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cording to any lien, priority, or equity, if any, which may be declared by the chancery court, touching any of said funds, in favor of any creditor or class of creditors." Another section authorized the receiver of back taxes to file a bill in chancery, in the name of the state, in behalf of all creditors, against all delinquent tax-payers, for the ascertainment and enforcement of the rights of the parties in regard to these back taxes unpaid. Such a bill was filed, and important proceedings have been had under it.
A bill was pending, however, in the circuit court of the United States before the bill authorized by this statute was filed, which sought to enforce the collection of taxes by certain parties, to which the receiver of back taxes was afterwards made a defendant, and under that bill a decree was rendered which treated the main provisions of this state legislation as void. On appeal from that decree this court reversed it, and announced certain principles which upheld the validity of the legislation of the state, but maintained the power of courts of the United States to enforce against the receiver and in his hands any decree or judgment by mandamus for levying and collecting taxes which had been made by such court prior to the beginning of this legislation. The case, a report of which contains the history of this legislation and the statutes above referred to, is that of Meriwether y. Garrett, 102 U. S. 472. Section 5 of the act last mentioned provided with some particularity for the receipt by the back tax collector, in payment of these back taxes, of certain classes of outstanding indebtedness of the city of Memphis, and fixed the rate, not always the same, at which they might be received, chiefly at the rate of 50 cents on payment of taxes for each dollar of indebtedness. The collection of these taxes and their distribution continued under the supervision of the court of chancery in the suit already mentioned, and many orders and decrees on the subject were made. The state in the mean time passed statutes which autborized the taxing district to compromise the indebtedness of the city of Memphis, by taking up its old obligations and issuing bonds of the taxing district at the rate of 50 cents of the latter for one dollar of the former. The two statutes on this subject, which are supposed to violate the constitution of the United States, were passed March 23, 1883. One of these acts, (chapter 170 of the acts of that year,) authorizes all municipal corporations and taxing districts to compromise and settle their debts, and to issue the bonds and coupons of taxing districts at the rate of 50 per cent. of the principal and past due interest; and a section of the act is as follows:
“Sec. 16. Be it further enacted that the acceptance and consummation by any creditor of the compromise provided by this act shall of itself operate to assign and transfer to said municipal corporation or taxing district all his rights to and claims against the uncollected taxes or other assets whatever of said municipal corporation, with the right in said municipal corporation or taxing district to enforce the same, either in its own name or in the name of the creditor; the funds that may be realized therefrom to be paid into the designated depository of such municipality or taxing district; and they are hereby devoted and appropriated exclusively to the payment of the bonds and coupons that come under the provisions of this act.
The other statute passed the same day is an act modifying the provision of chapter 92, March 13, 1879, as to what shall be received in payment of back taxes, and the rate at which the various items of debt should be received. One of these changes, made in evident relation to the act passed the same day for refunding this old indebtedness by bonds of the taxing district is in these words: And provided further, that when any indebtedness of such extinct municipality shall be hereafter funded into new bonds at fifty cents on the dollar, such new bonds and matured coupons thereon shall be received in payment of the back taxes due such extinct municipality at the same rate as herein provided for Flippin compromise bonds." The Flippin compromise bonds were to be received at double their face value. The obvious reason for this was that both the Flippin compromise bonds and the bonds to be issued under the new act just passed represented two dollars of old debt for one dollar on the face of the new bonds; and this new regulation was making all old indebtedness receivable at par. It was necessary, therefore, in order to place the holders of Flippin bonds who had compromised this old debt for 50 cents on the dollar, and those who might do the same under the new statute just passed at the same iate, on an equality with those who still held the old debt unchanged, to make this difference in the rate at which they might be received for back taxes. It the decree of the supreme court of Tennessee holding this legislation valid which is assigned for error, and the principal error in the case.
