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(113 U. S. 199)

NORTHERN LIBERTY MARKET Co. v. KELLY.

(January 19, 1885.)

PROMISSORY NOTE-MARKET-HOUSE COMPANY-COMPROMISE-NEW NOTE-CONSIDERATION. A market-house company, incorporated for 20 years, with power to purchase, hold, and convey any real or personal estate necessary to enable it to carry on its business, built a market-house on land owned by it in fee-simple, and sold by public auction leases for 99 years, renewable forever, of stalls therein at a specified rent. The highest bidder for one of the stalls gave the corporation several promissory notes in part payment for the option of that stall, received such a lease, and took and kept possession of the stall, and afterwards gave it a note for a less sum in compromise of the original notes, and upon express agreement that if this note should not be paid at maturity the corporation might surrender it to the maker, and thereupon the cause of action on those notes should revive. Held, that the new note was upon a sufficient legal consideration, and that the corporation, holding and suing upon all the notes, could recover upon this note only.

In Error to the Supreme Court of the District of Columbia.

R. T. Merrick and J. J. Darlington, for plaintiff in error. James G. Payne, for defendant in error.

GRAY, J. This was a writ of error to reverse a judgment for the defendant in an action brought on April 4, 1884, by a corporation formed for the purpose of erecting a market-house in the city of Washington, and carrying on a marketing business there, upon 20 promissory notes made by him to the plaintiff, dated January 1, 1875, for $171.05 each; two payable in 52 months, two in 58 months, two in 64 months, and two at the end of each succeeding 6 months, the last two being payable in 106 months after date, and all bearing interest at the yearly rate of 8 per cent. Also upon a promissory note made by the defendant, dated August 5, 1881, for $1,881.60, payable in 90 days after date; and upon a promissory note, dated March 11, 1881, for $394.08, made by one William S. Cross, and guarantied by the defendant, and payable in 60 days after date; each of the last two notes bearing interest at the yearly rate of 6 per cent.

The judgment was rendered upon a case stated by the parties, in substance as follows: The plaintiff is, and since May 18, 1874, has been, a corporation, duly incorporated under the general incorporation act in force in the District of Columbia, (Rev. St. D. C. §§ 553-593,) by which it became a corporation for 20 years, and capable of suing and being sued, and of taking, holding, and conveying any real and personal estate necessary to enable it to carry on its business. On January 1, 1875, being the owner in fee of a parcel of land in the city of Washington, and having built a market-house thereon, it offered for sale by public auction leases for 99 years, renewable forever, of the stalls in the market-house, at a specified rent, the highest bidder being entitled to his option of the stalls. At the sale the defendant was the highest bidder for a stall, and made and delivered to the plaintiff, in part payment of the purchase money for the option of that stall, the 20 notes for $171.05 each, and afterwards received from the plaintiff such a lease of that stall, and took and has since retained possession of the stall under the lease. On August 5, 1881, the defendant, with full knowledge of the foregoing facts, including the fact that by the terms of incorporation the plaintiff's corporate existence was limited to 20 years, made and delivered to the plaintiff the note for $1,881.60, in compromise of the 20 original notes, and upon express agreement that if this note should not be promptly paid at maturity, the plaintiff might surren der it to the defendant, and thereupon the plaintiff's cause of action upon the original notes should revive. The note for $394.08 was made by Cross, and guarantied by the defendant, under like circumstances, and in consideration of the surrender of two other notes similar in amount and consideration to the 20 notes before mentioned. All the notes in suit remain unpaid, other

wise than by the giving of the note for $1,881.60, and all are still held by the plaintiff.

