a view of organizing a joint-stock company for the sale of the land, for profit, in lots, and distribution of the net proceeds as dividends to shareholders, Menard being, however, the managing partner, and until April 18, 1837, holding the legal title, the indebtedness to White having been incurred in his own name, and the mortgage executed by him individually for the repayment of the same. About the date last mentioned, Menard released to one Triplett 640 acres of the land to compromise a conflicting claim of title; and afterwards, about June 15, 1837, the whole original tract, including that released to Triplett, was conveyed by all parties in interest, to trustees in trust, for the purpose of carrying into effect the original plan, Triplett and those interested with him becoming co-associates with Menard and his associates. To that end, the trustees were to issue 1,000 shares of stock, of which 400 were set aside to provide for certain certificates previously issued under the Menard interest, and the remaining 600 shares were to be sold and the proceeds applied first to the payment of expenses, and then to be divided, one-third to the Triplett interest and tow-thirds to the Menard interest, but the debt to White was to be provided for out of the Menard shares; and provision was made for issuing trustees' certificates to the individual owners of interests, which was in fact done, and the holders of certificates, which were assignable, became associated as the Galveston City Company. It is alleged, however, that out of the 600 shares, a number deemed sufficient for which no certificates were issued, but part of those which otherwise would belong to the Menard interest were reserved to be sold for the purpose of paying the debt to White, so as to relieve the Triplett interest from any charge on that account, and so as also to indemnify Menard individually against his liability therefor. The precise number of the shares thus set apart and appropriated, it is alleged, is not known; but it is charged that on March 10, 1851, 29 shares of the original number so appropriated still remained in the hands of the company undisposed of. On April 13, 1838, the holders of these certificates seem to have organized, as stockholders of a future corporation, the Galveston City Company, and elected five directors, to whom, as directors of the association, the legal title to the land was conveyed by the trustees. Thereafter the outstanding trustees' certificates were called in, and 'renewal certificates,' so called, were issued in exchange, which represented the shares of the company. It is further alleged that about November 7, 1838, the company, by Menard, its president and agent, but in his individual name, paid White $25,000 on account of the debt due to him out of the proceeds of the stock reserved for that purpose; and about the same time intrusted Menard, as agent of the company, with 50 shares of the reserved stock, for sale, to pay the remainder of the debt to White. Menard sold 21 of these shares and paid to White the proceeds thereof, being $10,550, in 1839, which, with the previous payment, is all that has been paid on account of the debt due to him, leaving $14,450 of the principal sum unpaid. On February 5, 1841, the stockholders of the association became incorporated by an act of the congress of the republic of Texas as the Galveston City Company, the defendant below. Long after the organization of the corporation, on March 10, 1851, Menard made a written report to the company of his agency in the sale of the 50 shares intrusted to him for the purpose of paying the debt to White. In that report he recounted the circumstances of the history of the transaction, and the facts as to the sale of the 21 shares, and the payment made to White, showing the balance due, as above set forth, for which he stated a suit was then pending against him individually, and for which he held the remaining 29 shares of stock. Valuing them at $5,800, which he estimated to be their market value, there would be a deficiency of $8,650 to provide for on the amount due to White. He also claimed that he was in advance for the company, in the sum of $13,000, on other accounts, and asked that the company make provision for his reimbursement by a par credit on its books for the full amount of $21,650. The board of directors, by resolution, admitted the correctness of Menard's statement of his account, and ordered a credit to him on its books for the amount stated. The suit referred to by Menard, as pending against him, had been brought in the name of one Lipscomb, administrator of White, the latter having died December 10, 1841, to recover the balance due to White's estate, and to enforce the lien of the mortgage upon the land. To this action Menard had pleaded the statute of limitations as a bar, and about May 20, 1951, it was dismissed, on his motion, for want of prosecution.

It is alleged that nothing further has ever been done by Menard, who died insolvent, in 1856, nor by the defendant, towards the payment of the debt due to White's estate; and that neither the plaintiffs nor the personal representatives of White had any knowledge, or by reasonable diligence could have learned, of the facts, of which they obtained information only within two years prior to the filing of the bill, in reference to the liability of the corporation as the principal, for whom Menard acted as agent, to pay the debt due to White, nor of the acknowledgment made of it by the company in 1851, as already detailed, nor of the trust of the 29 shares of stock appropriated for that purpose; and that, in fact, everything that would lead to such knowledge has been studiously concealed from them by the defendant, its officers, and agents. The bill prays for an account of what is due; that the amount be decreed to be a lien on the land of the defendant; that the 29 shares of stock alleged to have been reserved for the purpose be sold for the payment of the amount found to be due, and for general relief. It seemed to be supposed in argument that some support for this bill may be found in the allegations that charged the defendant as the successor in law, liable for their obligations, of the associates who were the undisclosed principals, on whose behalf Menard contracted the debt with White. But manifestly the statute of limitations that barred the claim against Menard, and the express lien of the mortgage, a defense not denied to have become perfect, as to them, would equally protect those on whose behalf Menard acted as agent, there being no circumstances of equity to prevent the operation of the statute in their favor. None such are alleged; the mere ignorance of the appellants, and even the concealment of the fact that Menard was merely an agent, and of those for whom he was agent, there being no fraud on their part charged, manifestly is insufficient for that purpose. It is equally plain that there is no trust as to the 29 shares of stock alleged to have been placed in Menard's hands as a fund for the payment by him of the debt to White. That arrangement is stated to have been intended as an indemnity to Menard against his own personal liability, and as a guaranty in favor of the Triplett interest. And when, in 1851, Menard made his report, and its recommendations were adopted by the company, the trust as stated seems rather to have been an out and out sale to him of these shares, for he has credit upon the books of the company for the amount of his advances and liabilities, and thus, as between himself and the company, becomes the principal debtor, and there is no ground for an inference that the shares in question were, or continued to be, in the control of the company. But even were this otherwise, it would be impossible to construe the arrangement into a trust for the benefit of White's estate. There was no privity, and no notice, and the arrangement obviously was merely an adjustment, made among the parties for their own convenjence, of the accounts between them, not intended to confirm or to confer any rights upon the appellants.

