French v. Shoemaker, 81 U.S. (14 Wall.) 314
Case details
Citation
81 U.S. 314
Full caption
French v. Shoemaker.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Majority
Clifford (Justice)
Majority
Miller (Justice)
Fre nch v . Shoemake r .
after answering, filed a cross-bill, insisting that B. ought to have made C. and D. parties to his original proceeding. Held, that the bill, not seeking any relief against B. and C., it was not necessary that they should be parties. 2. Equity will not set aside a contract whose purpose is a settlement of disputes, simply because one party to it was in want of money when he made it, and because such want may have been an inducing cause for his making it; the party having been an intelligent person, who acted deliberately and with knowledge of what he was doing. Equity favors amicable compromise of controversies where pecuniary interests are complicated and conflicting.
Appeal from a decree of the Circuit Court for the District of Virginia; the case .was thus:
In the year 1854 the legislature of Virginia passed an act to incorporate the Washington and Alexandria Railroad Company. Two persons, J. S. French and Walter Lenox, subscribed for the whole stock; French taking three-fourths and Lenox one-fourth, and French being made president of the company. The road was built. French and Lenox, however, spent very little money of their own in its construction, but raised large sums by borrowing. When, therefore, the road was built the company was seriously embarrassed. Two deeds of trust had been executed in 1855, and in 1857 another deed was made to Lenox, as trustee, to secure bonds, issued to raise money for the purposes of the road.
The civil war broke out when the road was in this condition. French and Lenox went South, and the government took military possession of the road.
During their absence, a proceeding was instituted in the Alexandria County Court for the removal of Lenox as trustee in the deed of trust to him, and for the substitution of a new trustee in his place. A new trustee, one Stewart, was appointed, and he proceeded in alleged conformity to the deed of trust to sell the railroad.
Under the sale thus made, a new company was organized, which assumed the name of the Washington, Alexandria,
Georgetown Railroad Company; and the government having relinquished the road in 1865, this company took p. 316possession of it at once; and not long afterwards entered into a contract with the Adams Express Company, represented by one Shoemaker, in relation to the conveyance of express freight, and the furnishing by the company of means to work the road. This contract did not prove satisfactory, and by consent of both parties, a lease for ten years was made to two persons, named Stevens and Phelps, in May, 1866; and in the following June, another contract for means of operation and for the conveyance of express freight was made for ten years with the Adams Express Company.
Litigation soon arose upon this lease and upon these contracts. One Davison, asserting himself to be a stockholder of the Washington, Alexandria, and Georgetown Railroad Company, filed his bill in the Alexandria County Court, in November, 1866, alleging that the lease was made without authority, and in fraud of the rights of the stockholders, and praying that it might be set aside and annulled. The Adams Express Company filed its bill about the same time, in the Circuit Court of the United States for the District of Virginia, praying for the enforcement of its contract with the company, and with the lessees; and under that proceeding an order was made by the Circuit Court for the appointment of receivers of the road, who took possession.
The Washington and Alexandria Railroad Company, describing itself as that company, by J. 8. French, its president, had already in March, 1866 (the government having, with the suppression of the rebellion, given up, as already said, its possession, and French and Lenox having returned from the South), filed its bill in the Alexandria County Court asserting its title to the road, charging fraud in the whole proceeding for the organization of the Washington, Alexandria, and Georgetown Railroad Company, and praying that it might be declared void, and that a decree might be made establishing its own original title to the road as unimpaired by that proceeding. But French, when he returned to Alexandria, was very needy, and so much in debt that he ■was quite without means to work this railroad if he had had it, or even to get a decree establishing the old company’s p. 317title to it. Lenox was little or no better off. And the debts of the road* were very heavy.
In this condition of their pecuniary concerns, and in the general state of opposed and opposing interests, in November, 1866, French and Lenox had an interview in Washington, at the house of Mi*» Merrick, who had been the counsel of Stevens and Phelps, with Shoemaker (representing the Adams Express Company), Stevens and Phelps, the lessees under the new, or as it was sometimes styled the “spurious” road, and Dean Smith, who had been counsel of Shoemaker, at which interview an inchoate agreement was made for the organization of a new company and the payment of the debts of the old one. This meeting, which was a long one, and where the whole condition of things was largely gone into, was apparently satisfactory to French. Shoemaker, Stevens and Phelps, and Smith were the active managers of the Washington, Alexandria, and Georgetown Railroad at this time, and perhaps its formal directors, but all seemed to be of the opinion that the sale by the trustee Stewart and the new organization could not stand in law.
This inchoate agreement remained unacted upon for some months, its details being the subject of conversations among the parties. It was subsequently reduced to writing, and at another meeting signed by all the parties except French, who was absent. It was not then dated; the date was left in blank.
The stipulations of this agreement in substance were:
1st. That French and Lenox would convey all their interest in the Washington and Alexandria Railroad Company to a corporation to be formed as specified, or to devote all of that interest to the common benefit of the parties, in the proportion specified, should the Washington and Alexandria Railroad be revived and the corporation by that name again come into existence.
2d. That when the parties should have agreed to reorganize and should actually reorganize that company, or should organize another company on the basis of the title of French and Lenox, Stevens and Phelps would assign to the company p. 318all their interest as lessees of the Washington, Alexandria, and Georgetown Railroad Company, or hold the same for the exclusive use of the parties to the agreement, according to their respective interests.
*
Brown v. Pierce, 7 Wallace, 214. f Chitty on Contracts, 217; 2 Greenleaf on Evidence, 283.
3d. That Shoemaker, for himself and the Adams Express Company, would aid the corporation to be formed or reorganized by money and credits; that is, to pay, settle or compromise all liabilities of the Washington and Alexandria Railroad Company, the liabilities of the lessees of the Washington, Alexandria, and Georgetown Railroad Company for stock and materials for the road, and all the bond fide liabilities incurred by them in behalf of the road; Shoemaker to be substituted in all rights of creditors paid by him; all compromises to be for the benefit of all the parties or the new organization ; no advances to discharge liens to be refunded until the final end of litigation; a majority in interest to have the right to substitute other securities for any thus acquired by him; and the net receipts of the company to be formed or reorganized to be devoted to reimburse the advances made by him, except 20 per cent, of the receipts, to be divided among the parties to the agreement in proportion to their interests.
4th. That the agreement should be carried into effect on the rendering of the decree of the Alexandria County Circuit Court in the case of The Washington and Alexandria Railroad Company v. The Washington, Alexandria, and Georgetown Railroad Company, and the new company to be formed or reorganized with a capital stock of 3000 shares, to be divided among the parties thus: French and Lenox, 1250; Stephens and Phelps, 850; Shoemaker, 500; Pean Smith, 200; G. W. Brent, 200.
5th. The lessees to be continued under the new corporation as general superintendent and manager, receiving $250 per month each until otherwise ordered by the board of directors, as to salary.
When the agreement thus reduced to writing was presented to French, early in the year 1867, by Mr. G. W. Brent, who was the professional adviser of French and p. 319Lenox, French refused to sign it, for certain reasons which were the subject of conversation between him and Brent; one of the reasons being that a certain $5000 which were to be advanced to him were not provided for in the agreement. Finally, however, on the 6th of December, 1867, French signed the contract. On the same day a separate contract was made between French and Shoemaker, by which the latter advanced the former $5000 on the transfer to the latter of French’s right and interest in the road. By this separate deed from French to Shoemaker, French conveyed, on account of $5000 paid him by Shoemaker, all his right and interest in the railroad, for the purpose of securing the payment of the $5000, and for the purposes set forth in the agreement of same date, 6th December, 1867.
After the courts in Virginia had finally decided, as they did on 28th August, 1868, the case of The Washington and Alexandria Railroad Company v. The Washington, Alexandria, and Georgetown Railroad Company in favor of the plaintiff therein, reinstating the said company and annulling the charter, of the new company. Lenox (September 22d, 1868) called a meeting of the parties who had signed the agreement of 6th December, 1867; the purpose of the meeting being to carry into effect the provisions of that agreement. French was present at the meeting. The meeting directed, among other things, that Mr. Brent should prepare and publish a call to form the ne,w company in accordance with the provisions of the Virginia code. The proceedings were printed and French received a copy. Acting under the instructions given to him, Brent did prepare a form of call and caused to be called a meeting at the Mansion House Hotel, in Alexandria, Va., for the 29th October, 1868.
The meeting was duly held. Lenox ■was present, and voted on the stock assigned him by the agreement of 6th December, 1867. Shoemaker was elected president of the company. One day previously, that is to say, on the 28th day of October, 1868, French filed a bill of complaint in the Circuit Court of Alexandria County, Virginia, against Shoemaker, the Adams Express Company, and Lenox, setting p. 320forth that Lenox had made a fraudulent combination with Shoemaker to injure and annoy the said Washington and Alexandria Railroad Company, and had called a meeting of stockholders at the Mansion House, in Alexandria, for the 29th October, and he prayed an injunction against them to forbid their holding the meeting under said notice, from electing a board of directors, &c.
In the meantime, that is to say, on the 30th day of September, 1868, a writ of possession had been issued from the Circuit Court of Alexandria County, Virginia, in the suit of The Washington and Alexandria Railroad Company v. The Washington, Alexandria, and GeorgetownRailroad Company, commanding the sheriff to put the former, the plaintiff, into possession of the railroad and its appurtenances. This writ of possession was taken out by French, as president of the company.
Hereupon Shoemaker filed in the Circuit Court of the United States for Virginia, against French, the bill on which the decree now appealed from was made. The bill had been prepared and was sworn to by Shoemaker on the 27th of October, 1868. A subpoena, ordered against French on the same day, and a rule to show cause why an injunction should not be issued, were served on French, all on the same 27th October; the day before he, French, applied for an injunction to prevent the meeting at the Mansion House to organize the new company.
The bill set forth most of the facts above stated, that the complainant had offered to convey to French his interest in the stock and property of the Washington and Alexandria Railroad Company, on his paying the $5000 advanced, which he had refused to do. It then prayed that the said French might be restrained from doing any act whatever as president of the Washington and Alexandria Railroad Company; from interfering with the road and property of the said company, or with the complainant and the parties to the agreement, in carrying out the provisions thereof and in organising a new company, or from taking any legal proceedings for that purpose; and prayed, further, that French’s interest
might be sold by a commissioner of the court for the pay, ment of the said sum of $5000.
The answer of French set up as its main defence needy
ciicuinstances and imposition. It was thus*
“The parties—Shoemaker, Stevens, Phelps, Smith—whom the defendant met at Mr. Merrick’s, were all strangers to him. Some of them he had never seen before; others of them he had seen and knew by sight. His interview with them was solely on the recommendation of his counsel, G. W. Brent. Such was the embarrassment under which the defendant was Suffering, resulting from the fraudulent deprivation of his property and the consequent want of himself and family, that he was scarcely in a condition to investigate the nature of the proposition; and such was the confidence which he had in his attorney, the said G. W. Brent, under whose counsel he acted, that it was impossible for him to suspect the propriety or the advantages of the proposition thus made to him. Before, however, these propositions were reduced to writing, the defendant was suddenly called by telegraph to his home in Southwestern Virginia, on account of the illness of a member of his family. This was in the month of November, 1866. The defendant heard nothing more of these negotiations until his return, in the month of January, 1867, when the contract referred to in complainant’s bill, signed by the complainant, the said Stevens, Smith, Brent and Lenox, was handed to the defendant by the said Brent, and the defendant was pressed by him to sign the same. The defendant declined to sign it, upon the grounds that it was not in accordance with the verbal agreement; that it contained no stipulation for thé advance of the sum which was .agreed to be advanced to the defendant, and the advance of which was the great inducement to his making the said agreement; and that the contract, in many particulars, was essentially different from the agreement discussed at the meeting. The defendant was
en t reatened by the said Stevens, and those acting in concert with him and the complainant, that they would keep the deendant out of possession of the road for years ; that they would set up the contract in a court of equity, and making the impression upon the mind of the defendant that, by protracted litigaion, t ey would render his property in said road unavailing to mi. Ihus assailed, importuned, and threatened, the defendant,.
VOL. XIV. 2J
after having for nearly one year resisted their influences, being greatly pressed by his necessities, was at length forced to sign the said contract upon the condition that the complainants would advance to the defendant the sum of $5000, and the further condition that the contract should be immediately carried into effect.
