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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 The facts are stated in the opinion, $11,616; to Clark, $8,346; to Spoonts on
Messrs. Maurice E. Locke and Eugene P. Clark's order, $1,500; to Culberson, $1,026; Locke for appellant.
and to the Phillips Investment Company, Messrs. F. M. Etheridge, Alexander &$1,540.24. It is these sums, other than that Thompson, McLaurin & Wozencraft, paid to Mrs. Mettler, that are in question Spoonts, Thompson, & Barwise, and Eth- here. eridge & Baker for appellees.
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:
some other questions which were raised, beThis is a bill in equity, brought in the cause we are of opinion that the appellees circuit court to enjoin the setting up of a are entitled to keep their money, even if judgment at law recovered in the same cir- the judgment can be impeached for fraud. cuit court upon three policies of life insur. They all got the legal title to the money ance, on the ground that the judgment was which was paid to them, or, what is the obtained by fraud. It also seeks to com- same thing, got the legal title transferred pel the plaintiff in the action at law, and to their order. That being so, the appellant other parties to whom interests in the poli- must show some
some equity before
before their cies were assigned, to repay the sums which legal title can be disturbed. It founds its they received upon them. The judgment claim to such an equity on the mode in was rendered in a case which came before which the judgment which induced it to this court, and the dramatic circumstances part with the title to its money was obof the alleged death are set forth in the retained. But fraud, of course, gives rise only port. Fidelity Mut. Life Asso. v. Mettler, to a personal claim. It goes to the motives, 185 U. S. 308, 46 L. ed. 922, 22 Sup. Ct. Rep. not to the formal constituents, of a legal 662. The appellant is the plaintiff in error transfer (Rodliff v. Dallinger, 141 Mass. in that case, having changed its name. Aft-1, 6, 55 Am. Rep. 439, 4 N. E. 805), and er the date of the judgment the appellant the rule is familiar that it can affect a discovered that Hunter, the party whose title only when the owner takes with notice life was insured, was alive, and that the or without having given value (Fletcher v. recovery was the result of a deliberate plot. Peck, 6 Cranch, 87, 133, 3 L. ed. 162, 177; Thereupon it forthwith brought this bill. 2 Wms. Vend. & P. 674. See The Eliza One of the defenses set up and argued be- Lines, 199 U. S. 119, 131, 50 L. ed. 115, 26 low and here was that, by the 7th Amend. Sup. Ct. Rep. 8). The question is whether ment to the Constitution, no fact tried by a the appellant can make out such a case as jury shall be otherwise re-examined in any that. court of the United States than according It is said that the title of the appellees to the rules of the common law. On the stands on the judgment, and that if the facts alleged and proved the circuit court judgment fails the title fails. But that entered a decree against the plaintiff at mode of statement is not sufficiently prelaw, Mettler, now Smythe, but dismissed the cise. The judgment hardly can be said to bill as against the assignees of partial in- be part of the appellees' title. It simply terests in the policies. The insurance com- afforded the appellant a motive for its pay. pany appealed to this court.
ment 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. Clarkey. 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. 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 pany had accepted the result by paying the promise, the equity must be founded upon money into court without waiting for an notice.
execution, it would be impossible to say The notice to be shown is notice of the that the supposed notice was not purged. fact that the judgment which induced the The appellees were not bound to contemappellant's payment was obtained by fraud. plate future discoveries of what they honBut notice cannot be established by the mere estly believed untrue, and a bill to impeach fact that, while the appellees held an in the final act of the law. See Bank of Unitterest in the policies only, they were as-ed States v. Bank of Washington, 6 Pet. 8, signees of choses in action, and took them 19, 8 L. ed. 299, 304, subject to the equities. That is due to a Decree affirmed. chose in action not being negotiable. It does not stand on notice. The general prop- Mr. Justice Harlan and Mr. Justice White osition was decided in United States v. dissent. Detroit Timber & Lumber Co. 200 U. S. 321, 333, 334, 50 L. ed. 499, 26 Sup. Ct. Rep. Mr. Justice McKenna took no part in the 282; and United States v. Clark, 200 U. S. decision of this case. 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;
COUNTY COMMISSIONERS OF WICOand, we have no doubt, is the law of Eng.