The objection that the suit should have been brought by a personal representative of White, and that it cannot be maintained by his heirs at law, seems also to be well taken, as no sufficient reason is alleged why the administrator, who prosecuted the suit for the foreclosure of the mortgage, might not have been complainant in the present suit. The claim itself, both as a debt and a lien upon the land, against the party with whom it was contracted, as we have said, is admitted to be barred by the lapse of time; there is no ground stated in this bill why, in equity, it should be revived against the appellee.

The demurrer was properly sustained, and the decree dismissing the bill is accordingly affirmed.


text: Talk:Ware v. Galveston City Company (111 U.S. 170)/Opinion of the Court


text:
Covell v. Heyman

Roger M. Butterfield, for plaintiff in error.

Lyman D. Norris for defendant in error.

MATTHEWS, J.

title: Covell v. Heyman


text: Talk:Covell v. Heyman

title: Talk:Covell v. Heyman


text:
Covell v. Heyman/Opinion of the Court

The defendant in error was the plaintiff in the state court, and brought her action of replevin for the recovery of specific personal property, to which she claimed title, and which she alleges was wrongfully detained from her by the plaintiff in error. The defendant below was deputy marshal of the United States, and, as such, had possession of the property replevied by virtue of an execution issued upon a judgment of the circuit court of the United States for the Western district of Michigan against Adolph Heyman, having taken the same by virtue of a levy under said execution, as the property of the judgment debtor. Judgment was rendered in the supreme court of the state for the plaintiff below, upon a finding in favor of her title to the property, reversing a judgment for the defendant below in the circuit court for the county of Kent. To reverse that judgment this writ of error is prosecuted.

The sole question presented for our decision is whether it was error in the state court to permit a recovery of the possession of property thus held, against a marshal of the United States or his deputy, for the rightful owner; and whether, on the other hand, it should not have adjudged in favor of the defendant below, that his possession of the property by virtue of the levy under the writ was, in itself, a complete defense to the action of replevin, without regard to the rightful ownership.

The case of Freeman v. Howe, 24 How. 450, was precisely like the present in its circumstances, except that there the process under which the marshal had seized and held the property replevied was an attachment according to the state practice in Massachusetts, being mesne process, directed, however, not against property specifically described, but commanding a levy, as in cases of ''fi. fa.'', upon the property of the defendant. Whether that difference is material is, perhaps, the only question to be considered, for the doctrine of that decision is too firmly established in this court to be longer open to question. The proper answer to it will be found by an examination of the principles on which the judgment in that case proceeded, and of those cases which preceded and of others which have followed it.

In the opinion in that case, Mr. Justice NELSON refers to the case of Taylor v. Carryl, 20 How. 583, as a conclusive and sufficient authority on the point. He said: 'The main point there decided was, that the property seized by the sheriff, under the process of attachment from the state court, and while in the custody of the officer, could not be seized or taken from him by a process from the district court of the United States, and that the attempt to seize it by the marshal, by a notice or otherwise, was a nullity, and gave the court no jurisdiction over it, inasmuch as to give jurisdiction to the district court, in a proceeding in rem, there must be a valid seizure and an actual control of the res under the process.' And referring to the grounds of the dissent in that case, he continues: 'The majority of the court was of opinion that according to the course of decision in the case of conflicting authorities under a state and federal process, and in order to avoid unseemly collision between them, the question as to which authority should for the time prevail, did not depend upon the rights of the respective parties to the property seized, whether the one was paramount to the other, but upon the question which jurisdiction had first attached by the seizure and custody of the property under its process.'

The opinion then proceeds to show that no distinction can be made, affecting the question, between process in rem and an attachment issued by a common-law court, although the latter is not the foundation of the jurisdiction, and the property seized is not the subject-matter of the suit, which is simply for the recovery of a debt, without a lien or charge upon the property, except that resulting from its seizure, as security for the judgment. The objection that the process was directed against the property of the defendant and conferred no authority upon the marshal to take the property of the plaintiffs in the replevin suit, is then answered, the court saying-'for the property having been seized under the process of attachment, and in the custody of the marshal, and the right to hold it being a question belonging to the federal court, under whose process it was seized, to determine, there was no authority, as we have seen, under the process of the state court to interfere with it.'

The opinion of the court then points out the error of Chancellor KENT in his statement, (1 Comm. 410,) that 'if a marshal of the United States, under an execution in favor of the United States against A., should seize the person or property of B., then the state courts have jurisdiction to protect the person and the property so illegally invaded.' Commenting on this statement, it is said that the effect of the principle, if admitted, would be to draw into the state courts, 'not only all questions of the liability of property seized upon mesne and final process issued under the authority of the federal courts, including the admiralty, for this court can be no exception, for the purposes for which it was seized, but also the arrests upon mesne and imprisonment upon final process of the person in both civil and criminal cases, for in every case the question of jurisdiction could be made;' and the court adds: 'We need scarcely remark that no government could maintain the administration or execution of its laws, civil of criminal, if the jurisdiction of its judicial tribunals were subject to the determination of another.'

To meet the objection that the party whose property had been wrongfully taken and withheld would be left without remedy, unless by virtue of citizenship he could sue in a federal court, the opinion then explains the remedy in such cases, by an ancillary proceeding in the court whose process has been made the instrument of the wrong,-a remedy the principle and procedured of remedy the principle and procedure of case of Krippendorf v. Hyde, 110 U.S. 276, S.C.. 4 SUP. CT. REP. 27, to restate and reaffirm.