« The defendant avers that the contract was void in law and equity, because against public policy, having been fraudulently made by the said complainant, Stevens, Smith, and Phelps, in violation of the fiduciary relations they sustained to the said Washington, Alexandria, and Georgetown Railroad Company; that the contract to purchase the interest of the said defendant and the said Lenox, and to furnish, supply, and advance the means to carry on the litigation of the suit then pending was illegal, and of the nature of champerty; and. that for these reasons, if there were none other, the complainant is not entitled to the relief prayed for in his said bill, and especially is not entitled to the injunction prayed for therein ; the contract being obnoxious to the maxim that ‘ex turpi contractu non oritur actio.'
“ That upon the face of the contract there was no consideration sufficient to support said contract, and that it was drawn with the fraudulent purpose and design of deceiving and defrauding the defendant, and he avers that the assignment aforesaid, which he executed only as a mortgage to secure the $5000 advanced to him by the complainant, was fraudulently prepared by the complainant, the said Smith and the said Stevens, with the design of deceiving the defendant into an assignment of his interest and estate in the said road, for purposes other than that which he intended.
“The defendant averred that the complainant, Phelps, Stevens, Smith, and Brent, have conspired together for the purpose of oppressing and defrauding him; that to this end they have imposed upon his confidence, taken advantage of his necessities, seized upon his property, appropriated the earnings of the road, three-fourths of the stock of which is owned by him, for the purpose of preventing the company, of which he is president, from obtaining possession of the road.”
A cross-bill was also filed by French to set aside the arrangement. It set up the same facts as the answer; admitting, notwithstanding, that he, French, was for a long time p. 323willing and anxious to carry out the arrangement, and asserting that the other parties had wholly failed to perform their part of it, though he, French, had frequently urged them to do so. It further insisted that Stevens and Phelps were necessary parties to the original bill. The answer to the cross-bill denied all its important allegations of fact.
The case as made out by the proofs was much as that already stated. There was no doubt that French was needy, and it seemed probable that his want of money was the prevailing consideration with him when he finally determined to sign the contract, but it was not proved that he acted unadvisedly or otherwise than his best interests in the complicated and embarrassed condition of the road and his own embarrassed condition might reasonably seem to suggest.
The questions were : 1. Whether Stevens and Phelps were necessary parties to the original bill. 2. If not, whether the contract of December 6th, 1867, was binding on French ? If it was, then of course his act in taking possession of the road with the view of excluding the other parties to the contract, and his application to the Circuit Court of Alexandria County, Virginia, for an injunction to restrain the parties to the agreement from holding a meeting to reorganize, was a breach of faith which justified the complainant in invoking the authority of the Circuit Court against him.
As to the first point the court below said :
“If the original bill sought any relief as against Stevens and Phelps, or any aid from the court in carrying into effect the settlement contract as to them, it "would be necessary to make these persons parties. But such is not the case. The bill seeks no relief as against them. There does not appear to be any controversy between them and the original complainant. And we cannot feee that the cross-complainant has a right to have any controversy he may have with them settled in this suit. It is'very certain that at the time the settlement contract was made he had no cause of complaint against them. Nothing, so far as they were concerned, appears to have been concealed from him. The plain language of the agreement, which he had before him nearly a whole p. 324year, stated their relation, and gave all the notice of circumstances connected with them which a court of equity will require. If their subsequent conduct affords ground of complaint, it must be in regard to the stock assigned to them; but this may be, and should be, as we think, submitted to judicial scrutiny, in a proceeding founded on the settlement contract; not hostile to it. The objection that Stevens and Phelps are not made parties to the original bill must therefore be overruled.”
On the second point—the merits—the court was of opinion that the equity of the case was with the complainant, and accordingly decreed that French be enjoined from any use of the title of the president of the Washington and Alexandria Railroad Company, and from any action to interfere with any proceeding for the reorganization of the said company under the contract of the 6th of December, 1867, and from any proceeding whatever not in accordance with the said contract, without prejudice, however, to his right to the stock assigned to him by the said contract, or to assert any claim he might have against the company reorganized under the contract, or against Shoemaker, or against the Adams Express Company, not in contravention of the contract, or to pursue by proper proceedings in law or equity any claim he might have in respect to the distribution of stock made by the contract, founded upon failure of consideration or other cause.
From this decree French brought the case here by appeal.
Messrs. H. 0. Claughton and B. Stanton, for the appellants; Messrs. T. J. Durant and J. H. Bradley, contra.
Mr. Justice CLIFFORD delivered the opinion of the court.
Complicated as the transactions are out of which the present controversy has arisen, it will be impossible to explain the grounds of our decision in a manner which will be satisfactory to the parties, without giving in the first place a pretty full statement of the facts.
On the twenty-seventh of February, 1854, the legislature
x Restatement of the case in the opinion.
of Virginia passed an act incorporating a company to construct a railroad between Alexandria and Washington, by the name of the Alexandria and Washington Railroad Company, and the record shows that three-fourths of the stock of the company was taken by James S. French, and the other fourth by Walter Lenox, an d~ that they continued to own the whole stock of the company and the entire railroad until they conveyed the same to the complainant. They proceeded to build the road, and in procuring means for that purpose they contracted large money obligations, and to secure those obligations they executed the three deeds of trust mentioned in the bill of complaint; that on the breaking out of the rebellion they went within the lines of the insurgents, and our government took possession of the railroad and used it for military purposes; that during their absence within the insurgent lines Joseph Davison presented a petition to the County Court of the State representing that he was the agent and attorney of all the holders of the bonds in the deed of trust to Walter Lenox, and that the trustee therein named was incapacitated from acting as such, and praying that a certain other person named might be appointed in his place; that the County Court removed the trustee named in the trust deed and appointed the person mentioned in the petition as substituted trustee, and that the substituted trustee subsequently, on the 10th of April, 1862, sold the railroad and everything belonging to it to the persons named in the record, and that the purchasers and others associated organized, or pretended to organize, a new company, called the Washington, Alexandria, and Georgetown Railroad Company. When the government relinquished the road, some time in the year 1865, this new company took possession of the same, and on the first of February entered into a contract with the Adams Express Company in relation to the conveyance of express freight and the furnishing by the latter of means to operate the road. On the twenty-eighth of March, 1866, French and Lenox, having returned, caused a suit to be instituted in the County Court in the name of the Washington and Alexandria Railroad Company against p. 326the new company organized or pretended to be organized under the aale, to recover the railroad and propeity belonging to it, upon the ground that the whole proceedings by which'the sale was made and the new company was formed were fraudulent and null and void. Dissatisfaction arose as to the contract with Adams Express Company, and on the fifth of May, 1866, by consent of both parties a lease for ten years was made by the new or spurious company to Oscar A. Stevens and W. J. Phelps, and on the eighteenth of June following another contract for means of operation and in respect to the conveyance of express matter was made for ten years with the same express company. Litigations ensued with respect to those contracts, some of which were pending when the contracts which are the foundation of the present litigation were executed, and others were commenced at a later period. Serious embarrassments surrounded the parties who had caused the suit to be instituted to set aside the pretended sale of the road during their absence within the insurgent lines, and it was at this stage of the controversy, in November, 1866, that it was arranged that the parties interested should meet for consultation, as shown by the proofs, and as admitted by the respondents. James S. French, 8. M. Shoemaker, Walter Lenox, Oscar A. Stevens, J. Dean Smith, and R. T, Merrick were present at the interview. Satisfactory proof is exhibited that they came to an amicable arrangement, subject to the condition that the pending suit in the County Court to set aside the pretended sale of the railroad should be determined in favor of the old company. They separated at the close of the consultation without reducing the agreement to writing, but it was diawn up in form, leaving the date blank, not long after, and was signed by all the parties except the complainant and respondent, who were not present. By the proofs, however, it appears that the complainant signed it shortly after and the respondent, on the sixth of December, 1867, also signed it, though he earnestly objected to signing it when it was first presented to him for that purpose not long after it was signed by the other parties. He not only signed the agreement, but at p. 327the same time executed a conveyance of all his interest in the railroad to the complainant to secure the repayment of five thousand dollars advanced to him by the grantee, and covenanted that it should be held by the grantee for the purpose and objects declared in the contract executed at the same time. j
1. By that contract French and Lenox agreed to convey all their right, title, and interest in the railroad to a corporation to be formed as specified, if such a company was formed, or to devote all their interest to the common benefit of the parties thereto, in the proportions specified, if the old company should be revived.
2. Stevens and Phelps agreed, if the parties decided to reorganize the old company or to form a new one as there suggested, to assign all their interest as lessees of the spurious company to such new’ company, or to hold the same for the exclusive benefit of the parties to the contracts in the proportions therein specified.
3. On behalf of himself and Adams Express Company the complainant agreed to aid the organization to be formed or revived, by money and credit, to pay, settle, or compromise all liabilities of the old company, and the liabilities of the lessees of the spurious company, for procuring stock and materials for working the road, and all other bona fide liabilities incurred by them on behalf of the road, the claimant being substituted to all the rights and remedies of any such creditors for the benefit of the parties to the agreement or the organization by them formed or revived, subject to certain conditions therein specified, excepting twenty per cent, of the receipts, which it was agreed should be divided among the parties to the instrument according to their respective interests.
4. They also agreed that the arrangement should be carried into effect on the rendition of the decree of the County Court in the pending case before mentioned, and that the company should then be formed and organized with a capital stock of three thousand shares, to be divided and distributed as follows : French and Lenox to have twelve hundred and p. 328fifty shares, Stevens and Phelps to have eight hundred and fifty shares, S. M. Shoemaker to have five hundred shares, J. Dean Smith to have two hundred shares, and George W. Brent also to have two hundred shares.
5. It was also agreed that the lessees should be continued as general manager and superintendent, at two hundred and fifty dollars each as salary until otherwise ordered by the directors.
Five thousand dollars were paid by the complainant, or agreed to be paid, at the date of the agreement, and in consideration thereof the respondent executed the instrument called the assignment, in which he acknowledges the payment of that sum of money, and proceeds to say, “ I do hereby assign, convey, transfer, and set over unto the said S. M. Shoemaker or his assigns, all my right, title, interest, claim, and demand in and to the property, stock, road, roadbed, franchise, and charter of the corporation known as” the old company, or “ any interest I may possess in and to the same, and do further agree to make such other and further conveyances or assurance as may be hereafter required by the grantee or his assigns for the following purposes,” to wit: (1.) To secure the payment of five thousand dollars due to the grantee as an advance on the same. (2.) For the purposes and objects set forth in the agreement bearing even date herewith, between the parties therein named, and which is particularly described in the pleadings.
Various defences were set up in the answer, but those chiefly to be noticed are the two following: (1.) That the signature of the respondent to the contract was obtained by fraud and oppression, that it is void as against public policy, and because it was fraudulently obtained. (2.) That the assignment, though intended only as a mortgage to secure the five thousand dollars advanced to him by the complainant, was fraudulently prepared with the design of deceiving the respondent into an assignment of his interest and estate in the road, and that he was compelled to sign it by threats, oppression, and persistent and deceptive influences and importunities.
Proofs were taken and the parties were fully heard upon the bill, answer, and replication, and upon the cross-bill, answer, and replication, and upon the proofs, and the Circuit Court being of the opinion that the equity of the case was with the complainant, granted an injunction perpetually restraining the respondent from any and every proceeding not in accordance with the contracts. Appeal was regularly taken to this court, and the principal error assigned here is that the Circuit Court erred in setting up and enforcing the contracts for the conveyance by the respondent of his right, title, and interest in the railroad to the complainant.
