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ciary, but dismissing the bill as against the before execution, the insurance company assignees of partial interests in the poli-paid the amount ($24,028.25) into court. cies. Affirmed. Out of this the clerk paid to Mrs. Mettler $11,616; to Clark, $8,346; to Spoonts on

The facts are stated in the opinion, Messrs. Maurice E. Locke and Eugene P. Clark's order, $1,500; to Culberson, $1,026; Locke for appellant.

Messrs. F. M. Etheridge, Alexander & Thompson, McLaurin & Wozencraft, Spoonts, Thompson, & Barwise, and Etheridge & Baker for appellees.

and to the Phillips Investment Company, $1,540.24. It is these sums, other than that paid to Mrs. Mettler, that are in question here.

It will not be necessary to consider the constitutional question under the 7th Mr. Justice Holmes delivered the opinion Amendment, to which we have referred, or

of the court:

This is a bill in equity, brought in the circuit court to enjoin the setting up of a judgment at law recovered in the same circuit court upon three policies of life insurance, on the ground that the judgment was obtained by fraud. It also seeks to compel the plaintiff in the action at law, and other parties to whom interests in the policies were assigned, to repay the sums which they received upon them. The judgment was rendered in a case which came before this court, and the dramatic circumstances of the alleged death are set forth in the report. Fidelity Mut. Life Asso. v. Mettler, 185 U. S. 308, 46 L. ed. 922, 22 Sup. Ct. Rep. 662. The appellant is the plaintiff in error in that case, having changed its name. After the date of the judgment the appellant discovered that Hunter, the party whose life was insured, was alive, and that the recovery was the result of a deliberate plot. Thereupon it forthwith brought this bill. One of the defenses set up and argued below and here was that, by the 7th Amendment to the Constitution, no fact tried by a jury shall be otherwise re-examined in any court of the United States than according to the rules of the common law. On the facts alleged and proved the circuit court entered a decree against the plaintiff at law, Mettler, now Smythe, but dismissed the bill as against the assignees of partial interests in the policies. The insurance company appealed to this court.

some other questions which were raised, be-
cause we are of opinion that the appellees
are entitled to keep their money, even if
the judgment can be impeached for fraud.
They all got the legal title to the money
which was paid to them, or, what is the
same thing, got the legal title transferred
to their order. That being so, the appellant
must show some equity before
before their
legal title can be disturbed. It founds its
claim to such an equity on the mode in
which the judgment which induced it to
part with the title to its money was ob-
tained. But fraud, of course, gives rise only
to a personal claim. It goes to the motives,
not to the formal constituents, of a legal
transfer (Rodliff v. Dallinger, 141 Mass.
1, 6, 55 Am. Rep. 439, 4 N. E. 805), and
the rule is familiar that it can affect a
title only when the owner takes with notice
or without having given value (Fletcher v.
Peck, 6 Cranch, 87, 133, 3 L. ed. 162, 177;
2 Wms. Vend. & P. 674. See The Eliza
Lines, 199 U. S. 119, 131, 50 L. ed. 115, 26
Sup. Ct. Rep. 8). The question is whether
the appellant can make out such a case as
that.

It is said that the title of the appellees stands on the judgment, and that if the judgment fails the title fails. But that mode of statement is not sufficiently precise. The judgment hardly can be said to be part of the appellees' title. It simply afforded the appellant a motive for its payment into court. The appellees derive their The material facts are these: By way of title immediately from Mrs. Mettler, and a contingent fee for the services in collect- remotely from the act of the appellant. ing the insurance, Mrs. Mettler assigned to They stand exactly as if the appellant had the present defendant Clark and his part- handed over the $24,000 in gold to her and ners one-third interest in the policies, with she thereupon had handed their proportion an additional sum in case statutory dam- to them. We are putting no emphasis on ages and attorney's fees were recovered. the fact that the thing transferred was monThis afterwards came to Clark alone. Clark ey. The appellees knew from what fund and Mrs. Mettler assigned $500 each, from they were paid, from what source it came, their respective interests, to the defendant and why it was paid to Mrs. Mettler. We Culberson, as a contingent fee for argument are insisting only that the title had passed and services in this court. Clark also em- to them. Clark also em- to them. But we repeat that, as the title ployed the defendant Spoonts, it would seem, had passed, the appellant must find some on a contingent fee. Finally he mortgaged equity before it can disturb it, and we now his right to the Phillips Investment Com- add that, as there is no question that the pany. When the judgment was recovered, appellees took for value, that is, in payment

for their services, or, if it be preferred, intered on the verdict, and the insurancé comperformance of Mrs. Mettler's contingent promise, the equity must be founded upon

notice.

pany had accepted the result by paying the money into court without waiting for an execution, it would be impossible to say that the supposed notice was not purged. The appellees were not bound to contemplate future discoveries of what they honestly believed untrue, and a bill to impeach the final act of the law. See Bank of Unit

19, 8 L. ed. 299, 304.

