hood v. Mc Gehe e., 237 U.S. 611 (1915)

hood v. Mc Gehe e .

APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.

No. 281. Submitted May 13, 1915.—Decided June 1, 1915.

A State may in its statute of descent exclude children adopted by proceedings in other States, as Alabama has done, without violating any Federal right. The construction of a contract of adoption as complying with the law

of the State where made, but as not giving any rights in the State where the property is situated because the law of descent of the latter State excludes children adopted in any other State,does not deny the adoption full faith and credit. An adoption, although good in the State where made, cannot acquire

a greater scope in other States than their laws give to it by reason of the adopters’ expectation that it will be effective in other States. 199 Fed. Rep. 989, affirmed.

The facts, which involve the construction of an instrument of adoption and the question of whether full faith and credit was given thereto in an action in another State, are stated in the opinion.

Mr. E. Howard McCaleb for appellants:

In the absence of any settled decision construing state statutes by the highest state court, Federal courts exercise an independent judgment as to what is the law of the State applicable to the case, even where a different view has been expressed by the state court after the rights of the parties accrued.

The status of an adopted child fixed as such by a state court having jurisdiction, is compelled by the full faith and credit clause of the Constitution and rights of inheritance accorded in another State, when the latter State

Argument for Appellants. 237 U. S.

has, by statute, recognized such rights of inheritance to adopted children, and where before such adoption, the heritable rights of such child has accrued, there was no settled decision of the highest state court construing its adoption statute adversely. Wharton Confl. Laws, § 25 a; Ross v. Ross, 129 Massachusetts, 243.

Executory agreements and mutual promises will be specifically enforced in equity.

In order to effectuate the intention of the parties to a contract, the state of things, the relation of the parties, their connection with the subject-matter, and the surrounding circumstances, should govern, and such interpretation accorded strongly against the grantor.

Statutory implications are operative only when the deed or instrument fails to contain statutory covenants.

Equity will not limit the meaning and intention of the contracting parties to the statutory implication.

In deeds, the words are to be strongly against the party using them, while in respect to statutes in derogation of the common law, they should be construed strictly.

The word “estate” as used in the contract under consideration is one of large signification and means all the property which the grantor would have at his death.

Ineffective adoption proceedings and contract accompanied by a promise of the adopting parent to leave his estate to the adopted child will amount to a contract when fully performed by the child and specifically enforced in equity against the collateral heirs of the adopting parent or his legal representative.

Practical construction of instruments by the parties to them should, in case of doubt as to the meaning of the words used, control the intention of the parties and the meaning of their language.

In support of these contentions see Abney v. Deloach, 84 Alabama, 393; Brown v. Finlay, 157 Alabama, 424;

hoo d v. Mc Gehee . 613

237 U. S. Counsel for Appellees.

Bradley v. Washington Packet Co., 13 Pet. 89; Brown v. Slater, 116 Connecticut, 192; Bolman v. Bolman, 80 Alabama, 451; Bush v. Whitaker, 45 Wisconsin, 74; Brown v. Sutton, 129 U. S. 239; Burns v. Smith, 21 Montana, 251; Canal Co. v. Hill, 82 U. S. 9^; Cross v. Scruggs, 115 Alabama, 264; Cranons v. Eagle Cotton Mills, 120 Indiana, 9; Chicago v. Sheldon, 76 U. S. 50; Douglas v. Lewis, 131 U. S. 75; Fusileer v. Masse, 4 Louisiana, 424; Field v. Lighter, 118 Illinois, 30; Godine v. Kidd, 19 N. Y. Supp. 335; Gall v. Gall, 19 N. Y. Supp. 332; Homer v. Shonfield, 84 Alabama, 315; Hunter v. McGraw, 32 Alabama, 519; Healy v. Simpson, 66 N. Y. Supp. 927; aff’d 167 N. Y. 572; Healy v. Simpson, 113 Missouri, 340; Jaffe v. Jacobson, 48 Fed. Rep. 21, 24; Kuhn v. Fairmont Coal Co., 215 U. S. 349; Kenyon v. Ulan, 53 Hun, 592; Leatherwood v. Sullivan, 81 Alabama, 858; Livingston v. Arrington, 28 Alabama, 424; Moran v. Prather, 13 Wall. 501; Mercian v. United States, 107 U. S. 441; Moran v. Bradley, 9 Wall. 407; Mathews v. Mathews, 62 Hun, 61; Parcell v. Striker, 41 N. Y. 480; 3 Parsons on Contracts, §§ 405, 406; Rock Island R. R. v. Rio Grande R. R., 143 U. S. 609; Sullivan v. Rabb, 86 Alabama, 433; Sanders v. Clark, 29 California, 300; Strong v. Gregory, 19 Alabama, 149; Sea v. McCormick, 68 Alabama, 549; Sharkey v. McDermott, 91 Missouri, 647; Shehak v. Battles, 110 N. W. Rep. 330; Schouler on Wills, §§ 452, 454; Thomas v. Blair, 111 Louisiana, 678; Tierman v. Craine, 121 Pac. Rep. 1007; Taylor v. Kelly, 31 Alabama, 59; Teets v. Flaners, 118 Missouri, 660; Topliff v. Topliff, 122 U. S. 121; United States v. Peck, 102 U. S. 65; United States v. Gibbon, 109 U. S. 200; Van Tine v. Van Tine, 15 Atl. Rep. 249; Van Dyne v. Vreeland, 11 N. J. Eq. 370; Winne v. Winne, 166 N. Y. 263; Wright v. Wright, 99 Michigan, 170; Waterman on Specific Performance, §41.

