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order of the court; which sale was made, and the proceeds so deposited. The order also directed that the lien of the judgment creditors, if there should be such lien, should follow and attach to the moneys arising from the said sale.

In November, 1877, John C. Brown, the assignee, filed his bill in equity in the said district court of the United States, charging that the said bank, being a creditor of the said Henry V. Cadwell, James C. Cadwell, and Lewis A. Cadwell, and having reason to believe that they, the said Cadwells, were insolvent, did, with the assent, connivance, and procurement of the said Cadwells, and knowing that a fraud on the act of congress of March 2, 1867, and acts supplementary to and amendatory thereof, was intended, commenced an action in the supreme court of the state of New York against the said Cadwells in which action the said bank obtained judgment as aforesaid upon the said notes against the makers thereof. This bill avers that before the filing thereof the assignee demanded of the defendant, the said bank, that it surrender its preference and all claims derived from the judgment to the property of the said Cadwells, and all liens It claimed to have by virtue of the said judgment and execution, which the bank refused, and persisted in refusing, to do. The bill alleged that said judgment and execution were void as against the assignee by reason of these acts, and prayed that the said judgments be decreed to be in fraud of the said bankruptcy laws of the United States, and void as against the plaintiff and creditors of the insolvents aforesaid.

The answer to this bill admits the refusal of the said bank to surrender its said preference and liens, but denies that it had knowledge of the insolvency of the said Cadwells at the time its said action was commenced against them, that said judgments were obtained with the consent, connivance, and procurement of the makers of the said notes, and that any fraud was intended upon the bankruptcy laws of the United States. Other allegations appear in the bill and answer, but upon them there was no contention at the trial of the cause.

The court being of opinion, from the evidence before it, that the said bankrupts, in contemplation of insolvency, desiring to secure their indorsers and the said bank, had decided to do so by means of judgments and executions, and that as the attorneys who brought the actions were the bankrupts' attorneys, and as the attorneys were under no professional obligations not to disclose the circumstances and designs of clients who desired to assist their employer, the said bank should be charged with all the knowledge possessed by the said attorneys. The court therefore rendered a decree in the cause adjudging the said judgment and execution void as against the complainant, the said assignee, and that the money which arose from

the said sale by said receiver belonged to the said assignee.

The defendant, the said bank, took an appeal from this judgment and decree to the circuit court of the United States for the northern district of New York, where the action of the said district court was affirmed, and judgment of affirmation entered in the said circuit court on March 15, 1881. Subsequently, upon an order of the said court, the money so deposited as aforesaid was paid to the said assignee.

In September, 1881, the Jefferson County National Bank brought an action in the supreme court of the state of New York against John C. Streeter, as indorser on the said notes, for the respective amounts thereof, averring in its complaint the protest for nonpayment of the said notes, and notice thereof duly given to the said indorser, and alleging liability on the part of the said indorser for their payment. The defendant, Streeter, in his answer to said complaint, alleges thatǝ by reason* of a fraudulent arrangement between the bank and the makers of the said notes, by which the bank became a preferred creditor of the same, and by reason of the decree aforesaid of the said circuit court of the United States adjudging such action of the bank to be void, the bank had, by reason of the provisions of the said statutes of the United States, precluded itself from all right or claim against the property of the makers of the said notes, and that all rights and remedies on the part of the bank and of himself, the said Streeter, were thereby lost; and that the defendant was thereby discharged from all liability to the plaintiff as indorser of said notes.

This case came for trial in the said supreme court of New York, and, a jury being waived, was tried by the court, and judg ment given for the plaintiff; the court holding that the bank is not precluded from mak. ing a claim against the property of the makers of the said notes, or from proving its claim against them as bankrupts, and that the defendant, Streeter, has not been discharged from liability as indorser on said notes.

An appeal from this judgment was taken to the court of appeals of the state of New York, which affirmed the order of the said supreme court. On remittitur, entered June S, 1887. the judgment of the said supreme court of appeals was made the order of the said supreme court of New York. 12 N. E. Rep. 700.

