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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.

On the 25th day of February, 1901, the Chicago Cattle Loan Company caused its agent to examine the records of Clark county as to chattel mortgages against Grimes, and upon this examination he found the record clear, except as to a mortgage executed by Grimes to the Siegel-Sanders Live Stock Company, October 24, 1900, and by it assigned to the Chicago Cattle Loan Company, and True so reported to the lastnamed company.

On April 17, 1901, Grimes executed two other notes to the Siegel-Sanders Company for $7,694.70 each, due October 27, 1901. These notes were probably renewals of notes previously given. To secure the payment of these two notes Grimes at the same time executed and delivered a chattel mortgage to the Siegel-Sanders Company on the cattle in question and other cattle. The two notes thus given were then sold by that company to the plaintiff in error for the amount named in the notes, and the plaintiff believed at the time it bought these notes that the mortgage securing them was the first lien on the cattle, and it secured this information through its agent, who personally examined the record.

It is further stated in the finding that there was practically no dispute as to the facts, and that the trial court expressly found that both parties to this action acted in good faith.

The release of the first mortgage, signed by the president of the Live Stock Commission Company and filed in the office of the register of deeds, as above stated, on November 24, 1900, was not acknowledged. After the execution of these various instruments, and between the 25th of April and the 1st of May, 1901, without the knowledge or consent of either of the banks, parties to this suit, Grimes, the original owner of the cattle, moved them from the state of Kansas to the county of Woodward, in the territory of Oklahoma, at which latter place, between the 19th and 20th of May, 1901, they were seized and taken possession of by the Geneseo Bank, the defendant. The plaintiff, within one year from the filing of the first mortgage, dated June, 27, 1900, in the office of the register of deeds of Clark county, Kansas, commenced this suit in replevin in the district court of Woodward county, Oklahoma, to recover possession of the cattle, claiming under the mortgage which was executed and delivered to the Siegel-Sanders Company on April 17, 1901, and by it sold to plaintiff; while the defendant claimed under the mortgage dated

Upon these facts, as found by the supreme court of Oklahoma, judgment was rendered for the defendant in error.

Messrs. Silas H. Strawn, Frederick S. Winston, John Barton Payne, Ralph M. Shaw, Blackburn Esterline, and Earle W. Evans for plaintiff in error.

Messrs. James S. Botsford, B. F. Deatherage, and O. G. Young for defendant in error.

Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court:

The defendant in error, at the outset, objects to the jurisdiction of this court on the ground that the plaintiff should have brought the case here by appeal instead of by writ of error, because the case was tried without a jury, and therefore the writ of error was improper. There is nothing in this objection, as in actions at law coming from the territory of Oklahoma it has been held that the proper way to review the judgments of the supreme court of that territory was by writ of error. Comstock v. Eagleton, 196 U. S. 99, 49 L. ed. 402, 25 Sup. Ct. Rep. 210; Oklahoma City v. McMaster, 196 U. S. 529, 49 L. ed. 587, 25 Sup. Ct. Rep. 324; Guss v. Nelson, 200 U. S. 298, 50 L. ed. 489, 26 Sup. Ct. Rep. 260.

Further objection is made that the court below found no facts upon which a review can be had in this court. The foregoing statement disposes of this objection also, and shows it to be untenable.

On the merits, the question arises which of these two parties shall sustain the loss occasioned by the improper act of the president of the Live Stock Commission Company in signing this pretended release, and acknowledging the payment of the $11,000 note, as above stated? The plaintiff in error contends that the defendant bank should bear the loss because of its failure to record or file the assignment to it of the first mortgage, securing the $11,000 note. The defendant opposes this view and insists that, being the holder and the owner of the $11,000 note, secured by a first mortgage duly executed on the 27th of June, 1900, and duly filed in the register's office, it has the prior right to the cattle, and that the statutes of Kansas do not require that it should file or record the assignment to it of the note and mortgage, and its claim should not therefore be postponed.

The note executed by Grimes for eleven thousand and some odd dollars was negotiable, and the chattel mortgage was given at 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 payee of the note transferred its ownership to the defendant bank. This transfer also transferred, by operation of law, the ownership of the mortgage, which was collateral to the note. Such a mortgage has no separate existence, and when the note is paid the mortgage expires, as it cannot survive the debt which the note represents. Carpenter v. Longan, 16 Wall. 271, 21 L. ed. 313; Burhans v. Hutcheson, 25 Kan. 625, 37 Am. Rep. 274; Mutual Ben. L. Ins. Co. v. Huntington, 57 Kan. 744, 48 Pac. 19; Swift v. Bank of Washington, 52 C. C. A. 339, 114 Fed. 643.

