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without any authority, filed in the office of June 27, 1900, a pretended release of which the register of deeds a pretended release of had been filed as already stated, but after the mortgage, in which payment of the the assignment to defendant. above debt was acknowledged.

Upon these facts, as found by the suOn the 25th day of February, 1901, the preme court of Oklahoma, judgment was Chicago Cattle Loan Company caused its rendered for the defendant in error. agent to examine the records of Clark county as to chattel mortgages against Grimes, Messrs. Silas H. Strawn, Frederick S. and upon this examination he found the Winston, John Barton Payne, Ralph M. record clear, except as to a mortgage exe. Shaw, Blackburn Esterline, and Earle W. cuted by Grimes to the Siegel-Sanders Live Evans for plaintiff in error. •Stock Company, October 24, 1900, and by Messrs. James S. Botsford, B. F. Deather

it assigned to the Chicago Cattle Loan Com- age, and O. G. Young for defendant in error. pany, and True so reported to the lastnamed company.

Mr. Justice Peckham, after making the On April 17, 1901, Grimes executed two foregoing statement, delivered the opinion other notes to the Siegel-Sanders Company of the court: for $7,694.70 each, due October 27, 1901. The defendant in error, at the outset, These notes were probably renewals of notes objects to the jurisdiction of this court on previously given. To secure the payment of the ground that the plaintiff should have these two notes Grimes at the same time brought the case here by appeal instead of executed and delivered a chattel mortgage by writ of error, because the case was tried to the Siegel-Sanders Company on the cat. without a jury, and therefore the writ of tle in question and other cattle. The two error was improper.

error was improper. There is nothing in notes thus given were then sold by that this objection, as in actions at law coming company to the plaintiff in error for the from the territory of Oklahoma it has been amount named in the notes, and the plain- held that the proper way to review the judgtiff believed at the time it bought these ments, of the supreme court of that terrinotes that the mortgage securing them was tory was by writ of error. Comstock v. the first lien on the cattle, and it secured Eagleton, 196 U. S. 99, 49 L. ed. 402, 25 Sup. this information through its agent, who Ct. Rep. 210; Oklahoma City v. McMaster, personally examined the record.

196 U. S. 529, 49 L. ed. 587, 25 Sup. Ct. Rep. It is further stated in the finding that 324; Guss v. Nelson, 200 U. S. 298, 50 L there was practically no dispute as to the ed. 489, 26 Sup. Ct. Rep. 260. facts, and that the trial court expressly Further objection is made that the court found that both parties to this action acted below found no facts upon which a review in good faith.

can be had in this court. The foregoing The release of the first mortgage, signed statement disposes of this objection also, by the president of the Live Stock Com and shows it to be untenable. mission Company and filed in the office of On the merits, the question arises which the register of deeds, as above stated, on of these two parties shall sustain the loss November 24, 1900, was not acknowledged. occasioned by the improper act of the pres