Complaint is also made that the decree of the Circuit Court is equivalent to a decree for specific peformance, but it is clear that it cannot be viewed in that light, as the contracts wrere executed and the conveyance made and delivered nearly a year before the bill of complaint was filed, nor is that the theory of the defence as set up in the answer or in the cross-bill. On the contrary, they both admit the execution of the agreement and the assignment to secure the sum advanced, but the respondent appears to rely chiefly for his defence upon the circumstances of hardship, imposition, and oppression alleged in the answer as affording a just ground to deny the prayer for relief contained in the bill filed by the complainant. He admits that the conveyance was made to secure the sum of five thousand dollars, but he alleges that he tendered the amount to the complainant on condition that the complainant would reconvey the property to him to be held as it was prior to the assignment, and that the complainant refused to receive the money on those terms. v
Fraud is certainly charged in the answer, but the charge is wholly unsupported by any satisfactory proof, and the charge is virtually abandoned by the cross-bili, in which it is alleged that the respondent, notwithstanding the oppression and injustice which compelled him to execute the agreement, was willing and anxious,*and for a long time continued to demand, that the same should be carried out according p. 330to its spirit and intent. What he there alleges as matter of complaint is that it was his necessities which compelled him to make the sacrifice and to surrender his stock on the hard terms of the agreement, and yet he affirms that he would have heen satisfied if the other parties to the agreement had fairly and honestly performed their part of the same, but he alleges that they have utterly failed so to do, though often reminded of the delinquency and repeatedly urged to commence their peformance. Many instances of such alleged failures are specified, but it is a sufficient answer to them all to say that they are separately denied in the answer to the cross-bill, and that the party making the charges has failed to introduce any sufficient proof to warrant a finding in his favor in respect to any one of the accusations. Nearly eight months elapsed after the contracts were signed before the County Court rendered their decree annulling the charter of the spurious company and restoring the railroad to its rightful owners. They entered the final decree on the twenty-eighth of August, 1868j and on the twenty-second of September following Walter Lenox called a meeting of the parties to the agreement, and the record shows that the respondent was duly notified and that he attended the meeting. He not only attended the meeting but he knew that the persons composing the meeting intended to effect an organization under the agreements described in the pleadings, as they directed one of their number to prepare and publish a call for another meeting to carry that purpose into effect in accordance with the code of the State and as contemplated by the terms of those agreements. Acting under those instructions the person designated for the purpose prepared the form of a call for such a meeting to be held on the twenty-ninth of October then next, and caused the same to be published; and the record also shows that the meeting was regularly held pursuant to the call for the same, and that the company was duly organized at that meeting by the choice of the complainant «¡s president of the company. Prior to that meeting, howbver, to wit, on the thirtieth of the preceding month, the respondent, claiming to act as p. 331president of the road, obtained a writ of possession under the decree annulling the pretended sale of the road, and it appears that he was put in possession of the road by the sheriff, to whom he delivered the writ for that purpose. Instead of co-operating with the other parties to perfect the organization the respondent applied to the County Court for an injunction to restrain the other parties from holding the meeting called for that purpose, but the subpoena was issued in this case on the same day and the complainant obtained a rule requiring the respondent to show cause why an injunction should not issue restraining him from doing any act as president of the road, and from interfering in any way to prevent the execution of the agreement, and it appears that the subpoena and the order to show cause were served on him the day before he obtained his injunction forbidding the contemplated meeting.
Sufficient has already been remarked to show that the defence of fraud is not proved, but inasmuch as that defence is set up in several forms in the answer it may be necessary to say that the antecedent remarks upon the subject apply to that defence in every form in which it is presented. Reference has also been made to the defence that the respondent was compelled to sign the contracts by threats, oppression, and by persistent and deceptive influences and importunities, but it becomes necessary to state that defence more in detail and to give it a more careful consideration.
He alleges that he was induced to sign the two instruments by threats that if he refused he should be kept out of the possession of the road for years, and that in consequence of his pecuniary embarrassments and through fear that the parties would render his property unavailing to him in case he continued to resist their importunities, he finally executed the agreement; that being pressed for the want of pecuniary means and overcome by threats, importunities, and deceptive influences, he was ultimately forced to sign the agreement upon the condition that the complainant would advance him five thousand dollars, and that the contract should be immediately carried into effect.
Even if admitted to be true the answer does not show that the instruments were executed under duress, as the respondent admits that the sum of five thousand dollars was to be advanced as a part of the consideration for the transfer, and that he finally consented to the arrangement on the condition that the contract should be immediately executed. Much discussion to show that a contract or written obligation procured by means of duress is inoperative and void both at law and in equity is hardly required, as the proposition is not denied by either party. Actual violence, even at common law, is not necessary to establish duress, because consent is the very essence of a contract, and if there be compulsion, there is no actual consent, and moral compulsion, such as that produced by threats to take life or to inflict great bodily harm, as well as that produced by imprisonment, is everywhere regarded as sufficient in law to destroy free agency, without which there can be no contract, because in that state of the case there is no consent.* In its more extended sense duress means that degree of constraint or danger, either actually inflicted, or threatened and impending, which is sufficient in severity or in apprehension, to overcome the mind and will of a person of ordinary firmness, f Decided cases may be found which deny that contracts procured by menace of a mere battery to the person, or of trespass to lands, or of loss of goods, can be avoided on that account, and the reason assigned for that restriction to the general rule is that such threats are held not to be of a nature to overcome the mind and will of a firm and prudent man, because it is said that if such an injury is inflicted sufficient and adequate redress may be obtained in an action at law, but the modern decisions in this country adopt a more liberal rule, and hold that contracts procured by threats of battery to the person or of destruction of property may be avoided on the ground of duress, because in such a case there is nothing but the form of a contract without the p. 333substance.* Grant all this and still the concession cannot benefit the respondent, as the proofs exhibited in the record are not sufficient to support the charges as made in the answer. Substantially the same charges are made by the respondent in his cross-bill, and every one of them is denied by the complainant under oath in his answer to that bill.
Enough appears in the record to convince the court that the respondent was in straitened circumstances, that his business affairs had become complicated, that he was greatly embarrassed with litigations, and that he was in pressing want of pecuniary means, but the court is wholly unable to see that the complainant is responsible for those circumstances or that he did any unlawful act to deprive the respondent of his property, or to create those necessities or embarrassments, or to compel him to do what he acknowledges he did do, which was to yield to the pressure of the circumstances surrounding him, and as a choice of evils accepted the advance of five thousand dollars and the shares assigned him in the new organization as proposed, and voluntarily signed both the agreement and the assignment. Such an act as that of signing those instruments, under the circumstances disclosed in the record, must be regarded, both in equity and at law, as a voluntary act, as it was unattended by any act of violence, or threat of any kind, calculated in any degree to intimidate the party or to force the result, or to compel that consent which is the essence of every valid contract. Suppose he consented reluctantly, as he avers, still the fact is that he did consent when he might have refused to affix his signature to the instruments, as he had repeatedly done for the year preceding; and having consented to the arrangement and signed the instruments he is bound by their terms, and must abide the consequences of his own voluntary act, unless some of his other defences set up in the answer have a better foundation.
Want of consideration is also averred in the answer, but p. 334the terms of the instrument disprove the allegation, and the proofs introduced by the respondent as well as those introduced by the complainant show that the defence is unfounded.
Mistake and misapprehension on the part of the respondent are alleged, but the allegation is not sustained by any satisfactory proof, and the attending circumstances, taken in connection with the lapse of time from the original meeting to the time the respondent signed the instrument, convinces the court that the defence is without merit, which is all that need be remarked upon the subject.
Delay in execution of the contract is also alleged in the cross-bill, and that the complainant has failed to perform his part of the agreement, but those allegations are expressly denied in the answer to the cross-bill, and being unsustained by any satisfactory proofs the defence must be overruled.
Inequitable and unconscionable contracts, it is said, ought not to be sustained, but it is not possible to regard the arrangement in question as falling within that category, as by the terms of the agreement the complainant was to advance five thousand dollars to the respondent and to aid the organization by money and credit, to pay, settle, and compromise all liabilities of the old company and the liabilities of the lessees of the spurious company, for procuring stock and materials for working the road, and all other bond fide liabilities incurred by them in behalf of the road. Authentic data to enable the court to compute the amount of those liabilities are not given in the record, but enough appears to satisfy the court that they must have been very large, and amply sufficient to constitute a valuable consideration for the contract.
Suggestion is also made that the contract was against public policy, as some of the parties were interested in the spurious company, but the court is of the opinion that the charge is without any foundation, as it is clearly proper that parties whose pecuniary interests are complicated and conflicting should compromise the controversy, nor is it possible to see how the respondent is injured even if some one or more of p. 335the parties failed to perform their duty to the spurious company which was annulled.
Suffice it to say, in respect to the alleged want of proper parties, that the court is of the opinion that the objection cannot be sustained, and being entirely satisfied with reasons given for overruling the objection in the Circuit Court it is not necessary to give the point any further examination.
Want of mutuality in the contract is also suggested, but it is clear that the suggestion is not well founded, as the covenants to make the advance, pay the debts and liabilities of the company, and to allot the stock as stipulated, could be enforced by suit in any court of competent jurisdiction.
Strong doubts are entertained whether any of those defences to the merits are open to the respondent, as the general rule is that where fraud is charged in the bill or set up in the answer, the party making the charge, if it is denied in a proper pleading, will be confined to that issue, but the court being disinclined to place the decision upon that ground has determined to give each defence a separate examination.*
Parties who execute contracts must expect that they will be enforced when due application for that purpose is made to a court of justice, nor can they reasonably hope that courts of justice will reopen matters which they have voluntarily and understandingly closed. Even if the terms of adjustment were unfavorable to the respondent still he is bound by the arrangement, as he voluntarily signed both the agreement and the assignment. Had he refused his assent to the arrangement the case might have been different, but the proofs show that he signed instruments after he had ample time for inquiry, examination, and reflection, and having done so, neither a court of equity or a court of law can release him from the obligation to fulfil his contracts according to the terms of thp instruments.
Decre e af fi rmed .
The Laura .
1. The master, officers, and crew of a vessel, with every person on board, having gone off in extreme anxiety for their personal safety from the vessel on to another which they had brought to them by signals of distress, the mere expressed intention by the master to employ if possible a tug to go and rescue his vessel (she then lying at anchor in a violent gale), to which expression of intention, the person to whom it was made replied, that he “could not get a tug that would come and bring the boat in, as the weather was too rough,” was held not sufficient to deprive the vessel of the character of a derelict, so far as timely effort to save her was contemplated. 2. A vessel undertaking in good faith to perform the office of salvor to a derelict vessel, held not responsible for the latter having been wholly lost in the effort to save her.
Appe al from the Circuit Court for the District of Louisiana; the case being thus:
The high-pressure steamer Savory and the steamer Laura, a low-pressure steamer of a rival line, were in the habit, in the year 1866, of plying on Lake Pontchartrain ; that is to say, of going up and down from the mouths of the rivers Tangipahoa and Tchefuncta (streams which empty into the north part of the lake), and from the towns of Mandeville and Madisonville (also on the north part of the lake its northeast part—and not far from each other, or from the mouths of the rivers named), to the railroad-landing, on the southwest part of the lake, of a short railroad which goes to New Orleans. The length of the lake is about thirty-six miles. As is common between steamers of opposing lines, there was some rivalry between them.
On the night of Friday, January 19th, 1866, the Savory, with twenty-five people on board—seven of them paying as passengers—and with a raft of timber in tow, had come from the Tchefuncta, and was on her way from the langipahoa to the railroad-landing. She had gone well down the lake when a gale came up which, increasing in severity, compelled her to cut away her rafts and to come to anchor. The Savory had been built originally as a river-boat, “ high p. 337up,” and was not specially adapted to the lake navigation. When she cast anchor, as just mentioned, she was within five or six miles of the railroad-landing where she wanted' to go, and not more than a mile and a half from the western shore of the lake. On that shore, and within three or four miles of where the vessel was anchored, was what is called the “ Old Basin,” and rather closer to her what was called the new one. The gale increased. About 3 o’clock of Saturday morning it became very steady, and the danger of her sinking was so considerable that the utmost anxiety prevailed among her officers, crew, and the few passengers on board, to get off her. The captain ordered the flag to be raised Union down; had his life-boat made ready; had driven spikes across the edges of a bale of cotton, and attached ropes to these for persons in the water to hold to and swim or float to shore; and by what he said, and by what in various ways he did, showed extreme anxiety for the safety of all on board, including specially himself.
In this state of things, and about 10 o’clock on the morning of Saturday, the Laura, being on her usual trip, hove in sight. The captain of the Savory at once blew signals of distress from his steam-whistle. “What can I do for you?”' was the inquiry of the captain of the Laura on hearing thewhistle and seeing the Union down. “ Save my passengersand crew,” was the reply from the Savory. Thereupon thecaptain of the Laura came alongside; in doing which, owingto the violence of the wind and waves, he was driven-against’ the Savory with so much force, that the wheel-house- of the Savory was considerably torn by the contact. As soon as she got near enough for persons on the Savory to pass onboard of her, they began to come; the clerk of the Savory first, and her captain right afterwards; the third1 or fourth person who did come. “There was no degree-of order,” said one witness, “observed by the passengers in getting on. They were very much excited, and came on the Laura the best way they could. We had to tell them several times to be calm, that there was no danger.” The captain ordered two or three men to remain, but not one single one of them.