The mortgage, therefore, is a prior lien upon the cattle, as security for the payment of the note, unless defendant has lost it by its failure to record an assignment of the mortgage. Whether it has or not is to be determined by the law of Kansas.

the assignor, and paragraph 26 provides that, on presentation of such assignment for record, it shall be entered upon the margin of the record of the mortgage by the register of deeds, who is to attest the same, as therein provided. Now, in relation to chattel mortgages and the assignment thereof, there is no such provision or anything similar to it. Provision is made for the satisfaction of a chattel mortgage when paid by the mortgagee, assignee, etc., but that does not make it necessary to record or file the assignment of a chattel mortgage in order to protect the assignee.

The supreme court of Kansas has held that there is no statute making it necessary to record an assignment of a chattel mortgage, in order to protect the rights of such assignee, and that it need not be recorded or filed. Burhans v. Hutcheson, supra; 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, but 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 margin. It is said this statute by implication provides for the recording of an assignment of a chattel mortgage.

Assuming that the statute makes provision for such recording, it is then argued that it is the duty of the assignee to do so, and his failure takes away a right of priority of lien which he might otherwise have. This reasoning is not satisfactory. We cannot make the assumption that the statute cited does make provision for the recording of the assignment, and we fail, therefore, to find its necessity. That necessity depends upon statute, and without some statutory provision therefor the necessity does not exist. Uncertain and doubtful implications arising from portions of a statute not requiring the recording of an instrument are not to be regardea as furnishing a rule upon the subject. There are statutory provisions for recording assignments of real estate mortgages to be found in the Kansas statutes. See paragraph 19, § 4234, and paragraph 26, § 4241, General Statutes of Kansas for 1901, by Dassler. Paragraph 19, above, provides for the acknowledgment

Paragraph 36, § 4251, General Statutes of Kansas for 1901, by Dassler, provides as, follows:

"When any mortgage of personal property shall have been fully paid or satisfied, it shall be the duty of the mortgagee, his assignee or personal representative, to enter satisfaction or cause satisfaction thereof to be entered of record in the same manner as near as may be, and under the same penalty for a neglect or refusal, as provided in 27 S. C.-6.

The first of the above cases (Burhans v. Hutcheson) holds that where a mortgage upon real estate is given to secure payment of a negotiable note, and before its maturity the note and mortgage are transferred by indorsement of the note to a bona fide holder, the assignment, if there be a written one, need not be recorded. This is held even where there was an express statute as to the record of such an assignment. The statute was held not to apply to the case of a mortgage given as collateral to a negotiable note.

The second case (Wiscomb v. Cubberly) has reference also to a mortgage on real estate, and involves much the same principle.

In the third case (Mutual Ben. L. Ins. Co. v. Huntington) it was again held that after the assignment and delivery by the payee of a negotiable promissory note, before maturity, together with the mortgage on real estate, given as collateral security for its payment, the original mortgagee had no power to release or discharge the lien of the mortgage, and a release made by him without authority, even though the assignment case of the satisfaction of mortgages of real estate. The entry of satisfaction shall be made in the book in which the mortgage is entered, as hereinbefore provided; and any instrument acknowledging satisfaction shall not be recorded at length, but shall be referred to unuer the head of 'Remarks', and filed with the mortgage or copy thereof, and preserved therewith in the office of the register."

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 assignment of record, as the purpose of the statute was to clear the record, and therefore the defaulting party must have record

an impertinent interference by a stranger. That action did not raise the question herein presented, and the court made no reference to the case of Burhans v. Hutcheson, supra. It is quite clear that it did not intend to overrule that case. In any event, as already mentioned, the Burhans Case has been approved in 57 Kan. 744, 48 P. 19, above cited. We cannot treat the rule which we have stated above as having been at all shaken by the two cases from 28 and 29 Kansas (supra.)