The plaintiff insists that the original notes were valid, because a corpora-* tion, empowered to hold and convey real estate for the objects of its incorporation, may convey an estate in fee or any less estate in lands which it has purchased, and may therefore make a valid lease of them for any term of years, though extending beyond the limit of its corporate existence. But it is unnecessary to express a definitive opinion upon that point, because it is agreed in the case stated that the defendant gave, in compromise of the original 20 notes for $171.05 each, the new note for $1,881.60. If the plaintiff had exceeded its corporate powers in making the original contract, yet it had authority to compromise and settle all claims by or against it under that contract. Morville v. American Tract Soc. 123 Mass. 129. The compromise of the disputed claim on the original notes was a legal and sufficient consideration for the new note. Cook v. Wright, 1 Best & S. 559; Tuttle v. Tuttle, 12 Metc. 551; Riggs v. Hawley, 116 Mass. 596. By the terms of the agreement of compromise, the plaintiff's cause of action on the original notes was not to revive, in case of the new note not being paid at maturity, except upon the surrender of this note to the defendant. The plaintiff, not having surrendered it, but holding and suing upon it as well as upon the original notes, has not performed the condition on which the revival of the right of action on the original notes depended. It follows that the plaintiff cannot recover in this action on the original notes for $171.05 each, but is entitled to recover on the new note for $1,881.60, and also, for like reasons, on the note for $394.08, made by Cross and guarantied by the defendant. Judgment reversed, and case remanded, with directions to enter judgment for the plaintiff on the twenty-first and twenty-second counts.

(113 U. S. 205)

CARDWELL v. AMERICAN RIVER BRIDGE Co.1

(January 19, 1885.)

1. CONSTITUTIONAL LAW-REGULATION OF COMMERCE-NAVIGABLE RIVERS - POWER OF STATES.

The commercial power of congress is exclusive of state authority only when the subjects upon which it is exerted are national in their character, and admit and require uniformity of regulations affecting alike all the states; and when the subjects within that power are local in their nature or operation, or constitute mere aids to commerce, the states may provide for their regulation and management until congress intervenes and supersedes their action.

2. SAME-NAVIGABLE RIVERS IN CALIFORNIA-ACT OF 1859.

The state of California was not shorn, by the clause in relation to navigable waters within her limits, in the act of September 9, 1850, admitting her into the Union as a state, of any of the powers which the original states possessed over such waters within their limits.

3. SAME CONSTRUCTION OF CLAUSE IN ACT OF 1859.

The object of that clause was to insure a highway equally open to all, without preference to any, and unobstructed by duties or tolls, and thus prevent the use of navigable streams by private parties to the exclusion of the public and the exaction of any toll for their navigation; and it contemplated no other restriction upon the power of the state in authorizing the construction of bridges over them, whenever such construction would promote the convenience of the public.

4. SAME-AMERICAN RIVER.

The American river in California is a navigable water of the United States, and, as such, under the control of the general government in the exercise of its power to regulate foreign and interstate commerce, so far as may be necessary to insure its free navigation.

Appeal from the Circuit Court of the United States for the District of California.

IS. C. 19 Fed. Rep. 562.

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J. J. Scrivner, for appellant. A. T. Britton and J. B. Haggin, for appellee FIELD, J. The American river is a branch of the Sacramento river in California. It is entirely within the state, and navigable for small steam-boats and barges from its mouth to the town of Folsom, a distance of 30 miles. By its junction with the Sacramento river, vessels starting upon it can proceed to the bay of San Francisco, and thence to adjoining states and foreign countries. It is therefore a navigable water of the United States, and, as such, is under the control of the general government in the exercise of its power to regulate foreign and interstate commerce, so far as may be necessary to insure its free navigation.

The defendant is a corporation organized under the laws of California, and, pursuant to the authority conferred by an act of its legislature, has constructed a bridge over the American river, of 20 feet in width and 300 feet in length, which is used as a roadway across the stream. Its floor is about 14 feet above extreme low water, and about 5 feet above extreme high water; and the bridge is without a draw or opening for the passage of vessels. Steam-boats and other craft are therefore obstructed by it in the navigation of the river.

