Ins. Cos. v. Weides, 81 U.S. (14 Wall.) 375

Case details
Citation
81 U.S. 375
Full caption
Insurance Companies v. Weides.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Majority
Strong (Justice)
Majority
Clifford (Justice)
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. 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.
under oath, and until such examination should be permitted no loss should be paid, Held that the insurers could not, as a condition of recovery, compel the assured to answer questions as to the sum per cent, of claim for which he had settled with other parties insuring him.
3. Under a policy one of whose conditions is that in case of loss the assured should produce “ certified copies'’ of all bills and invoices, the originals of which had been lost, and exhibit the same for examination to any person named by the insurers, and that until the proofs, declarations, and certificates were produced and examinations and appraisals permitted the loss should not be payable—Held, in the absence of proof when the insured was requested to produce duplicate bills of purchase— whether before the commencement of the action or afterwards, and of proof whether there was neglect or refusal of the insured to comply— that the insurers, even though they gave proof tending to show that the insured were requested to produce duplicates of invoices, could not properly ask an instruction that if the jury believed the assured were requested by the insurers to produce “ duplicates” of invoices of goods purchased by them, the originals of which were alleged by them to be destroyed, and neglected to do so before the commencement of the action, no right to recover existed.
4. Under a policy one of whose conditions is that fraud or false swearing on the part of the assured in an examination which, by the terms of the policy, he was bound to submit to on a claim by him for loss, it is only fraudulent false swearing in furnishing the preliminary proofs or in the examination which avoids the policy ; and whether there has been such false swearing is a matter for the jury to determine.
Error to the Circuit Court for the District of Minnesota; the case being this:
C. & J. R. Weide insured in four different companies a stock of goods which they had; all the policies being alike, and each containing clauses thus:
“ In case of loss the" assured shall forthwith give notice of said loss to the companies, and as soon after as possible render a particular account of such loss, signed and sworn to by them, stating whether any and what other insurance has been made on the same property, giving the actual cash value of the property, their interest therein, for what purpose and by whom the building insured, or containing the property insured, and the several parts thereof, were used; when and how the fire originated ; and shall also produce a certificate, under the hand and seal of a magistrate, . . . nearest to the place of the fire, stating that he has examined the circumstances attending the loss, p. 377knows the character and circumstances of the assured, and verily believes that the assured has, without fraud, sustained loss on the property insured, to the amount which such magistrate shall certify; and the assured shall, if required, submit to an examination under oath, by any person appointed by the companies, and subscribe to such examination when reduced to writing; and shall also produce their books of account and other vouchers of all property hereby insured, whether damaged or not damaged; and shall also produce certified copies of all bills and invoices, the originals of which have been lost, and exhibit the same for examination by any one named by the company. . . . All fraud, or attempt at fraud, or false swearing on the part of the assured, shall cause a forfeiture of all claim* under this policy.”
A fire having occurred and the goods insured having been burnt, the Weides sued the companies on the policies. On the trial it became material to prove what was the quantity and value of the goods which the plaintiffs had when the fire occurred. As bearing upon this, evidence was introduced, without objection, tending to show that the plaintiffs took a correct inventory of their stock on the 28th of February, 1866, which was correctly reduced to writing by one of them in an inventory book; that the prices or values were correctly footed up therein; that at the same time the footings were correctly entered by one of the plaintiffs upon the fly-leaf of an exhausted ledger, and afterwards transferred also by one of the plaintiffs to the fly-leaf of a new ledger; that neither of the plaintiffs could remember the amount of such inventory or footings, and that both the inventory book and the exhausted ledger had been destroyed. The plaintiffs then offered the entry of the footings upon the fly-leaf of the new ledger, which the court, in the face of objection by the other side, received.
The reception of this evidence made the first exception.
The plaintiffs then offered in evidence “ the said first item on the debit side in their present ledger of said merchandise account therein,” which the court received under objection; and afterwards “ the said merchandise account in said leds-er p. 378contained,” received in like manner. The reception of these two items of evidence made the second and third exceptions.
There being evidence tending to show that the real loss of the plaintiffs was far less than the total amount of insurance made by the companies sued, and that certain other insurance companies had made insurance on the plaintiffs’ stock of merchandise; and also that the plaintiffs had made certain settlements at the rate of 54 cents on a dollar with certain of the said other insurance companies; and that on an examination of the plaintiffs before this action was commenced under oath, required by the defendant of the plaintiffs, under the already quoted conditions of the policies, the plaintiffs disclosed the fact that they had made such settlements, but on such examination refused to answer questions put to them by the defendant as to the amounts for which they made such settlements; the companies’ defendant requested the court to instruct the jury thus:
11 If the jury shall believe that the plaintiffs, or either of them, in the course of an examination on oath, under the policy, refused to answer any questions by which defendant could fairly estimate or reasonably infer the plaintiffs’ real loss in the insured property, and have not before the commencement of this action answered the said questions under oath, then the jury must find for the defendant.”
Which instruction the court refused to give; this refusal being the subject of a fourth exception.
There being also evidence tending to show that the plaintiffs were requested to produce duplicate bills of purchases, the defendant moved the court to instruct the jury as follows:
“ If the jury believe from the evidence, that the plaintiffs were requested by the defendants to produce duplicates of invoices of goods purchased by them, the originals of which were alleged by them to be destroyed, and neglected to do so before the commencement of this action, their right of action never accrued, and the jury must find for the defendant.”
Which instruction the court refused to give; this refusal being the matter of the fifth exception.
So to the testimony of the plaintiffs tending to show material discrepancy from material statements made by them in their proofs of loss and their examination on oath under the policy, the defendant moved the court, as his fourth prayer,'to instruct the jury as follows:
“If the jury shall believe that the plaintiffs testifying on this trial have made statements materially differing from statements knowingly made under oath in their proofs of loss, whether in their particular account made to the defendant, or any examination on oath submitted to by them, under the terms of the policy, this is false swearing, and the jury must find for the defendant.”
Which instruction the court refused to give.
In the examination on oath made by the plaintiffs under the policy, the plaintiffs having stated their outstanding debts to be between $18,000 and $20,000, and having stated in evidence before the jury that their indebtedness did not exceed $8000 at the time of the fire, and there being evidence tending to show that plaintiffs knowingly made the statement in their examination on oath, and subscribed and made oath to the same, the defendant moved the court, as a fifth prayer, to instruct the jury as follows:
“In their examinations uhder the policy, plaintiffs seem to have sworn that the outstanding debts of their firm amounted to between $18,000 and $20,000 at the time of the fire. In their testimony here they state positively that their indebtedness did not exceed $8000 at that time. If the jury shall believe that they knowingly made the statement set forth in their examination on oath and subscribed and made oath to the same, the jury must find for the defendants.”
Which motion or request the court refused to give; their refusal of these fourth and fifth prayers making a sixth and seventh exception.
The reception of the evidence of the footings on the fly-leaf of the new ledger and the refusals to charge as requested were the matters assigned for error.
There were two other errors assigned arising from a refusal by the court to lay down as rules of law a certain rule p. 380for the jury to pursue, in computing the amount of stock from certain data. But the counsel of the companies in this court, while asserting that the rule was undoubtedly correct arithmetically, candidly admitted that it could not be stated as a rule of law to be laid down by the court. The requests, therefore, need not be stated.
Messrs. J. M. Carlisle and J. D. McPherson, for the plaintiffs in error; Messrs. W. H. Peckham and Lorenzo Allis, contra.
Mr. Justice STRONG delivered the opinion of the court.
It is contended in the first place, that there, was error in the court’s receiving the entry of the footings upon the fly-leaf of the new ledger. It will be observed that the footings upon the fly-leaf of the ledger were not offered or received as independent evidence. They were accompanied by proof that they were correct statements of the values of the merchandise, and that they were correctly transcribed either from the inventory book or from the fly-leaf of the exhausted ledger, both of which appear to have been originals. How far papers, not evidence per se, but proved to have been true statements of fact, at the time they were made, are admissible in connection with the testimony of a witness who made them, has been a frequent subject of inquiry, and it has many times been decided that they arp to be received. And why should they not be? Quantities and values are retained in the memory with great difficulty. If at the time when an entry of aggregate quantities or values was made, the witness knew it was correct, it is hard to see why it is not at least as reliable as is the memory of the witness. It is true a copy of a copy is not generally receivable, for the reason that it is not the best evidence. A copy of the original is less likely to contain mistakes, for there is more or less danger of, variance with every new transcription. For that reason e^ven a sworn copy of a copy is not admissible when the original can be produced. But in this case the inventory book and the fly-leaf of the exhausted ledger p. 381had both been burned. There was no better evidence in existence than the footings in the new ledger. And we do not understand the bill of exceptions as showing those footings to have been copied from a copy. It does not appear whether they were taken from the inventory book or from the fly-leaf of the old ledger. And it is of little importance, for as those entries were made at the same time, neither ought to be regarded as a copy of the other, but rather both should be considered originals. We do not, however, propose to discuss this exception at length, for we regard it as settled by the decision in Insurance Company v. "Welde* that the evidence under the circumstances was properly received.