. These cases would seem to establish the rule in Kansas that it is not necessary to record the assignment of a mortgage even upon real estate, when given to secure pay-title or his satisfaction would apparently be ment of negotiable notes, although there is a statute which, in general terms, provides for the recording of assignments of real estate mortgages. Still stronger, if possible, is the case of a chattel mortgage given to secure the payment of negotiable notes, when there is no statutory provision for the recording of the assignment of such mortgage. It is probable that in the large majority of cases the only evidence of an assignment of a negotiable note and a chattel mortgage given to secure its payment is the indorsement of the note, and delivery thereof to the purchaser. In such a case there would be no assignment to record, and there is no provision in the statute for filing a copy of the note with its indorsement, together with a statement that it had been delivered to a third party, as the pur-signment. It is not necessary that there chaser or assignee thereof.

The policy of the state of Kansas seems to be not alone to give to a negotiable promissory note all the qualities that pertain to commercial paper, but also to clothe mortgages given as collateral security for the payment of such notes with the same facility of transfer as the note itself, to which it is only an incident.

The counsel for plaintiff contends that, assuming there was no statute providing for the recording of an assignment of a chattel mortgage in the state of Kansas, yet there was no law of that state which prohibited the Geneseo Bank from recording its as

should be a law to prohibit the recording of such assignments. There must be a law which provides for their record, either in express terms or by plain and necessary implication from the words stated. Where the statute does not so provide, it is not necessary nor is it the duty of the assignee to record or file his assignment. There must be some legal duty imposed upon the assignee before the necessity arises for the recording of the assignment.

Counsel have cited many cases from states other than Kansas, in which the

The plaintiff, however, contends for the opposite doctrine, and cites, among others, Lewis v. Kirk, 28 Kan. 497, 42 Am. Rep. 173, as its authority. In that case the question was which should suffer, a bona fide pur-rights of assignees of mortgagees as against chaser of the real estate which had been mortgaged, or the bona fide purchaser of the mortgage, who had failed to have his as signment recorded. The court held in favor of the purchaser of the real estate, and distinguished Burhans v. Hutcheson, supra, though not assuming to overrule it. The mortgage in the Lewis Case was upon real estate, and would not, therefore, necessarily affect the case of a chattel mortgage, where there is no statute for recording an assignment of the mortgage.

subsequent mortgages or conveyances have been discussed and decided. In many cases the question has arisen in regard to the recording of assignments of mortgages upon real estate, where the states had provided for the recording of such assignments, and where, in the absence of such recording, the assignee has failed in obtaining priority of rights under his mortgage, which he would have had if the assignment had been recorded. But, as the owner of the cattle mentioned herein resided in Kansas at the

But in Mutual Ben. L. Ins. Co. v. Hunt-time the mortgages were given, and the ington, supra, the case of Burhans v. Hutcheson, supra, was cited, and the doctrine that a bona fide holder of negotiable paper, transferred by him by indorsement thereon before maturity, and secured by a real estate mortgage, need not record the assignment of mortgage, was again approved.

In Thomas v. Reynolds, 29 Kan. 304, cited by plaintiff, it was held that an action to recover the penalty provided for by the statute for refusal to enter satisfaction of a chattel mortgage when it had been paid

cattle were then in that state, and the mortgages were filed there, the transactions are to be judged of with reference to the law of that state, and we decide this question with reference to such law. Under that law the assignee of the first mortgage of June, 1900, has a superior lien to the assignee of the second mortgage of April, 1901, although such assignee of the first mortgage did not have his assignment recorded. Judgment is affirmed.

MERCANTILE TRUST & DEPOSIT COM-, ferred to a master. Evidence was taken PANY OF BALTIMORE, Appt.,

V.

CITY OF COLUMBUS, L. H. Chappell, May

or. et al.

Courts-jurisdiction of Federal circuit court -case arising under Federal Constitu

tion.

A controversy arising under the Federal Constitution, of which a Federal circuit court has original jurisdiction without regard to the citizenship of the parties, is presented by a bin which asserts that the obligation of a contract for the exclusive privilege of supplying water to a city and its inhabitants is impaired by a subsequent municipal ordinance and a legislative enactment under which the municipality is proceeding to issue and market its bonds for the purpose of constructing its own waterworks system. *

[No. 50.]

before him, and a report thereafter filed, to which exceptions were duly taken by both parties and an argument had thereon before the court. The judge certifies that, before a decision had been made by the court on the questions of law raised by the excep

tions, the defendant filed a motion to dismiss the bill, on the ground that, if the parties to the suit were properly placed, there was no such diversity or citizenship as was required to sustain the jurisdiction of the court, and also on the ground that there was no Federal question involved. The court granted the motion on those grounds and made its certificate, as stated.