MICO COUNTY, land. Of course, the assignee of an ordinary contract can only stand in the shoes
SAMUEL BANCROFT, JR. of the party with whom the contract was made. In the discussions of the rule which courts—following decisions of state courts. we have seen we have found no other reason 1. Whether a repealable exemption from offered, as no other is necessary. But the state taxation has been in fact repealed by assumption of the good faith of the assignee a subsequent state statute is a question of occurs in more cases than one.
state law, upon which the decisions of the The principle which we apply is further highest courts of the state, in the absence
The principle which we apply is further of any contract rights, are binding on the illustrated by the priority given to the later Federal courts.* of two equitable titles, if the legal title be Taxes—exemption-repeal. added to it (2 Pom. Eq. Jur. 3d ed. $$ 727, 2. The withdrawal of a repealable ex. 768) by the doctrine of tacking, and, in emption from state taxation of the propsome degree, by the great distinction recogerty of a reorganized railway company, if nized in other respects between the holder any such exemption existed, was effected by of title under an executed contract and Md. Acts 1896, chap. 120, which directs a & party to a contract merely executory in the state, and expressly declares that the
new assessment for taxation of the property See 1 Wms. Vend. & P. 540, and cases cited.
property of every railroad shall be assessed We may add further that, even if we were for county and municipal purposes, and conwrong, the equities to which an assignee tains a proviso that nothing therein contakes subject are equities existing at the tained shall be held to discharge, release, or time of the assignment (1 Wms. Vend. impair any irrepealable contract or obliga& P. 584), and that the notice with which tion then existing, which sufficiently evi. he is supposed to be charged as assignee dences the legislative intent to repeal ex. can be of nothing more. Therefore, merely emptions from taxation which were not proas assignees, the appellees had not notice of tive control, and to bring all property within
tected by binding contracts beyond legislathe, as yet, unaccomplished fraud in ob- the taxing power of the state.f taining the judgment. The policies were honest contracts, and it was an interest in
[No. 129.] the policies which was assigned, at least to Clark.
Argued October 9, 1906. Decided November The appellant is driven, therefore, to con
5, 1906. tend, as it did contend at the argument, that notice of the denial that Hunter was dead, in the suit on the policy, was notice O WRIT of Certiorari to the Circuit
Court of Appeals for the Fourth Circuit 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 of the Circuit Court for the District of believed the plaintiff's case. In such cir- Maryland, enjoining state taxation of cercumstances, even if the answer had gone tain railway property. Reversed and refurther, and had charged the plaintiff with
*Ed. Note.-For cases in point, see vol. 13, all that the present bill charges against her, Cent. Dig. Courts, sg 956-958, 961. when a jury had decided that the charges Ed. Note.-For cases in point, see vol. 45, were groundless, a judgment had been en- 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.
or out of this state, for the purpose of carThe facts are stated in the opinion. rying on their business, and any other rail. Mr. James E. Ellegood for petitioners. road company in this state shall have the
Messrs. Nicholas P. Bond, Ralph Robinson, right to lease or sell its railroad or other and Edward Duffy for respondent.
property to the said Baltimore & Eastern
Shore Railroad Company." Mr. Justice Day delivered the opinion of The Baltimore & Eastern Shore Railroad the court:
Company accepted the provisions of the act The respondent, Samuel Bancroft, Jr., be- and completed the construction of its road gan an action in the circuit court of the between the termini named in August, 1891. United States for the district of Maryland In June, 1890, it purchased the property of to enjoin the county commissioners of the Wicomico & Pocomoke Railroad ComWicomico county from levying taxes on the pany, extending from Salisbury to Ocean property of the Baltimore, Chesapeake, & City. Afterwards, the Baltimore & Eastern Atlantic Railway Company, alleging that he Shore Railroad Company mortgaged the enwas the holder of twenty bonds secured by tire property to secure $1,600,000 of mortmortgage upon the company's property, gage bonds. This mortgage was foreclosed which, under the laws of the state, had been in 1894, and the purchaser proceeded to orexempted from taxation. Such proceedings ganize a new corporation—the Baltimore, were had that a decree was entered enjoin- Chesapeake, & Atlantic Railway Company, ing taxation of certain property of the rail. the respondent becoming the holder of some way company. Upon appeal to the circuit of its mortgage bonds. This reorganization court of appeals, the judgment was af- was under § 187 and 188 of art. 23, Maryfirmed (70 C. C. A. 287, 135 Fed. 977), and land Code of 1888, which provides as the case was brought here by writ of cer- follows: tiorari.