The plaintiffs in error are parties who held and still hold debts against the city of Memphis, which were not secured by a lien or claim on any tax specially assessed for their payment. Their debts belonged to the unpreferred class. While a large part of the debt of the city during the time between the first and latest enactments we have mentioned was satisfied by using it in payment of back taxes at the rate of two dollars for one, or by exchanging it for the new bonds of the taxing district, the parties now complaining did neither, but still held their old bonds with accumulated interest. It is to be observed, also, that the special taxes assessed under writs of mandamus to pay judgments prior to the repealing law could only be paid in money, and as fast as it was paid it was appropriated to the payment of the debts for which it was specifically assessed. And so also of all taxes assessed for any special purpose. One result of this process was that the back taxes were gradually being paid and satisfied by exchange for this old indebtedness, whereby the holders of it who sold it to tax-payers to be used for that purpose, were getting something for it, and both the indebtedness and the back taxes were being extinguished by a process of set-off. For, when a tax debtor became by purchase an owner of any part of this debt, the extinguishment of the tax and the debt was clearly within the doctrine of set-off of mutual obligations. When, howover, the back tax receiver began to receive in payment, under the law of 1883, the new bonds of the taxing district, issued in compromise of the old indebtedness, these plaintiffs in error insisted that this could not be done to their prejudice; and by a petition to the chancery court they prayed its interference to prevent it. As the language of the statute was plain, they insisted that it was void, because forbidden by the constitution of the United States. The supreme court of the state held the law to be valid, and hence this writ of error.
The assignment of errors in plaintiff's brief points out no special provision of the constitution which forbids the legislation of Tennessee complained of, which, it is to be remembered, is only the more recent statutes we have referred to. The language of the brief, as repeated in several forms, is that the court erred because it did not hold that these statutes, as construed by the court, were a violation of the constitution of the United States, and divested the rights of plaintiffs as set out in their petition. This expression, when the argument in its support is examined, resolves itself into the proposition that chapter 92 of the acts of 1879 conferred on them some right, which they insist became a vested right, of which right they have been deprived by the later act. But we do not see what right was vested in them by that statute. It is to be remembered that their debts did not belong to any class which at the time the statute was passed constituted a lien on any part of these back taxes. Such liens as did exist, or such vested rights in any special class of taxes as then existed, were carefully preserved by the statute, and these taxes could only by its terms be collected in money and used to discharge these liens or special claims. It gave no lien of the general debtor on the back taxes, or any part of them. It provided for their collection, and for their use when collected, in payment of the debts of the city. In this respect it did not
change any existing law, but provided the means of enforcing the rights of the creditors of the city against its assets.
The legislature having assumed charge of the property of the defunct corporation, and undertaken to administer its assets, passed judicious laws for this purpose, and it is not asserted that the original act which allowed the use of the debt of the city in payment of the taxes was unjust, though it required two dollars of the former in satisfaction of one of the latter. All hold. ars of the general city debt were placed on equality in this respect. Plaintiffs here could have used their debt or disposed of it in that manner as others did. The state did not come under any obligation to pay their debt, except as it could be paid in this manner, and it did not guaranty that the back taxes, whether paid in this manner or in any other, would give it a fund sufficient to pay all back indebtedness. It only undertook to do the best it could with the means it had.
The legal and equitable right in a general way of a debtor to procure the obligations of his creditor and use them as a set-off for his own debt, will hardly be denied when the law of the state authorizes it, and such a law can be liable to no impeachment as divesting vested rights or impairing the obli. gation of contracts. Blount v. Windley, 95 U. S. 173. Both the original act, (chapter 92,) and the two acts of 1883, did this. The fact that the later acts made a change in the rate at which this set-off should be allowed did no injustice to plaintiffs, but rather favored them, since it permitted their debt with its accumulated interest to be set off dollar for dollar, whereas this could only be done before at two dollars for one. It did them no injustice, and violated no right of theirs, nor any contract of theirs, that the new bonds ex. changed for old indebtedness*should be receivable for back taxes at the same rate that the old indebtedness would have been received if no exchange had been made.