The point of the decision in Freeman v. Howe, supra, is that when property is taken and held under process, mesne or final, of a court of the United States, it is in the custody of the law, and within the exclusive jurisdiction of the court from which the process has issued, for the purposes of the writ; that the possession of the officer cannot be disturbed by process from any state court, because to disturb that possession would be to invade the jurisdiction of the court by whose command it is held, and to violate the law which that jurisdiction is appointed to administer; that any person, not a party to the suit or judgment, whose property has been wrongfully, but under color of process, taken and withheld, may prosecute, by ancillary proceedings, in the court whence the process issued, his remedy for restitution of the property or its proceeds, while remaining in the control of that court; but that all other remedies to which he may be entitled, against officers or parties, not involving the withdrawal of the property or its proceeds from the custody of the officer and the jurisdiction of the court, he may pursue in any tribunal, state or federal, having jurisdiction over the parties and the subject-matter. And, vice versa, the same principle protects the possession of property while thus held by process issuing from state courts, against any disturbance under process of the courts of the United States, excepting, of course, those cases wherein the latter exercise jurisdiction for the purpose of enforcing the supremacy of the constitution and laws of the United States.

The doctrine of Freeman v. Howe, supra, was further defined by the decision in Buck v. Colbath, 3 Wall. 334, which checked and corrected an attempted misapplication of its principle, which, if permitted, would cover actions against the officer for trespasses not involving any interference with the property itself while in his possession. It was there satisfactorily shown that the officer was protected against such an action only in that class of cases where he could justify under process or order of a court directing expressly the very act alleged to be wrongful, and not in that other class where the writ or order, such as a writ of attachment or other mesne process, and the final process of execution upon a judgment, commands the seizure of property described not specifically, but only generally, as the property of the party named in the writ. In the latter, the officer acts at his peril, and is responsible in damages to the party injured for the consequences of any error or mistake in the exercise of his discretion in the attempt to enforce the writ. In the former, as he has no discretion, it is the court itself which acts, and the officer is protected in his obedience to its command. Of this class, the case of Conner v. Long, 104 U.S. 228, was an example; that of Buck v. Colbath, supra, fell within the latter. And in distinguishing that case from Freeman v. Howe, supra, Mr. Justice MILLER stated the principle of the latter decision; 'a principle,' he said, 'which is essential to the dignity and just authority of every court, and to the comity which should regulate the relations between all courts of concurrent jurisdiction;' 'that principle is,' he continued, 'that whenever property has been seized by an officer of the court, by virtue of its process, the property is to be considered as in the custody of the court, and under its control for the time being; and that no other court has a right to interfere with that possession, unless it be some court which may have a direct supervisory control over the court whose process has first taken possession, or some superior jurisdiction in the premises.' Here, it will be perceived that no distinction is made between writs of attachment and executions upon judgments, and that the principle embraces both, as indeed both are mentioned as belonging to the same class, elsewhere in the opinion. And there is nothing in the nature, office, or command of the two descriptions of process by which, so far as the question here involved is concerned, they can be distinguished. One is mesne process and the other final; but in the courts of the United States the attachment cannot be used, as in the practice of other jurisdictions, as means of compelling the appearance of the defendant, or of founding jurisdiction as a proceeding in rem. Both alike command the seizure of the property of the defendant without a specifie description, and in obeying the precept the officer exercises precisely the same discretion, and with the same consequences if he commits a wrong under color of it. The court has the same control over both forms of its process, and has custody of the property seized by virtue of them in the same sense. The circumstance that as to property held under an attachment the final judgment may direct its sale, while the execution is issued upon the proecipe of the party, and is executed without further order, cannot alter the relation of the court, either to the officer or the property. It has jurisdiction over the latter to meet and satisfy the exigency of either writ, and that jurisdiction can be maintained only by retaining the possession acquired by the officer in executing it. A third person, a stranger to the suit and claiming as owner, may prosecute his right to restitution in either case, in the same methods as pointed out in Krippendorf v. Hyde, supra, or he may pursue his remedy for damages against the officer, either personally for the trespass, as in Buck v. Colbath, supra, or for the breach of his official duty, upon his bond and against his sureties, as in the case of Lammon v. Feusier, 111 U.S. 17; S.C.. 4 SUP. CT. REP. 286.

The very point was involved in the decision in Hagan v. Lucas, 10 Pet. 400, where it was expressly held that property held by a sheriff under an execution from a state court could not be taken in execution by a marshal of the United States by virtue of final process upon a judgment in a federal court. Mr. Justice MCLEAN, delivering the opinion of the court, said: 'Had the property remained in the posession of the sheriff under the first levy, it is clear the marshal could not have taken it in execution, for the property could not be subject to two jurisdictions at the same time. The first levy, whether it were made under the federal or state authority, withdraws the property from the reach of the process of the other. * *  * A most injurious conflict of jurisdiction would be likely often to arise between the federal and state courts if the final process of the one could be levied on property which had been taken by the process of the other. The marshal or the sheriff, as the case may be, by a levy, acquires a special property in the goods, and may maintain an action for them. But if the same goods may be taken in execution at the same time by the marshal and the sheriff, does this special property vest in the one, or the other, or both of them? No such case can exist; property once levied on remains in the custody of the law, and it is not liable to be taken by another execution in the hands of a different officer, and especially by an officer acting under a different jurisdiction.'

That which cannot be done by final process is equally out of the reach of original or mesne process. The forbearance which courts of co-ordinate jurisdiction, administered under a single system, exercise towards each other, whereby conflicts are avoided, by avoiding interference with the process of each other, is a principle of comity with perhaps no higher sanction than the United States, it is something more. It between state courts and those of the United States, it is something more. It is a principle of right and of law, and therefore of necessity. It leaves nothing to discretion or mere convenince. These courts do not belong to the same system, so far as their jurisdiction is concurrent; and althought they co-exist in the same space, they are independent. and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes into its jurisdiction a specific thing, that res is as much withdrawn from the judicial power of the other as if it had been carried physically into a different territorial sovereignty. To attempt to seize it by a foreign process is futile and void. The regulation of process, and the decision of questions relating to it, are part of the jurisdiction of the court from which it issues. 'The jurisdiction of a court,' said Chief Justice MARSHALL, 'is not exhausted by the rendition of its judgment, but continues until that judgment shall be satisfied. Many questions arise on the process, subsequent to the judgment, in which jurisdiction is to be exercised.' Wayman v. Southard, 10 Wheat. 1.