The suit was brought by the appellant, a citizen of Maryland, against the city of Columbus, a municipal corporation created by the state of Georgia, and its mayor and aldermen, all of them citizens of the state of Georgia, and against the Columbus Waterworks 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

APPEAL from the Circuit Court of the for the bondholders in a certain mortgage

United States for the Northern Dis- executed by the waterworks company, in 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 exSee same case below on motion for tem- tensions and improvements thereof. The porary injunction, 130 Fed. 180.

Statement by Mr. Justice Peckham:

mortgage is upon all of the company's property, and also upon all contracts made, or thereafter to be made, between the waterThe 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 in- to 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 certified to this court under § 5, chapter 517, of the Acts of Congress of 1891. [26 Stat. at L. 827, U. S. Comp. Stat. 1901, p. 549.]

It also included therein a contract, which had been entered into in October, 1881, between one Thomas R. White, of the city of 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- contract provided in great detail for the *Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Courts, §§ 820-824.

erection of a water system for the city and for private consumers, and it contained all the usual provisions for that kind of a contract.

It was, among other things, provided in the contract that the city should grant a franchise to the other party named therein, for the exclusive privilege of maintaining and operating the waterworks for a period of thirty years, or until they might be purchased by the city, as provided in the contract.

the same should have been validated, as by law required, thereafter the waterworks were to be considered a separate and distinct department of the city government, and a water commission was to be created for the government and control and operation of the waterworks. Other provisions were contained in the proposed ordinance, regulating the doing of the work and the operation of the constructed work.

On the 3d day of December, 1902 (the 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 to, and dia, for some years, furnish water, under its provisions, to the city and its inhabitants.

and authority generally to do and perform all things necessary to carry the object and purposes of the act into effect. Section 7 of the act expressly conferred upon the city the right to issue and sell its bonds, for the

terworks. Provision was also made in the act for the appointment of a board of water commissioners, who should have the supervision and control of the construction, operation, and management of the waterworks. This board was to regulate the distribution and use of water in all places, it was to fix the price for the use thereof, and terms of payment therefor. The moneys coming into the hands of the board for water rents and the sale of any apparatus or other property, or from any other source connected with the waterworks, were to be paid to the treasurer of the city, and were to be used by him only for the purpose of paying any principal and interest becoming due on the bonds issued by the city. The board was to be regarded as a subordinate branch of the city government.

act to amend its charter, so as to confer power and authority upon the city to construct, maintain, and operate a system of 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 fulfil the contract in that respect. The company contended, on the other hand, that it had done all that possibly could be done, under the circumstances of an extraordinary and unprecedented drought, and was will-purposes of building and operating the waing to spend more money for the purpose of enlarging its field of supply, if the city would not, by its proposed action, defeat such purpose. The differences continued until finally, on the 14th day of September, 1902, the city passed an ordinance for submitting to the voters of the city the question of issuing $250,000 of bonds of the city, to be used for the purpose of building and operating and owning a system of waterworks by the city. A special election was called for the 4th day of December, 1902. The ordinance opened with the statement that the water company had totally failed to supply the city of Columbus and its inhabitants with a sufficient quantity of pure and wholesome water, and that the public health of the city was of paramount importance to every other consideration, and the city, therefore, proposed an ordinance (which it set forth for the approval of the electors) for the issuing of bonds for the building of a separate system of works to be owned and operated by the city. It was provided in the proposed ordinance that if the electors assented to the issue and sale. of the bonds to be used for the purpose of building and operating the waterworks, that thereafter bonds of the city should be issued upon certain conditions, and an annual tax should be levied for the payment of the interest on the bonds and a certain proportion of the principal every year. The proposed ordinance also provided that in the event of the assent of the voters at the election, and the issuing of the bonds when

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The ordinance above mentioned and this act of the legislature of Georgia having been passed subsequently to the execution of the contract, are asserted by the complainant to be acts which impair the obligation of such contract.

Proceedings were taken under the ordinance, and the election was held pursuant to its provisions on the 4th of December, 1902, and resulted in the assent of the requisite number of electors to the issuing of the bonds and the use of the proceeds in the erection of a water system, to be owned and controlled by the city.

A board of water commissioners was thereupon appointed, under the provisions of the ordinance and the act of the legislature,

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