VOL. XIV. 22
1
A., B., C., and D., having a dispute about their rights in a railroad company, entered into a contract of settlement, by which they divided the stock in certain proportions among them. A. refused to carry out the. contract. B. filed a bill to compel him to stand to his agreement. A., * 1 Black, 179.
did remain; and as the Laura left the Savory, her captain was heard to remark, in reference to her, “ There are $5000 •gone!”
Subsequently, and on their way down the lake, the captain of the Savory told the captain of the Laura, as that officer swore, that he was “ going to try to get a tug to bring the Savory out;” to which the captain of the Laura told him that “ he could not get one in the whole basin that would come out and bring his boat in, as the weather was too rough.” The captain of the Savory swore that he said he was going ashore to get a tug to bring his boat in.
The Laura now arrived at the railway-landing where both vessels had been bound, and there, in about three hours after she left the Savory, and in about three-quarters of an hour after her arrival at the landing, she had landed her own passengers and those which she had taken from that steamer. Here the owner of the Laura, one Frigerio, came on board. After the freight was discharged and the Laura was about to make a return trip, her captain went to Frigerio: “I told him,” said the captain, “that it was my duty to go over there and save that steamer, and asked him if he would let me go.” He replied, “ that I was the captain of the boat, and had to use my own discretion.” The captain hereupon went on his trip for the other end of the lake, meaning to make fast to the Savory and tow her to the Tchefuncta River, the place whence the Savory had come, and near to which, as already said, was the town of Mandeville, where he himself was going in regular course. The captain of the Savory, while on the landing, saw the Laura reach the Savory, take her in tow, and start to sea with her, heading northward for Mandeville. After that, and on the same Saturday afternoon, he went to New Orleans and engaged a tug, then lying in the New Basin, to go after the Savory. The tug did go after her; setting off on Sunday morning at 9 o’clock; the captain of the Savory on board. “We had heard, before we started,” said the chief engineer of the tug, “ that the Savory had been taken off by the Laura; and she was by us supposed to be at Mandeville. p. 339We went in sight of Mandeville, saw that the Savory was not there; then changed our course for Madisonville, but did not find her there. We found the Laura there. The captain of the Savory went aboard of the Laurareturned, and ordered us back to New Orleans.”
The history had been thus: The Laura, on arriving at the Savory, found her wheel-house, as already mentioned, considerably torn by the contact which she had made with her when signalled to come to her relief; that her chimneys were loosened and careened, and that, though the vessel was not leaking, the waves were breaking over her decks, and water getting into her hold. Her captain went alongside, struck her bulwarks a little, but not so, he thought, as to make her leak, caused the chain to be cut, put three men aboard of her to keep her clear of water, and took her in tow; his “ intention being,” as he testified, “ to save the boat, if he could, by towing her into smooth water on the north shore, which was the only place where there was smooth water.” The sequel was thus told by the captain himself:
“I towed her about ten or twelve miles, with her chimney hanging pretty well on her starboard side, which was loose and shaking from one side to the other. I found the boat was coming more to the starboard all the time, and then sung out to the men to heave some of the wood and lumber overboard, off the starboard side. This was done, but did not help her much. The water went in her so strong that finally she capsized bottom up. One of the men was in the pilot-house when she capsized, the other two finally came up amongst the broken-up cabin. I then went and picked up the three men, and went on my trip to Mandeville.”
The captain gave it as his belief, that “ had the Savory remained at anchor where she was, and with the weather that prevailed, she would have gone down in six hours, as the norther blew until next day, and harder that night than in daytime.”
When she went down, the captain of the Laura said that “ that would be the fate of all the high-pressure steamers on the lake.”
Argument for the Savory.
The owners of the Savory, after the disaster, filed a libel both against the Laura and her owner, Frigerio, alleging that when the vessel was lying at anchor in Lake Pontchartrain, near Lakeport, and within a half-mile of the shore, and when she was neither abandoned nor in need of assistance, the Laura, under the direction and at the instance of Frigerio, did wrongfully take her from her anchorage and tow her out into the lake, and then sink her.
Frigerio, answering for himself, and as claimant of the Laura, set up that the Savory was in a sinking condition, abandoned by her officers and crew, and that in an effort to save her by towing her to a place of safety, she capsized and sunk; that this result was without fault on his part or of the officers of the Laura, but was the result of a severe gale and of the crippled condition of the Savory.
Evidence was taken and the facts as above presented, including the alarm of the captain of the Savory, and indeed of an extreme anxiety for his own personal safety, fully established. On the hearing in the District Court, however, and in the face of this he denied that he knew that the Union was down, and swore that he gave no orders for signals of distress. He swore also that he had a permit from the custom-house to carry passengers; while the inspector of steamboats for New Orleans showed that he had none.
The District Court decreed in favor of the libellants. The Circuit Court reversed this decree and dismissed the libel. The owners of the Savory now brought the case here.
Mr. J. Hubley Ashton, for the appellants:
1. The Savory and the Laura were opposition boats, running on Lake Pontchartrain, by regular trips between New Orleans and the same towns. There was a good deal of rivalry and jealousy between them; and obvious ill feeling on the part of the owner and master of the Laura to high-pressure steamers. It is perhaps not a greatly-strained conclusion that the Laura meant to destroy this vessel. Such is the impression certainly of the libellants.
2. The Savory was anchored not more than three or four
Argument for the Savory.
miles from the entry of the Old Basin, and somewhat nearer the New Basin, and although she might easily have been towed into the New or the Old Basin, if the master of the Laura really meant to save her, and although the master of the Lauia professes to have believed she would have gone down at her anchorage if he had never touched her; nevertheless he cut her anchor chain, attached a hawser to her, and attempted to cross the lake, a voyage of thirty miles, in the face of a head wind and a rough sea, with the Savory in tow. The result was as might have been expected. In three hours, the gale being very heavy, little or no progress was made, but the Savory went down; pulled obviously to pieces.
3. It is not pretended that the master or owner of the Laura had any authority from the owners or master of the Savory to touch that vessel. The right to do what was done, if right existed at all, must be rested on the fact that she was derelict.
But the Savory, at the time she was taken by the Laura, was not derelict. The owners were in constructive if not actual possession of her. The master swears that he gave no orders for signals of distress, and that he did not know that the flag had the Union down. All this shows that the condition of the vessel was not one of great peril, and that the case could not have been one of derelict. What constitutes a case of derelict has been authoritatively defined by this court:
“The abandonment must have been final, without hope of recovery, or intention to return. If the crew have left the ship temporarily, with intention to return after obtaining assistance, it is no abandonment, nor will the libellants be entitled to salvage as of a derelict.”*
The British admiralty authoritifes are likewise clear to the point, that in every case of derelict there must be an abandonment animo derelinquendi; and that the intention at the p. 342time of going is the point on which the question of derelict must be decided.* The evidence shows affirmatively that the master of the Savory left her temporarily, for the purpose of obtaining a tug to tow her into the basin. Conclusive proof of his purpose is furnished by his subsequent acts in execution of his original intention of obtaining assistance. We have seen that he went at once to New Orleans and engaged the services of a tug, and followed the Savory with her to Madisonville.
The case in short is one of a trespass, and the vessel having been lost the Laura and her owners are responsible.
Mr. T. J. Durant, contra.
Mr. Justice MILLER delivered the opinion of the court.
Some attempt is made to show that the Laura and the Savory were rival vessels in the same trade, and that the result was due to the wish of the owner or the master of the Laura to remove a competitor in business. But of this there is nothing but suspicion. On the contrary, there is strong evidence that the master of the Laura, who controlled her entirely in the matter, though her owner was on board, was governed by a sincere wish to afford all the relief he could to the Savory and her passengers and crew.
It is also argued that the master showed a culpable want of skill and judgment in attempting to carry the Laura across the lake, instead of trying to get her into the mouth of the bld or new canal, within a mile or two of w’here she •was abandoned. But though there is some apparent conflict of testimony on this point, we are satisfied that the master of the Laura wTas justified in assuming that in such a gale as was then blowing, it was more dangerous to attempt to land her in either canal than to tow her across the lake to calmer water, and a safe harbor on the other side.
The only question of any doubt in the case arises on his right to interfere at all to save the vessel. The libellants p. 343deny this right on two grounds: 1st, that she was safe where she was; and, 2dly, that the master of the Laura was distinctly informed by the master of the Savory, that he was going ashore to get a tug to relieve her.
1. In regard to the condition of the vessel at the time the Laura took her in tow, we are of opinion that it justified the belief that her condition was one of great peril and that she would sink in a short time if left alone.
The testimony of the master of the Savory, which it is argued shows a state of facts that would not justify this conclusion, is so fully contradicted, and he appears to have been so overcome with fear at the time of leaving the vessel, that but little credit can be given to any of his statements.
2. It is sworn by the master of the Savory that on his way to the railroad landing he told the master of the Laura that he was going ashore to get a tug to bring his boat in. The master of the Laura swears that the master of the Savory did say that he was going to try to get a tug to bring the Savory out, to which he replied that he could not get a tug in the whole basin that would come and bring the boat in, as the weather was too rough.
This conversation evidently had reference to the tugs in the basin at the mouth of the canal, and the efforts of the master to get a tug in New Orleans were not in pursuance of this conversation, for he expressly says that he saw the Laura start with the Savory before he left the shore for New Orleans. This effort was to bring her back from such place as the Laura might have carried her to, and show’s that he did not think it probable she could be navigated without such assistance.
In the case of The Esperance the claimants received a letter from the master, who, with the crew, had left the vessel, advising them of the fact, and immediately sent proper persons to take charge of her and her cargo. But before they arrived other salvors had taken the vessel and finally brought her in and libelled her. Sir W. Scott said it was a clear case of derelict; there was first the chance of the party sent p. 344by the claimants not finding her; and, secondly, that if found, she would be a complete wreck.*
In the case of the brig John Gilpin,^ Judge Betts, in considering a question of derelict somewhat analogous, said, that “she” (the vessel) “was apparently abandoned, and if her crew might have been absent to procure assistance from other vessels and more force, their ability to return to the wreck, or the chance of affording any aid after the lapse of a few hours, must, in the then condition of things, have been most dubious contingencies.”
In The Coromandel,J Dr. Lushington, in speaking of a case very similar to this, remarks: “It may be perfectly true that the master and these fifteen men, when they had got on board the Young Frederick, and were sailing away to Yarmouth, intended, if possible, to employ steamers to go and rescue the vessel, which was at no great distance. But is not that the case every day? A master and crew abandon a vessel for the safety of their lives; he does not contemplate returning to use his own exertions, but the master hardly ever abandons a vessel on the coast without the intention, if he can obtain assistance, to save his vessel. That does not take away from the legal character of derelict.” This language applies with a precision remarkable to the case before us. 'And the casual observation of the master abandoning the vessel in great fear for his own immediate personal safety, that he designed to get a tug to bring his boat in, is of the class of intentions referred to by Dr. Lushington above, and that he made no response to the reply of the captain of the Laura, that he could get no tug to try it in such rough weather, shows the truth of Dr. Lushington’s remarks.
We think that the master of the Laura was authorized to conclude that the Savory was in a condition of immediate peril, and abandoned so far as any timely effort to save her was contemplated; that he acted in good faith, and with reasonable judgment and skill, and that, therefore, the libel p. 345of appellants was properly dismissed by the Circuit Court. The decree is accordingly
Aff irmed .
The Continent al .
1. Although one vessel may be sailing at night with lights other than those whose use is made obligatory on her by acts of Congress, and may by actually misleading another vessel tend to cause a collision, yet this will not discharge the other vessel if she, on her part, have suffered herself to be misled by the wrong lights when, if she had been intelligently vigilant, other indications would have pointed out or led her to suspect that the vessel was not what her lights indicated. 2. Accordingly, where one vessel was using wrong lights, and the other was not thus intelligently vigilant, the two vessels were made to divide equally a loss by collision between them.
An act of Congress—that of July 25th, 1866* —prescribes that all coasting steamers and those navigating bays, lakes, or other inland waters, shall carry a green light on the starboard side, a red light on the port side, and in addition thereto a central range of two white lights, the after light being carried at an elevation of at least fifteen feet above the light at the head of the vessel; the head-light to be s'o constructed as to show a good light through twenty points of the compass, namely, from right ahead to two points abaft the beam on either side of the vessel; and the after light to show all around. It also enacts that ocean-going steamers shall carry “ at the foremast-head a bright white light,” on the starboard side a green light, and on the port side a red light; these two last so fixed as to throw the light from right ahead to two points abaft the beam, and fitted with in-board screens projecting three feet, so as to prevent these lights being seen across the bow.
