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maturity of a call for redemption, payable at the option of the holder on demand, but without future interest, at any time prior to the day fixed for ultimate payment, when it becomes unconditionally due. The construction which, after the maturity of such a call, reads the contract as if the day when interest is to cease had been originally inserted as the day of of ultimate payment, confounds and obliterates the express distinction made in the law itself between redeemability and payability, and rewrites the contract upon a different basis. The legal effect of the call undoubtedly is to entitle the holder to demand payment at its maturity, and, even though not demanded, to exonerate the government from liability for interest accruing after that date. but, consistently with the terms of the statutes, and the obvious purposes in view, in the original creation and issue of the securities in the form adopted, it cannot be that the legal effect of such a call for the purpose of redemption is the same as if the bond had been originally framed as an obligation to pay absolutely on a day previously fixed.

*The acts of congress, under which these and similar bonds of the United States were authorized and issued, do not in terms attach to them the legal quality of negotiable securities; but they are such in form and fact, and obviously for the purpose of giving them the highest credit and the widest and most unfettered currency by passing, by delivery, with a title unimpeachable in the hands of bona fide purchasers for value. In the form in which those now in question were issued, until a call for their redemption was advertised, they were not due upon their face until the day fixed for final payment; and the right reserved to the government, at its option, to anticipate the payment cannot be construed as affecting the contract injuriously to the holder any further than the law declaring it, either expressly or by necessary implication, requires. That law gives to the holder three months after the date of the call for redemption within which to present his bonds for payment or exchange, with interest to the date of redemption; but the only penalty it prescribes, if the holder chooses to retain his original security, is the loss of future interest. In no other respect does it alter the original contract. It seeks to impose upon it no other disability, nor take from it any other immunity. It stands, therefore, upon its statutory basis as a bond redeemable at the treasury on demand, without interest after the maturity of the call, payable according to its original terms, and not overdue, in the commercial sense, till after the day of unconditional payment. If the obligation had been originally written in that form-a promise to pay absolutely on the first day of July, 1885, with interest according to coupons attached, but redeemable at the treasury at and after July 1, 1870, interest to cease three months thereafter if not presented for redemption within that period-it would have expressed in advance the exact contract as it became by the exercise of the reserved option of redemption; and in that form it seems to us quite plain that it could not be considered an overdue obligation, in the sense in which that term is applied to ordinary commercial paper, until after the limit fixed for final payment had been passed.

The title of the purchaser of overdue negotiable paper, such as a bill of exchange or a promissory note, stands on the same footing as if it had been dishonored by a refusal to accept or pay, and had been put under protest. When transferred after it has become due, although not reduced to the rank of an ordinary chose in action, the legal title to which cannot pass by assignment or delivery, it carries on its face the presumption which discredits it, and deprives it of that immunity which, while the time for payment was still running, was secured to it in favor of a bona fide purchaser for value without actual notice of any defect, either in the obligation or the title. This was put by Mr. Justice BULLER, in Brown v. Davies, 3 Term R. 80, on the ground that to take an overdue note or bill was "out of the common course of dealing." Ordinarily a note or bill when due becomes functus officio, because it