The principle which defines the boundaries of jurisdiction between the judicial tribunals of the states and of the United States, the application of which effectually prevents their confusion, was set forth and vindicated in the judgment of this court in Ableman v. Booth, 21 How. 506. It was there said by Chief Justice TANEY (page 516) 'that the sphere of action appropriated to the United States is as far beyond the reach of the judicial process issued by a state judge or a state court as if the line of division was traced by landmarks and monuments visible to the eye.' And speaking of the procedure in cases of habeas corpus, issued under state authority, and admitting the duty of the officer of the United States, holding the prisoner under its process, to return the fact and show his warrant, the chief justice continues: 'But after the return is made and the state judge or court judicially apprised that the party is in custody under the authority of the United States, they can proceed no further. They then know that the prisoner is within the dominion and jurisdiction of another government, and that neither the writ of habeas corpus nor any other process issued under state authority can pass over the line of division between the two sovereignties. He is then within the dominion and exclusive jurisdiction of the United States. If he has committed an offense against their laws, their tribunals alone can punish him. If he is wrongfully imprisoned, their judicial tribunals can release him and afford him redress. * *  * No judicial process, whatever form it may assume, can have any lawful authority outside of the limits of the jurisdiction of the court or judge by whom it is issued; and any attempt to enforce it beyond these boundaries is nothing less then lawless violence.' And in Tarble's Case, 13 Wall. 397, commenting on this language of Chief Justice TANEY in Ableman v. Booth, supra merely to meet cases where the authority of the United States was undisputed, but cases where its validity was questioned, and it appeared that the prisoner was held under claim and color of such authority, in good faith, and not by way of mere pretense and imposition. And the exclusive authority of the court issuing the writ extends, not only to the decisions of all questions affecting its jurisdiction, and the form and force of the writ itself, and the validity of the proceeding in issuing and executing it, but also of all questions affecting the identity of the person or property seized and held under color of its authority, and the right to exempt them from its operation. It does not avail, therefore, to say that, as the writ commands the officer to take the property of the defendant, he cannot under that claim to take and hold the property of another; because the property which he does actually take, he takes and holds as the property of the defendant, claiming it to be such, and therefore he has it in his possession under color of process and claim of right.

In Lammon v. Feusier, supra, it was said by Mr. Justice GRAY, in reference to the case of a common-law attachment, that 'the taking of the attachable property of the person named in the writ is rightful, the taking of the property of another person is wrongful; but each being done by the marshal in executing the writ in his hands, is an attempt to perform his official duty, and is an official act.'

The same is true of a similar levy under an execution, as we have shown that there is no difference, relevant to the point, between the two writs. Property thus levied on by attachment, or taken in execution, is brought by the writ within the scope of the jurisdiction of the court whose process it is, and as long as it remains in the possession of the officer it is in the custody of the law. It is the bare fact of that possession under claim and color of that authority, without respect to the ultimate right, to be asserted otherwise and elsewhere, as already sufficiently explained, that furnishes to the officer complete immunity from the process of every other jurisdiction that attempts to dispossess him. That was the defense made and relied on by the plaintiff in error in the present case, and to which the supreme court of Michigan refused to give its due and conclusive effect. For that error its judgment is reversed, and the cause is remanded with directions to affirm the judgment of the circuit court for the county of Kent, in favor of the plaintiff in error; and it is so ordered.

title: Covell v. Heyman/Opinion of the Court


text: Talk:Covell v. Heyman/Opinion of the Court


text:
Rosenthal v. Walker

S. Shellabarger and J. M. Wilson, for plaintiff in error.

Chester H. Krum and Eugene H. Lewis, for defendant in error.

WOODS, J.

title: Rosenthal v. Walker


text: Talk:Rosenthal v. Walker

title: Talk:Rosenthal v. Walker


text:
Rosenthal v. Walker/Opinion of the Court

This was an action at law, brought December 30, 1879, by Preston Player, as assignee in bankruptcy of Thomas Carney, against the plaintiff in error, Joseph Rosenthal, under section 5047 of the Revised Statutes, which authorizes an assignee in bankruptcy to recover by suit, in his own name, all the estate, debts, and effects of the bankrupt. The suit was brought to recover from Rosenthal certain money paid and property sold to him by Carney in fraud, as was alleged, of the bankrupt act. A petition in involuntary bankruptcy had been filed against Carney by his creditors October 20, 1875. He was adjudicated a bankrupt March 18, 1876, by the district court for the Eastern district of Missouri, and on May 1, 1876, Player, the defendant in error, was appointed assignee of the estate. The petition, having averred the foregoing facts, alleged that Carney, being insolvent and in contemplation of insolvency, as Rosenthal had reasonable cause to believe, on June 22, 1875, with intent to defeat the operation of the bankrupt law, and to evade its provisions, as Rosenthal well knew, sold and transferred to him 500 cases, containing 50,000 pairs of boots and shoes, of the value of $45,000, and that on July 20th following, to make effectual the fraudulent transfer, Rosenthal agreed that Carney should have an equal interest with him in the goods so sold and transferred, and accordingly recognized and admitted such interest. The petition also averred that Carney, being insolvent and in contemplation of insolvency, as Rosenthal had reasonable cause to believe, and with intent to hinder the operation of the bankrupt law, and evade its provisions, as Rosenthal well knew, on July 22, 1875, sold and transferred to him 100 barrels of whisky, etc., of the value of $9,400, and Carney also stipulated that he should retain an interest in the whisky equal with that of Rosenthal, who then and there recognized said interest accordingly, and that Rosenthal, between July 20, 1875, and March 1, 1876, disposed of and converted to his own use all the property so sold and transferred to him.