Section 187, that in case of the sale of any The case was tried upon an agreed state- railroad under foreclosure of mortgage, the ment of facts, from which the following, purchaser may form a corporation for the pertinent to the determination of the case, purpose of owning, possessing, maintaining, may be extracted: The Baltimore & East- and operating such railroad, by filing in the ern Shore Railroad Company, organized to office of the secretary of state, a certificate build a line of road from Eastern Bay, in of the name and style of such corporation, Talbot county, to Salisbury, Wicomico coun- the number of directors, etc. ty, in the same state, by act of the legisla- “Sec. 188. Such corporation shall possess ture of Maryland, was granted certain privi- all the powers, rights, immunities, privileges (Acts of the Assembly, 1886, chap. leges, and franchises in respect to such rail133), $$ 2, 4, and 5 being as follows: road, or the part thereof included in such
"Sec. 2. And be it enacted, That said cor- certificate, and in respect to the real and poration shall have perpetual existence, and personal property appertaining to the same, its franchises, property, shares of capital which were possessed or enjoyed by the corstocks, and bonds shall be exempt from all poration which owned or held such railroad state, county, or municipal taxation for the previous to such sale under or by virtue of term of thirty years, counting from the date its charter, and any amendments thereto, of the completion of said road between the and of [any) other laws of this state,” etc. termini mentioned in its charter.”
Under authority of the Maryland statutes “Sec. 4. And be it enacted, That the said the Baltimore, Chesapeake, & Atlantic RailBaltimore & Eastern Shore Railroad Com-way Company issued the mortgage bonds of pany aforesaid shall have power to unite, which respondent is the holder. The county connect, and consolidate with any railroad commissioners of Wicomico county have company or companies, either in or out of levied and assessed taxes upon the railroad this state, so that the capital stock of said company's property, and threatened to sell companies so united, connected, and consoli- the same for nonpayment thereof. The cirdated (respectively) may, at the pleasure cuit court held, and the circuit court of apof the directors, constitute a common stock, peals affirmed the judgment, that $$ 187 and the respective companies may thereafter and 188 of the Maryland Code, extending constitute one company and be entitled to immunities to the new company, had the efall the property, franchises, rights, privi- fect to exempt from taxation certain properleges, and immunities which each of them ty of the reorganized company, and that the possess, have, and enjoy under and by virtue exemption constituted a contract between of their respective charters.
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 com, tempt of the county commissioners to levy pany in general terms, did not repeal prior taxes upon the property.
legislation, which, properly construed, gives Notwithstanding this decision of the cir- the privilege of exemption from taxation to cuit court of appeals, it is now conceded in the property of the reorganized railroad the brief of the respondent's counsel, so far company. We, therefore, are to consider a as this argument is concerned, that there case wherein there is no contention that a was no binding contract upon the state en- valid and binding contract has been impaired titled to protection under the Federal Con-by state action, and the questions are as to stitution (article 1, § 10) against state im- the proper construction of the statute, and pairment of the obligation of the contract. whether a repealable exemption from taxaIn view of the provisions of the Maryland tion has been withdrawn by subsequent Constitution this concession would seem in legislation of the state. harmony with the right reserved in that in- Previous decisions of this court have setstrument to amend, repeal, and alter char-tled the proposition that whether such ex. ters. Northern C. R. Co. v. Maryland, 187 emption has been in fact repealed by a subU. S. 258, 47 L. ed. 167, 23 Sup. Ct. Rep. 62. sequent state statute is a question of state And see Wisconsin & M. R. Co. v. Powers, law in which the decisions of the highest 191 U. S. 379, 48 L. ed. 229, 24 Sup. Ct. Rep. courts of the state, in the absence of a con. 107. But it is insisted, conceding that the tract, are binding; and that it is only where exemption from taxation was merely a the exemption is irrepealable, thus constibounty or gratuity, it extended to the reor- tuting a contract, that it becomes the duty ganized company by force of the Maryland of this court to decide for itself whether the statutes above quoted, and has never been subsequent act did or did not impair the obrepealed nor withdrawn by the state, and, ligation of the contract. Gulf & S. I. R. Co. therefore, the bondholder, being directly in- v. Hewes, 183 U. S. 66–74, 46 L. ed. 86–90, terested in the property, has a right to be 22 Sup. Ct. Rep. 26; Northern C. R. Co. v. protected by injunction against the levying Maryland, 187 U. S. 258, 266, 267, 47 L. ed. of such taxes so long as the act remains in 167, 170, 172, 23 Sup. Ct. Rep. 62. It is force.