A previous act, the well-known one of April 29th, 1864, “for preventing collision on the waters,”! thus prescribes:
* 14 Stat, at Large, 228. f 13 Id. 58.
Art icl e 5. Sailing ships under way . . . shall carry the same lights as steamships under way, with the exception of the white masthead lights, which they shall never carry.
Arti cle 13. If two ships under steam are meeting end on, so as to involve risk of collision, the helm o[ both shall be put to port so that each may pass on the port side of each other.
Art icl e 15. If two ships, one of which is a sailing ship and the other a steamship, are proceeding in such directions as to involve risk of collision, the steamship shall keep out of the way of the sailing ship.
Art icl e 16. Every steamship, when approaching another ship, so as to involve risk of collision, shall slacken her speed, or, if necessary, stop and reverse.
These two statutes being in force, the steam propeller North Hampton and the side-wheel steamboat Continental, two vessels of rival lines, were in the habit of making regular daily trips between New York and New Haven, on the Long Island Sound; the North Hampton leaving New York about 6 p.m . on one day, and the Continental leaving New Haven about midnight on the same day.
On the night of the 23d of October, 1868, the rival vessels were making their customary trips. That night, though cloudy and with occasional spits of rain, was not very dark nor windy. The sea was open and comparatively smooth. About midnight, the wind being north-northeast, the North Hampton approached New Haven, and by the captain s order steered straight east-northeast for the New Haven lighthouse; a right course apparently for her to steer when about to enter the harbor. She soon saw the lights of a steamer, which she inferred, and rightly, was the Continental coming down and out of the harbor. After the Continental came down the harbor, she changed her course to go down the Sound towards New York. “When she first changed her course,” said the captain of the North Hampton, who was examined as a witness, “ she headed directly for the North Hampton, which,” said he, “I could tell by her range of lights, they being exactly in range after she got her course. He continued:
“After a little her course varied, a little southerly. She was then, when she hauled up, on her course westerly, distant about three miles. ' I continued going our course east-northeast until I was distant from the Continental, I should judge, about three-quarters of a mile. She was then bearing a very little on our port bow, nearly ahead. I then gave one blast of the whistle and changed my course one point easterly to east by north. I received no response to that whistle for, I should say, nearly or quite a minute. I then heard two blasts of the Continental’s whistle, which I immediately answered by one whistle, rung two bells to stop the boat, and in the meantime told the pilot to heave the wheel hard aport.”
Notwithstanding this the two steamers came violently together, the Continental striking the North Hampton oh her port side a little abaft midships, nearly square on, and running through her in such a way that she went down in half an hour; her passengers just escaping with their lives.
The defence set up by the Continental for this collision was, the fact that the North Hampton had had no “ central range of two white lightsfor want of which, as the Continental alleged, she took the steamer for a sailing vessel, and starboarded her helm instead of porting it. On the subject of the North Hampton’s lights generally, one of the boat’s hands of that vessel who had been at the wheel prior to the collision, and left it when he saw the steamer coming down the Sound, testified thus:
“ I found the bow light burning brightly. The side lights were also burning brightly. The stern light I found burning dim. There were two lanterns in one box. They showed as one light. I went aft and lowered it down. After I got the box down, I went into the door where the space is, out of the draft, so they would not blow out, and when there picked up the wicks of both lights, one after another. After that was done, I took them to the staff and put them in the box and hoisted them up. I heard the North Hampton blow one whistle. I was aft then, at the time of this first whistle, was just stepping inside the passage-way with the lights, as near as I can recollect. After an interval there was a reply with two whistles from the Continental. I was then coming out of the passage- p. 348way, as near as I can remember. The North Hampton blew one whistle again, directly after. I was then in the act of hoisting the lights at that time. After hoisting up the lights I saw the Continental coming for us, and I ran forward on starboard side. I got part of the way forward, when the vessels came together and the concussion knocked me down.”
It appeared from the testimony of those on board the Continental that they had, in point of fact, mistaken the North Hampton for a sailing vessel.
The lookout of the Continental—her forward deck lookout, who had no other duty than that of lookout—“ not seeing the vessel itself, but seeing a green and white light”— which he judged to be then a mile or a mile and a half distant—reported, five or six minutes before the collision, “ Sail off starboard bow,” and was answered at the pilot-house, “Aye, aye!”
The wheelsman, who heard the lookout’s report, saw also a green and white light, “ but no red light then four or five minutes before the collision, as he judged, and a mile or a mile and a half off, the North Hampton’s lights bearing pretty much the whole time, until it was too late to avoid the collision, about three points on the Continental’s bow.” He thereupon starboarded his helm so as to keep her off.
The captain, who had been on the line for thirty years, and who was in the pilot-house with the wheelsman, said:
“I saw the North Hampton’s green and white light5 she had no stern light; sometimes in a sailing vessel they come forward and stick out a white light when they get frightened; sometimes they have a light forward to overhaul the anchor-chain.”
The captain added:
“ A lookout reports a steamer as a steamer, and a vessel as a vessel; all he knows by is the lights; at night, he reports four lights as a steamer, and two lights as a vessel. If the vessel seen has one colored and only one bright light, he reports her as a sail vessel. That’s his orders.”
On board the Continental there happened to be, going
Argument for the North Hampton. •
down the Sound that night, one Horton, for seven years a Hellgate pilot. He had been in the pilot-house, and saw a green and white light—the white light forward, but he saw no aft light. The vessel on which they were seemed to him, he testified, to be a sailing vessel. He said:
“I guessed she was a sailing vessel because she did not have any stern light; I could not see her hull when I first saw her. It is generally the case for a vessel coming into port to take a light forward, to get her chain and anchor ready to drop anchor. I went away from the pilot-house to the lower cabin after I saw the lights. From the time I left the pilot-house till the collision was five or six minutes. After the collision, I saw a stern light halfway up the flag-mast.”
As already mentioned, the Continental was starboarded under the impression that the North Hampton was a sailing vessel, and with a view of keeping out of her way. The North Hampton being in fact a steamer, and knowing that the approaching vessel was one, ported. A collision came of course.
The owners of the North Hampton having libelled the Continental in the District Court of Connecticut, that court dismissed the libel, considering that the North Hampton was in fault; having had no stern-light, and running in direct violation of law, which required her to have a central range of two white lights; ’ The Circuit Court affirmed, this decree, and the owners of the North Hampton brought the case here.
Messrs. (J. Donohue, C. R. Ingersoll, and J. S. Beach, for the appellants :
Assuming that the steamer could see only the bow and side-lights of the propeller, it was a fault on her part to act as if they were the lights of a sailing-vessel. A white light is prohibited to a sailing vessel under way. She is forbidden to carry any other light than the green light on her starboard side, and the red light on her port side. Sea-going steamers are required to carry the single white light with the side colored lights. Coasting and inland water steamers carry
Argument for the North Hampton.
the colored side-lights with the bow and stern white lights. The lights, therefore, which the steamer saw, were lights which a sea-going steamer must carry, but which a sailing-vessel must never carry. And the steamer assumed that the vessel carrying it was not the kind of vessel which the lights declared it to be, but was the kind of vessel which the lights declared it not to be. This was recklessness.
If a steamer sees a light which does not clearly indicate the character of the vessel carrying it, she has no right to jump to the conclusion that it is carried by a vessel of any particular class, and especially not of that class which is forbidden to carry such a light. It is her duty to ascertain the truth by all the cautionary means in her power. She must use all necessary vigilance to discover whether the strange light is a fixed light or not—and if fixed, whether it is on a vessel in motion or at anchor—and if on a vessel in motion, what is the course of that vessel as indicating whether she is moved by the wind or by steam. She must look for the strength of the light seen as distinguishing a regulation-light from an ordinary hand-lantern, commonly used about a vessel’s deck—and watch for the sails of the vessel—her hull— the noise of her paddles, and the lights of her saloon, if a steamer—and for all the usual indications characterizing the different classes of vessels. And if this inquiry cannot be made without slackening her speed, she must slacken her speed. If not without blowing her whistle, as a signal, she must blow her whistle. She has no right to go on at all if she is in any reasonable doubt on the subject. If, without exercising all reasonable precautions, she insists upon going on, and a collision occurs, she takes the risk, and the fault is justly visited upon her. In the case of The Gray Eagle,* that vessel was held to be in fault because she did not, by watching the bearings of the light of another vessel coming towards her—The Perseverance—discover that the light was in motion, and therefore could not be upon a vessel at
* 9 Wallace, 505; see also Nelson v. Leland, 22 Howard, 48; The Louisiana v. Isaac Fisher et al., 21 Id. 1; The Birkenhead, 3 W. Robinson, 75.
Argument for the North Hampton.
anchor. And she was condemned as in fault, although the Perseverance was carrying a light she had no right to carry. And such is the law of negligence everywhere. If a man goes upon a railroad track with shut eyes and deaf ears and is run over, it is in vain for him to complain that the whistle was not blown. In the present case no precaution whatever was taken by the steamer to discover the character of the approaching vessel. For it was manifest to the steamer, or should have been, that the vessel was approaching, and was bound into New Haven harbor. The steamer knew that the propeller was due at that place at that time. The two boats were accustomed to meet on every trip of the propeller, and were perfectly well known to each other. It was therefore the steamer’s duty to look out for the propeller, just when and where the lights of this approaching vessel appeared. But at least there was reason for a doubt, and, if so, it was clearly her duty to settle that doubt. But those on board did not allow any doubt whatever to enter their mind. They assumed at once that it was a sailing-vessel thus coming toward them, right in the eye of the wind, and they adhered to that assumption stubbornly, until it resulted in disaster.
2. The character of the light was manifested to the steamer, beyond any question, by its bearings.
Those bearings are given to us by the wheelsman of the Continental as three points on the starboard bow when the light was first seen, and they continued the same without alteration until the collision, or until it was too late to avoid the collision. Now these bearings ought to have told those navigating the steamer, that the vessel carrying those lights was directly approaching the steamer. Otherwise they would have changed.
3. And the wind, it is admitted, was north-northeast. The vessel with the lights, therefore, was approaching directly in the eye of the wind. And yet the captain of the Continental swears that he supposed the North Hampton to be a sailing-vessel all the while, and the court below tells us that he was justified in that supposition.
Again: the wind being north-northeast, a sailing-vessel,
Argument for the Continental.
in order to show her green light to the steamer, must have been on her starboard tack, and could not have lain closer to the wind on that tack than a northwest course. This course would have been nearly at right angles to the steamer’s course, and, if the vessel sailing on it was first seen three points on the steamer’s starboard bow, every minute would carry her further out of the steamer’s way, and would of course change the bearings of her lights, and the relative distance between her lights.
4. The orders which the captain of the steamer testifies he had given to his lookout,* and upon which the lookout seems to have acted, on this occasion, shows him to have had a very confused notion of the object of the regulation lights, and indicates a habit of inattention to their particular significance. It is not surprising that a lookout, receiving such orders, should report the propeller as a sail, and is certainly not to be wondered at that the officer who could give them should adopt such a report as infallible, and shut his eyes and ears to any further evidence on the subject.
Messrs. E. H. Owen and T. C. Doolittle, contra:
The North Hampton was ruqning in open violation of statutory requirement and of the well-settled rules of navigation adopted for the purpose of preventing collisions, in that she had no “ after light.”
It is probable that at no time was the after light such as the statute requires, for it is clear that it had been a poor, defective light for some time previous to its being taken down. But however this may have been, it was taken down at the exact moment that it was specially needed to be up, and kept down until the Continental was completely misled by the want of it, and a collision became inevitable.
The statute, by positive requirement, makes a central range of white lights obligatory in inland waters. The requirement applies to all vessels under steam except “ ocean-bound steamers.” And there is the greatest reason for the
Argument for the Continental.
requirement, for without the central range of white lights the true course and direction of an approaching steamer cannot be had in narrow work. With nothing but the colored lights, steamers may be approaching nearly end on, and so as to involve the risk of collision, when one of them is not visible. The colored lights are to be so constructed as to shine from a point right ahead to two points abaft the beam, so that one steamer approaching another on nearly a parallel course, a very little off either hand, would only see one colored light, and could not thereby determine how near the two were approaching “end on.” The bow light alone would not enabl§ the approaching steamer to determine this fact without the aid of the after light, giving thereby a central range of two white lights. If approaching directly end on, the two white lights will be in range, and if not, they will be “ open.”