The petition further alleged that Carney, between July 20 and August 23, 1875, inclusive, being insolvent and in contemplation of insolvency, as Rosenthal had reasonable cause to believe, and with the purpose of defeating the object and hindering the operation of the bankrupt law, as Rosenthal well knew, made to him certain payments of money, amounting in the aggregate to $30,000. The petition then made the following averment: 'The plaintiff states that both the said Carney and the defendant kept concealed from him, the said plaintiff, the fact of the said payment and transfer of the said aggregate sum of $30,000, hereinbefore mentioned, and of all the component parts thereof; and also kept concealed from him the fact of the sale, transfer, and conveyance of the said goods and merchandise hereinafter set forth, and that he, the said plaintiff, did not obtain knowledge and information of the said matters, or either of them, until the twenty-ninth day of November, 1879, and then for the first time the said matters were disclosed to him and brought to his knowledge.'

Rosenthal excepted to the petition on two grounds,-First, because, as appeared on its face, the suit was not brought within two years from the time when the cause of action accrued; and, second, because the said sale of boots and shoes, alleged to have been made by Carney to Rosenthal on June 22, 1875, was not made within three months next before the filing of the petition in bankruptcy against Carney. The court overruled the first exception absolutely, and ordered that the second exception 'be dismissed so as not to prejudice the right of plaintiff to prove any of the transactions alleged in said petition to have taken place on the twentieth day of July, 1875, and within three months next before the institutions of proceedings in bankruptcy against the bankrupt, Thomas Carney, and maintaining said ground of exception only so far as relates to the transfer and sale of five hundred cases of boots and shoes, alleged to have been made on the twenty-second day of June, 1875. But the plaintiff shall have the right to prove, as by him alleged, that subsequently to June 22, 1875, the bankrupt, by agreement with defendant, was reinvested with an interest in said goods, and thereafter, within three months, the goods were disposed of as alleged.'

On March 3, 1880, Rosenthal filed his answer, which was a general denial of all the averments of the petition. On December 7th following, after the trial had commenced, he filed the following plea and supplemental answer:

'Now comes the defendant and pleads the prescription of two years, as provided for in the bankruptcy act, sec. 5057, of the Revised Statutes of the United States, in bar of plaintiff's action. And for supplemental answer to petition of plaintiff, defendant specially denies that the matters and things alleged in plaintiff's petition were first disclosed to him on November 29, 1879, as alleged; but avers that said plaintiff had full knowledge of all transactions that ever took place between the defendant and Carney, bankrupt, at the time said plaintiff was elected assignee.'

On the motion of the plaintiff the supplemental answer was stricken out, and the defendant excepted, but, as the record shows,

'during the trial of the cause no restraint was put upon the defendant in offering evidence as to the knowledge of plaintiff, as alleged in that part of the supplemental answer which was stricken out, and both sides offered evidence as to such knowledge, and the court, upon this point, left it to the jury to say whether the action was commenced within two years from the time when the plaintiff knew, or by due diligence might have known, of the cause of action.' The pleadings having been thus made up, the issues of fact were submitted to a jury, which returned a verdict for the plaintiff for $17,500, on which the court rendered judgment against the defendant. To reverse that judgment this writ of error is prosecuted. Player, the original assignee, having died after the judgment in the circuit court, W. R. Walker was appointed assignee and substituted as defendant in error in his stead.

The petition disclosed upon its face that the suit was brought more than four years after the cause of action arose, and more than three years after the appointment of the defendant in error as assignee. Section 5057 of the Revised Statutes provides as follows:

'No suit, either at law or in equity, shall be maintainable in any court between an assignee in bankruptcy and a person claiming an adverse interest touching any property or rights of property transferable to or vested in such assignee, unless brought within two years from the time when the cause of action accrued for or against the assignee. And this provision shall not in any case revive a right of action barred at the time when the assignee is appointed.'

The first question raised by the assignments of error is whether the averments of the petition excuse the failure to bring the suit within two years after the cause of action accrued to the defendant in error. These averments are in substance that Carney, the bankrupt, and Rosenthal, the plaintiff in error, kept concealed from the defendant in error the payments of money and transfers of property charged in the petition, and that the defendant in error did not obtain information of said matter until November 29, 1879, when, for the first time, they were disclosed to him and brought to his knowledge. The judgment of the circuit court, by which it was held that these averments excused the failure to bring the suit within two years after the cause of action accrued, is sustained by the opinion and decree of this court in the case of Bailey v. Glover, 21 Wall. 342. That case was a bill in equity filed by the complainant as assignee in bankruptcy of Glover, one of the defendants, to set aside a conveyance made by him of his property to defraud his creditors. The suit was brought more than two years after the appointment of the assignee. To excuse the delay and take the case out of the operation of the statute, the following averment was made: The bankrupt and the other defendants to whom he had conveyed his property 'kept secret their fraudulent acts and endeavored to conceal them both from the knowledge of the assignee and his one creditor, whereby both were prevented from obtaining any sufficient knowledge or information thereof until within the last two years, and that, even up to the present time, they had not been able to obtain full and particular information as to the fraudulent disposition made by the bankrupt of a large part of his property.' The court held that, 'as the bill contained a distinct allegation that the defendants kept secret and concealed from the parties interested the fraud which was sought to be redressed,' the case was not subject to the bar of the statute. The court added: 'To hold that by concealing a fraud, or by committing a fraud in a manner that it concealed itself until such time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law which was designed to prevent fraud the means by which it is made successful and secure.' The court also declared that the exception to the bar of the statute was applicable to suits at law as well as in equity.