The second and third exceptions are disposed of by what we have already said, and they are unsustained.
There is nothing also in the fourth exception. By the policies the assured after furnishing proofs of loss were bound, if required, to submit to an examination under oath, and it was stipulated that until such examination should be permitted the loss should not be payable. Of course it is to be understood that the examination contemplated relates to matters pertinent to the loss. In these cases the plaintiffs did submit to an examination, but declined to answer questions respecting the amounts for which they had made settlements with other insuring companies. We are unable to perceive that the questions proposed had any legitimate beating upon the inquiry, what was the actual loss sustained in consequence of the fire. If the plaintiffs had claims upon other insurers, and compromised with some of them for less than the sums insured, it is not a just inference that their claim against these insurers was exaggerated. A compromise proposed or accepted is not evidence of an admission of the amount of the debt. There was then no sufficient foundation laid for the instruction requested by the defendants, that if the jury should believe that the plaintiffs, or either of them, in the course of an examination on oath, under the policies, refused to answer any questions by which
* 9 Wallace, 677.
the defendants could fairly estimate, or reasonably infer plaintiffs’ real loss in the insured property, and had not before the commencement of the actions answered the questions under oath, the verdict must be for the defendants. There was no evidence of refusal to answer such questions.
The fifth exception is to the refusal of the court to instruct the jury that if they believed from the evidence the plaintiffs were requested by the defendants to produce duplicates of invoices of goods purchased by them, the originals of which were alleged by them to be destroyed, and neglected to do so before the commencement of the actions, their right of action never accrued, and that the verdicts must be for the defendants. The prayer for this instruction was founded on the clause in the policy that the assured should produce certified copies of all bills and invoices, the originals of which had been lost, and exhibit the same for examination to any person named by the company, and that until the proofs, declarations, and certificates (stipulated for in case of loss) were produced and examinations and appraisals permitted, the loss should not be payable. The bills of exception state that there was evidence tending to show that the plaintiffs were requested to produce duplicate bills of purchases, but there does not , appear to have been any evidence when the request was made, whether before the commencement of the actions or afterwards, or whether there was neglect or refusal of the plaintiffs to comply. Moreover, the request was for duplicates, and not for certified copies. We cannot, therefore, say there was error in refusing the instruction asked for.
Nor was there error in denying the defendants’third and fourth prayers. It is true the policies stipulated that fraud or false swearing on the part of the assured should work a forfeiture of all claim under them. The false swearing referred to is such as may be in the submission of preliminary proofs of loss, or in the examination to which the assured agreed to submit. But it does not inevitably follow from the fact.that there was a material discrepancy between the statements made by the plaintiffs under oath in their proofs p. 383of loss, and their statements when testifying at the trial that the former were false, so as to justify the court in assuming it, and directing verdicts for the defendants. It may have been the testimony last given that was not true, or the statements made in the proofs of loss may have been honestly made, though subsequently discovered to be mistaken. It is only fraudulent false swearing in furnishing the preliminary proofs, or in the examinations which the insurers have a right to require, that avoids the policies, and it was for the jury to determine whether that swearing was false and fraudulent.
The remaining two assignments of error are not pressed, and it is properly conceded that the court could not lay down as a rule of law the mode of computation designated in the prayers for instruction.
Jud gmen t affir med .
Ban k of Bethe l v . Pahq uioq ue Ban k .
banks were organized, and numerous State ones, availing themselves of power given by the act, were converted into National ones, and like those first created by the act placed under the control of the laws and officers of the United States,, including specially a Comptroller of the Currency, under whose directions a limited amount of notes were to be given to the banks; these notes being the only ones that the banks could issue.
The act, after providing for the mode in which the new banks were to be organized under articles of association, enacts:
Sec ti on 8. That every association formed pursuant to its provisions shall “be a body corporate,” and “have succession by the name designated in its organization certificate for a period of twenty years from its organization, unless sooner dissolved.
(1st.) According to the provisions of its articles of association, OR,
(2d.) By the act of its shareholders, owning two-thirds of its stock, OR,
(3d.) Unless the franchise shall be forfeited by a violation of this act.’'
“By such name,” continues the section, “it may sue and be sued, complain and defend as fully as natural persons.”
The 32d section, after enacting that all the banks in certain cities of the United States shall redeem their circulating notes at par in New York, provides:
“That nothing in this section shall relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful money on demand.”
The 46th section enacts:
“ That if any such association shall, at any time, fail to redeem in the lawful money of the United States any of its circulating notes when payment thereof shall be lawfully demanded . • • the holder may cause the same to be protested, in one package, by a notary public, . . . and such notary public on making such protest or upon receiving such admission shall forthwith forward such admission, or notice of protest, to the Comptroller
of the Currency. . . . And after such default, ... it shall not be lawful for the association suffering the same to pay out any of its notes, discount any of its notes, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to deliver special deposits.”
The 50th section enacts:
“That on becoming satisfied, as specified in this act, that any association has refused to pay its circulating notes as therein mentioned and is in default, the Comptroller of the Currency may forthwith appoint a receiver . . . who . . . shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to such association, and upon the order of a court of competent jurisdiction may sell or compound all bad or doubtful debts, and pn a like order sell all the real and personal property of such association, on such terms as the court shall direct. . . . And such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the comptroller. And from time to time the comptroller, after”full provision shall have been first made for refunding, &c., . . . shall make a ratable dividend of the money so paid over to him on all such claims as may have been proved to his satisfaction, or adjudicated in a court of competent jurisdiction.”
A proviso to this section says, however,
“That if such association against which proceedings havebeen so instituted on account of any alleged refusal to redeem its circulating notes as aforesaid, shall deny having failed to do so, such association may . . . apply to the nearest circuit or district or territorial court of the United States to enjoin further proceedings in the premises, and such court. . . after the decision of the court or the finding of a jury that such association has not refused to redeem its circulating notes . . . shall make an order enjoining the comptroller or any receiver from all further proceedings on account of such alleged refusal.’*
The 45th section enacts: ‘ That all associations under this act when designated for that purpose by the Secretary of the Treasury, shall be depositories
he public money (except receipts from customs), under such.
VOL. XIV. 25
regulations as maybe prescribed by the secretary; and they may also be employed as financial agents of the government; and they shall perform all such reasonable duties' as depositories of the public moneys and financial agents of the government as shall be required of them.”
The 52d section enacts:
“ That all transfer of the notes, bonds, bills of exchange, and other evidences of debt owing to any association, or of any deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money for either, made after the commission of an act of insolvency, or in contemplation thereof, with a view to prevent the application of its assets in the manner prescribed by this act, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void.”
The 53d section enacts :
“That if the directors of any association shall knowingly violate or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this act, all the rights, privileges, and franchises of the association derived from this act shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that purpose by the Comptroller of the Currency, in his own name, before the association shall be dissolved.”
The 57th section (and this is an important one to be noted in the case) enacts:
“ That suits, actions, and proceedings against any association, und,er this act, may be had in any circuit, district, or territorial court of the United States, held within the district in which such association may be established; or in any state, county, or municipal court in the county or city in which said association is located; having jurisdiction in similar cases. Provided, however, that all proceedings to enjoin the comptroller under this act shall be had in a circuit, district, or territorial court of the p. 387United States, held in the district in which the association is located.”
In this state of statutory law about National banks, the First National Bank of Bethel, in Connecticut, on the 21st of February, 1868, failed to redeem so.me of its circulating notes. They were protested, and on the 26th of February a receiver was appointed under the above-quoted 50th section of the Currency Act, who immediately entered on the duties of his office.
The National Pahquioque Bank of Danbury, Fairfield County, in the same State, asserted that it was a creditor of the Bethel Bank, and presented its claim to the receiver. The receiver, however, disallowed it.