Thereupon the said John C. Streeter, defendant in the said action, sued out his writ of error, bringing the case before this court.

Watson M. Rogers, for plaintiff in error. John Lansing, for defendant in error.

"Mr. Justice SHIRAS, after stating the facts in the foregoing language, delivered the opinion of the court.

John C. Streeter, the plaintiff in error, contends that the record discloses, as matter of fact, that the Jefferson County National Bank, being the holder of certain promissory notes made by the firm of H. V. Cadwell & Co., entered into a collusive arrangement with said firm, who were insolvent at the time, and who were shortly afterwards adjudged bankrupts, whereby the bank was, by procuring judgment on said notes, to obtain an illegal preference over other creditors of the firm; that by reason of this collusive arrangement the bank disabled itself from proving its claim on these notes against the estate of the bankrupts, and thereby discharged Streeter, who was an accommodation indorser, from liability to the bank.

The assignee in bankruptcy brought an action in the district court of the United States for the northern district of New York to test the validity of the bank's judgment, and it was adjudged by that court that the judgments were void as against the assignee, and, on appeal, this judgment was affirmed by the circuit court.

The case will be found reported as Brown v. Bank, 19 Blatchf. 315, 9 Fed. Rep. 258.

An examination of that case discloses that the judgment in favor of the bank was held an illegal prefercuce, within the purview of the bankrupt law, because the attorneys employed to represent the bank in bringing the suit and obtaining the judgment had been the attorneys of H. V. Cadwell & Co., and. as such, had obtained knowledge of their insolvent condition, and of their desire that the bank should obtain a preference.

The question that was presented to the New York supreme court and the New York court of appeals was whether the fraud imputed to the bank, arising from the knowledge of its attorneys of the insolvent condition of H. V. Cadwell & Co. at the time the judgments were obtained, was such a case of fraud as to disable the bank from proving its claim in bankruptcy, and thus to effect a discharge of Streeter as indorser.

The provision of section 5084 of the Revised Statutes of the United States is as follows:

"Any person who, since the 2d day of March, 1867, has accepted any preference, having reasonable cause to believe that the same was made or given by the debtor contrary to any provisions of the act of March 2, 1867, c. 176, to establish a uniform system of bankruptcy, or to any provisions of this title, shall not prove the debt or claim on account of which the preference is made or given, nor shall he receive any dividend there. from, until he shall first surrender to the assignee all property, money, benefit, or advantage received by him under such preference."

Section 5021, as amended in 1874, is as follows:

"Provided, that the person receiving such payment or conveyance had reasonable cause

to believe that the debtor was insolvent, and knew that a fraud on this act was intended; and such person, if a creditor, shall not, in cases of actual fraud on his part, be allowed to prove for more than a moiety of his debt, and this limitation on the proof of debts shall apply to cases of voluntary as well as involuntary bankruptcy."

It is contended on behalf of the plaintiff in error that the bank did not, within the meaning of the law, surrender its preference, and hence could not prove its claim, and that the case was one of "actual fraud" on the part of the bank, which could not, therefore, in any event prove for more than a moiety of its debt.

To sustain the contention that the bank did not surrender its preference, it is urged that the bank did not at once, on demand of the assignee, turn over the goods levied on, but litigated the matter with the assignee in both the district and circuit courts, and that the proceeds of the executions were not relinquished until final judgment was entered against the bank.

It was the opinion of the state court that as the sheriff, having custody of the goods seized on execution, was, with the consent of the bank's attorneys, appointed special receiver, and was ordered to sell the goods and pay the proceeds into court, to await the result of the litigation between the bank and the assignee in bankruptcy, and that as the proceeds were finally turned over to the assignee, and thus became subject to distribution as bankruptcy assets, the transaction amounted to a surrender under section 5084. In so holding, we think the state court was right.