The complainant alleges that he is the owner of a large tract of land, bordering on the river, below Folsom, and raises many tons of grain each year; that he is also the owner of a steam-boat and other vessels by which he could ship his grain down the river but for the obstruction caused by the bridge; that there are also large quarries of granite on his land sufficient to supply the markets of Sacramento and San Francisco for years, and also large deposits of cobble-stone which have a value for paving, and, but for the obstruction, he could ship the granite and cobble-stone by his vessels and sell them at a profit, whereas the expense of sending them by rail or other means open to him are such as to deprive him of all profit on them. He therefore files his bill against the company, and prays that it may be enjoined from maintaining the bridge across the river until a draw shall have been placed in it sufficient to allow steam-boats, vessels, and water-craft, capable of navigating the stream, to pass and repass, freely and safely. A demurrer to the bill was sustained, and the bill dismissed, and the case is brought here on appeal. *The questions thus presented are neither new nor difficult of solution. Except in one particular, they have been considered and determined in many cases, of which the most important are Willson v. Blackbird Creek Marsh Co. 2 Pet. 245; The Wheeling Bridge Case, 13 How. 564; Gilman v. Philadelphia, 3 Wall. 713; Pound v. Turck, 95 U. S. 459; Escanaba Co. v. Chicago, 107 U. S. 678; S. C. 2 SUP. CT. REP. 185; and Miller v. Mayor of New York, 109 U.S. 385; S. C. 3 SUP. CT. REP. 228. In these cases the control of congress over navigable waters within the states so as to preserve their free navigation under the commercial clause of the constitution, the power of the states within which they lie to authorize the construction of bridges over them until congress intervenes and supersedes their authority, and the right of private parties to interfere with their construction or continuance, have been fully considered, and we are entirely satisfied with the soundness of the conclusions reached. They recognize the full power of the states to regulate within their limits matters of internal police, which embraces among other things the construction, repair, and maintenance of roads and bridges, and the establishment of ferries; that the states are more likely to appreciate the importance of these means of internal communication and to provide for their proper management, than a government at a distance; and that, as to bridges over navigable streams, their power is subordinate to that of congress, as an act of the latter body is, by the constitution, made the supreme law of the land; but that until congress acts on the subject their power is plenary. When congress acts directly with reference to the bridges authorized by the state, its will must control so far as may be necessary to secure the free navigation of the streams.

In Willson v. Blackbird Creek Marsh Co. a dam had been constructed across a small navigable river in the state of Delaware, by authority of its legislature; and this court held that the obstruction which it caused to the naviga. tion of the stream was an affair between the government of the state and its citizens, in the absence of any law of congress on the subject. In the case of Gilman v. Philadelphia a bridge across the Schuylkill river, connecting East and West Philadelphia, had been constructed by authority of the legislature of Pennsylvania. It was without a draw, and prevented the passage of vessels to wharves above it, although the river was tide-water and navigable to them, and commerce had been carried on to them for years in all kinds of vessels. The owner of the wharves filed a bill to prevent the erection of the bridge, alleging that it would be an unlawful obstruction to the navigation of the river and an illegal interference with his rights, and claimed that he was entitled to be protected by an injunction against the progress of the work, and to a decree for its abatement should it be proceeded with to completion. But the court held that the state had not exceeded the bounds of her authority in permitting its construction, and until the power of the constitution was made effective by appropriate legislation, the power of the state was plenary, and its exercise, in good faith, could not be made the subject of review here. The court observed that it was not to be forgotten that bridges, which are connecting parts of turnpikes, streets, and railroads, were means of commercial transportation, as well as navigable waters; that the commerce which passed over a bridge might be much greater than would be transported on the water obstructed; and that it was for the municipal power to weigh the considerations that applied to the subject, and to decide*which should be preferred, and how far either should be made subservient to the other.