The Pahquioque Bank thereupon, on the 30th of May, 1868, brought assumpsit in the Superior Court of Fairfield County, a court of Connecticut having jurisdiction in similar cases, against the Bethel Bank. The Bank of Bethel defended itself against the claim on these, in substance, among other grounds:
1. That the courts of the United States alone had jurisdiction after the appointment and acceptance of the receiver.
2. That prior to the suit brought the Bank of Bethel had forfeited its charter by a violation of the Currency Act, in not paying its notes, and could not be sued anywhere.
3. That it could not be sued because it was, at the time, under the control and in possession of a duly appointed receiver, “ incapable of self-defence, and entitled to the legal protection and guardianship thrown about it by the law.”
4. That the decision of the receiver on the presentation of the claim was conclusive on the parties to the suit as an adjudication, unless set aside by the Comptroller of the Currency, or by some court of the United States having jurisdiction.
But the court gave judgment for the Pahquioque Bank for the full amount of its claim. The Bethel Bank then took the case on error before the Supreme Court of the State, where the judgment of the Superior Court of Fair-
Argument for the Bethel Bank.
field County was affirmed. To review this final judgment of the Supreme Court this writ of error was brought.
Messrs. C. B. Goodrich, Roger Averill, and L. D. Brewster, for the Bank of Bethel, plaintiff in error:
1. The National banks, under the act of 3d June, 1864, have been established as instruments by which the government may perform some of its trusts. They are controlled by the Treasury department. They are allowed to receive from the Comptroller of the Currency notes which they may circulate as money. They cannot issue any instrument for circulation or use as money, or as a substitute for money, except the notes intrusted to them by the comptroller. Their existence, as bodies corporate, can be sustained under the Constitution, only, because they may be employed by the government in the execution of its functions. The act imposes upon the Comptroller of the Currency certain duties of a public character, to perform which he is clothed with certain powers. The legality and propriety of the supervision and control which is exercised by the Comptroller of the Currency of the United States over National banking associations, and the effect of his acts in relation thereto, are to be determined, exclusively, by the laws of the United States; the construction of which is ultimately to be given by the courts of the United States. The suit brought in the Superior Court of Fairfield County, a State court of Connecticut, was thus brought in a court without jurisdiction.
2. An association under the act is to have succession (that is to say, corporate existence) for the period of twenty years from its organization, unless the franchise (which consists in a right of banking) shall be forfeited by a violation of the act. Now the Bank of Bethel committed a violation of the act, a “ default,” as the act itself calls it, on the 21st of February, 1868, at which time it failed to redeem some of its circulating notes; which failure was duly ascertained by the Comptroller of the Currency, who, on the 26th of February, acted thereupon, by the appointment of a receiver. This action of the comptroller was not enjoined by any District, Circuit,
Argument for the Bethel Bank.
or Territorial Court of the United States; the only courts competent to enjoin or act in the matter. The result is that the power of succession (corporate capacity) ceased to exist prior to the 30th May, 1868, on which day the Pahquioque Bank instituted their suit. The association was dissolved; the receiver was clothed with power to reduce the assets to money, by suit in his own name; was directed to pay the money to the Treasurer of the United States, subject to the order of the Comptroller of the Currency, for the use of those entitled as creditors, giving priority of payment to the United States; the remainder or surplus of the proceeds, after the payment of debts, to be paid by the comptroller to the shareholders of the association or their legal representatives, in proportion to the stock by them respectively held, and not to the association in its corporate capacity.
3. On the 30th May, 1868, on which day the Pahquioque Bank commenced its suit, the Bank of Bethel had no authority to pay, was prohibited from paying, any creditor; it had no means within its control with which to pay. If the bank had authority, after notice by the comptroller, to «pay a creditor, it might by such payment defeat the provision of the act which gives to the United States, from the assets of the association, priority of payment for any deficiency in the redemption of its circulating notes after applying the bonds deposited for their redemption. It results, from the want of authority to pay a creditor, at the time the suit by the Pahquioque Bank was instituted, that no suit at law, in any court, State or National, could be instituted against the Bank of Bethel.* If one creditor, after the appointment of a receiver, may institute a suit in a court of law, every creditor can, and by such course of proceeding disregard the winding up under the direction of the comptroller.
4. After an association has been placed in the hands of a receiver, the statute prescribes the mode of winding up, which includes an ascertainment of the creditors, and the amount severally due to them. This mode of proof excludes all
Argument for the Pahquioque Bank.
others. This cannot be doubted, except by holding that the act conferring authority upon the Comptroller of the Currency to appoint a receiver, to receive proof of claims, to wind up the affairs of the corporation, is unconstitutional.
Messrs. W. j F1. Taylor and O. S. Seymour, contra:
1. The whole argument against the jurisdiction of State courts is answered by the 57th section of the act which in cases like that where the Pahquioque Bank sued, gives the jurisdiction in express words to “any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.”
2. The association does not become extinct, ipso facto, by the appointment of a receiver. The 50th section speaks of it as existing. The powers of the receiver may be superseded, if the bank shows that it did not fail to redeem its notes. Default in paying notes only curtails its privileges. But even if it were a cause for forfeiture, still by the undoubted rules of the common law and by the express provisions of the 59th section of the act, a judgment of forfeiture by a judicial tribunal is necessary, and the corporate existence continues till such judgment is had. Questions of forfeiture cannot be tried in a collateral way. The only evidence which the law admits is the copy of the judgment of forfeiture, by a competent tribunal, in a proceeding instituted directly for the purpose of an adjudication of forfeiture.
3. A judgment by a State or other court, for a sum of money (such a judgment was given in the courts below), does not take things out of the receiver’s hands. It does not interfere with any duties which the Currency Act imposes on him. It merely ascertains the justice of a claim and fixes its amount. Payment of the claim can be made only in subordination to the Currency Act. No number of judgments would prevent “the winding up under the direction of the comptroller.” The only result is that the claim being “adjudicated by a court of competent jurisdiction” the creditor under it comes in for a dividend.
Then is the disallowance by the receiver of the claim pre- p. 391sented to him before the judicial adjudication, a decisive adjudication of that claim? Certainly not. The comptroller and receiver are not judges of the United States. They cannot hold a court, summon a jury, compel the appearance of witnesses, or swear witnesses if they should appear. Every citizen of the republic may of common right appeal to a judicial tribunal for the adjudication of his rights. The right of trial by jury is secured by the Constitution to controversies of the character of that between these two banks, and the right of trial, by jury implies that the controversy may be brought before a court that has power to summon a jury. There is in the act no provision for the establishment of a special tribunal to adjudicate claims against the insolvent bank. The failure to make any, leaves their adjudication to the courts in the ordinary course and manner of settling disputed claims. This would be the necessary inference from mere silence, and is confirmed and established by the provision in the 50th section, that the comptroller is to make a ratable dividend “on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction.”
Mr. Justice CLIFFORD delivered the opinion of the court.
Associations for banking, formed pursuant to the act to provide a National currency, and duly authorized by the Comptroller of the Currency to commence the business of banking, become bodies corporate and have a succession for the period of twenty years from their organization, unless sooner dissolved according to the provisions of their articles of association, or by the act of the shareholders owning two-thirds of the stock, or unless the franchise shall be forfeited by a violation of the act under which the association was formed. Such an association is allowed to select, subject to certain conditions and the approval of the Comptroller of the Currency, another such association at which it will redeem its circulating notes at par, but the provision is that nothing in that section shall relieve any such association from its liability to redeem its notes in circulation at its own counter, at par, in p. 392lawful money, on demand; and in case of failure so to do, thef holder may cause the same to be protested in one package by a notary public, unless the president or cashier of the association which issued the notes, or the president or cashier of the association designated as the place for redeeming the same, will waive demand and notice of protest and execute an admission in writing stating the amount demanded and the fact of non-payment, and it is made the duty of the notary forthwith to forward the admission or notice of protest, as the case may be, to the Comptroller of the Currency for his information and action in the premises.