After the execution of these various in ident of the Live Stock Commission Comstruments, and between the 25th of April pany in signing this pretended release, and and the 1st of May, 1901, without the acknowledging the payment of the $11,000 knowledge or consent of either of the banks, note, as above stated? The plaintiff in erparties to this suit, Grimes, the original ror contends that the defendant bank should owner of the cattle, moved them from the bear the loss because of its failure to record state of Kansas to the county of Woodward, or file the assignment to it of the first in the territory of Oklahoma, at which lat. mortgage, securing the $11,000 note. The ter place, between the 19th and 20th of defendant opposes this view and insists that, May, 1901, they were seized and taken pos being the holder and the owner of the $11,session of by the Geneseo Bank, the de. 000 note, secured by a first mortgage duly fendant. The plaintiff, within one year from executed on the 27th of June, 1900, and the filing of the first mortgage, dated June, duly filed in the register's office, it has the 27, 1900, in the office of the register of prior right to the cattle, and that the statdeeds of Clark county, Kansas, commenced utes of Kansas do not require that it should this suit in replevin in the district court of file or record the assignment to it of the Woodward county, Oklahoma, to recover note and mortgage, and its claim should possession of the cattle, claiming under the not therefore be postponed. mortgage which was executed and delivered The note executed by Grimes for eleven to the Siegel-Sanders Company on April 17, thousand and some odd dollars was negotia1901, and by it sold to plaintiff; while the ble, and the chattel mortgage was given at defendant claimed under the mortgage dated that time to secure the payment of the note. The indorsement of the note and its delivery of assignments of real estate mortgages by before maturity to the defendant by the the assignor, and paragraph 26 provides payee of the note transferred its ownership that, on presentation of such assignment to the defendant bank. This transfer also for record, it shall be entered upon the martransferred, by operation of law, the owner- gin of the record of the mortgage by the ship of the mortgage, which was collateral register of deeds, who is to attest the same, to the note. Such a mortgage has no sepa- as therein provided. Now, in relation to rate existence, and when the note is paid chattel mortgages and the assignment tlierethe mortgage expires, as it cannot survive of, there is no such provision or anything the debt which the note represents. Carpen- similar to it. Provision is made for the ter v. Longan, 16 Wall. 271, 21 L. ed. 313; satisfaction of a chattel mortgage when Burhans v. Hutcheson, 25 Kan. 625, 37 Am. paid by the mortgagee, assignee, etc., but Rep. 274; Mutual Ben. L. Ins. Co. v. Hunt- that does not make it necessary to record or ington, 57 Kan. 744, 48 Pac. 19; Swift v. file the assignment of a chattel mortgage in Bank of Washington, 52 C. C. A. 339, 114 order to protect the assignee. Fed. 613.

The supreme court of Kansas has held The mortgage, therefore, is a prior lien that there is no statute making it necessary upon the cattle, as security for the payment to record an assignment of a chattel mortof the note, unless defendant has lost it by gage, in order to protect the rights of such its failure to record an assignment of the assignee, and that it need not be recorded mortgage. Whether it has or not is to be or filed. Burhans v. Hutcheson, supra; determined by the law of Kansas.

Wiscomb v. Cubberly, 51 Kan. 580, 33 Pac. There is no express provision in the stat. 320; Mutual Ben. L. Ins. Co. v. Huntington, utes of Kansas for the filing or recording of supra. It is true that these cases refer to assignments of chattel mortgages. Para- real estate mortgages, þut the reasoning susgraph 36, § 4251, General Statutes of Kan- tains the statement as to chattel mortgages. sas for 1901, by Dassler, may be found in The first of the above cases (Burhans v. the margin. It is said this statute by im- Hutcheson) holds that where a mortgage plication provides for the recording of an upon real estate is given to secure payment assignment of a chattel mortgage.

of a negotiable note, and before its maAssuming that the statute makes provi- turity the note and mortgage are transsion for such recording, it is then argued ferred by indorsement of the note to a that it is the duty of the assignee to do bona fide holder, the assignment, if there 80, and his failure takes away a right of be a written one, need not be recorded. This priority of lien which he might otherwise is held even where there was an express have. This reasoning is not satisfactory. statute as to the record of such an assignWe cannot make the assumption that the ment. The statute was held not to apply statute cited does make provision for the to the case of a mortgage given as collateral recording of the assignment, and we fail, to a negotiable note. therefore, to find its necessity. That neces- The second case (Wiscomb v. Cubberly) sity depends upon statute, and without has reference also to a mortgage on real some statutory provision therefor the neces- estate, and involves much the same prinsity does not exist. Uncertain and doubtful ciple. implications arising from portions of a stat- In the third case (Mutual Ben. L. Ins. Co. ute not requiring the recording of an instru- v. Huntington) it was again held that after ment are not to be regardea as furnishing the assignment and delivery by the payee a rule upon the subject. There are statu- of a negotiable promissory note, before matory provisions for recording assignments of turity, together with the mortgage on real real estate mortgages to be found in the estate, given as collateral security for its Kansas statutes. See paragraph 19, § 4234, payment, the original mortgagee had no and paragraph 26, § 4241, General Statutes power to release or discharge the lien of the of Kansas for 1901, by Dassler. Paragraph mortgage, and a release made by him with19, above, provides for the acknowledgment out authority, even though the assignment