was made to be paid at maturity, and if it fails of its intended operation and effect, the presumption is that it is owing to some defect, which has furnished a sufficient reason to the party apparently chargeable for not having punctually performed his obligation. In the strong language of Lord ELLENBOROUGH in Tinson v. Francis, 1 Camp. 19, “after a bill or note is due it comes disgraced to the indorsee." No such presumption, in our opinion, arises to affect the title of a holder of the bonds of the United States, such as those now in question, acquired by a bona fide purchaser for value prior to the date fixed in the bonds themselves for their ultimate payment; for, as we have already shown, the only change in the original effect of the contract by the exercise of the right of earlier redemption is to stop the obligation to pay future interest. And as against one choosing for any purpose of his own to retain his bond as a continuing security for the value it always represents, having impressed upon it by the law of its creation the faculty of passing from hand to hand as money, and therefore just as useful in the pursuits of trade and the exchanges of commerce and banking as so much money in the form of coin or bank-notes, and more convenient because more portable, no such presumption can be entertained on the ground that its continued circulation is not in the due course of business, that it has fully performed all its intended functions, and that it has been, in any sense, dishonored by a refusal on the part of the obligor to fulfill its obligation. On the contrary, supposing the purchaser bound to know, what in fact does not appear on its face, that the bond has been called for redemption under penalty of a stoppage of interest after three months, the very notice, which it is said discredits his title, is in fact an advertisement, not that the maker has any ground to refuse payment, but that the previous holder preferred to hold the security for the money rather than to accept the money which it represents.

As we have seen, the true effect to be given to the exercise of the right of redemption within the period of absolute payment, is to make the bonds payable during that interval, on demand, but without interest after three months from the maturity of the call. But the rule as to ordinary negotiable paper, payable on demand, is that it is not due, without demand, until after the lapse of a reasonable time within which to make demand; and what the length of that reasonable time is, may vary according to the circumstances of particular cases, and must be governed very largely by the intentions of the parties, as manifested in the character of the paper itself, and the purposes for which it is known to have been created and put in circulation. It was said by Baron PARKE, in Brooks v. Mitchell, 9 Mees. & W. 15, that "a promissory note, payable on demand, is intended to be a continuing security." And in Losee v. Dunkin, 7 Johns. 70, it is said: "The demand must be made in reasonable time, and that will depend upon the circumstances of the case and the situation of the parties." In reference to the bonds involved in this litigation, we have no hesitation in saying that, at the time the title of the purchasers was acquired, no unreasonable length of time had elapsed after the maturity of the call. On the contrary, we think any holder had a right, without prejudice, except as to loss of interest, to wait without demand for the whole period, at the expiration of which the bond was unconditionally payable.

The fact that interest was to cease to accrue three months after the date of call had no tendency to discredit the bonds or affect the title of a bona fide purchaser for value in the due course of trade. While it has been held that a note, the principal of which is payable by installments, is overdue when the first installment is overdue and unpaid, and is thereby subject to all equities between the original parties, (Vinton v. King, 4 Allen, 562,) yet it is said by the supreme judicial court of Massachusetts in National Bank of N. A. v. Kirby, 108 Mass. 497-501: "We are referred to no case in which it has been held that failure to pay interest, standing alone, is to be regarded sufficient

in law to throw such discredit upon the principal security upon which it is due, as to subject the holder to the full extent of the security to antecedent equities." "To hold otherwise," said this court, in Cromwell v. County of Sac, 96 U. S. 51-58, “would throw discredit upon a large class of securities issued by municipal and private corporations having years to run, with interest payable annually or semi-annually." And the doctrine was reaffirmed in Railway Co. v. Sprague, 103 U. S. 756. These were cases where non-payment of interest was in breach of the contract, and constituted a default. It is much stronger in its application here, where the obligation to pay interest ceases because that is the contract, to which the holder of the bond has consented and to which he submits, because he prefers to hold a security, although not bearing interest, rather than to surrender it at once.

But an adequate and complete view of the nature and function of the right of redemption reserved in these bonds, and of its intended effect upon the rights of the parties under the contract, cannot be had without considering it in its actual operation and execution. The clause which makes the bonds redeemable was not a casual provision occurring in a single obligation, but was an effective and significant instrument in a series of great financial transactions. The five-twenty bonds issued under the acts of March 3, 1865, (13 St. 668,) and April 12, 1866, (14 St. 31,) as we are informed by public official documents, amounted to $958,483,550, nearly a thousand millions of dollars.