We see no vested right of plaintiffs which is violated by the decree, no contract of theirs impaired by the legislation complained of, and no injustice done them, and especially none which this court can remedy. The decree of the supreme court of Tennessee is therefore affirmed.
(114 U. S. 373)
WALDEN 0. KNEVALS.
(April 13, 1885.) 1. LAND GRANT/ST. JOSEPH & DENVER RAILROAD-ROUTE “DEFINITELY FIXmD."
The route was “ definitely fixed," within the intention of the act of congress of July 23, 1866, making a land grant to the St. Joseph & Denver Railroad Company, so that the grant attached to adjoining sections when the route was adopted
by the company and a map designating it filed with the secretary of the interior. 2. SAME-ENTRY OF LANDS BY PRIVATE PARTY-NOTICE.
A party entering lands included in the grant of July 23, 1866, subsequently to the performance by the company of the conditions required in that act, is affected with notice, and can take no title
See Van Wyck v. Knevals, 108 U. 8. 360 ; 8. C. 1 Sup. CT. REP. 338. Appeal from the Circuit Court of the United States for the District of No braska.
D. A. Walden, for himself. J. M. Woolworth, for appellee.
FIELD, J. The questions presented in this case are similar to those considered and decided in Van Wyck v. Kneouls, reported in 106 U. S. 360; 8. C. 1 SUP. CT. REP. 336. By the act of congress of July 23, 1866, there was granted to the state of Kansas, for the use and benefit of the St. Joseph & Denver Railroad Company, in the construction of a railroad from Ellwood in that state to its junction with the Union Pacific Railroad, or a branch thereof, not further west than the 100th meridian of west longitude, every
alternate section of land, designated by odd numbers, for 10 sections in width on each side of the road, to the point of intersection. The grant was accom. panied, however, with this qualification: that in case it should appear that the United States had, when the line or route of the road was “definitely fixed,” sold any section or part thereof thus granted, or that the right of preemption or homestead settlement had attached to the same, or that it had been reserved by the United States for any purpose whatever, then it should be the duty of the secretary of the interior to cause an equal quantity of other lands to be selected from the odd sections nearest to those designated, in lieu of the lands thus appropriated. The main question here, as in the case mentioned, is, when was the route of the road to be considered as "definitely fixed," so that the grant attached to the adjoining sections? In the case mentioned we held that the route must be considered as “definitely fixed” when it had ceased to be the subject of change at the volition of the company; that until the map designating the route of the road was filed with the secretary of the interior, the company was at liberty to adopt such a route as it might deem best, after an examination of the ground had disclosed the advantages of different routes. But it was held that when the route was adopted by the company, and a map designating it was filed with the secretary of the interior, and accepted by that officer, the route was established. In the language of the act it was “definitely fixed," and could not be the subject of further change so as to affect the grant except by legislative consent; and that no further action was required on the part of the company to establish the route. It then became the duty of the secretary to withdraw the lands granted from market, and the court said: “If he should neglect this duty, the neglecto would not impair the rights of the company, however prejudicial it might prove to others. Its rights are not made dependent upon the issue of the secretary's order, or upon notice of the withdrawal being given to the local land officers. Congress, which possesses the absolute power of alienation of the public lands, has prescribed the period at which other parties than the grantee named shall have the privilege of acquiring a right to portions of the lands specified, and neither the secretary, nor any other officer of the land department, can extend the period by requiring something to be done subsequently, and until done continuing the right of parties to settle on the lands as previously.” 106 U. S. 366; S. C. 1 Sup. CT. REP. 336. Since the decision of that case, the court, in Railway Co. v. Dunmeyer, 113 U. S.
-; S. C. ante, 566, has reconsidered the question and come to the same conclusion, the receipt of the map in the land-office without objection being considered as equivalent to its acceptance.