Paragraph 36, § 4251, General Statutes case of the satisfaction of mortgages of real of Kansas for 1901, by Dassler, provides as, estate. The entry of satisfaction shall be follows:

made in the book in which the mortgage “When any mortgage of personal property is entered, as hereinbefore provided; and shall have been fully paid or satisfied, it any instrument acknowledging satisfaction shall be the duty of the mortgagee, his as- shall not be recorded at length, but shall be signee or personal representative, to enter referred to unuer the head of 'Remarks', and satisfaction or cause satisfaction thereof to filed with the mortgage or copy thereof, and be entered of record in the same manner as preserved therewith in the office of the reg. near as may be, and under the same pen- ister." alty for a neglect or refusal, as provided in

27 S. C.-6.

was not recorded, would not affect the rights, could not be sustained against the assignee of the assignee.

of the mortgage without proof of the asThese cases would seem to establish the signment of record, as the purpose of the rule in Kansas that it is not necessary to statute was to clear the record, and thererecord the assignment of a mortgage even fore the defaulting party must have record upon real estate, when given to secure pay- title or his satisfaction would apparently be ment of negotiable notes, although there is an impertinent interference by a stranger. a statute which, in general terms, provides That action did not raise the question herefor the recording of assignments of real in presented, and the court made no refer. estate mortgages. Still stronger, if possi-ence to the case of Burhans v. Hutcheson, ble, is the case of a chattel mortgage given supra. It is quite clear that it did not into secure the payment of negotiable notes, tend to overrule that case. In any event, when there is no statutory provision for as already mentioned, the Burhans Case has the recording of the assignment of such been approved in 57 Kan. 744, 48 Pirc. 19, mortgage. It is probable that in the large above cited. We cannot treat the rule majority of cases the only evidence of an which we have stated above as having been assignment of a negotiable note and a chat- at all shaken by the two cases from 23 and tel mortgage given to secure its payment is 29 Kansas (supra.) the indorsement of the note, and delivery The counsel for plaintiff contends that, thereof to the purchaser. In such a case assuming there was no statute providing for there would be no assignment to record, and the recording of an assignment of a chattel there is no provision in the statute for mortgage in the state of Kansas, yet there filing a copy of the note with its indorse - was no law of that state which prohibited ment, together with a statement that it had the Geneseo Bank from recording its a3been delivered to a third party, as the pur-signment. It is not necessary that there chaser or assignee thereof.

should be a law to prohibit the recording The policy of the state of Kansas seems of such assignments. There must be a law to be not alone to give to a negotiable prom- which provides for their record, either in exissory note all the qualities that pertain to press terms or by plain and necessary im. commercial paper, but also to clothe mort- plication from the words stated. Where the gages given as collateral security for the statute does not so provide, it is not necespayment of such notes with the same fa- sary nor is it the duty of the assignee to cility of transfer as the note itself, to which record or file his assignment. There must it is only an incident.

be some legal duty imposed upon the asThe plaintiff, however, contends for the signee before the necessity arises for the opposite doctrine, and cites, among others, recording of the assignment. Lewis v. Kirk, 28 Kan. 497, 42 Am. Rep. 173, Counsel have cited many cases from as its authority. In that case the question states other than Kansas, in which the was which should suffer, a bona fide pur- rights of assignees of mortgagees as against chaser of the real estate which had been subsequent mortgages or conveyances have mortgaged, or the bona fide purchaser of the been discussed and decided. In many cases mortgage, who had failed to have his as the question has arisen in regard to the resignment recorded. The court held in favor cording of assignments of mortgages upon of the purchaser of the real estate, and dis-real estate, where the states had provided tinguished Burhans v. Hutcheson, supra, for the recording of such assignments, and though not assuming to overrule it.

The

where, in the absence of such recording, the mortgage in the Lewis Case was upon real assignee has failed in obtaining priority of estate, and would not, therefore, necessa- rights under his mortgage, which he would rily affect the case of a chattel mortgage, have had if the assignment had been rewhere there is no statute for recording an corded. But, as the owner of the cattle assignment of the mortgage.

mentioned herein resided in Kansas at the But in Mutual Ben. L. Ins. Co. v. Huntington, supra, the case of Burhans v. Hutch-time the mortgages were given, and the eson, supra, was cited, and the doctrine cattle were then in that state, and the that a bona fide holder of negotiable paper, mortgages were filed there, the transactions transferred by him by indorsement there are to be judged of with reference to the on before maturity, and secured by a real law of that state, and we decide this quesestate mortgage, need not record the assign- tion with reference to such law. Under that ment of mortgage, was again approved.

law the assignee of the first mortgage of In Thomas v. Reynolds, 29 Kan. 304, cited June, 1900, has a superior lien to the assignee by plaintiff, it was held that an action to of the second mortgage of April, 1901, al. recover the penalty provided for by the though such assignee of the first mortgage statute for refusal to enter satisfaction of did not have his assignment recorded. a chattel mortgage when it had been paid Judgment is affirmed.