As the bank did not, at any time, receive any money or property from the insolvent firm, but pursued only a lawful remedy in a lawful manner, it was not under any legal obligation to abandon its executions, and to turn over their fruits to the assignee immediately upon demand. We do not perceive that the course of the bank, in resisting the claim of the assignee by setting up a defense, is subject to just criticism, or thereby estopped itself from proving its claim after the assignee had prevailed in his suit.

The endeavor of the bank to maintain its executions would, if successful, have been for the benefit of the indorser, who would, in that event, have been the last to complain; and it is certainly not apparent why the indorser should be discharged from his liability by the effort of the bank to legally collect a debt in his exoneration.

The decision of the state court, that the facts did not make out a case of actual fraud on the part of the bank, so as to deprive it of a right to prove for more than a moiety of its debt, and thus relieve the indorser of liability, in whole or in part, seems to be well founded in reason. There was no actual knowledge by the bank or its officers that the insolvent firm had done anything what

ever to facilitate the procurement of the Judgments. There was no giving and accepting of any security. There was no finding in the district court of the United States of actual fraud.

The state court cites with approval the case of In re Riorden, 14 N. B. R. 332, in which it was held by Mr. Justice Blatchford, then sitting as district judge, that a mere fraud on the bankrupt law, by the acceptance of a preference, was not, in itself, actual fraud; and, commenting on this decision, the court said: "Such conclusion seems just and reasonable. The bringing of an action by a creditor in the ordinary mode of procedure in the state courts, and procuring a judgment, may be, as in this case, constructive fraud, for which the lien will be set aside. But even that will depend upon the further fact that bankrupt proceedings shall be instituted within the limited time provided by law. If such proceedings are not so begun, the lien would be valid and effectual. How, then, can it be construed to be actual fraud to pursue a legal remedy which may be efficatious, and especially when no action of the bankrupt debtor gives the creditor the obnoxious preference?"

It follows that, as the bank was not precluded from proving its claim, Streeter, the Indorser, could, by paying and lifting the notes, have participated in the distribution of the bankrupt estate, and hence has failed to show any defense to the suit of the bank. The judgment of the court below is therefore affirmed.

(147 U. S. 1)

STATE OF IOWA v. STATE OF ILLINOIS.

(January 3, 1893.) No. 5.

BOUNDARIES BETWEEN STATES-MISSISSIPPI RIVER. The expressions, "middle of the Mississippi river" and "the center of the main channel of that river," as used respectively in the enabling acts under which the states of Illinois and Wisconsin were admitted into the Union, and "middle of the main channel of the Mississippi river," as used in the enabling acts of Missouri and Iowa, all being descriptive of the boundaries of those states, are synonymous terms, and mean the middle of the main navigable channel, or channel most used, and not the middle of the great bed of the stream, as defined by the banks of the river.

Original suit brought by the state of Iowa against the state of Illinois to determine the boundary line between them, along the course of the Mississippi river.

John Y. Stone, Atty. Gen., and James C. Davis, for complainant. George Hunt, Atty. Gen., for defendant.

Mr. Justice FIELD delivered the opinion of the court.

The Mississippi river flows between the states of Iowa and Illinois. It is a navigable

stream, and constitutes the boundary be tween the two states; and the controversy between them is as to the position of the line between its banks or shores which separates the jurisdiction of the two states for the purpose of taxation and other purposes of gov ernment.

The complainant, the state of Iowa, contends that for taxation, and for all other pur poses, the boundary line is the middle of the main body of the river, taking the middle line between its banks or shores without regard to the "steamboat channel," as it is termed, or deepest part of the stream, and that, to determine the banks or shores, the measurements must be taken when the water is in its natural or ordinary stage, neither swollen by floods nor shrunk by droughts.

On the other hand, the defendant, the state of Illinois, claims that, for taxation and all other purposes, its jurisdiction extends to the middle of "the steamboat channel" of the river, wherever that may be, whether on its east or west bank,-the channel upon which commerce on the river by steamboats or other vessels is usually conducted, and which for that reason is sometimes designated as "the channel of commerce."