It is no excuse for the North Hampton that her stern light, having become dim, had been temporarily removed for the purpose of being trimmed.*
The absence of the necessary range of lights did in fact deceive, and could not fail to deceive, those in charge of and navigating the Continental. The North Hampton was taken to be a sailing-vessel; she was reported as such, and the movements made on the part of the Continental were based upon that idea.
It is no answer to say that those navigating the Continental, upon reflection, might have known that the North Hampton could not have been a sailing-vessel, because a sailing-vessel does not carry a white light forward, and because, with that wind, a sailing-vessel could not have been heading as she was. Although sailing-vessels are not permitted by law to carry a white light, yet it was proved to be not unusual in the night, when making preparations for landing, to have a light on the forward deck in getting lines and chains ready. As shh did not have the lights which steamers are required to carry, the Continental was not bound to pre- p. 354sume, from the mere fact that a white light was seen at her bow, that the vessel whose lights were seen was a steamer. There is no evidence that “ ocean-bound steamers,” which carry a white light forward, ever frequent or are ever seen navigating any part of the Sound.
The North Hampton was also in fault in not having a lookout. The fact that she had one is not asserted on the other side. This was gross negligence. She was bound by law to have one. It was necessary for her guidance. The master and pilot had other duties to perform which rendered them incompetent.* The fact that the Continental was seen by the master and pilot does not obyiate the objection. If she had had a vigilant lookout, the lights of the Continental and her direction would have been more carefully reported, and the collision might have been avoided. A 'vigilant lookout in the night, in a thoroughfare, is an absolute and inflexible necessity. No one can .tell what might have been the effect of having a vigilant lookout forward.
The North Hampton was clearly in fault for sounding one blast of her whistle, and in attempting to cross over and pass the Continental on her left or port side, thus throwing herself right across the bows of the latter vessel.
The Continental was properly navigated and was not in any respect in fault. She was pursuing her lawful and proper course on her voyage. She had all the lights required by law properly set and burning brightly. She had a competent lookout properly stationed and faithfully attending to his duty. She had a competent engineer at his post who answered all the orders from the pilot-house promptly.
Mr. Justice CLIFFORD delivered the opinion of the court.
Ships and vessels are held liable for damage occasioned by collision, either on account of the culpable neglect or complicity, direct or indirect, of their owners, or on account of the negligence, unskilfulness, or Carelessness of those employed in their control and navigation. When employed in p. 355navigation ships and vessels should be kept seaworthy and be well manned and equipped for the voyage, and in cases where they are not seaworthy or not well manned or equipped, and a collision ensues between such a vessel and one without fault in that respect, the owners of the vessel not seaworthy or not well manned and equipped cannot escape responsibility, if it appears that the unseaworthiness of the vessel or the want of a competent master or of a sufficient crew or of suitable ‘tackle, sails, or other motive power, as the case may be, caused or contributed to the disaster; and as the owners of the vessel appoint the master and employ the crew, they are also held responsible for their conduct in the control and navigation of the vessel.
Controversies growing out of collisions are cognizable in the admiralty, and when prosecuted in that jurisdiction, the rules of decision are different in several respects from those which prevail even in similar controversies when prosecuted in the courts of common law. Where the collision occurs exclusively from natural causes and without any fault on the part of the owners of either vessel or those intrusted with their control and management, the maritime rule, as defined by the Federal courts is, that the loss shall rest where it falls, on the principle that no one is responsible for such a disaster when produced by causes over which human skill and prudence could exercise no control.* Admiralty courts everywhere have now adopted that rule, but it cannot be applied where both or either of the vessels are in fault—as where the vessel of the respondent is alone in fault the libellant is entitled to a decree for his damages, and the converse of the proposition is equally true, that if the vessel of the libellant is alone in fault, proof of that fact is a sufficient defence to the libel, but if both vessels are in fault, then the damages must be equally apportioned between the offending vessels. Much uncertainty often attends the inquiry by which of those rules' a given controversy should be determined, and where the evidence is conflicting the issue presented is frequently one of doubt and difficulty.
856 The Cont inen tal . [Sup. Ct.
Full damages are claimed by the libellants in this case, upon the ground that the steamboat of the respondents was alone in fault, or if that theory cannot be sustained, then they contend that both steamers were in fault and that the damages should be divided. On the other hand, the respondents contend that the vessel of the libellants, the propeller, was "wholly in fault, and that the decree of the Circuit Court dismissing the libel should be affirmed.
Daily trips were run by the propeller between the ports of New Haven and New York, carrying passengers and freight, and she was on her return trip from the latter port and near the entrance to the harbor of her home-port when she was struck by the Continental, the steamboat of the respondents, on her port side, abaft her midships, and damaged to such an extent that she sunk in half an hour. Corresponding trips were run by the steamboat of the respondents between the same ports, the Continental, however, usually leaving the port of New Haven on the same day that the propeller, the North Hampton, left New York on her return trip to the port where both steamers belonged. Accustomed as they were to start on their respective trips at stated hours, each knew pretty nearly when they would meet and where they would pass each other on the route, except when one or the other was detained by stress of weather or other special circumstances, and the proofs exhibited furnish no reason to suppose that either of the steamers met with any detention during this trip. Testimony was taken on both sides and both parties having been heard, the District Court entered a decree for the respondents. Prompt appeal was taken by the libellants to the Circuit Court, but the Circuit Court affirmed the decree of the District Court, and the libellants appealed to this court.
Before the Continental came out of the lower harbor her lights were seen by those on board the propeller when the two steaHpiers were four or five miles apart. Distant from each other as they then were, the better opinion is that they were not at that time on courses which involved any risk of collision, but the Continental, shortly after she came out of p. 357the lower harbor, hauled up as usual on her Sound course, heading more directly towards her ultimate destination, and from that moment the course of the two steamers was such that the rules of navigation as well as the dictates of common prudence made it the duty of each to adopt proper precautions to prevent a collision. Beyond doubt they were approaching each other nearly end on, within the maritime meaning of that phrase, and under such circumstances all must admit that the rules of navigation require that “the helms of both shall be put to port, so that each may pass on the port side
of the other.”*
Extended argument to establish that theory of fact does not appear to be necessary, as it agrees with the first finding of the District judge and is supported by all the attending circumstances as well as by the weight of the direct testimony. Evidently the two steamers were far enough apart at that time to have adopted whatever precautions were necessary to have prevented a collision, and it is clear that if each had obeyed the rules of navigation, they would have passed each other in safety. Fault is imputed to the steamboat Continental, because she did not port her helm as required by the rules of navigation established by the act of Congress, but the respondents contend that they were deceived and misled as to the character of the approaching vessel and consequent nature of their duty by the failure of those on board of the propeller to display proper lights, as they also were required to do by the same Congressional regulations, as amended by. a subsequent act.f
Evidence to that effect was given by one of the witnesses called by the libellants. He testified that he was at the wheel prior to the collision; that he saw the Continental coming down the harbor and spoke to another seaman to take his place; that the seaman spoken to did as requested; that he went and called the master and the mates; that he looked at the lights; that the bow light and both the side lights were burning brightly, but that the stern light, which
*18 Stat, at Large, 60. f 14 Id. 228. p. 358consisted of two lanterns and showed as one light, he found was “ burning dimthat he went aft and took down both lanterns and went forward in the passage-way on the starboard side and having picked up the wicks carried the lanterns back and put them in the box where they belonged ; that he stepped forward into the passage-way to get out of the draft, so that the wind might not blow the lights out, and he further states that he heard the propeller give one whistle just as he was stepping into the passage-way with the lanterns; that he also heard two whistles from the Continental in reply just as he was returning to replace the lights in the box; that the propeller, just as he was hoisting the lanterns, again blew oné whistle; that after he replaced the lights he saw the Continental approaching the propeller, when he rau forward part way and was knocked down by the concussion.
Such a disaster could not have occurred without fault on the part of one or both vessels, as they bad an open sea and good weather, and the night, though cloudy, was not very dark, as fully appears from the fact that those on board the propeller saw the lights of the Continental when she was at least four miles distant.
Coasting steamers are required to carry a central range of two white lights as well as the red and green lights prescribed for ocean-going steamers, the after light to be carried at least fifteen feet above the light at the head of the vessel, and the requirement of the act of Congress in respect to it is that it shall “ show all around the horizon.”* Signal lights are required by the acts of Congress in order that they may be seen by an approaching vessel in season to enable those in charge of the vessel to adopt the necessary precautions to prevent a collision with the vessel whose lights are so displayed, and when it appears that they were burning so dimly as not to fulfil the purpose and object for which they are required, they cannot be regarded as constituting a compliance with the prescribed requirement.! Apply that rule to the present case and it is quite clear that the propel-
* 14 Stat, at Large, 228-9. f Chamberlain v. Ward, 21 Howard, 566. p. 359]er was in fault, and it appears that the District and Circuit Courts both came to the conclusion that she was solely in fault and denied to the libellants all claim for damages, either as owners of the propeller or as bailees of the cargo. Whether that decision is correct or not must depend upon the evidence, as it is clear that the absence of one or more of the lights required by the act of Congress will not necessarily cast upon the delinquent party the entire consequences of such a disaster. Absence of lights in a case falling within the acts of Congress renders the owners of the vessel liable for the consequences resulting from the omission, but it does not confer any right upon the other vessel to disregard or violate any rule of navigation or to neglect any reasonable or practicable precaution to avoid a collision which the circumstances afford the means and opportunity to adopt.
Steamers displaying proper signal lights are in that respect without fault, but they have other duties to perform to prevent collision besides complying with that requirement, and if they neglect to perform such other duties they will not be held blameless because they displayed proper lights as required by the act of Congress upon that subject.*
Some conflict undoubtedly exists in the testimony as to the precise manner in which the two steamers were approaching each other after the Continental came out of the harbor and hauled up upon her Sound course, but the better opinion we all think is that they were approaching each other nearly end on, or substantially in that manner, as found by the District Court. Inquiry as to what their respective courses were before that time would be useless, as the respondents do not claim that either the lookout or master of the steamboat saw7 the propeller or her lights before the steamboat was put upon her Sound course. Unquestionably the lights of the propeller might have been seen earlier, but it is clear that they were not, if the witnesses are to be believed.
Lookouts are required to be vigilant, and it is not doubted
The Gray Eagle, 9 Wallace, 510.
if proper vigilance had been exercised in this case those on board the steamboat might have ascertained the character of the approaching vessel in season to have adopted every necessary precaution to have avoided a collision. They must have expected to meet the propeller about that time, and under the circumstances they had no right to assume without a closer scrutiny that the approaching vessel was a sail-vessel because she did not show a stern light. She did show a bow light, which might well have satisfied them that the vessel was not a sail-vessel, as it is more reasonable to suppose that the stern light of a steamer has become dim or extinguished than that a sail vessel will show a light not required nor authorized by the prescribed regulations. Proper scrutiny as to the character of the approaching vessel would or should have induced greater caution on the part of the master of the Continental, and if any doubt remained after such scrutiny was made the steamboat should have slackened her speed or have stopped until every reasonable degree of uncertainty was overcome. Navigators have no right arbitrarily to assume under all circumstances that every vessel approaching which does not show both the signal lights and the central range of two white lights is a sail-vessel which is bound to keep her course, and that if she does not she may be run down and sunk.
Prior to the enactment of the sailing rules neither steamers nor sail vessels, except on the lakes, were required to carry lights of any kind, and yet the rules of navigation were substantially the same as those prescribed in the existing acts of Congress. Lights are now required, but the omission of one vessel to comply with the requirement will not excuse the other from the exercise of all due and reasonable care to prevent a collision.*
Viewed in the light of these suggestions, as the case must be, the court is fully satisfied that those in charge of the steamboat did not exercise due care and vigilance to ascertain the character of the approaching vessel, and .that it
* 13 Stat, at Large, 58; 9 Id. 382; 14 Id. 228; Steamship Company®. Rumball, 21 Howard, 884 p. 361they had done so they would have been enabled to have adopted reasonable precautions to have prevented the collision. Consequently the court is of the opinion that both vessels were in fault, and that the damages should be equally apportioned between the offending vessels.*
Where two steamers are approaching each other in an open sea on a night when the lights of a vessel may be seen five miles, the defence that one of the steamers mistook the other for a sail-vessel cannot be admitted as valid, unless it is established by full proof; and where, as in this case, it appears that the approaching steamer showed a bow light in addition to the red and green lights, the court will be still less inclined to give credence to the theory as a valid defence.
Decr ee rev ers ed , and the cause remanded for further proceedings in conformity to the opinion of this court.