The case of Bailey v. Glover is a decision construing the statute which is relied on in this case, and, unless subsequently overruled by this court, is conclusive of the point under discussion. It has never been overruled.

The plaintiff in error relies on the case of Wood v. Carpenter, 101 U.S. 135, and ''Nat. Bank v. Carpenter'', Id. 567. The first was an action at law, the second a suit in equity. The court in both cases was called on the construe a statute of limitations of the state of Indiana, and it followed the adjudications of the supreme court of that state upon the same statute. Neither case refers to the opinion of the court in Bailey v. Glover, or can be held to overrule or modify it. The case of Bailey v. Glover has been often cited by this court, but has never been doubted or qualified. Wood v. Bailey, 21 Wall. 640; Wiswall v. Campbell, 93 U.S. 347; Gifford v. Helms, 98 U.S. 248; Upton v. McLaughlin, 105 U.S. 640. We are of opinion, therefore, that the assignment of error under consideration is not well founded.

The next complaint of the plaintiff in error is that, after the circuit court had struck out of the petition the averments relating to the sale on June 22, 1875, of 500 cases of boots and shoes, by Carney to the plaintiff in error, the court admitted, in spite of the objection of the latter, the depositions of Louis Temm and other witnesses, which related solely to that sale. The contention is that this evidence, relating, as it did, to a sale that was perfectly valid, and the averments concerning which had been stricken from the petition, was immaterial, and tended to mislead and confuse the jury to the injury of the plaintiff in error. The bill of exceptions shows that the court, in overruling the objection to the admission of this evidence, stated that 'the facts and circumstances surrounding the case should be submitted to the jury; and the facts of the sale on June 22, 1875, and its circumstances, were allowed to be proved on the representation of counsel that said evidence was to be followed up by testimony showing a subsequent investment of an interest in said goods in the bankrupt by agreement with defendant.' In accordance with this representation of counsel, proof tending to show that on July 1, 1875, the bankrupt, by a secret agreement with the plaintiff in error, acquired title to a half interest in the goods sold to the latter on June 22d preceding, was offered by the defendant in error, and admitted. We think the court was right in admitting the depositions relating to the sale of June 22d. Besides the charge made in the petition of the fraudulent sale of goods on June 22, 1875, there was an averment of another sale by the bankrupt to Carney of other goods of the value of $9,400 on July 22, 1875, and within three months next before the proceedings in bankruptcy. It was averred that this sale was made by Carney in contemplation of insolvency, and that the plaintiff in error had reasonable cause to believe such to be the fact. To establish these propositions it was perfectly competent to show what had been the business dealings between Carney and the plaintiff in error before the sale in question. Thus, to prove that plaintiff in error had reasonable cause to believe that the sale made to him by Carney on July 22d was in contemplation of insolvency, it was competent to show that on June 22d, just one month before, Carney had made another sale to the plaintiff in error of 50,000 boots and shoes, worth $45,000, and then within eight days thereafter, by a secret agreement, had reinvested Carney with the ownership of one-half the property so sold. Evidence tending to establish both these facts was produced and submitted to the jury. It clearly tended to show that Carney was trying to cover up his property from his creditors, and that plaintiff in error was aiding him to do it, and that when Carney made the subsequent sale to the plaintiff in error on July 22d, the latter had reasonable cause to believe that it was made in contemplation of insolvency. The evidence objected to was therefore proof of one of two facts, which, taken together, tended to establish a material and necessary averment of the petition, and was therefore properly admitted.

The next assignment of error relates to the admission in evidence by the circuit court of certain letter-press copies of letters written by Carney to the plaintiff in error. The record shows that Carney testified that, while he was in St. Louis and the plaintiff in error in New Orleans, they were corresponding with each other; that several letters were written by each to the other, and were received by each from the other; that Carney, having so testified, produced two letters purporting to have been addressed by the plaintiff in error, in New Orleans, to him at St. Louis, and which he testified he had received through the mails. These letters having been admitted in evidence, Carney produced certain letter-press copies of letters which he testified he had written to the plaintiff in error, and mailed with his own hand in the postoffice at St. Louis, postage prepaid, directed to the plaintiff in error at New Orleans, and to his proper address in that city. The record also shows that in response to a subpoena duces tecum the plaintiff in error swore that he never received the letters addressed to him by Carney. Upon this state of the evidence, the defendant in error offered to read to the jury the letterpress copies of the letters which Carney swore he had mailed to the plaintiff in error. They were objected to, but were admitted by the court in spite of the objection. This action of the court is now urged as a ground for reversing the judgment.

We think the copies were properly admitted in evidence. The point in dispute between the parties was whether the original letters had been received by the plaintiff in error. One of the letters from the plaintiff in error to Carney is clearly in answer to two of the letters which Carney swears he mailed to him, and is proof that those letters were received by him. Independently of this fact, the proof that the letters were received by the plaintiff in error was prima facie sufficient, and the court properly allowed the copies to go to the jury, leaving them to decide, on all the evidence, whether the originals had been received. The rule is well settled that if a letter properly directed is proved to have been either put into the post-office or delivered to the postman, it is presumed, from the known course of business in the post-office department, that it reached its destination at the regular time, and was received by the person to whom it was addressed. Saunderson v. Judge, 2 H. Bl. 509; Woodcock v. Houldsworth, 16 Mees. & W. 124; Dunlop v. Higgins, 1 H. L. Cas. 381; Callan v. Gaylord, 3 Watts, 321; Starr v. Torrey, 2 Zab. 190; Tanner v. Hughes, 53 Pa. St. 289; Howard v. Daly, 61 N. Y. 362; Huntley v. Whittier, 105 Mass. 392. As was said by GRAY, J., in the case last cited. 'the presumption so arising is not a conclusive presumption of law, but a mere inference of fact, founded on the probability that the officers of the government will do their duty and the usual course of business; and, when it is opposed by evidence that the letters never were received, must be weighed with all the other circumstances of the case, by the jury in determining the question whether the letters were actually received or not.' The presumption that a letter was received is based on considerations that it is perfectly clear that it applies without regard to the contents of the letter. The contention, therefore, of counsel for plaintiff in error that the presumption fails when the contents of the letter would, if the letter were received, tend to subject the party receiving it to a penalty or forfeiture, is not well founded. The rule and the authorities cited in support of it sustain the action of the court in admitting in evidence the copies of the letters, and in submitting to the jury the question whether the letters had been received, to be decided upon all the testimony bearing upon the point.