V.

MERCANTILE TRUST & DEPOSIT COM- , ferred to a master. Evidence was taken PANY OF BALTIMORE, Appt., before him, and a report thereafter filed, to

which exceptions were duly taken by both CITY OF COLUMBUS, L. H. Chappell, May parties and an argument had thereon before or, et al.

the court. The judge certifies that, before

a decision had been made by the court on Courts-jurisdiction of Federal circuit court

--case arising under Federal Constitu- the questions of law raised by the exception.

tions, the defendant filed a motion to disA controversy arising under the Fed- miss the bill, on the ground that, if the eral Constitution, of which à Federal circuit parties to the suit were properly placed, court has original jurisdiction without re- there was no such diversity of citizenship gard to the citizenship of the parties, is pre- as was required to sustain the jurisdiction sented by a bin which asserts that the obli- of the court, and also on the ground that gation of a contract for the exclusive priv- there was no Federal question involved. ilege of supplying water to a city and its in- The court granted the motion on those habitants is impaired by a subsequent municipal ordinance and a legislative enact grounds and made its certificate, as stated. ment under which the municipality is pro

The suit was brought by the appellant, a ceeding to issue and market its bonds for citizen of Maryland, against the city of Cothe purpose of constructing its own water- lumbus, a municipal corporation created by works system. *

the state of Georgia, and its mayor and al

dermen, all of them citizens of the state of [No. 50.]

Georgia, and against the Columbus Water

works Company, a corporation also created Argued October 22, 23, 1906. Decided De- by the state of Georgia. cember 3, 1906.

It appears from the averments contained in the bill that the complainant is trustee

age United States for the Northern Dis- executed by the waterworks company, in

the of trict of Georgia to review a decree dismiss- January, 1891, to complainant, as trustee, to ing, for the alleged want of jurisdiction, a secure the payment of certain bonds, and to bill to enjoin a municipality from construct- raise money for the purpose of making iming its own system of waterworks. Re-provements and additions to the waterworks versed and remanded for further proceed which were to supply the city of Columbus ings.

with water, and for providing for future ex. See same case below on motion for tem- tensions and improvements thereof. The porary injunction, 130 Fed. 180.

mortgage is upon all of the company's prop

erty, and also upon all contracts made, or Statement by Mr. Justice Peckham: thereafter to be made, between the water

The appellant filed its bill in this case in works company and the city of Columbus the United States circuit court for the for the supplying of water by the company northern district of Georgia to obtain an into the city, or any public institution of pubjunction restraining the city of Columbus, lic office. The mortgage also included all in the state of Georgia (one of above de- the water rents, etc., and all the income fendants) from the construction of water- whatsoever of the mortgagor, due or to grow works for the supplying of water to the due, arising from its business of supplying defendant city and its inhabitants. Judg-water within the city, or within its vicinity ment was entered by the circuit court dis- or elsewhere, during the continuance of the missing the bill for the want of jurisdiction, lien under the mortgage. and the question of jurisdiction alone was It also included therein a contract, which certified to this court under $ 5, chapter 517, had been entered into in October, 1881, beof the Acts of Congress of 1891. [26 Stat.tween one Thomas R. White, of the city of at L. 827, U. S. Comp. Stat. 1901, p. 549.] Philadelphia, and the mayor and council of

The complainant based the jurisdiction of the city of Columbus (defendant herein) for the circuit court on the ground of diverse the construction and operation of an effeccitizenship, and also upon the existence of tive system of waterworks for the supplying a Federal question. An amended bill was of the city with water for the various uses filed and a motion made for an injunction required. This is the contract in question in pendente lite, enjoining the city from issu- this suit. Provision for a corporation was ing bonds or doing any work towards the made in the contract, to which it was to be construction of the waterworks. The mo- assigned; the corporation was subsequently tion was granted, and a demurrer to the created, and such contract was assigned by amended bill having been overruled, and is- White to the water company, and the assue having been joined by the service of an signment was assented to by the city. The answer and replication, the case was re-l contract provided in great detail for the