Pugh v . Mc Cormic k .
1. The 5th section of the act of July 14th, 1870 (16 Stat, at Large, 257),—by which the power of collectors of internal revenue to post-stamp certain instruments of writing and remit penalties for the non-stamping of them when issued, is extended in point of time,—applies to notes issued before the passage of the act as well as to notes issued subsequently.
2. Though error may have been committed by a court below on the then state of statutory law, yet where a statute has been passed since that court gave their judgment, changing the then existing law, so that if the judgment were reversed and the case sent back, the court would now and in virtue of the new statute have to rightly give the same judgment, that they gave before erroneously, this court will affirm. 3. An indorsement of a promissory note need not be stamped under any existing statutes of the United States. 4. Nor a waiver in writing, by an indorser, of demand of payment and notice of dishonor.
On the 12th of April, 1863, R. C. Martin, at Assumption, Louisiana, drew his promissory note at one year for $7000,
* Catharine v. Dickinson, 17 Howard, 170; 1 Parsons on Shipping, 527; The Morning Light, 2 Wallace, 557.
in favor of W. W. Pugh, which note after being indorsed there by Pugh came into the hands of James McCormick. The note, as issued, had no stamp upon it.
It was not paid at maturity and no notice of non-payment was given to Pugh, the indorser, who was thus of course discharged. More than eighteen months after the non-payment, however, Pugh wrote upon the note—
“Ass ump tio n , October 16th, 1865.
“Notice of demand, non-payment, and protest waived, and all legal responsibility assumed.
“ W. W. Pugh .”
. Neither the indorsement nor the waiver of protest, &c., had any stamp.
On the 1st and 14th of July, 1862, the 3d March, 1863, and the 30th of June, 1864, Congress had passed acts* requiring all notes, under penalty of their being incapable of being sued on and void, to bear certain stamps; making also some benignant mitigations.of the law in cases where, without fraudulent intent, they had not been stamped; neither acts nor modifications being necessary to be here stated.
On the 13th of July, 1866,f however, was passed an act necessary to be more fully mentioned. That act—amending the 158th section of the act of June 30th, 1864, and enacting that “any person who shall make, sign, or issue, or who shall cause to be made, signed, or issued any instrument, document, or paper ... or shall accept, negotiate, or pay, or cause to be accepted, negotiated, or paid any bill of exchange, draft, or order, or promissory note for the payment of money without the same being duly stamped . . . with intent to evade the provisions of the act, shall for every such offence forfeit the sum of $50;” and, enacting further, that such instrument, document, or paper, bill, draft, order, or note, not being stamped according to law, shall be deemed invalid and of no effect—went on in its 9th section to make certain provisos by which the instrument, though void wheu
* 12 Stat, at Large, 480, 561; lb. 725; 13 Id. 291, 481. f 14 Id- 143- p. 363made, from not being stamped, might be validated and made operative by being post-stamped. The 2d, 3d, and 4th of the provisos ran thus:
“ And provided (2d) further, That hereafter, in all cases where the party has not affixed to any instrument the stamp required by law thereon, at the time of making or issuing the said instrument, and he or they, or any party having an interest therein, shall be subsequently desirous of affixing such stamp to said instrument, he or they shall appear before the collector of the revenue of the proper district, who shall upon the payment of the price of the proper stamp required by law, and of a penalty of fifty dollars . . . affix the proper stamp to such instrument or copy, and note upon the margin thereof the date of his so doing, and the fact that such penalty has been paid, and the same shall thereupon be deemed and held to be as valid, to all intents and purposes, as if stamped when made or issued.
“ And provided (3 <7) further, That where it shall appear to said collector, upon oath or otherwise, to his satisfaction, that any such instrument has not been duly stamped at the time of making or issuing the same, by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the United States of the stamp, or to evade or delay the payment thereof, then, and in such case, if such instrument shall within twelve calendar months after the first day of August, eighteen hundred and sixty-six, or within twelve calendar months after the making or issuing thereof, be brought to the said collector pf revenue to be stamped, and the stamp tax chargeable thereon shall be paid, it shall be lawful for the said collector to remit the penalty aforesaid and to cause such instrument to be duly stamped, and the instrument may be used in all courts and places in the same manner and with like effect as if the instrument had been originally stamped.
“ And provided (lastly) further, That in all cases where the party has not affixed the stamp required by law upon any instrument made, signed, or issued, at a time when and at a place where no collection district was established, it shall be lawful for him or them, or any party having an interest therein, to affix the proper stamp thereto, . . . and the instrument to which the proper stamp has been thus affixed prior to the first day of January, one thousand eight hundred and sixty-seven, p. 364shall be as valid to all intents and purposes as if stamped by the collector in the manner hereinbefore provided.”
In this state of enactment McCormick, the holder of the note, sued on the 25th March, 1868, Pugh, the indorser, in one of the inferior State courts of Louisiana, upon it. The trial coming on January 12th, 1870—and there being no question but that a stamp of $3.50 was the proper stamp as respected amount, for the note (on which $5000 had been paid)—the note was offered in evidence, when it was found to have a $3.50 stamp upon it, but also a certificate thus:
Internal revenue stamps to the amount of $3.50 affixed to this instrument and cancelled, by me, at the request of James McCormick, Esq., this 7 th day of October, 1869. Penalty remitted, interest collected.
J. S. Chapman ,
$3.50 Collector of United States Internal Revenue stamp for the Second District of Louisiana, cancelled s—.-y—' Collector ’s Offi ce , Bato n Rou ge , La ., October 7th, 1869.
The defendant objected to the introduction in evidence, of—
1st. The note itself, because a note which had been issued unstamped could not after twelve months be post-stamped, unless the penalty was paid; that after twelve months the collector could not stamp and remit the penalty.
2d. To the introduction of the indorsement of the defendant to the instrument, because the said indorsement was not stamped at the time of making it, nor at any time since.
3d. To the writing showing a waiver of demand, protest, and notice of protest, because the said waiver was not, and had never been, stamped.
The court overruled the objections, considering— 1st. That the stamping of the note by Chapman, the collector of internal revenue, was regular enough.
2d. That no stamp was needed for the indorsement. 3d. That none was needed for the waiver. Judgment accordingly was given, January 12th, 1870, for the plaintiff, and that judgment being taken to the Supreme p. 365Court of Louisiana, the judgment was, on the 7th of March, 1870, there affirmed. The case was now here for review.
The reader perceives, of course, that in remitting the penalty the collector of internal revenue had proceeded under the third of the provisos, quoted on page 363, his capacity to do which was given but for twelve months from August 1st, 1866, or twelve months from the issuing of the note, i. e., in this particular case, twelve months from the 12th April, 1863; whereas here the collector’s certificate showed that the remission had been on the 12th of October, 1869; plainly too late; though had the penalty been paid, then, under the previous proviso,—where no limit of time was fixed to the collector’s power to post-stamp—the post-stamping would have apparently been good.
In this state of things Congress, on the 14th July, 1870,* passed yet another act, amending the act of July 30th, 1866, containing the provisos above quoted. It was amended:
“ By striking out the words ‘ fifty dollars,’ in the second proviso, and inserting in lieu thereof the following, ‘ double the amount of tax remaining unpaid, but in no case less than $5;’ also by striking out the words ‘sixty-six’ in the third proviso, and inserting in lieu thereof the words ‘seventy-one;’ also by striking out the words ‘sixty-seven’ in the last proviso, and inserting in lieu thereof the words ‘seventy-two.’ ”
Of course, with the act of 1866, thus amended—assuming that the amendatory act operated retrospectively (that is to say, on notes made previously to July 14th, 1870, the date of its passage), though not unless that assumption was made—if the collector any time after its passage and prior to the 1st of August, 1871, affixed the stamp and remitted the penalty the post-stamping would have been good. Here it had been done on the 12th of October, 1869.
The questions before this court were: 1. Whether this amendatory act of July 14th, 1870, operated retrospectively.
2. Whether, assuming that it did, the court would reverse
* 16 Stat, at Large, 257.
the judgment below, since though the court below might have wrongly.decided at the time that the case came before it (January 12th, 1870), that the collector had power on the 7th October, 1869, to remit the penalty, yet, when by reversal, the case should come again before it the same decision would in virtue of the subsequently passed amendatory act of July 14th, 1870, and its retrospective operation, have to be made, and the same judgment have to be now rightly given which was then given wrongly.
3. Whether the indorsement by Pugh required a stamp. 4. Whether the waiver of demand and notice did. The case came up to be argued in this court February 7th, 1872.
Mr. Miles Taylor, for the plaintiff in error; Mr. T. J. Durant, contra.
Mr. Justice CLIFFORD, on the 19th of February, 1872, delivered the opinion of the court.
Reference will be made to the parties as they existed in the State court where the suit was commenced.
Martin, on the twelfth of April, 1863, by his promissory note of that date promised to pay, twelve months after date, to the order of the defendant, at the place mentioned in the note, seven thousand dollars with eight per cent, interest, and the note is indorsed by the defendant without date.
Ou the seventh of December of that year the defendant paid two thousand dollars, which is indorsed on the note, and on the seventeenth of May following he made another payment of three thousand dollars, for which a receipt was given by the plaintiff. Prior to that, however, to wit, on the sixteenth of October of the preceding year, the following waiver of protest was signed by the defendant, to wit: “Notice of protest, demand, and protest waived, and all legal responsibilities assumed.”
When the note was executed no internal revenue stamps were affixed to it, and it remained without any such stamps until the seventh of October, 1869, when such stamps, to p. 367the amount of three dollars and fifty cents, were, at the request of the plaintiff, affixed to it and cancelled by the collector of internal revenue for the district, the interest being collected and the penalty remitted as more fully appears by the certificate of the collector set forth in the record.
Payment being refused, the plaintiff, as the holder and indorsee of the note in good faith and for value, on the twenty-fifth of March, 1868, instituted the present action of assumpsit to recover the balance due on the note. Service was made and the defendant appeared and pleaded that the plaintiff acquired the note directly from the maker of the same; that no consideration ever passed between the defendant and the plaintiff* or between the defendant and the maker of the instrument in regard to the note, and the defendant also denied that he was ever legally bound by the instrument or that he ever at any time rendered himself liable to pay the amount. Neither party demanding a jury the cause was heard and determined by the court, and judgment was rendered for the plaintiff in conformity with the declaration.
Exceptions were filed by the defendant, and by the exceptions it appears that the defendant, when the plaintiff offered the note in evidence, objected to its admissibility upon three grounds: (1) Because the face of the instrument was not legally stamped with the internal revenue stamps, as required by law; (2) because the indorsement on the note was not legally stamped; (3) because the certificate waiving demand, notice, and protest was never stamped, and he insisted that the note for the want of such stamps could not be admitted in evidence. All three objections were overruled, and judgment having been rendered for the plaintiff the defendant appealed to the Supreme Court of the State, where the judgment was affirmed. Whereupon the defendant sued out a writ of error to the State court and removed the cause into this court for re-examination.
Two principal questions are presented by the assignment of errors: (1.) Whether the stamps affixed to the note were legally affixed. (2.) Whether the certificate waiving demand, p. 368notice, and protest was an instrument which the internal revenue laws required should be stamped. Evidently a satisfactory response to these questions cannot be given without a careful examination of the several provisions in the acts of Congress imposing such revenue duties, and the modifications of the same as enacted by Congress prior to the time when the note and the certificate of waiver were offered and admitted in evidence.
Promissory notes, except bank notes issued for circulation, where the note was given for a sum exceeding twenty dollars and not exceeding one hundred dollars, were by the act of the first of July, 1862, subjected to a stamp duty of five cents. Nine other gradations were prescribed in the same schedule by which the rate per cent, of the duty was somewhat diminished as the amount of the note was increased. Where the note exceeded five thousand dollars the amount of the stamp duty imposed by that schedule was one dollar and fifty cents, and one dollar in addition for every twenty-five hundred dollars or part of twenty-five hundred dollars in excess of five thousand dollars, which shows that the note given in evidence in this case was subject under that act to a stamp duty of three dollars and fifty cents.*
Persons who made, signed, or issued, or caused to be made, signed, or issued any instrument, document, or paper of any kind, without the same being duly stamped, were declared by the ninety-fifth section to be subject to a penalty of fifty, dollars, and the further provision in the same section was that such instrument, document, or paper should be deemed invalid and of no effect. Section one hundred also provided that if any person made, signed, or issued, or caused to be made, signed, or issued, or accepted or paid or caused to be accepted or paid, with design to evade the payment of any such stamp duty, any bill of exchange, draft, or order, or promissory note for the payment of money and liable to any such duty, he should, for every such bill, draft, order, or note forfeit the sum of two hundred dollars.!