The next assignment of error relates to the charge given by the court to the jury, and its refusal to charge as requested by the plaintiff in error. It appears from the record that Player, the original assignee in bankruptcy of Carney, was sworn on the trial as a witness in his behalf. He testified that he was an attorney; that he had been one of the solicitors of the creditors of Carney in the proceedings to have him adjudicated a bankrupt; that in pursuance of his rights as assignee he had in May, 1876, subjected the bankrupt to an examination pursuant to the provisions of the bankrupt act, at which said bankrupt, after having testified at great length, finally refused to answer any other questions relating to his property or affairs, on the ground that his answers might criminate him, as there was an indictment for a criminal offense under the bankrupt laws of the United States then pending against him; that thereupon said examination ceased, and defendant in error took no further steps to compel said bankrupt to answer, because he thought it would be better not to press him at that time, and the defendant in error did not again examine the bankrupt until November, 1879. The plaintiff in error contends that upon this evidence the court should have charged the jury, as he requested it to do, that the knowledge, in 1876, on the part of the assignee, that the bankrupt had refused to answer proper questions, relating to his property and effects, when under an examination authorized by law, on the ground that his answers might criminate him, and the knowledge of the fact that the bankrupt was under indictment for an offense committed against the provisions of the bankrupt law, created such a state of affairs as put the assignee on inquiry in relation to the alleged fraudulent sales; that, being put on inquiry in 1876, he must be presumed to have known all that he could have found out by due diligence, and that it followed as matter of law that he had knowledge of the fraudulent sales, and that there was therefore no concealment, such as would take the case out of the bar of the statutes. The question raised by the pleadings, to be decided by the jury, was whether the cause of action had been fraudulently concealed from the defendant in error. The concealment was averred by the petition and denied by the answer. The charge which the court was asked to give the jury assumed that the only evidence on this point was that relied on by the plaintiff in error. But this was not the fact. The record shows that there was evidence, and persuasive evidence, tending to prove actual concealment by the bankrupt and the plaintiff in error of the facts upon which the cause of action was founded. Besides, the bill of exceptions does not profess to give all the evidence upon this question. The court was therefore in effect, asked to charge the jury to consider the evidence on one side of a disputed issue and disregard all the evidence on the other. Instead of doing this the court said to the jury: 'It is for you to say whether it is a case where this assignee has failed to make the discovery, because he did not use due diligence, or whether it is a case where, using due diligence, he failed to make the discovery because the parties to the transaction, who were already the repositaries of its existence, one or more of them, wickedly concealed it and filed oath upon oath in effecting that concealment. * *  * So far as the instruction asked assumes any fact, I decline to give it, and I shall leave the whole question of prescription or no prescription to be determined by you. It is undoubtedly true that if he was put upon inquiry as a reasonable man, which he refused to follow up, and which, if you found as a fact, if he had followed up would have led to a knowledge, then the statute would have been a bar. But it is for you to say whether, upon all the evidence, there has or has not been such concealment, and so continued, as would qualify the rule as to prescription.' We are of opinion that the issue was fairly presented by the charge given by the court, and that the instructions requested by the plaintiff in error would have been unjust to the defendant in error, and have required the jury to shut their eyes to all the evidence on one side of the issue to which the charges referred. But if the charges requested had been unobjectionable, the court, having in its own way fairly presented the issues, was not bound by its duty to give them. The Schools v. Risley, 10 Wall. 115. We are of opinion, therefore, that there was no error in the refusal of the court to charge the jury as requested by the plaintiff in error or in the charge given to the jury.

There are other assignments of error which have not been argued by the counsel for the plaintiff in error. Most of them have been covered by what we have said. The others present, in our opinion, no good ground for the reversal of the judgment. We find no error in the record. The judgment of the circuit court is therefore affirmed.


text: Talk:Rosenthal v. Walker/Opinion of the Court


text:
Stephens v. Monongahela National Bank

P. A. Knox and C. E. Boyle, for plaintiff in error.

''Geo. Shiras, Jr.'', for defendant in error.

WAITE, C. J.

title: Stephens v. Monongahela National Bank


text: Talk:Stephens v. Monongahela National Bank


text:
Stephens v. Monongahela National Bank/Opinion of the Court

This suit was brought by the Monongahela National Bank of Brownsville, Pennsylvania, and judgment was given against Barzilla Stephens, the defendant, for want of a sufficient affidavit of defense. The grounds of defense, as set forth in the affidavit, were: (1) That another suit was pending in the court of common pleas of Green county, Pennsylvania, between the same parties, for the same identical cause of action. (2) That the original of the note in suit was discounted and taken by the bank on the twenty-seventh of June, 1871; that the money advanced thereon at the time was only $8,434.65; that the loan was renewed by six subsequent notes, the last being the note in suit; that upon such loan and each of the renewals the bank 'knowingly took, received, reserved, and charged' usurious interest amounting in the aggregate to $3,736.50; that the defendant is only surety for Israel Stephens, the maker of the note; and that the defendant is entitled to set off the amount of the 'interest so knowingly taken, received, reserved, and charged by the bank' 'against the money loaned on the original of the note in suit.' (3) That the bank had 'knowingly taken, received, reserved, and charged at various times discount and interest, in excess of the amount permitted by its fundamental law on other loans to the principal debtor, amounting in the aggregate to $6,773.10, which was a proper set-off against the claim in this suit. (4) That the paper on which the note sued on was written was signed in blank by the parties thereto when it was taken to the bank for the purposes of renewal; that no one had authority to fill the blanks for anything else than the exact amount due on the original note, after deducting all payments, and that it was filled by an officer of the bank for the sum of $9,500, when, in view of the usury taken, less than $6,000 was due.