These cases illustrate the general doctrine, now fully recognized, that the commercial power of congress is exclusive of state authority only when the subjects upon which it is exerted are national in their character, and admit and require uniformity of regulations affecting alike all the states, and that when the subjects within that power are local in their nature or operation, or constitute mere aids to commerce, the states may provide for their regulation and management until congress intervenes and supersedes their action. The complainant, however, contends that congress has intervened and expressed its will on this subject by a clause in the act of September 9, 1850, admitting California as a state into the Union, which declares "that all the navigable waters within the said state shall be common highways and forever free, as well to the inhabitants of said state as to the citizens of the United States, without any tax, impost, or duty therefor. 9 St. 454. This declaration is similar to that contained in the ordinance of 1787, for the government of the territory of the United States north-west of the Ohio river, so far as the latter relates to the navigable waters flowing into the Mississippi and the St. Lawrence. And in Escanaba Co. v. Chicago we held, with respect to the state of Illinois, that the clause was superseded by her admission into the Union, for she then became entitled to and possessed of all the rights of domain and sovereignty which belonged to the original states. The language of the resolution admitting her declared that it was on "an equal footing with the original states in all respects whatever;" so that, after her admission, she possessed the same power over rivers within her limits that Delaware exercised over Blackbird creek, and Pennsylvania over Schuylkill river.

The act enabling the people of Wisconsin territory to form a constitution and state government, and for admission into the Union, contains a similar clause. And yet, in Pound v. Turck, which was before this court at Octo ber term, 1877, it was held that a statute of that state which authorized the ⚫erection of a dam across a navigable river within her limits was not unconstitutional, in the absence of other legislation by congress bearing on the case. The court does not seem to have considered the question as affected by the

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clause in the enabling act. That clause is not, it is true, commented on in the opinion, but the section containing it is referred to, and the declaration that navigable streams within the state are to be common highways, must have been in the mind of the court. It held, however, that the case was governed by the decisions in the Delaware and Pennsylvania cases, observing that there were in the state of Wisconsin, and other states, many small streams navigable for short distances from their mouths in one of the great rivers of the country, by steam-boats, but whose greatest value, in water carriage, was as outlets to saw-logs and lumber, coal, and salt, and that, in order to develop their greatest utility in that regard, it was often essential that dams, booms, and piers should be used, which are substantial obstructions to general navigation, and more or less so to rafts and barges; but that to the legislature of the state the authority is most properly confided to authorize these structures where their use will do more good than harm, and to impose such regulations and limitations in their construction and use as will best reconcile and accommodate the interests of all concerned. And the court added that the exercise of this limited power may all the more safely be confided to the local legislatures, as the right of congress is recognized to interfere and control the matter whenever deemed necessary.

The clause, therefore, in the act admitting California, quoted above, upon which the complainant relies, must be considered, according to these decisions, as in no way impairing the power which the state could exercise over the subject if the clause had no existence. But, independently of this consideration, we do not think the clause itself requires the construction which the court below placed upon it, and which counsel urges so earnestly for our con"1 sideration. That court held that the clause contains two provisions: one that the navigable waters shall be a common highway to the inhabitants of the state, as well as to citizens of the United States; and the other, that they shall be forever free from any tax, impost, or duty therefor; that these provisions are separate and distinct, and that one is not an adjunct or amplification of the other. Possibly, some support is given to that view by language used in the opinion in Escanaba Co. v. Chicago. In that case all the bridges over the Chicago river had draws for the passage of vessels, and we there held that a bridge constructed with a draw could not be regarded, within the ordinance of 1787, as an obstruction to the navigation of the stream. We were not required to express any further opinion as to the meaning of the ordinance. But upon the mature and careful consideration which we have given in this case to the language of the clause in the act admitting California, we are of opinion that if we treat the clause as divisible into two provisions, they must be construed together as having but one object, namely, to insure a highway equally open to all without preference to any, and unobstructed by duties or tolls, and thus prevent the use of the navigable streams by private parties to the exclusion of the public, and the exaction of any toll for their navigation; and that the clause contemplated no other restriction upon the power of the state in authorizing the construction of bridges over them whenever such construction would promote the convenience of the public. The act admitting California declares that she is "admitted into the Union on an equal footing with the original states in all respects whatever." She was not, therefore, shorn by the clause as to the navigable waters within her limits of any of the powers which the original states possessed over such waters within their limits. Decree affirmed.