contended, however, that inasmuch as the The questions arising in this case, as to respondent acquired his bonds in 1896, the construction and force of the acts of the which were issued in 1894, at a time when legislature of the state, have been before the none of the Maryland decisions above resupreme court of Maryland in three cases: ferred to had been made, the first of them Baltimore, C. & A. R. Co. v. Ocean City, 89 being in 1899, the construction of the stat. Md. 89, 42 Atl. 922; Baltimore C. & A. R. utes and their continued force are questions Co. v. Wicomico Countỹ, 93 Md. 113, 48 Atl. for the Federal courts having jurisdiction of 853; and Baltimore, C. & A. R. Co. v. Wico- the cause and the parties. And further, mico County, 63 Atl. 678. In these cases it that while the Federal tribunals will differ was held that the exemption from taxation reluctantly from the state courts upon a provided for by the laws above quoted did question of the validity of state statutes, not extend to the reorganized company, and and will “lean towards an agreement of in the last case, decided March 27, 1906, since views with the state courts,” nevertheless, the decision in the circuit court of appeals, they must in such cases exercise an indeit was held that the general assessment law pendent judgment in determining the force of 1896 (Acts of 1896, chap. 120) declaring and validity of state statutes. Burgess v. that the property of every railroad should be Seligman, 107 U. S. 20, 23, 27 L. ed. 359, assessed for county and municipal purposes, 361, 2 Sup. Ct. Rep. 10; Great Southern and providing that nothing in the act should Fire Proof Hotel Co. v. Jones, 193 U. S. discharge or release any irrepealable con- 532, 48 L. ed. 778, 24 Sup. Ct. Rep. 576, and tract or obligation existing at the date of cases cited in the opinion in that case. the passage of the act, amounted to a recall If we could concede the soundness of this of the immunity granted by the former law, contention, we are of opinion that the court which had at all times been subject to re- of appeals of Maryland was right in holding peal by the state, and that, conceding the that the legislation of 1896 (Acts of 1896, immunity extended to the reorganized com- chap. 120), directing a new assessment of pany under § 187 of the statute, the repeal the property of the state, and expressly deof the exemption did not violate any con- claring that the property of every railroad tract with the state, entitled to the protec- in the state should be valued and assessed tion of the Federal Constitution.
for county and municipal purposes, had the As we have said, the argument addressed effect to withdraw the prior exemption from to this court is rested upon the proposition taxation if a proper construction of the legthat the subsequent law of 1896, imposing I islation 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 Kentucky. It was brought by the bridge nothing therein contained shall be held to company to compel the auditor of public discharge, release, impair, or affect any irre- accounts for the state to issue his warrant pealable contract or obligation of any kind on the state treasury for the amount of a whatsoever existing at the date of the pas- franchise tax collected under authority of sage of the act. This proviso evidences the $8 4079 and 4080 of the Kentucky statutes. legislative intent to repeal exemptions from The return of the tax was asked upon the taxation which were not protected by bind- ground that it levied a burden on the ining contracts beyond legislative control, if terstate commerce business of the bridge any such existed, and to bring all property company, pertaining exclusively to comwithin the taxing power of the state. We merce between Kentucky and Ohio, and was agree with the reasoning expressed by the therefore repugnant to the Federal Constitucourt of appeals of Maryland upon this tion. branch of the case. Baltimore, C. & A. R. The auditor appeared by counsel, and, by Co. v. Wicomico County, 63 Atl. 683. general demurrer, raised the question of the
From this view it follows that the decree sufficiency of the allegations of the petition, of the Circuit Court of Appeals must be re- and by special demurrer challenged the juversed and the cause remanded to the Cir-risdiction of the court to entertain the ac. cuit Court with directions to dismiss the tion. The circuit court, passing the ques. bill.
tion of jurisdiction, held that levying the tax in question did not violate the com
merce clause of the Federal Constitution, COVINGTON & CINCINNATI BRIDGE CO., as it was a tax upon property, and not upon Plff. in Err.,
the business of the company, sustained the
general demurrer, and dismissed the petiS. W. HAGER, Auditor of Public Accounts tion. of the Commonwealth of Kentucky. We are of opinion that the court below
had no jurisdiction of this action. It has Mandamus-original jurisdiction of circuit courts.
been too frequently decided in this court to The Federal circuit courts have no require the citation of the cases that the jurisdiction of an original action in man- circuit courts of the United States have no damus to compel the return of a franchise jurisdiction in original cases of mandamus, tax collected under the authority of a state and have only power to issue such writs in statute, although the basis of the relief aid of their jurisdiction in cases already sought is the alleged repugnancy of the tax pending, wherein jurisdiction has been acto the commerce clause of the Federal Con- quired by other means and by other process. stitution,
Many of the cases are collected in 4 Fed.
Stat. Annotated, 503. [No. 37.]
The question was before this court recentSubmitted October 17, 1906. Decided No-ly in Knapp v. Lake Shore & M. S. R. Co. vember 5, 1906.
197 U. S. 536, 49 L. ed. 870, 25 Sup. Ct. Rep.
538, an action by the Interstate Commerce IN N 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 rany, 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.