Decree affirmed.

Mr. Justice Harlan and Mr. Justice White dissent.

The notice to be shown is notice of the fact that the judgment which induced the appellant's payment was obtained by fraud. But notice cannot be established by the mere fact that, while the appellees held an interest in the policies only, they were as-ed States v. Bank of Washington, 6 Pet. 8, signees of choses in action, and took them subject to the equities. That is due to a chose in action not being negotiable. It does not stand on notice. The general proposition was decided in United States v. Detroit Timber & Lumber Co. 200 U. S. 321, 333, 334, 50 L. ed. 499, 26 Sup. Ct. Rep. 282; and United States v. Clark, 200 U. S. 601, 607, 608, 50 L. ed. 613, 26 Sup. Ct. Rep. 340; and earlier in Judson v. Corcoran, 17 How. 612, 615, 15 L. ed. 231, 232; and, we have no doubt, is the law of England. Of course, the assignee of an ordinary contract can only stand in the shoes of the party with whom the contract was made. In the discussions of the rule which we have seen we have found no other reason

offered, as no other is necessary. But the assumption of the good faith of the assignee

occurs in more cases than one.

The principle which we apply is further illustrated by the priority given to the later of two equitable titles, if the legal title be added to it (2 Pom. Eq. Jur. 3d ed. §§ 727, 768) by the doctrine of tacking, and, in some degree, by the great distinction recognized in other respects between the holder of title under an executed contract and a party to a contract merely executory. See 1 Wms. Vend. & P. 540, and cases cited. We may add further that, even if we were wrong, the equities to which an assignee takes subject are equities existing at the time of the assignment (1 Wms. Vend. & P. 584), and that the notice with which he is supposed to be charged as assignee can be of nothing more. Therefore, merely as assignees, the appellees had not notice of the, as yet, unaccomplished fraud in obtaining the judgment. The policies were honest contracts, and it was an interest in the policies which was assigned, at least to Clark.

The appellant is driven, therefore, to contend, as it did contend at the argument, that notice of the denial that Hunter was

Mr. Justice McKenna took no part in the decision of this case.

COUNTY

COMMISSIONERS OF WICO-
MICO COUNTY,

V.

SAMUEL BANCROFT, JR. Courts-following decisions of state courts. 1. Whether a repealable exemption from state taxation has been in fact repealed by a subsequent state statute is a question of state law, upon which the decisions of the highest courts of the state, in the absence of any contract rights, are binding on the Federal courts.*

Taxes-exemption-repeal.

2. The withdrawal of a repealable exemption from state taxation of the property of a reorganized railway company, if any such exemption existed, was effected by Md. Acts 1896, chap. 120, which directs a new assessment for taxation of the property in the state, and expressly declares that the property of every railroad shall be assessed for county and municipal purposes, and contains a proviso that nothing therein contained shall be held to discharge, release, or impair any irrepealable contract or obligation then existing, which sufficiently evidences the legislative intent to repeal exemptions from taxation which were not protive control, and to bring all property within tected by binding contracts beyond legislathe taxing power of the state.†

[No. 129.]

Argued October 9, 1906. Decided November 5, 1906.

dead, in the suit on the policy, was notice ON WRIT of Certiorari to the Circuit ΟΝ Court of Appeals for the Fourth Circuit

of the Circuit Court for the District of Maryland, enjoining state taxation of certain railway property. Reversed and re

of the fraud. But it is admitted that the to review a decree which affirmed a decree appellees all acted in good faith; that they believed the plaintiff's case. In such circumstances, even if the answer had gone further, and had charged the plaintiff with all that the present bill charges against her, when a jury had decided that the charges were groundless, a judgment had been en

*Ed. Note.-For cases in point, see vol. 13,

Cent. Dig. Courts, §§ 956-958, 961.