Notes to a large amount, issued by the corporation defendants for circulation, were held by the corporation plaintiffs, and the plaintiffs presented the same to the defendants for redemption, and the defendants failing to redeem the same, the plaintiffs offered the notes for protest, but the defendants having waived demand and notice of protest, and having tendered an admission in writing stating the amount demanded and the fact of non-payment, the plaintiffs accepted the written admission, and the notary forwarded the same to the Comptroller of the Currency as required under such circumstances. Pursuant to the requirement of law the Comptroller of the Currency appointed a special agent to ascertain whether the facts set forth in the protest were true, and the agent so appointed having reported that the defendants had failed to redeem in lawful money their circulating notes when payment thereof was duly and lawfully demanded, he, the Comptroller of the Currency, appointed a receiver of the delinquent association, with all the powers, duties, and responsibilities given to or imposed upon such an appointee in such case made and provided, and the record shows that the receiver entered upon the duties of his office and took possession of all the books, records, and assets, real and personal, of the association, and that he has ever since had the exclusive possession of the same, to be disposed of according to law. Before the commencement of the suit the Comptroller of the Currency caused notice to be published requiring all claimants to present and make proof p. 393of their claims against the delinquent association, and the record also shows that the plaintiffs presented the claim in controversy to the receiver for allowance, and that the receiver having disallowed the same, the plaintiffs instituted the present suit in the State court to recover the amount. Appiopriate proceedings followed, as in an action of assumpsit, and the parties having been heard the subordinate court where the suit was brought made a finding of facts, but reserved the question whether the case ought to be dismissed for want of jurisdiction, and if not, what judgment ought to be Tendered in the case, and all questions of law arising upon the facts found, for the opinion and advice of the Supreme Court of Errors. Proper measures were adopted to obtain the opinion and advice of the appellate tribunal, and they were duly received, and thereupon the subordinate court rendered judgment in favor of the plaintiffs for the whole amount claimed in the declaration. Proceedings in the nature of a writ of error were instituted by the defendants, by which the cause was removed into the Supreme Court of Errors, where the parties were again heard and the decision of the Court of Errors was that the judgment should be in all things affirmed. Final judgment having been rendered in the State court, the defendants sued out a writ of error under the twenty-fifth sectipn of the Judiciary Act and removed the cause into this court.
Four only of the errors assigned will be examined, as the others, in the view of the case taken by the court, either involve substantially the same considerations or present questions not re-examinable in this court under a writ of error to a State court. Briefly stated the errors assigned to be examined are as follows:
(1.) That the State court had no jurisdiction of the case or of the parties at the time the suit was commenced.
(2.) That the defendant association prior to the. institution of the suit had forfeited its franchise by a violation of the act under which it was formed and had been dissolved by the action of the Comptroller of the Currency.
(3.) That the defendant association could not be impleaded p. 394at the time the action was commenced, as prior to that time the association was prohibited by the act of Congress from paying or satisfying any of its creditors.
(4.) That the decision of the receiver disallowing the claim of the plaintiffs was final and was not subject to review in the State court.
Support to the first proposition is supposed to be derived from the conceded fact that such associations are created by an act of Congress and that they are instruments of the National government intrusted with the power of carrying on the business of banking and of employing and circulating treasury notes as a National currency, subject to the supervision and direction of the Comptroller of the Currency and of the Secretary of the Treasury. Banking associations, it is said, were established as instruments by which the government may perform the trust of furnishing and regulating the National paper currency, and the argument is that inasmuch as they are instruments of the government to carry into effect a National purpose they cannot be impleaded in a State court. Confirmation of that view is also attempted to be drawn from the fact that such associations are controlled by the Treasury Department, that all the notes which they circulate as money are received from the Comptroller of the Currency, and that they «cannot issue any instrument for circulation or use as money except the notes intrusted to them by the Comptroller of the Currency, as authorized by the act of Congress.
Beyond all doubt such associations are created by an act of Congress and for the purposes assumed by the defendants, but the conclusion attempted to be drawn from those facts cannot be sustained, as express provision is made by the fifty-seventh section of the act that suits, actions, and proceedings against any such association may be had “ in any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.” Commenced as the action was in the proper court of the State where the association is located and in a court having jurisdiction in similar cases, which is not de- p. 395nied, it is quite clear that the objection to the jurisdiction of the court founded upon the character of the association as an instrument of the National government, must be overruled. Jurisdiction in such suits is unquestionably vested in any circuit, district, or territorial court of the United States held within the district in which such association may be established, but the decisive answer to the objection of the defendants is that the same section of the act of Com gress gives authority to creditors to prosecute such controversies in “any state, county, or municipal court in which said association is located” in all cases where it appeal's that such courts have jurisdiction under the State laws in similar controversies. Proceedings to enjoin the Comptroller of the Currency under that act must, it is true, be instituted and prosecuted in a circuit, district, or territorial court of the United States, but the act allows creditors to sue in the proper State courts in all suits, actions, and proceedings against the association, as specifically provided in the fittyseventh section of the act. Authorities to support the proposition are not necessary, as it rests upon an express provision in the act of *Congress.
II. Associations <)f the kind have a succession for the period of twenty years from their organization, unless sooner dissolved in some one of the modes pointed out in the act under which such associations are formed, and throughout that period, unless sooner dissolved, they may make contracts in the name designated in their organization-certificate and may sue and be sued or complain and defend in any court of law or equity as fully as natural persons. Such corporate franchises cease to exist when the term for ■which they were granted expires, and the association may at any time go into liquidation and be closed by the vote of its shareholders owning two-thirds of the stock, but it is not necessary to remark upon those topics, as it is not pretended that the defendant association has ceased to exist or been dissolved in either of those modes. All such associations
* 13 Stat, at Large, 116.
are bound to redeem their circulating notes either at their own counter or at such other similar association as they are allowed to select for that purpose, and the provision is that if any association shall fail either to make the selection or to redeem its notes as required, the Comptroller of the Currency may, upon receiving satisfactory evidence thereof, appoint a receiver, in the manner provided in the act, to wind up its affairs. Holders of the circulating notes of such an association may demand payment thereof at the office of such association or at its place of redemption designated as aforesaid, and if the association fail to redeem the same in lawful money they may cause the same to be protested, as before explained, and the notary on making such protest or upon receiving such admission, shall forthwith forward the same to the Comptroller of the Currency for his information and action in the premises. Being informed of the default of the association in that mode, it is made the duty of the comptroller to make an examination into the facts, and if satisfied that the default has been committed, to give notice to the association ; and the same section provides that from that time it shall not be lawful for the association suffering the default to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it and to deliver special deposits. On receiving such notice the Comptroller of the Currency, with the concurrence of the Secretary of the Treasury, may appoint a special agent to examine into the facts of the case, and if satisfied from the protest or the report of the special agent that the charge of default as made is true, he shall, within thirty days, declare the bonds and securities pledged by the association forfeited and give notice to the holders of the circulating notes to present the same for payment at the treasury, and the provision is that in that event he may in his discretion cause an amount of the bonds pledged, equal at current rates to the amount paid to redeem the outstanding notes of the association, or he may cause such an amount of the bonds pledged as may he necessary to redeem the outstanding notes, to be sold at p. 397public auction ; or, if be shall be of the opinion that the public interest will be best promoted thereby, he may sell at private sale any of the bonds so pledged and receive therefoi either money or the circulating notes of such failing association. Power is also conferred upon the Comptroller of the Currency in such a case forthwith to appoint a receiver to take possession of the books, records, and assets of every description of the association and to collect all debts due and claims belonging to it, and upon the order of a court of record of competent jurisdiction he may sell or compound all bad or doubtful debts and may sell all the real and personal property of the association on such terms as the court shall direct, and may, if necessary to pay the debts of the association, enforce the individual liability of the stockholders, as enacted by the twelfth section of the act. All moneys so made by the receiver he is to pay over to the Treasurer of the United States, subject to the order of the Comptroller of the Currency, and he is also to make report to that officer of all his acts and proceedings. Receivers may also be appointed for other causes than those already mentioned; as, for example, in case the money reserve which the association is required to have on hand shall fall below the prescribed amount, and when notified to make it good the association shall fail for thirty days to comply with the requirement, or shall fail for thirty days to increase the capital stock of the association to the minimum amount required, where the same has been reduced below that amount by the delinquency of the shareholders and consequent sale and reduction of the stock; or, in case any such association which is required to keep undiminished the twenty per centum surplus mentioned in the twelfth section of the act, shall fail to keep it good, in which event the provision is that the Comptroller of the Currency may compel said banking association to close its business and wind up its affairs, as provided in the act under which it was organized. Whenever a receiver 18 appointed the comptroller is required to give notice of the fact, requesting all persons having claims against the association to present the same and to make legal proof thereof. p. 398Provision is first to be made by the comptroller for refunding to the United States any such deficiency in redeeming the notes of the association as is mentioned in the act, and having refunded that amount the comptroller is required in the next place to make a ratable dividend of the money paid over to him by the receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction. Claims proved to the satisfaction of the comptroller are to be included in the list, and he is also to include in the list all claims adjudicated in a court of competent jurisdiction, which shows conclusively that claims disallowed by the comptroller may be prosecuted in a court having jurisdiction in such cases.* Where the whole assets are not collected and distributed in the first dividend, further dividends on claims proved and adjudicated may be made as the proceeds of the assets are collected and paid to the treasurer, and the remainder, if any, shall be paid to the shareholders.