As to the first of these defenses, it is sufficient to say that the plea of another action pending is a plea in abatement. Bac. Abr. 'Abatement,' M; Com. Dig. 'Abatement,' H, 24; 1 Chit. Pl. (10th Am. Ed.) 453; 3 Chit. Pl. 903, note y. And by section 1011 of the Revised Statutes, which is a re-enactment of a similar provision in the judiciary act of September 24, 1789, c. 20, § 22, (1 St. 84, 85,) it is expressly provided that there shall be no reversal in this court or the circuit court for error in ruling any plea in abatement, other than a plea to the jurisdiction of the court. Under this statute, it was held in Piquignot v. Penn. R. Co. 16 How. 104, which came from the same district as this case, that the judgment of the circuit court, on precisely such a plea as that contemplated by this affidavit of defense, was 'not subject to our revision on a writ of error.' The defense is one which merely defeats the present proceeding, and does not conclude the plaintiff forever, either as to his right to sue in the circuit court of the United States or as to the merits of the matter in dispute.

All the other defenses are covered by the decision of this court in Barnet v. ''Nat. Bank'', 98 U.S. 555. The only difference between that case and this is that there the defendant was the maker of the note, who actually paid the usurious interest, and here the defendant is the surety of the maker. It is difficult to see how the surety stands, as to the question now presented, in any better position than his principal. The ground of that decision was that as without the statute there could be no recovery from the bank for usurious interest actually paid, and as the statute which created the right to such a recovery also prescribed the remedy, that remedy was exclusive of all others for the enforcement of that right. ''Farmers' & Mechanics' Nat. Bank v. Dearing'', 91 U.S. 29. The surety has not, any more than his principal, the right to recover back the interest without the aid of a statute. Consequently, if his principal could not make this defense, he cannot. The forfeiture and the remedy are creatures of the same statute, and must stand or fall together.

The defense, as stated in the affidavit, is not that interest stipulated for has been included in the note, but that interest actually paid at the time of the discount, and the several renewals, should be applied to the discharge of the principal. In this particular, the case presents the same facts substantially as Driesbach v. ''Nat. Bank'', 104 U.S. 52. To entitle the defendant to such relief as was given in Farmers' & Mechanics' Bank v. Dearing, supra, it should be made to appear by distinct averment that the note sued on includes interest stipulated for and not paid, as well as principal. That has not been done in this case.

Judgment affirmed.


text: Talk:Stephens v. Monongahela National Bank/Opinion of the Court


text:
Chouteau v. Gibson

''Thos. T. Gantt, S. T. Glover, and J. R. Shepley'', for plaintiffs in error.

C. Gibson and John W. Noble, for defendant in error.

WAITE, C. J.

title: Chouteau v. Gibson


text: Talk:Chouteau v. Gibson

title: Talk:Chouteau v. Gibson


text:
Chouteau v. Gibson/Opinion of the Court

This is a motion to dismiss a writ of error to the supreme court of Missouri for want of jurisdiction. From the beginning it has been held that to give us jurisdiction in this class of cases it must appear affirmatively on the face of the record, not only that a federal question was raised and presented to the highest court of the state for decision, but that it was decided or that its decision was necessary to the judgment or decree rendered in the case. Murdock v. Memphis, 20 Wall. 636. The present record shows that Chouteau and Maffit began this suit against Gibson in the circuit court of St. Louis county, Missouri, to obtain a conveyance of certain lands, which they claimed that he held in trust for them. Among other defenses, Gibson set up a judgment in his favor in a suit brought by him against Chouteau and Maffit to recover the possession of the lands, in which, as he alleged, the identical matters presented in this case were directly passed upon and adjudicated between the parties. It is conceded that the state supreme court in deciding the case sustained this defense, and rendered the decree now here for review in favor of Gibson on that ground alone, without considering any of the other questions involved. Such being the case, it is clear we have no jurisdiction. The legal effect of the judgment set up in bar is a question of general law as to which the decision of the state court is not reviewable here. The federal questions, if any there were in the case, lay behind this defense, and could not be reached until it was out of the way. The question presented by the defense was not whether a federal right had been properly denied by a former judgment, but whether the right had been once judicially determined so as to become res judicata between the parties. Whether an equitable title could be set up in bar of the action at law brought by Gibson, the holder of the legal title, to recover possession, is a question of state law upon which the judgment of the state court is conclusive. The same is true of the question whether the pleadings in the former action were such as to present the equitable defense in proper form for final adjudication. The court below has decided that the pleadings were sufficient; that the equitable defense could be made; and that the judgment in that action in favor of Gibson was, in its legal effect, a judgment that Chouteau and Maffit had no title to the land in controversy. Consequently that judgment was a bar to this action, and precluded the court below as well as this court from reopening the original litigation and considering again the questions that were put at rest between the parties by the decision in their former suit. It is apparent, therefore, that no federal question which there may have been in the case was decided by the state court, and that the decision of such a question was not necessary to the final decree rendered.

Without determining whether, if the former judgment had not been a bar to the action, there were questions in the case that might have given us jurisdiction, we grant the motion to dismiss.

title: Chouteau v. Gibson/Opinion of the Court


text: Talk:Chouteau v. Gibson/Opinion of the Court


text:
Astor v. Merritt

''Geo. De Forest Lord'', for plaintiff in error.

''Sol. Gen. Phillips'', for defendant in error.

BLATCHFORD, J.

title: Astor v. Merritt


text: Talk:Astor v. Merritt

title: Talk:Astor v. Merritt