+Ed. Note.-For cases in point, see vol. 45, Cent. Dig. Taxation, §§ 335-337.

manded to the Circuit Court with directions | timore & Eastern Shore Railroad Company to dismiss the bill. shall have power to lease or purchase and

See same case below, 70 C. C. A. 287, 135 operate any railroad or railroads, either in Fed. 977.

The facts are stated in the opinion.
Mr. James E. Ellegood for petitioners.
Messrs. Nicholas P. Bond, Ralph Robinson,
and Edward Duffy for respondent.

Mr. Justice Day delivered the opinion of the court:

The respondent, Samuel Bancroft, Jr., began an action in the circuit court of the United States for the district of Maryland to enjoin the county commissioners of Wicomico county from levying taxes on the property of the Baltimore, Chesapeake, & Atlantic Railway Company, alleging that he was the holder of twenty bonds secured by mortgage upon the company's property, which, under the laws of the state, had been exempted from taxation. Such proceedings were had that a decree was entered enjoining taxation of certain property of the railway company. Upon appeal to the circuit court of appeals, the judgment was affirmed (70 C. C. A. 287, 135 Fed. 977), and the case was brought here by writ of certiorari.

The case was tried upon an agreed statement of facts, from which the following, pertinent to the determination of the case, may be extracted: The Baltimore & Eastern Shore Railroad Company, organized to build a line of road from Eastern Bay, in Talbot county, to Salisbury, Wicomico county, in the same state, by act of the legislature of Maryland, was granted certain privileges (Acts of the Assembly, 1886, chap. 133), §§ 2, 4, and 5 being as follows:

or out of this state, for the purpose of carrying on their business, and any other railroad company in this state shall have the right to lease or sell its railroad or other property to the said Baltimore & Eastern Shore Railroad Company."

The Baltimore & Eastern Shore Railroad Company accepted the provisions of the act and completed the construction of its road between the termini named in August, 1891. In June, 1890, it purchased the property of the Wicomico & Pocomoke Railroad Company, extending from Salisbury to Ocean City. Afterwards, the Baltimore & Eastern Shore Railroad Company mortgaged the entire property to secure $1,600,000 of mortgage bonds. This mortgage was foreclosed in 1894, and the purchaser proceeded to organize a new corporation-the Baltimore, Chesapeake, & Atlantic Railway Companythe respondent becoming the holder of some of its mortgage bonds. This reorganization was under § 187 and 188 of art. 23, Maryland Code of 1888, which provides as follows:

Section 187, that in case of the sale of any railroad under foreclosure of mortgage, the purchaser may form a corporation for the purpose of owning, possessing, maintaining, and operating such railroad, by filing in the office of the secretary of state, a certificate of the name and style of such corporation, the number of directors, etc.

"Sec. 188. Such corporation shall possess all the powers, rights, immunities, privileges, and franchises in respect to such railroad, or the part thereof included in such "Sec. 2. And be it enacted, That said cor- certificate, and in respect to the real and poration shall have perpetual existence, and personal property appertaining to the same, its franchises, property, shares of capital which were possessed or enjoyed by the corstocks, and bonds shall be exempt from all poration which owned or held such railroad state, county, or municipal taxation for the previous to such sale under or by virtue of term of thirty years, counting from the date its charter, and any amendments thereto, of the completion of said road between the and of [any] other laws of this state," etc. termini mentioned in its charter." Under authority of the Maryland statutes "Sec. 4. And be it enacted, That the said the Baltimore, Chesapeake, & Atlantic RailBaltimore & Eastern Shore Railroad Com-way Company issued the mortgage bonds of pany aforesaid shall have power to unite, connect, and consolidate with any railroad company or companies, either in or out of this state, so that the capital stock of said companies so united, connected, and consolidated (respectively) may, at the pleasure of the directors, constitute a common stock, and the respective companies may thereafter constitute one company and be entitled to all the property, franchises, rights, privileges, and immunities which each of them possess, have, and enjoy under and by virtue of their respective charters.

which respondent is the holder. The county commissioners of Wicomico county have levied and assessed taxes upon the railroad company's property, and threatened to sell the same for nonpayment thereof. The circuit court held, and the circuit court of appeals affirmed the judgment, that §§ 187 and 188 of the Maryland Code, extending immunities to the new company, had the effect to exempt from taxation certain property of the reorganized company, and that the exemption constituted a contract between the state and the company entitled to pro"Sec. 5. And be it enacted, That the Bal-tection under the contract clause of the Fed

eral Constitution, against the subsequent at- | taxes upon the property of the railroad comtempt of the county commissioners to levy taxes upon the property.