Kone of these proceedings, however, support the theory that the association ceased to exist when the receiver was appointed, nor at any time before the assets of the association are fully administered and the balance, if any, is paid to the owners of the stock or their legal representatives.
Delinquent associations whose notes have been protested, and whose officers have been notified by the comptroller that proceedings for liquidation under the act have been instituted, cannot lawfully pay out any of their notes, or discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to the association, and to deliver special deposits, which of itself refutes the theory that the association at that stage of the proceedings has ceased to exist. Evidence to refute that theory is also found in the proviso to the fiftieth section of the act, which empowers the association, if they deny having failed to redeem their circulating notes, to apply, within ten days after being so notified by the comp-
Kennedy v. Gibson, 8 "Wallace, 506.
troller that such proceedings have been commenced, to the nearest circuit, or district, or territorial court of the United States to enjoin further proceedings in the premises, and those courts are invested with full jurisdiction to hear and determine the matters put in issue by such an application.
Such associations are authorized to elect or appoint directors, and the directors are empowered to exercise all such incidental powers as shall be necessary to carry on the business of banking. They may make by-laws, discount and negotiate promissory notes, drafts, bills of exchange, or other evidences of debt; receive deposits, buy and sell exchange, coin, and bullion; loan money on personal security and obtain, issue, and circulate notes, according to the provisions of the act to provide a National currency. Throughout they are enjoined to conform to the regulations of that act, and the provision is that if they knowingly violate any of its provisions or knowingly permit them to be violated, all the rights, privileges, and franchises of the association derived from the act shall be thereby forfeited; but the further provision is that such violation, before the association shall be declared dissolved, shall be determined and adjudged by a proper circuit, district, or territorial court of the United States, which shows conclusively that the act of the comptroller in appointing a receiver does not work a complete dissolution of the association, as is supposed by the defendants.*
III. Exp ress power to sue and be sued, complain and defend, in any court of law and equity, is conferred on such associations by the eighth section of the act providing for their organization, and it seems quite clear that the association is a proper party to be sued in all matters in which the corporation is interested, unless the association is disqualified for that purpose by virtue of the appointment of a receiver or by his subsequent action as such under his appointment. Neither power to sue nor to be sued in such cases is p. 400anywhere in terms conferred upon the receiver, nor upon the Comptroller of the Currency in any case except when he institutes a suit to forfeit the rights, privileges, and franchises of the association, and in that case the provision is express that the suit shall be in his own name.* Beyond doubt the appointment of a receiver supersedes the power of the directors to exercise the incidental powers necessary to carry on the business of banking, as the receiver is required to take possession of the books, records, and assets of every description of the association, and from that moment the association is forbidden to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, but the corporate franchise of the association is not dissolved, and the association, as a legal entity, continues to exist, as is shown to a demonstration by the fact that it is required safely to keep the money on hand belonging to it, and may deliver special deposits in its keeping to the rightful owners.
Much aid cannot be derived from authorities in the examination of this proposition, as the question turns chiefly if not entirely upon the construction of the act of Congress, and suflice it to say that we are all of the opinion that the act contains nothing in its subsequent provisions inconsistent with the theory of the plaintiffs, that the association may sue and be sued, complain and defend, in all cases where it may be necessary that the corporate name of the association shall be used for that purpose in closing its business and winding up its affairs under the provisions of the act which authorized its formation.
Suits and proceedings under the act, in which the United States or their officers or agents are parties, whether commenced before or after the appointment of a receiver, are to be conducted by the district attorney under the direction of the solicitor of the treasury, and no doubt is entertained that the directors, from the time a receiver is appointed, cease to have any power in respect to such matters, and that p. 401the control and supervision of the same are vested in the proper officers of the United States. Claims presented by creditors may be proved before the comptroller or may be established by a suit against the association in any court of competent jurisdiction.* Creditors, say the court in that case, must seek their remedy through the comptroller, in the mode prescribed in the act of Congress, and cannot proceed directly in their own names against the stockholders, or debtors of the corporation. Suits may be brought by the receiver, both at law or in equity, and the express decision there is that he may sue in his own name or in the name of the association for his use, and no reason is perceived to doubt the correctness of the rule adopted in that case, though the act of Congress does not in terms give him authority to sue in his own name.f
IV. Enough has already been remarked to show that the fourth proposition of the defendants cannot be sustained, as the act of Congress provides that the receiver, in making the basis for a dividend, shall include in the list not only claims proved before him to his satisfaction, but claims also adjudicated in a court of competent jurisdiction.
Attempt is made to show that the adjudicated claims there referred to are only such as had been adjudicated before the receiver was appointed, but the court is of the opinion that such a construction is not warranted either by the language employed, or the subject-matter to which it relates, or thepurpose to be accomplished, or by the analogies of the law or the usual rules of interpretation which courts apply in ascertaining the meaning of a legislative provision of a remedial character. Tested by any one or all of these criterion®, the court is of the opinion that the construction assumed, by the defendants is quite too narrow to carry into effect the intention which the framers of the provision had in view at the time it was adopted. Claims presented by creditorsmay be proved before the receiver, or they may be put in. suit in any court of competent jurisdiction, as a means of p. 402establishing their validity and to determine the amount owed by the association, but the judgment when recovered will not give the creditor any lien on the property of the delinquent association, nor secure to the judgment creditor any preference over other creditors whose claims are proven before the receiver. All alike must await the action of the Comptroller of the Currency, and be content with a just and legal distribution of the proceeds of the assets collected by the receiver and liquidated by the comptroller according to the act of Congress in such case made and provided.
Nothing further need be remarked in respect to the other errors assigned, as it is clear that the conclusions announced dispose of all the questions in the case which are examinable under a writ of error to a State court.
Jud gmen t af fir med .
O’Dowd v . Russe ll .
On imotion to dismiss a writ of error to the Supreme .Court of the State of Georgia.
"Wdlker, Jones, and O’Dowd were sued in the Superior «Court of Richmond County, Georgia, upon a bond given by
Argument for the dismissal.
Walker, as principal, and Jones and O’Dowd, as sureties, for the faithful discharge by Walker of his duties as vendue-master in the city of Augusta.
The breach alleged was that Walker, having received, as vendue-master, certain goods for sale, and having sold them and received the proceeds in his capacity as vendue-master, failed to account. The defendants pleaded Walker’s discharge under the bankrupt act, and the plea was sustained; but the sureties were held liable under the 33d section of that act, notwithstanding the discharge of their principal. Two writs of error were prosecuted upon this judgment to the Supreme Court of Georgia. One by Jones and O’Dowd to reverse the judgment against them, upon the ground that the discharge of Walker was a bar to the suit against them as sureties; and one by the plaintiff in the action, upon the ground that Walker could not avail himself of his discharge, the debt having been created by his defalcation as a public officer, and while acting in a fiduciary capacity.
The judgment of the Superior Court in favor of Walker was, on thè 31st of October, 1871, reversed by the Supreme Court, and the judgment against the sureties on the same day affirmed. To reverse the judgment of the Supreme Court, O’Dowd prosecuted a writ of error. He had given written notice to both Walker and Jones of his intention to carry the case to this court, and requested their co-operation ; but each declined to carry on the controversy longer.
The writ (dated by mistake, October 16th, 1871), issued November 10th, 1871, returnable to the first Monday of December following, and was served by filing in the clerk’s office, and the case on that day removed by service of the writ. The bond was dated on that same day, but when it was allowed, or when it was filed, did not appear; nor did it appear that any copy was lodged in the office of the clerk of the Supreme Court for the defendant in error.
Jfr. II. M. Hilliard, for the defendant in error, now moved to dismiss the case on these, among other grounds—
1st. Because it had been prosecuted by O’Dowd alone, and without summons and severance of Walker and Jones.
2d. Because the judgment was not “final” within the meaning of the Judiciary Act, which gives a writ of error only on judgments which are “final.”
3d. Because the writ, the bond, the citation, and the copy of the writ of error for the defendants, were not seasonably served or filed.
As to this last ground assigned for dismissing the writ, the reader will, of course, remember that the 23d section of the Judiciary Act enacts that—
“A writ of error shall be a supersedeas and a stay of execution in cases only where the writ of error is served by a copy thereof being lodged for the adverse party in the clerk’s office where the record remains, within ten days, Sundays exclusive, after rendering the judgment and passing the decree complained of.”
Mr. J. P. Carr, contra.