On March 1, 1871, the nearest date prior to the commencement of operations under the refunding act of 1870, the following amounts of 6 per cent. five-twenty bonds were outstanding:

Five-twenties of 1862,

Five-twenties of March, 1864,
Five-twenties of June, 1864,
Five-twenties of 1865,
Act March 3, Consols of 1865,


Consols of 1867,
Consols of 1868,

$493,738,350 3,102,600 102,028,900 182,112,450


338,832,550 39,663,750

"(The National Loans of the United States," by Bailey, Washington, 1882, p. 94.)


Of these, large amounts were held abroad by investors in foreign countries, and had been dealt in by bankers in the principal money centers of the world. It was expected and desired by congress that this should be so, as the secretary of the treasury had been expressly authorized by law to dispose of any of the bonds of the United States, "either in the United States or elsewhere." Act March 3, 1865, § 2. And under the refunding act of July 14, 1870, as we have already seen, the secretary of the treasury established an agency in London for the purpose of delivering the bonds sold under that act, and receiving in exchange therefor the outstanding securities of the United States agreed to be received in payment therefor. The object of this great exchange was to reduce the annual interest on the public debt of the United States from 6 to the lower rates of 5, 43, and 4 per cent. To have called in the redeemable debt and paid for it in gold coin, and to have obtained the gold coin for that purpose by sales of the new securities, would have been awkward, circuitous, and impracticable, involving the needless export and import of a mass of the gold coin distributed by the necessities of the world's commerce throughout its markets, the attempt to do which would have produced disturbances of market values, certain to have defeated it. Any transfer of specie, in large amounts, to meet balances occasioned by these operations, would have been almost as serious in its effects, and was, therefore, by every consideration of public and private interests, to be avoided. The difficult prac



tical question was, how to avoid it,how to substitute in the markets of the world one loan for the other by an exchange of securities without any serious and disturbing movement of coin. Congress had placed it within the power of the secretary of the treasury to accomplish this by authorizing him to receive the five-twenty bonds, to be redeemed in exchange at par for the bonds to be issued at a lower rate of interest. This he was enabled to do by calling in the five-twenty bonds for redemption, by which they were made equal in value as money to par and interest then due, and by agreeing to treat and receive them as money in the exchange. This created a demand for the "called bonds" to be used for that purpose, and they were bought from the holders by bankers and agents of the syndicates who had contracted to place the new loans under the act of 1870. This transaction could only have been successfully effected upon the assumption that the call for redemption did not affect the negotiable quality of the bonds, nor impose upon them any disability, except the cessation of interest after the maturity of the call, nor deprive them of any other immunity which had previously belonged to them.

On the contrary, it must have been within the contemplation of the treasury department, and of those with whom it was dealing, that the "called bonds, until finally absorbed by payments into the treasury in exchange for new bonds, which constituted the fact of redemption, were equivalent, in all legal qualities, to money itself, or to those usual equivalents of money which circulate, without question, as such, like treasury notes, payable on demand. And this view, we have already seen, the parties were authorized and justified in adopting by the language and purposes of the statutes under which the transactions were accomplished. By this means an enorinous public debt was shifted and converted, so as largely to reduce the burden of its interest; the agents of the government were facilitated in the great work they had undertaken; the individual holders of the securities of the United States, scattered throughout the countries of Europe, received the money due them on the bonds for which they subscribed, at their own domiciles; and this series of great financial operations was successfully accomplished without interference with the usual course of the business of the world, without disturbing the fixed distribution of currency which commerce had apportioned to its appropriate markets, and without unsettling the value of property or labor, either at home or abroad. These beneficial results were greatly facilitated, if not made feasible, by the unquestioned negotiability of the called bonds, which, when subjected to the right of redemption reserved by their terms, were 'thereafter considered and treated as the equivalent of money. This could not have been if the principles which protect bona fide purchasers for value, in the due course of trade, without actual notice of a defect in the obligation or title, had not been practically adopted. The practice, as found to have existed, was, in our opinion, well warranted by law. This confidence was invited by the convenience of the government itself, and certainly promoted its interests and advanced its purposes. The practice it engendered, on the part of the public dealing in its securities, had been expressly sanctioned by formal recognition and approval by the treasury department long prior to the negotiation of the war loans, which commenced in 1862. In 1860 Atty. Gen. Black officially advised the secretary of the treasury (9 Op. 413) that treasury notes, redeemable after one year from date, interest thereon to cease at the expiration thereafter of 60 days' notice of readiness to pay and redeem the same, were intended to be a continuing security, and to pass by delivery, after the period of redemption equally as before, as money or banknotes, not liable to any equities between the original or intermediate parties.