Notwithstanding this decision of the circuit court of appeals, it is now conceded in the brief of the respondent's counsel, so far as this argument is concerned, that there was no binding contract upon the state entitled to protection under the Federal Constitution (article 1, § 10) against state impairment of the obligation of the contract. In view of the provisions of the Maryland Constitution this concession would seem in harmony with the right reserved in that instrument to amend, repeal, and alter charters. Northern C. R. Co. v. Maryland, 187 U. S. 258, 47 L. ed. 167, 23 Sup. Ct. Rep. 62. And see Wisconsin & M. R. Co. v. Powers, 191 U. S. 379, 48 L. ed. 229, 24 Sup. Ct. Rep. 107. But it is insisted, conceding that the exemption from taxation was merely a bounty or gratuity, it extended to the reorganized company by force of the Maryland statutes above quoted, and has never been repealed nor withdrawn by the state, and, therefore, the bondholder, being directly interested in the property, has a right to be protected by injunction against the levying of such taxes so long as the act remains in force.

The questions arising in this case, as to the construction and force of the acts of the legislature of the state, have been before the supreme court of Maryland in three cases: Baltimore, C. & A. R. Co. v. Ocean City, 89 Md. 89, 42 Atl. 922; Baltimore C. & A. R. Co. v. Wicomico County, 93 Md. 113, 48 Atl. 853; and Baltimore, C. & A. R. Co. v. Wicomico County, 63 Atl. 678. In these cases it was held that the exemption from taxation provided for by the laws above quoted did not extend to the reorganized company, and in the last case, decided March 27, 1906, since the decision in the circuit court of appeals, it was held that the general assessment law of 1896 (Acts of 1896, chap. 120) declaring that the property of every railroad should be assessed for county and municipal purposes, and providing that nothing in the act should discharge or release any irrepealable contract or obligation existing at the date of the passage of the act, amounted to a recall of the immunity granted by the former law, which had at all times been subject to repeal by the state, and that, conceding the immunity extended to the reorganized company under § 187 of the statute, the repeal of the exemption did not violate any contract with the state, entitled to the protection of the Federal Constitution.

As we have said, the argument addressed to this court is rested upon the proposition that the subsequent law of 1896, imposing

pany in general terms, did not repeal prior legislation, which, properly construed, gives the privilege of exemption from taxation to the property of the reorganized railroad company. We, therefore, are to consider a case wherein there is no contention that a valid and binding contract has been impaired by state action, and the questions are as to the proper construction of the statute, and whether a repealable exemption from taxation has been withdrawn by subsequent legislation of the state.

Previous decisions of this court have settled the proposition that whether such exemption has been in fact repealed by a subsequent state statute is a question of state law in which the decisions of the highest courts of the state, in the absence of a contract, are binding; and that it is only where the exemption is irrepealable, thus constituting a contract, that it becomes the duty of this court to decide for itself whether the subsequent act did or did not impair the obligation of the contract. Gulf & S. I. R. Co. v. Hewes, 183 U. S. 66–74, 46 L. ed. 86–90, 22 Sup. Ct. Rep. 26; Northern C. R. Co. v. Maryland, 187 U. S. 258, 266, 267, 47 L. ed. 167, 170, 172, 23 Sup. Ct. Rep. 62. It is contended, however, that inasmuch as the respondent acquired his bonds in 1896, which were issued in 1894, at a time when none of the Maryland decisions above referred to had been made, the first of them being in 1899, the construction of the statutes and their continued force are questions for the Federal courts having jurisdiction of the cause and the parties. And further, that while the Federal tribunals will differ reluctantly from the state courts upon a question of the validity of state statutes, and will "lean towards an agreement of views with the state courts," nevertheless, they must in such cases exercise an independent judgment in determining the force and validity of state statutes. Burgess v. Seligman, 107 U. S. 20, 23, 27 L. ed. 359, 361, 2 Sup. Ct. Rep. 10; Great Southern Fire Proof Hotel Co. v. Jones, 193 U. S. 532, 48 L. ed. 778, 24 Sup. Ct. Rep. 576, and cases cited in the opinion in that case.