The CHIEF JUSTICE delivered the opinion of the court. Several grounds are assigned for dismissing this writ. It will be necessary to notice but three of them.
The first of these is, that the writ of error is prosecuted by O’Dowd without summons and severance of his co-defendants. Formerly this was held to be necessary when one of several defendants desired to prosecute his writ of error alone. But, in the case of Masterson v. Herndon* we held that such a writ of error would be sustained, if it appeared from the record that the defendants, not joined, had been notified in writing, and had refused to join. In this case it appears, by the record, that written notice was given to the co-defendants of O’Dowd, and that they declined to join. This was equivalent to summons and severance.
It is also insisted that the motion to dismiss must be allowed, because the judgment was not final. The judgment against Walker was reversed, because he was held not entitled to the exemption which he claimed under the Bank-
* 10 Wallace, 418.
rupt Act, and the judgment against the sureties was affirmed, because they were held not entitled to the benefit of his discharge. We think that both judgments were final, and that both are brought under review by the writ of error.
Another reason assigned for dismissal is, that the writ of error, the bond, the citation, and the copy of the writ of error for the defendants, W’ere not seasonably served or filed. It appears, from the record, that the judgment of the Supreme Court was rendered on the 31st of October, 1871, and on the 10th of November, 1871, a writ of error was issued returnable on the first Monday in December, and was served by filing in the clerk’s office. The writ is dated on the 16th of October, 1871. This was before the judgment was affirmed, and is obviously a mistake. It does not, however, vitiate the writ. The case was removed by service on the 10th of November.
The citation was served on the 3d of February, 1872. This was sufficient to advise the opposite party that the cause had been removed to this court, and was served and returned within the term.
It does not, however, appear, from the record, that any copy of the writ was lodged for the defendants in error in the clerk’s office of the Supreme Court. It was necessary that such a copy should be filed within ten days to make the writ of error a supersedeas.* Nor does it appear when the bond was allowed and filed. It bears date of the 10th of November. The allowance is not dated; nor is its filing noted.
We are of opinion, therefore^ that a writ of error cannot operate as supersedeas ; but the motion to dismiss must be
Deni ed .
The Stea mer Web b .
1. Although an engagement by a steamer to tow a sailing vessel does not impose more than an obligation to carry out the contract with that degree of caution which prudent navigator^ usually employ in similar services, yet there may be Cases in which the result is a safe criterion by which to judge of the act which has caused it. And when a steamer undertaking to tow a ship and having a well-known and straight course to pursue, suffered the ship, after towing her for but an hour or an hour and a half, to run aground at the end of a course of nine miles, on a shoal between three and four miles from the proper line of the voyage, the court held the steamer liable, especially as thete was very considerable evidence that her compasses were untrue. And this decision was not affected by the fact that <ho voyage-lay through waters where the currents were variable in the direction of their flow (the direction and force, however, being well known), and though for a part of the nine miles there was a thick fog.
2. The court refused to reverse a decree which on the merits they approved because a deposition which ought not to have been read was read before a commissioner to whom the case was referred to compute damages: there being other evidence that the damages were as great as this court finally awarded.
3. Decree in admiralty in the District and Circuit Courts for a greater amount than the sum for which sureties were bound, on stipulations for a discharge of the vessel from the marshal’s custody, reformed by this court so as not to exceed that sum.
Appe al from the Circuit Court for the District of Southern New York; the case, as assumed by the court on a considerable body of evidence, which it examined and recapitulated, haying been essentially thus:
In March, 1859, the steamer Webb, a steamer of good character, belonging to the port of Npw York and engaged in towing ships at sea, was in Boston, having just then, under charge of a coast pilot named Sherwood, towed a ship to that port. This pilot Sherwood had had twelve years’ experience as a coast pilot and was recommended by insurance companies. The Owners of the Webb had engaged him to take the steamer back to New York, and they had agreed also with the owners of another ship, then lying at New Bedford, to stop for her on the way and tow her to p. 407New York, and that this towage should be under direction of the same pilot.
In these circumstances one Hazard, master of the ship Shooting Star, lying at Portsmouth, New Hampshire, applied to the owners of the Webb to tow her to New York. The owners agreed in writing accordingly “ to tow the ship and furnish coast pilot for $625.” Having gone to Portsmouth and taken h§r tow, the Webb, under the pilotage of Sherwood, set off with a good complement of men ,on her voyage for New York. The course of the voyage lay south, past and round Cape Cod, through the waters that lie between the island of Nantucket on the south side and Barnstable County, Massachusetts, on the north, into what is known as the Vineyard Sound; and so through Long Island Sound to New York. The approaches to the Vineyard Sound (which for the purpose of this case may be considered as beginning with “Handkerchief Shoal” on the east of it, and as you leave the main ocean to enter the passages made by islands and the main land of Massachusetts) abound with shoals and with currents, which last, though close to each other, run in opposite directions. But the currents follow each its own direction, and, like the shoals, are marked with precision upon the charts.
About a hundred yards south of Handkerchief Light—a light upon the shoal—the Webb and her tow found themselves at about 2 or 2J o’clock a .m .—nearer the latter time, perhaps, than the former—on the morning of March 23d. This was the exact position where they ought to have been in order to reach New York; and their route to that port was by a single straight course west, three-quarters south, to a light called Cross Rip Light, eleven nautical miles (rather less than thirteen statute or land miles) distant from the Handkerchief. This Cross Rip Light is on a boat where there is a fog-bell, audible in fogs, three miles off. The rate of the vessels as they passed the Handkerchief was about twelve knots an hour. The tide, at this time, bad just turned ebb, the effect of which was to make the current for about half-way from Handkerchief to Cross Rip run north, and for the p. 408rest of the distance to run southwest. There was a light wind from the southeast; it was raining, but not so that they could not see the coast-lights which they had passed, and even that on the northeast point of Nantucket, more than five miles off. Soon after passing the Handkerchief Light the wind died out, the weather became misty, and in half an hour, and by the time that they got half-way from the Handkerchief to Cross Rip it was so thick that they could not see even the lights of the ship astern; though up to this point the fog had not been thus thick. Lookouts were properly posted. When the fog rose they were on the course mentioned, going, as already stated, twelve knots. The pilot decided to keep up this speed for thirty minutes, expecting at the end of that time to be within hearing of the bell from Cross Rip. Captain Hazard objected to going on through this fog and desired to anchor, but on the pilot’s statement that a vessel which once anchored where they were had been obliged? to cut some spars to avoid running aground, and on an assurance that there was no danger in running to Cross Rip, he yielded and consented to keep on. The pilot gave the course west half south, but the steamer was headed by her compass west-southwest, in order to allow for a variation from local attraction caused by iron on board the vessel, which Captain Hazard supposed to be one and a half points south of their true course when running west, diminishing to zero, when running south. They ran on this course at full speed for thirty-two minutes, and then, not hearing the bell, shut oft* steam, reducing their rate to between two and three knots, and having the lead cast by another pilot named Wilson, the captain of a Boston packet, who as a friend of Sherwood’s had been allowed a free passage to New’ York. After running slow for forty-five «minutes they found themselves in shallow water, which Sherwood took for a shoal called Horseshoe Shoal, that lies about a mile north of Cross Rip. To avoid this he turned his steamer towards the south, and immediately the ship was aground. She had run on Tuckernuck Shoal, a point about four miles southeasterly from both the Horseshoe and Cross Rip, about nine miles p. 409southwest by west half west from the Handkerchief Light, and fully three and a third miles to the south of the course in which the vessels ought to have been. This was at half-past three, or a very little later, in the morning. After some vain endeavors to drag her off, the steamer left the ship and cast anchor in the neighborhood.
After daylight the steamer tried to approach the ship, to give her the end of the towing hawser, the ship having drifted off the shoal and then riding at anchor. The crew began to heave on the anchor. As was alleged by the people on the steamer, they on the ship hove short, and the vessel picked up her anchor and drifted away. But the ship had, in fact, lost her anchor. She soon went ashore again, her stern resting on the sand. The wind getting very strong and the sea violent, under a gale which had suddenly sprung up, the ship, in order to prevent her bow being thrown upon a ridge, which, if she struck, her captain thought might dash her to pieces, after losing the port anchor cast out the starboard one. The ship swung directly upon the flukes of this anchor and knocked holes in her bottom through which she filled with water. Before this she had not leaked. The gale was so high and the sea so rough and boisterous that communications between the vessels could not be made. The steamer then went to Edgartown, a town on the island of Martha’s Vineyard, for a steam-pump and wreckers. In the meantime, and before the Webb got back, one Levi Hotchkiss—a part owner of the vessel, who happened to be aboard—got on to a sloop and, acting with energy, procured relief from Boston and Nantucket. Thus aided, the ship got off, and her leaks having been temporarily stopped, she was got into New York and sent into dock for repairs.