Mr. John P. Tillman for appellees.

Mr . Just ice Holme s delivered the opinion of the court.

This is a bill to quiet title to land in Alabama. It was dismissed by the Circuit Court on demurrer and the decree was affirmed without further discussion by the Circuit Court of Appeals. 189 Fed. Rep. 205. 199 Fed. Rep. 989. The plaintiffs and appellants are children of the late General Hood and were adopted in Louisiana in 1880 by George T. McGehee, who bought the property in question in 1886. The defendants are McGehee’s heirs if the Louisiana adoption does not entitle the plaintiffs to the Alabama land. The bill sets up that the adoption did entitle them to it by virtue of Article IV, § 1, of the Constitution and the Act of Congress in pursuance of the same, entitling the Louisiana record to full faith and credit. By the instrument of adoption the McGehee’s ‘bind and obligate themselves to support, maintain and educate them [the plaintiffs] as if they were their own children; and hereby invest them with all the rights and benefits of legitimate children in their estate ’; and the bill further sets up that the latter clause constituted a contract with the plaintiffs so to invest them. It alleges services as children to McGehee and also in advance to him of $8,600, being the plaintiffs’ share of the Hood Relief Fund collected in the Southern States. Finally a familiar letter of McGehee to the plaintiffs, which has been probated as a will in Mississippi where McGehee lived, but is not alleged to have been admitted to probate in Alabama, is set forth, valeat quantum. It states that, with immaterial exceptions, ‘ everything else of mine is to be yours equally divided’ and that the letter will be valid as a will.

The language relied upon as a contract was simply the language of adoption used in the duly authorized notarial act. It had its full effect by constituting the plaintiffs adopted children under the Louisiana law. It gave them whatever rights the Louisiana law attempted and was competent to give them as such children, and it did not purport to do more. As matter of supererogation we may repeat the remark of Judge Grubb that the proceeding gave the children all that was expected at the time, as it was effective in Louisiana and recognized in Mississippi, and that it cannot acquire a greater scope on the strength of a subsequent purchase in Alabama, or from McGehee’s mistaken expectation that the land would descend to them.

ERROR TO THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF TEXAS.

। No. 293. Submitted May 14, 1915.—Decided June 1, 1915.

This action by the trustee to recover funds formerly belonging to the bankrupt corporation, not being a suit to avoid a transfer by the bankrupt of its property, but a suit against wrongdoers who had appropriated the bankrupt’s property without its assent, is not one within §§ 23b and 70e of the Bankruptcy Act, and the District Court properly dismissed the bill for want of jurisdiction.

The facts, which involve the right of a trustee in bankruptcy to recover funds formerly belonging to the bankrupt, are stated in the opinion.

Mr. John Neethe, Mr. J. D. Williamson and Mr. Rhodes 8. Baker for plaintiff in error.

Mr. Charles A. Boynton, Mr. W. M. Sleeper and Mr. Ben G. Kendall for defendants in error.

Mr . Justi ce Holmes delivered the opinion of the court.

This is a suit by a trustee in bankruptcy to recover funds formerly belonging to the bankrupt. The District Court dismissed the bill for want of jurisdiction. The defendants in error admit that the court had jurisdiction of a suit by the trustee to recover property fraudulently transferred by the bankrupt, §§ 23b, 70e, but deny that this is such a suit. The plaintiff says that it is—so that our decision must rest upon an analysis of the bill. The trouble with it is that the cause of action is not very steadily conceived;

PARK v. CAMERON. 617

but in view of what seem to us the dominant allegations we are of opinion that the decree was right.

If we stopped with the opening averment it is uncompromising: that the bankrupt transferred to the defendants, for the purpose of defrauding its creditors, $8,250 in cash. The declaration goes on to tell that the defendants, being largely interested in the bankrupt Corporation, bought 275 shares of one Altgeld to prevent the depreciation of the stock on the market; that they sold them to Harris, but had trouble about collecting the price (two notes for $4,125 each, secured by the stock), Harris discovering that he had been overreached; that thereafter the defendants, being directors, conspired with one Kirksey, the general manager, and induced him to make a pretended purchase of the stock, but really for the Corporation, and to use in payment for the same $8,250 of the Corporation’s funds; that the Corporation had no funds with which to purchase its own stock but was heavily involved and that the sale was void; that the purchase was a pretense to purchase the stock from the defendants and that $4,125 of the Corporation’s funds were received by each of them. Then it is alleged that the defendants knew or ought to have known that the Corporation was not indebted to Kirksey, that it was insolvent, and ‘ that the stock so pretended to be sold by them, either to the said Kirksey, or to the said Corporation, was of no value’ and that the money received was the property of the bankrupt. So far it might seem that the declaration sustained the plaintiff’s contention. But it continues that the Corporation did not authorize the foregoing transactions or ratify them, and that the defendants knew it; and ‘that to conceal said misapplication of funds’ the defendants caused entries to be made on the Corporation’s books making the transaction appear to be a purchase of the stock by Kirksey, contrary to the facts, ‘and the defendants knew said S. F. Kirksey, Jr., was not to repay said funds to said Corpora-

Syllabus. 237 U. S.

tion’ and the liability was not intended to be a bona fide one and afterwards pursuant to the conspiracy was cancelled and retired. The other allegations are not material to the question before us. Those that we have recited seem to us in their conclusion to import not that the corporation has done anything, but that certain of its officers by false pretenses have withdrawn its funds. If so the suit is not to avoid a transfer by the bankrupt of its property, but a suit against wrongdoers who have appropriated it without the bankrupt’s assent, and therefore not within §§ 23b and 70e of the Act.