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If we could concede the soundness of this contention, we are of opinion that the court of appeals of Maryland was right in holding that the legislation of 1896 (Acts of 1896, chap. 120), directing a new assessment of the property of the state, and expressly declaring that the property of every railroad in the state should be valued and assessed for county and municipal purposes, had the effect to withdraw the prior exemption from taxation if a proper construction of the legislation of the state would extend it to the

property of the reorganized company. The United States for the eastern district of act contains the significant proviso that nothing therein contained shall be held to discharge, release, impair, or affect any irrepealable contract or obligation of any kind whatsoever existing at the date of the passage of the act. This proviso evidences the legislative intent to repeal exemptions from taxation which were not protected by binding contracts beyond legislative control, if any such existed, and to bring all property within the taxing power of the state. We agree with the reasoning expressed by the court of appeals of Maryland upon this branch of the case. Baltimore, C. & A. R. Co. v. Wicomico County, 63 Atl. 683.

From this view it follows that the decree of the Circuit Court of Appeals must be reversed and the cause remanded to the Circuit Court with directions to dismiss the

bill.

Kentucky. It was brought by the bridge company to compel the auditor of public accounts for the state to issue his warrant on the state treasury for the amount of a franchise tax collected under authority of §§ 4079 and 4080 of the Kentucky statutes. The return of the tax was asked upon the ground that it levied a burden on the interstate commerce business of the bridge company, pertaining exclusively to commerce between Kentucky and Ohio, and was therefore repugnant to the Federal Constitution.

The auditor appeared by counsel, and, by general demurrer, raised the question of the sufficiency of the allegations of the petition, and by special demurrer challenged the jurisdiction of the court to entertain the action. The circuit court, passing the question of jurisdiction, held that levying the tax in question did not violate the commerce clause of the Federal Constitution,

COVINGTON & CINCINNATI BRIDGE CO., as it was a tax upon property, and not upon

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the business of the company, sustained the general demurrer, and dismissed the petition.

We are of opinion that the court below had no jurisdiction of this action. It has been too frequently decided in this court to require the citation of the cases that the circuit courts of the United States have no jurisdiction in original cases of mandamus, and have only power to issue such writs in aid of their jurisdiction in cases already pending, wherein jurisdiction has been acquired by other means and by other process. Many of the cases are collected in 4 Fed. Stat. Annotated, 503.

The question was before this court recent

Submitted October 17, 1906. Decided No- ly in Knapp v. Lake Shore & M. S. R. Co.

IN

vember 5, 1906.

197 U. S. 536, 49 L. ed. 870, 25 Sup. Ct. Rep. 538, an action by the Interstate Commerce IN ERROR to the Circuit Court of the Commission, by petition for mandamus in United States for the Eastern District the circuit court of the United States for the of Kentucky to review a judgment sustain- northern district of Ohio, against the Lake ing a demurrer to, and dismissing, the peti- Shore & Michigan Southern Railroad Comtion in an original action in mandamus to pany, to compel it to file reports required compel the return of a franchise tax col- by the act to regulate interstate commerce. lected under the authority of a state statute, It was argued for the government that while on the ground that such tax was a burden decisions of this court under the judiciary on interstate commerce. Modified so as to act of 1789 (1 Stat. at L. 73, chap. 20) and show that the case was dismissed for want the act of 1875 (18 Stat. at L. 470, chap. 137, of jurisdiction, and, as so modified, affirmed. U. S. Comp. Stat. 1901, p. 508) had been The facts are stated in the opinion. construed to confer no original jurisdiction Messrs. Shelley D. Rouse and Charlton B. in mandamus in the United States courts, Thompson for plaintiff in error.

yet the act of March 3, 1887 (24 Stat. at L. Messrs. N. B. Hays, John W. Ray, and C. 552, chap. 373, U. S. Comp. Stat. 1901, p. H. Morris for defendant in error.

508), in view of the modern development in proceedings by mandamus, should be held to

Mr. Justice Day delivered the opinion of confer the jurisdiction upon the circuit the court: courts to entertain original suits in manIn this case an original action in man-damus. The contention was rejected and the damus was begun in the circuit court of the prior cases adhered to.

*Ed. Note.-For cases in point, see vol. 13, Cent. Dig. Courts, § 820.

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