After the accident, the Webb’s compass was carefully examined and tested; and considerable testimony tended to prove that the variation from local attraction (the iron on the vessel) on the west course was one and a half points to the north, instead of to the south, as had been supposed by the captain and pilot.
Hereupon the owners of the ship, by proceeding in rem, p. 410libelled the Webb for $17,500 damages, and the marshal seized her. She was, however, discharged from his custody on her owners entering into bonds for $18,000 as the value of the ship, and $250, the sum estimated as possible amount of costs, conditioned to pay what might be awarded by final decree.
To establish the case of the ship the testimony of Hotchkiss, already mentioned, one of her part owners, had been taken, June 20th, 1859, “saving the exception as to the competency of the witness;” the statute of July 16th, 1862, which allows parties and interested witnesses to testify not having then passed. Damages suffered by the ship, and much exceeding $18,000, were proved by the bills of repairs produced and by other witnesses than Hotchkiss. The deposition of Hotchkiss was not read in the District Court; without hearing which that court decreed against the steamer, and referred the case to a commissioner to ascertain damages. The commissioner, however, did hear the deposition, and awarded $20,378 damages; this being followed by a final decree in the District Court for $24,590. On appeal to the Circuit Court, that court not reading the deposition, affirmed the decree, and gave a final decree there for $28,292. From that decree the case was brought here by the owners of the steamer, the record which came here including Hotchkiss’s deposition.
Mr. JE. C. Benedict, for the appellants:
The owners of the steamboat were not common carriers nor insurers. All they contracted for was a propelling power to tow the ship with reasonable skill and care. They did not guarantee successful towing, free from all accident and injury. Like the professional man, they are responsible only for actual negligence, for the lack of such care as a careful man would give to his own property.* And this negligence must be proved by the libellant. The presump- p. 411tion is against the negligence, and the burden is on him to prove it affirmatively, not only that there was negligence, but culpable negligence that caused the damage.*
Now here the steamer and the care and precaution on board of her were of the best kind. The pilot; Captain Sherwood, was a competent pilot, of large experience and well recommended; and he had the aid of Wilson, a skilful friend. The lead was heaved, shoals were watched, and there was a good lookout.
The damage was caused by the perils of the sea—the inevitable accidents of the navigation—the act of God; the rain, the fog, the darkness, the variable, conflicting, and imperceptible currents and the winds. The waters through which this navigation lay are very peculiar waters. Islands and shoals, and swashes, and channels abound. The currents do not flow regularly, six hours one way and six hours another. At different parts of the tide it will run in the same place two hours in one direction, and in the next two hours in the opposite direction in the same ebb or flow; and in some places, when the tide will be running west, the same tide, at a little distance off, will be running southwest, or south. These uncertain and contradictory currents and tides, make thO navigation dangerous in the night in fair weather, even when the many lights in light-houses and light-ships are visible. Of course they make it doubly so when nothing is visible in consequence of dense fog. And when such a fog shuts suddenly down, there is no retreating nor evading or escaping, except by slow and careful going on, with abundant lookout and a constant casting of the lead. All that we gave. We slackened speed; we heaved the lead; we kept a sharp lookout, with in fact two pilots.
Shutting off the steam was a plain duty, and yet doing this caused the vessel to run more slowly, and allowed the currents to have more effect on it. The ship would thus be under the influence of two equal forces operating nearly at right angles; steam driving her to the westward and the p. 412current bearing her to the southward. The combination of those two forces would force her between the two on a diagonal line directly upon Tuckernuck Shoal on which she struck.
There is no sufficient evidence to discredit the compasses. They were in good condition. Their variation, caused by the iron on board, as is the case in all steamers, was regular and well known. On an east or west course it was a point and a half; that is to say, to make a west course you would have to steer west by south half south, and on an east course, the same rule. This variation was properly allowed for in all courses.
But after all, the injury to the ship was caused by her own mismanagement after she struck the shoal and cast her port anchor. She got off the shoal where she first grounded without any injury, and if after that she had been guilty of no negligence there would have been no damage. Instead of remaining quietly at her anchor where the steamer might take hold of her, and take her out with a long chain, on her voyage, they hove the anchor short, and the ship then picked up her anchor and went ashore—broke adrift, and drove astern on to the shoals. This heaving short was a great negligence, and was the first and material cause of damage. She then lay with her stern on the sand, her bow swinging and straining on her short chain, which parted; and if left to herself she would have gone over the shoal into deep water. It was a great negligence which let go the starboard anchor on the starboard side of the ship when she was swinging to starboard, her stern lying aground. As a natural consequence she swung on the anchor and stove holes in her bottom, the second and the principal cause of the damage. If no anchor had been thrown out, the ship would have gone through the shoal into deep water and floated without any damage except scraping the copper.
Neither was the steamer in fault. Her duty to the ship was to tow her to New York, to act as her propelling power, to use all reasonable care and diligence to do so, and if she got in difficulty to endeavor to extricate her. It had this p. 413extent; no more. The captain of the steamer was not under the least obligation to throw his boat alongside of that ship in the midst of breakers and uneven and rolling shoals in a tempestuous gale. It could not possibly do the ship any good, and might destroy them both. It was his duty not to do it, and it was his duty to go to the nearest port and procure surf-boats and wreckers to aid her, which was just what he did. During the time that the ship was ashore, the steamer tried to get to her, making repeated efforts, backing in towards her, but was unable to get to her. The noise made by the gale prevented hailing, and the ship could not fail to know when the steamer turned toward Edgartown that it was going for assistance, without which nothing useful could be done.
Under the contract “to furnish a coast pilot,” the pilot was the servant of the ship and not of the steamer. The mate of the tug was not responsible for the conduct of the pilot. His only contract as to the pilot, was to get a pilot for the owner of the ship, and to get one of good repute for skill and diligence. Hazard was the agent of the owner of the ship, who accepted and approved his choice of a pilot.
The commissioner also allowed the deposition of Captain Hotchkiss, which was incompetent, to be read in evidence before him on the question of damages. The deposition, not being competent when taken, did not become competent by lapse of time, or by any subsequent statute. This improperly affected the final decree, which on account of the result which the error caused ought to be reversed.
The libellants at best are entitled to a decree for but $18,250. The sureties are only bound to the extent of the obligation expressed in their bond.*
Mr. D. D. Lord, contra.
Mr. Justice STRONG delivered the opinion of the court. The libel filed in this case against the steamer is to recover the damages sustained by the ship in consequence of p. 414the alleged careless and unskilful towage, and the first question is whether the towage was either unskilful or negligent.
It must be conceded that an engagement to tow does not impose either an obligation to insure, or the liability of common carriers. The burden is always upon him who alleges the breach of such a contract to show either that there has been no attempt at performance, or that there has been negligence, or unskiliulness to his injury in the performance. Unlike the case of common carriers, damage sustained by the tow does not ordinarily raise a presumption that the tug has been in fault. The contract requires no more than that he who undertakes to tow shall carry out his undertaking with that degree of caution and skill which prudent navigators usually employ in similar services. But there may be cases in which the result is a safe criteiion by which to judge of the character of the act which has caused it. Had the ship in this case been towed upon a shoal ten miles north or ten miles east of Handkerchief Shoal, after leaving that shoal for Cross Rip, it cannot be doubted that the fact of the stranding at such a place, would, in the absence of explanation, be almost conclusive evidence of unskilfulness, or carelessness in the navigation of the tug. The place where the injury occurred would be considered in connection with the injury itself, and together, they would very satisfactorily show a breach of the contract, it no excuse were given. At least they would be sufficient to cast upon the claimants of the tug the burden of- establishing some excuse for the deviation from the usual and proper course.
In the present case the departure from the true course was not so great, but it was enough to devolve upon the tug the duty of explanation. The ship was, as we have noticed, towed upon a shoal more than three miles south ot the proper course to Cross Rip Light. Had the course been a long one the deviation would not have been so remarkable. But as the entire distance from Handkerchief Shoal to Cross Rip is less than thirteen statute miles, and as the ship was stranded when only about three-quarters of this distance was p. 415passed, it is apparent there must have been either bad management of the tug, or some unusual cause must have operated to produce the disaster, a cause against which ordinary prudence was not bound to guard. Certainly this is enough to impose upon the tug the necessity of explaining how she came to be so far off her course in running so short a distance. We do not say that in order to excuse her it must be shown the accident was inevitable, but it ought to appear that so remarkable a deviation from her correct course, made so soon after leaving Handkerchief Light, was consistent with cautious and skilful management.