It appears from the agreed statement of facts that previous to the twentyfirst of March, 1870, the engineers of the railway company surveyed and staked out upon the ground the proposed line of the road, made a topographical map of the country through which the line ran, showing the government Burveys and the proposed route with reference to the section lines, and the towns, counties, and rivers; that such map was on that day approved by the board of directors, and on the twenty-fifth of the same month was filed, together with a certificate of the approval indorsed thereon, with the secrotary of the interior, who approved the same, and on the twenty-eighth of the same month transmitted it to the commissioner of the general land-office, with directions to instruct the proper local land officers to withdraw from sale or other disposal all the odd-numbered sections falling within the limits of 20 miles on each side of the line of the route. On the eighth of April following the commissioner transmitted by mail a copy of the map to the register and receiver of the local land-office at Beatrice, in Nebraska, but it was not received by them until the fifteenth of that month. On the eighth of April, 1870, one Clark Irvin entered the lands in question at the land-office in Beatrice, and on the first of November, 1871, a patent was issued to him. At
the time of his purchase no instructions had been received from the land de. partment of the government that the lands were withdrawn from market, and he made his purchase without any actual knowledge of the filing of the company's map with the secretary, or of his order to withdraw the lands from market. Subsequently the company applied to the land department for a patent of the lands, and tendered the necessary fees and charges. The application was refused on the ground that Irvin's right of entry had attached to the lands, and a patent for them had been issued to him. The plaintiff deraigned title from tbe railroad company, and the defendant deraigned title from Irvin, by deed, for which he paid a valuable consideration, without notice of the claim of the plaintiff. It thus appears that the defendant inade his entry, and therefore acquired whatever rights he possesses after the map of the company designating its route had been filed with the secretary of the interior, March 25, 1870, and the route had thereby become definitely established. The title of the company to the adjoining odd sections was then fixed. No rights could be initiated subsequently which could affect that title. The entry of the defendant being on the eighth of April afterwards created no interest in him, and the patent issued upon that entry passed none.
All other questions presented in this case are fully considered in Van Wyck v. Knevals, and we see no ground to change the conclusions then reached. For the reasons there stated the decree of the court below must, therefore, be affirmed.
(114 U. S. 376) PENN Nat. BANK 0. FURNESS and another, Adm’rs, etc., and others.
(April 13, 1885.) PARTNERSHIP-RETIRING MEMBER — SUBSEQUENT INSOLVENOY OF FIRM LIABILITY FOR
Unless upon proof of fraud, the retiring member of a partnership that subse quently became insolvent cannot be held liable for any firm debts contracted after his retirement. Appeal from the Circuit Court of the United States for the Eastern District of Pennsylvania.
N. A. Sharpless, for appellant. Charles Hart and Samuel Dickson, for appellees.
*FIELD, J. This is a suit by the Penn National Bank to charge the firm of Furness, Brinley & Co., of Philadelphia, with moneys obtained from the bank by the firm of Furness, Ash & Co., of that city, in a discount of its paper, and used in payment of the debts of the first firm, and also to charge the defendant Edward L. Brinley with the moneys thus obtained by Furness, Ash & Co. which were used to pay its debt to him.
it appears from the record that for many years preceding January 1, 1878, the firm of Furness, Brinley & Co. was engaged in business as auctioneers in the city of Philadelphia, and was in good standing and credit. It consisted, up to October 1, 1878, of James T. Furness, Edward L. Brinley, Joshua P. Ash, William H. Ash, Henry Day, and Dawes E. Furness. At that time Henry Day and Dawes E. Furness retired from the firm. Soon afterwards Edward L. Brinley expressed a desire also to retire from it. An agreement was accordingly entered into between him and James T. Furness and Joshua P. Ash to the effect that he should retire, his retirement to take place as of the first of July, 1877, but not to be announced until the first of January, 1878, and that he was to withdraw*as his capital in the firm, $25,000, to be paid in monthly payments of $5,000, commencing on the first of December, 1877. For the payment of this amount, James T. Furness and Joshua P. Ash made themselves individually liable. On the first of January, 1878, Brinley's ro Sirement was accordingly announced, and a new firm was then formed, under