* 12 Stat, at Large, 480. f lb. 475, 477.
Instruments, documents, and papers made, signed, or issued without being duly stamped were, by the ninety-fifth section of that act, declared to be invalid and of no effect, but the twenty-fourth section of the act of the fourteenth of July in the same year provided that no instrument, document, or paper made, signed, or issued prior to the first day of January then next should be deemed invalid or of no effect because it was made, signed, or issued without being duly stamped. Provision, however, was made in the same section that no such instrument, document, or paper should be admitted or used as evidence in any court until it was duly stamped nor until the holder proved to the satisfaction of the court that he had paid five dollars to the collector for the use of the United States.*
Exemption from such declared invalidity and nullity was further extended to such instruments, documents, and papers made, signed, or issued prior to the first day of June, 1863, by the sixteenth section of the act of the third of March, passed in the same year, but the same section also provided that no such instrument, document, or paper, or any copy thereof, should be admitted or used as evidence in any court until the required stamps were affixed, together with the initials of the person affixing the stamps and the date when the same were so affixed.f
All laws in force in relation to stamp duties when the act of the thirtieth of June, 1864, was passed were by that act continued in force until the first day of August of that year, apd the same act adopted a new schedule of stamp duties, which took effect from and after that day. By that schedule persons making, signing, or issuing promissory notes not exceeding one hundred dollars were required to stamp the same with a five-cent stamp, and to add another of the same amount for every additional hundred dollars or fractional part of one hundred dollars.^
Neither deeds, instruments, documents, or papers, nor any copy thereof, not stamped, as required by previous laws,
* 12 Stat, at Large, 561. f lb. 725. J 13 Id. 291, 298.
vol . xiv. 24 p. 370could be recorded or admitted or used as evidence under that act until the same was stamped as therein required, but the act provided that no instrument, document, or paper, made, signed, or issued prior to the passage of that act, without being stamped, should be deemed invalid or of no effect for that cause if the stamp or stamps required should be subsequently affixed, and the act gave authority to the person desiring to use or to record any such deed, instrument, document, writing, or paper as evidence to affix the stamp or stamps thereon required in the presence of the court, register, or recorder.*
But persons making, signing, or issuing any instrument, document, or paper of any kind, or who caused the same to be made, signed, or issued, or who accepted or paid, or caused to be accepted or paid, any bill of exchange, draft, order, or promissory note .without the same being stamped, were by that act subjected to a forfeiture of two hundred dollars, and the further provision was that such instrument, document, or paper, bill, draft, order, or note, should be deemed invalid and of no effect.f
Stamps were also required by the act of the thirty-first of March, 1865, where bills of exchange and promissory notes were negotiated as well as where they were accepted and paid, but the forfeiture created by the preceding-act for the intentional evasion of the requirements was reduced to fifty dollars instead of two hundred dollars, as provided in the prior law.J
Provision was also made that persons desirous of ^fixing stamps to instruments, not stamped as required by prior laws, might appear before the collector of the proper district and affix the same upon paying the price of the proper stamp and the penalty of fifty dollars, with interest on the stamp duty if it exceeded the amount of the penalty. Such acts being done, that is, the proper stamp being affixed, the penalty paid, and a note of those acts and the date thereof made in the margin of the instrument, the section provides
* 13 Stat, at Large., 295, f lb. 294. J lb. 481. p. 371that the instrument “ shall thereupon be deemed and held to be as valid to all intents and purposes as if stamped when made or issued.”*
Fifty dollars forfeiture for making, signing, or issuing such an instrument, or for causing the same to be made, signed, pr issued, or for accepting, negotiating, or paying, or causing to be accepted, negotiated, or paid, any bill of exchange, draft, or order or promissory note, without the same being duly stamped, was also imposed by the act of the 13th of July, 1866, in cases where the act was done with intent to evade the provisions of that act, but the collector was empowered by that act to remit the penalty and to cause the instrument to be duly stamped in all cases where it appeared to his satisfaction that the omission to affix the stamp happened by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the revenue, or to evade or delay the payment of the duty. Twelve calendar months from the first day of August then next were allowed to the delinquent party by that act to avail himself of that provision, and the section specifically points out the acts to be done by. the party and the collector to render the instrument as valid as if it had been stamped at the time it was made, signed, or issued.
Original instruments, or a certified or duly proved copy thereof, duly stamped so as to entitle the same to be recorded, may under that act be presented to <the clerk, register, or recorder, or other officer having charge of the original record, and such officer may, upon the payment of the lawful fee, make a new record thereof, and note upon the original record the fact that the error or omission in the stamping of the original instrument has been corrected pursuant to law, and the provision is that the original instrument, or such certified copy thereof, or the record thereof, may in that event be used in all courts and places, in the same manner and with like effect as if the instrument had been originally stamped.f-
* 13 Stat, at Large, 481-2. -j- 14 Id. 143.
Errors or omissions of the kind which occurred or happened before the first day of August, 1866, might be remedied under that act at any time within twelve calendar months from that date, and subsequent errors and omissions of the kind might also be remedied in the same way at any time within twelve calendar months from the time the instrument, document, or paper was made, signed, or issued without being stamped as required by law, but it is quite clear that the case before the court does not fall within that proviso, as the application to the collector was not made in season to bring the case within either of those regulations.
Had legislation stopped there the ruling admitting the note in evidence would, certainly be erroneous, but the act of the fourteenth of July, 1870, amends the preceding act by striking out the words sixty-six, in the third proviso, and inserting in lieu thereof the words seventy-one, whereby the collector of the proper district is still empowered to remit penalties of the kind occurring or happening under the circumstances described in the third proviso of the prior act.
Since the passage of that act it is conceded that the collector may remit the forfeiture therein imposed if it occurred “ by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the United States of the stamp or to evade or delay the payment thereof,” but it is insisted that the new provision does not operate retrospectively, that it does not empower the collector to remit the penalty for any such omission if it occurred prior to the passage of the act, but the court here is of a different opinion for several reasons.
Special attention is called in the first place to the peculiar phraseology of the new provision, which is that section one hundred and fifty-eight of the act of the thirtieth of June, 1864, as amended by the ninth section of the act of the thirteenth of July, 1866, be and is hereby amended as therein provided. Three amendments are then made in the lastnamed act, as follows: (1.) By striking out the words fifty dollars in the. second proviso and inserting in lieu thereof the following: Double the amount of the tax remaining un- p. 373paid, but in no case less than five dollars. (2.) By striking out the words sixty-six in the third proviso and inserting in lieu thereof the words seventy-one. (3.) By striking out the words sixty-seven in the last proviso and inserting in lieu thereof the words seventy-two.*
Section one hundred and fifty-eight of the act first named provided that the forfeiture, where the omission to affix the stamp was with the intent to evade the duty, should be two hundred dollars, but the succeeding act passed the next year reduced the forfeiture to fifty dollars.f
Such an omission subjected the party to a penalty of fifty dollars also under the act of the thirteenth of July, 1866, but the penalty under the present act cannot exceed a sum which is double the amount of the tax unless that sum is less than five dollars.
Legislation in respect to the amount of the forfeiture in the earlier acts of Congress upon the subject would have been unnecessary if it had not been intended to extend the jurisdiction of the collector or some other officer to delinquencies of the kind which arose under the acts of Congress therein mentioned. All agree that the collector might, within the period of time designated in those acts, remit such forfeitures or penalties for past delinquencies if the application, as before explained, was seasonably made, and the court is unanimously of the opinion that the better construction of the act under consideration is that Congress intended to give such delinquent party a further opportunity to remedy such errors and omissions on the terms and conditions prescribed in the new provision.
Extended argument in support of the conclusion does not seem to be necessary, as the reasons to support it are apparent from its statement. Grant all that and still it may be suggested that the ruling in this case was made before the present act was passed, and it must be admitted that the suggestion is correct, but the new act shows to a demonstration that the ruling in question has become immaterial, hav-
* 16 Stat, at Large, 257. f 13 Id. 293 ; lb. 481.
ing ceased to be prejudicial to the defendant, as the collector now possesses the power to do what he then did, that is, to affix the stamps to the note, remit the penalty, and make the proper memorandum of his doings; and it is so clear that the plaintiff would have a right to require those acts to be done if a new trial were ordered that the court is unhesitatingly of the opinion that the judgment ought not to be reversed for that cause, as the proper stamps were affixed to the instrument and the amount of the required duty was deposited in the treasury before the note was used as evidence.*
Where the case is brought here by a writ of error to a State court for re-examination the court is not inclined to reverse the judgment unless there is some substantial eiioi to the prejudice of the complaining party, and especially not where it appears that the error has become immaterial and that the same party will be entitled to judgment if a new trial is granted. Payment of the stamp duty was made to the collector at the time he affixed the stamps to the note, and inasmuch as the government makes no complaint, and the whole transaction is characterized by good faith, the court is of the opinion that the judgment of the State court may be sustained.
II. Objection is also made that the note was not admissible as evidence because the indorsement was not stamped, but the court is of the opinion that the objection is without merit, as a stamp is not required to such a writing.j"
III. Whenever a party in a suit upon a bill of exchange
or promissory note is required to prove demand and notice or protest, he may comply with those conditions by proving that the opposite party waived the requirement.
Proof to that effect was offered in this case, which consisted of the usual memorandum signed by the party and written on the back of the note, and the statement in the bill of exceptions is that the defendant, when the note was offered, objected to the admissibility of that writing, but the court admitted it and the defendant excepted.
Satisfactory proof of waiver in such a case is in all respects equivalent in law to a compliance with the requirement.*
Such a waiver need not be in writing, as an oral declaration to that effect would be equally effectual, and it jddes not appear that any one of the internal revenue acts contains any requirement if it is in writing that it should be stamped, nor is any authority referred to as a support to the objection taken to the ruling of the court. On the contrary, the Supreme Court of California has decided the other way and this court is of the same opinion.f
Jud gmen t affir med .
Insu ranc e Compani es v . Weid es .
1. A statement in figures of the value of certain merchandise destroyed by fire, which statement professed to be a copy of another and original statement contained in a "book——itself destroyed in the fire—accompanied by proof that on a certain day the witnesses took a correct inventory of the merchandise and that it was correctly reduced to writing by one of them and entered in the volume burnt, and that what is offered is a correct copy, may, on a suit against insurers", be received in evidence to fix the value of the merchandise burnt, even though there be no independent recollection by the witnesses affirming to the correctness of the original statement of what they found the value of the merchandise to be.
*
Foshay v. Ferguson, 5 Hill, 158 ; Central Bank v. Copeland, 18 Maryland, 317 ; Eadie v. Slimmon, 26 New York,. 12; 1 Story’s Equity Jurisprudence, 9th ed. 239.
*
Eyre v. Potter, 15 Howard, 42; Fisher v. Boody, 1 Curtis, 206; Price v. Berrington, 7 English Law and Equity, 254.
*
The Cosmopolitan, 6 Notes of Cases, 24 ; The Aquila, 1 C. Robinson, 40; The Barefoot, 14 Jurist, 841 ; The Sarah Bell, 4 Notes of Cases, 146.
*
L’Esperance, 1 Dodson, 46. f Oloott, 78. J 1 Swabey, 208.
*
See supra, foot of p. 348.
*
*
The Ottawa, 3 Wallace; 268.
*
Campbell v. Wilcox, 10 Wallace, 422; Tobey v. Chipman, 13 Allen, 124; Corbin v. Tracy, 34 Connecticut, 326 ; (J. S. v. Anderson, 9 Wallace, p. 68. f Tilsley on Stamps, 172; Richards v. Frankum, 9 Carrington & Payne, 221; Penny v. Innes, 1 Crompton, Meeson & Roscoe, 439; Bacon v. Simpson,’3 Meeson & Welsby, 78; Edwards on Stamps (2d ed.), 140; Tilsley's Digest, 28.
2
Under a policy one of whose conditions is that in case of loss the assured, after furnishing evidence of his loss, shall submit to an examination
*
Taunton Bank v. Richardson, 5 Pickering, 444; 2Starkie on Evidence, 274; Woodman®. Thurston, 8 Cushing, 157; Marshall®. Mitchell, 35 Maine, 221 ; Collins on Stamps, 30. t Pacific Bank ®. De Ro, 37 California, 542 ; Chitty on Stamps, 192-200.