It was, by force of such a custom, declared by Lord SELBORNE "to be the legitimate, natural, and intended consequence (unless there should be any law to prohibit it) of that representation and engagement which appears on the face of the scrip itself, when construed according to the obvious import of its


terms," that in the case of Goodwin v. Robarts, first in the exchequer chamber (L. R. 10 Exch. 337) and afterwards in the house of lords, (1 App. Cas 476,) an instrument, payable to bearer in the bonds of a foreign government, was held to be negotiable by delivery, on the ground that, "after those payments had been made and receipts for them signed, the scrip was as much a *symbol of money due and as capable of passing current upon the principle explained in the authorities, with respect to bank-notes and exchequer bills, as the bonds themselves would have been if they had been actually delivered in exchange for it." 1 App. Cas. 497.

We are, therefore, of opinion that the title of J. S. Morgan & Co., and of L. Von Hoffman & Co., respectively, to the bonds claimed by them, ought to have prevailed against that set up by the Manhattan Savings Institution; and, for error in not so holding, the several judgments of the court of claims in these cases are reversed, and the causes are remanded to that court, with directions to render judgments in accordance with this opinion; and it is so ordered.

(113 U. S. 516)

UNION PAC. RY. Co. v. RYAN, Marshal, etc.

(March 2, 1885.)


The value of a railroad depends upon the whole line as a unit to be used as a thoroughfare and means of transportation. Its rolling stock has no particular locality, except a constructive one in the place where the principal office of the railroad company is situated, and it would be manifestly unequal to give to that place the benefit of taxing the whole of it.


The railroad assessment act of Wyoming (Act December 13, 1879) is not such general legislation, as compared to a special act like the charter of Cheyenne, (Act November 26, 1879,) as renders its provisions inapplicable to that city without a distinct repeal of the latter law so far as it refers to taxation.


The language of the railroad assessment act of Wyoming is intended to cover the case of every territorial division smaller than a county. The words "county or district" sufficiently imply this intent.


In a bill for relief against an alleged illegal taxation, allegations that such tax would involve complainant in a multiplicity of suits as to the title of lots laid out to be sold, prevent the sale of such lots, and cloud complainant's title to all his real estate, are sufficient to give jurisdiction to a court of equity.

Appeal from the Supreme Court of the Territory of Wyoming.

John F. Dillon, S. Shellabarger, and J. M. Wilson, for appellant. Francis Miller, for appellee.

BRADLEY, J. The bill in this case was filed by the Union Pacific Railway Company against the city of Cheyenne and its marshal, Ryan, to enjoin the collection of certain city taxes for the year 1880, which the railway company alleges were unlawfully assessed against it. The bill was demurred to by the defendants, and the district court for the First judicial district of Wyoming, in which the suit was brought, overruled the demurrer, and granted the injunction prayed for. The defendants adhered to their demurrer, and appealed to the supreme court of the territory, and the decree of the district court was reversed, and the bill ordered to be dismissed, and the case is now brought here by appeal.

The main question raised by the bill is whether the Union Pacific Railroad, which passes through the whole length of Wyoming territory, and in its course passes through the city of Cheyenne, with its accompanying telegraph, appurtenances, and rolling stock, is liable to be assessed and valued for the


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