*Ed. Note. For cases in point, see Cent. Dig. vol. 13, Courts, $S 820-824.

con

erection of a water system for the city and the same should have been validated, as by for private consumers, and it contained all law required, thereafter the waterworks the usual provisions for that kind of a con- were to be considered a separate and distinct tract.

department of the city government, and a It was, among other things, provided in water commission was to be created for the the contract that the city should grant a government and control and operation of the franchise to the other party named therein, waterworks. Other provisions were for the exclusive privilege of maintaining tained in the proposed ordinance, regulating and operating the waterworks for a period the doing of the work and the operation of of thirty years, or until they might be pur- the constructed work. chased by the city, as provided in the con- On the 3d day of December, 1902 (the tract.

day before the election under the city orThe work under the contract was com- dinance), the legislature, at the request, as pleted and accepted by the city November it may be presumed, of the city, passed an 6, 1882, and the company then commenced act to amend its charter, so as to confer to, and dia, for some years, furnish water, power and authority upon the city to conunder its provisions, to the city and its in- struct, maintain, and operate a system of habitants.

waterworks of its own. The act gave power Thereafter disputes and differences arose to the city to appropriate private property, between the parties, regarding the sufficient and to lay its pipes through its streets, supply of water for the city and its inhab- either within or without the corporate limitants, the city contending that the water its of the city, and the city was given power company had entirely failed to satisfactorily and authority generally to do and perform fulfil the contract in that respect. The all things necessary to carry the object and company contended, on the other hand, that purposes of the act into effect. Section 7 it had done all that possibly could be done, of the act expressly conferred upon the city under the circumstances of an extraordinary the right to issue and sell its bonds, for the and unprecedented drought, and was will-purposes of building and operating the waing to spend more money for the purpose of terworks. Provision was also made in the enlarging its field of supply, if the city act for the appointment of a board of water would not, by its proposed action, defeat commissioners, who should have the supersuch purpose. The differences continued un- vision and control of the construction, operatil finally, on the 14th day of September, tion, and management of the waterworks. 1902, the city passed an orainance for sub- This board was to regulate the distribution mitting to the voters of the city the ques- and use of water in all places, it was to tion of issuing $250,000 of bonds of the city, fix the price for the use thereof, and terms to be used for the purpose of building and of payment therefor. The moneys coming operating and owning a system of water into the hands of the board for water rents works by the city. A special election was and the sale of any apparatus or other propcalled for the 4th day of December, 1902. erty, or from any other source connected The ordinance opened with the statement with the waterworks, were to be paid to the that the water company had totally failed treasurer of the city, and were to be used to supply the city of Columbus and its in- by him only for the purpose of paying any habitants with a sufficient quantity of pure principal and interest becoming due on he and wholesome water, and that the public bonds issued by the city. The board was health of the city was of paramount im- to be regarded as a subordinate branch of portance to every other consideration, and the city government. the city, therefore, proposed an ordinance The ordinance above mentioned and this (which it set forth for the approval of the act of the legislature of Georgia having been electors) for the issuing of bonds for the passed subsequently to the execution of the building of a separate system of works to contract, are asserted by the complainant to be owned and operated by the city. It was be acts which impair the obligation of such provided in the proposed ordinance that if contract. the electors assented to the issue and sale Proceedings were taken under the ordiof the bonds to be used for the purpose of nance, and the election was held pursuant building and operating the waterworks, that to its provisions on the 4th of December, thereafter bonds of the city should be is- 1902, and resulted in the assent of the reqsued upon certain conditions, and an annual uisite number of electors to the issuing of tax should be levied for the payment of the the bonds and the use of the proceeds in the interest on the bonds and a certain propor- erection of a water system, to be owned tion of the principal every year. The pro- and controlled by the city. posed ordinance also provided that in the A board of water commissioners was event of the assent of the voters at the thereupon appointed, under the provisions of election, and the issuing of the bonds when I the ordinance and the act of the legislature,

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