The weight of the evidence is that the ship was run upon the shoal in a little more than an hour, manifestly not more than an hour and a half, after she passed Handkerchief Light. All the witnesses agree that it was between three and four o’clock when she took ground. It follows that the entire departure from the true course was made within this period of an hour, or at most, an hour and a half.
The, excuses set up in behalf of the steamer arc that the night was foggy and dark, and that the currents were variable, conflicting, and imperceptible. There is no evidence that there was any wind which could have caused embarrassment until some time after the ship had stranded. It blew lightly from the south and east, and its tendency, therefore, was to keep the steamer up to the northward of her true course. It was raining, but there was no fog until after Handkerchief Light had been passed. Soon afterwards the weather began to grow misty and thick, but the clear preponderance of the testimony is that it was not until they had passed over about half the distance to Cross Rip that the fog became so dense that the lights could not be seen. If this is so there was no difficulty in determining the position of the steamer. It is not perceived, however, that this is very material. The fog, whether dense or thin, was itself no embarrassment to the steamer’s taking and keeping the right course, a course marked on the chart, and well known by the pilot and by the captain.
Though the currents were variable in the direction of p. 416their flow, yet both their direction and their force were well known. All that was needed was to give them careful attention, and to make allowances for their operation. So much prudent navigation required. There is no evidence that they were of unusual strength on the night of the disaster, or that they ran in an unusual direction, and there was nothing in the state of the weather to cause a difference from what was common. Ordinary skill was quite sufficient to enable the pilot of the tug to counteract their force, and to keep both the tug and the tow on the proper course. It was during the first third of the tide that the passage was made over the first third of the course from Handkerchief Light to Cross Rip, as stated by the pilot. During this time the current or tide was setting northwest, bearing the steamer northward, and on the last half of the course, on which she entered before the steam was shut oft’, the ebb-tide was setting southwest. Such is the evidence, as also that, after the steam was shut oft’, the motion of the steamer through the water was at the rate of two or three knots an hour, and that she was thus moving about forty-five minutes before the ship struck. If this is so, she was constantly making westing during that three-quarters of an hour, if headed right; and, if she was in the right position when the steam was shut oft*, the calculation is easy that shows a southwest current couid not have carried her on to Tuckernuck Shoal. It is plain, therefore, the stranding of the ship was not the fault of the currents. They do not account for it, even if nothing was done to counteract their known tendency.
There is nothing else in the case that tends to show that the disaster was not due to thé negligence of the tug. On the contrary, there is very considerable evidence that her compasses were untrue, and so deranged as on a westerly course to head her too much to the south. This, of itself, would account for the deviation, and this of course would be the steamer’s fault.
It has been strenuously argued that the great injury to the ship was caused by her own mismanagement after she p. 417had struck the shoal and cast her port anchor. After daylight, when the steamer was about to back down in order to attach herself again to the ship, which had then got off the shoal and was riding at anchor, the ship’s crew commenced heaving on the anchor; and it is alleged they hove shoit, so that the anchor was picked up, and, a gale coming on to blow suddenly, she went again upon the shoal. The anchor, however, instead of being picked up, was lost, and it was proper to heave upon it in order to bring the ship nearer the stern of the steamer, and thus aid in the effort to renew attachment to the steamer. We do not discover in this any negligence on the part of the ship. What was done was rendered prudent, if not necessary, by the prior misconduct of the tug. Nor was casting the. starboard anchor, after the ship broke adrift, negligence under the circumstances, though it proved unfortunate, and though the ship afterwards swung upon it and bilged. The port anchor had been lost, and the wind was then blowing a gale. Probably the bilging was what saved the ship from total destruction; and, if casting the starboard anchor was an act of mistaken judgment, it cannot excuse the tug, which negligently brought the ship into the peril from which she sought thus to escape.
The attempt to escape responsibility under the allegation that the wrong, if any, was that of the pilot, and that the pilot was the employee of the ship and not of the steamer, wholly fails. Neither the written contract for towage nor the antecedent negotiation establishes any such thing. Under the engagements of the steamer, assumed before the contract of towage was made, it was impossible to have any other pilot than Sherwood, who was the pilot of the steamer,, and there is nothing to show that the ship undertook to run the risk of pilotage.
It is finally objected that the deposition of Levi Hotchkiss, was allowed to be read, though he was incompetent when it was taken. It does not appear to have been used in either the District or the Circuit Court, though it was read before the commissioner appointed to ascertain the damages. Ob-
VOL. XIV. 27 p. 418jection was made to it there, and it must be conceded the deposition should not have been received, but its reception can hardly justify us in sending the case back for a new trial. When the commissioner received it, if it was intended to insist upon the objection, application should have been made to the court for an order to exclude it. This was not done. Conceding, however, that the error was not thus cured, still the evidence before the commissioner related only to the amount of damages, and without the testimony of Hotchkiss, the damages were plainly more than the libellants are entitled to recover in this proceeding. The libel was in rem, against the steamer, and the decree cannot be for more than is within the jurisdiction of the court. The steamer was discharged from arrest, pu stipulation in the sum of eighteen thousand dollars for value, and two hundred and fifty dollars for costs. The stipulators, to the extent of their stipulation, have been substituted for the steamer, and thus nothing but the eighteen thousand dollars value and two hundred and fifty dollars for costs is within the control of the court. To that extent and no greater the stipulators have subjected themselves to the judgment of the court, and they cannot be made liable as stipulators beyond it. This was determined in the case of The Ann Caroline* and we need not repeat what was then said. The decree in this case was largely in excess of the stipulation, and while it is affirmed upon its merits, it must be modified in regard to the amount of damages recoverable from the stipulators.
The decree of the Circuit Court is aff irm ed , wi th th e modi fic ati on that it be reduced to the sum of eighteen thousand dollars damages and two hundred and fifty dollars costs.; and it is further ordered that each party pay his own costs in this court.
* 2 Wallace, 538.
1
A National banking association may be sued in any state, county, or municipal court in the county or city where such association is located, having Jurisdiction in similar cases.
2
Such an association does not lose its corporate existence by mere default in paying its circulating notes, and upon the mere appointment of a receiver.
3
Such an association may be sued though a receiver have been appointed, and is administering its concerns.
4
The decision of the receiver upon the validity of a claim presented to him for a dividend is not final; the creditor may proceed afterwards to have the validity of the claim judicially adjudicated in a suit in a proper State court, against the bank. In error to the Supreme Court of Connecticut; the case being thus: On the 3d of June, 1864, Congress passed its well-known “act to provide a National currency, secured by a pledge of United States bonds;”* under which act numerous new * 13 Stat, at Large, 99.
*
Atlas Bank v. Nahant Bank, 23 Pickering, 480; Hubbard v. Hamilton Bank, 7 Metcalf, 340.
*
Frost v. Coal Company, 24 Howard, 283; Angel & Ames on Corporations, 9th ed. 777 ; Abbott’s Digest, title “ Corporation,” 338; Grant on Corporations, 295.
*
Case v. Terrell, 11 Wallace, 201.
*
Kennedy v. Wilson, 8 Wallace, 506. f Booth v. Clark, 17 Howard, 322. VOL. xiv. 26
1
A notice by one of three defendants to his co-defendants of his intention to prosecute a writ of error, and a refusal by them to co-operate, is equivalent to the old proceeding of summons and severance, and the one defendant can take his writ accordingly.
2
A judgment in a court of last resort, that a judgment against A. (who had been sued for not faithfully discharging the duties of a vendue-master of a city and been held discharged under the Bankrupt Act) be reversed, is a final judgment within the meaning of the Judiciary Act; as is also a judgment in a court of last resort that a judgment in an inferior court, holding B. and C. (the sureties of A. on his bond as vendue-master) liable, be affirmed.
3
When the record does not show that a copy of the writ was lodged within ten days in the clerk’s office, nor that the bond was approved and filed within the same term, the writ cannot be made to operate as .».supersedeas.
*
Bailroad Company v. Harris, 7 Wallace, 574.
*
The Julia, 1 Lushington, 231; Wells v. The Steam Navigation Company, 2 Comstock, 208-9.
*
The Farragut, 10 Wallace, 334.
*
Ann Caroline, 2 Wallace, 538
ProvenanceKnow exactly where this document came from.Members see the sourcing behind every authority on DocPost — so you can check the record yourself and cite with confidence.Request access