The state of Iowa in its bill alleges that prior to and at the time of the treaty between England, France, and Spain, in 1763, (3 Jenkinson's Collection of Treaties, p. 177,) the territory now comprising the state of Iowa was under the dominion of France, and the territory now comprising the state of Illinois was under the dominion of Great Britain, and that, by the treaty named, the middle of the river Mississippi was made the boundary line between the British an French possessions in North America.

That by the treaty of Paris between Great Britain and the United States, which was concluded September 3, 1783, (Id. p. 410, art. 2, and 8 St. p. 80,) the territory comprising the state of Illinois passed to the United States, and that by the purchase of Louisiana * from France, under the treaty of 1803, (8 St. p. 208,) the territory comprising the state of Iowa passed to the United States.

That the boundary between the territory comprising the states of Illinois and Iowa remained the middle of the rive: Mississippi, as fixed by the treaty of 1763.

That by the act of congress of April 18, 1818, known as the "Act Enabling the People of Illinois to Form a State Constitution," (3 St. p. 428,) the northern and western boundaries of Illinois were defined as follows: Starting in the middle of Lake Michigan, at north latitude 42 degrees and 30 minutes, "thence west to the middle of the Mis

sissippi river, and thence down along the

middle of that river to its confluence with the Ohio river;" and that the constitutions of Illinois of 1818, 1848, and 1870 defined the boundaries in the same way.

And the bill further alleges that the state of Illinois and its several municipalities border

ing on the Mississippi river claim the right to assess and do assess and tax, as in Illinois, all bridges and other structures in the river from the Illinois shore to the middle of the steamboat channel, or channel of the river usually traversed by steam and other crafts in carrying the commerce of the river, whether such channel is east or west of the middle of the main body or arm of the river, and that they thus assess and tax, as in that state, the bridge of the Keokuk & Hamilton Bridge Company across the river from Keokuk, Iowa, to Island No. 4, in Hancock county, Ill., from the west shore of the island westward 2,462 feet to the east end of the draw of the bridge, and to a point not over 580 feet east from the Iowa shore of the river and 941 feet west of the middle of the main arm or body of the river at that point.

That the steamboat channel, or channel of the river where boats ordinarily run in carrying the commerce of the river, varies from side to side of the river, sometimes being next to the Illinois shore and then next to the Iowa shore, and at most points in the river shifting from place to place as the sands of its bed are changed by the current of the water; that at the point of the Keokuk & Hamilton bridge, mentioned, the river bed is rock, and not subject to much change; that at that point, were it not for the bridge, the middle of the steamboat channel would be, and was before the bridge was erected, fully 300 feet east of the east end of the draw in the bridge, or 880 feet from the Iowa shore of the river and 2,162 feet from the shore of the river in Illinois on Island No. 4; that at places in the river there are two or more channels equally accessible and useful for navigation by steamboats and other crafts carrying the commerce of the river; and that at the Keokuk & Hamilton bridge the channel used by steamboats is partly artificial, constructed by excavation of rock from the river bed to facilitate the approach to the lock of the United States canal immediately north of the bridge.

That the state of Iowa claims the right to tax all bridges across the river to the middle thereof, and does tax the Keokuk & Hamilton bridge to its middle between the east and west abutments thereof,-that is, the west approach and abutment, 200 feet, and 1,096 feet of the bridge proper, thereby treating, for convenience of taxation, the middle of the bridge between abutments as the middle of the river at that point, but which is in fact 225 feet less than one half the distance across the main arm or body of the river at that point.

That the state of Illinois and its municipalities assess and tax, as in that state, 716 feet of the bridge actually assessed and taxed in Iowa, and 225 feet of the bridge, in addition thereto, located in Iowa, but not taxed in that state.

That the Keokuk & Hamilton Bridge Company, owner of the Keokuk & Hamilton

| bridge, is a corporation of both of said states, consolidated, and complains of such double taxation.

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That litigation is now pending over such taxation, and is liable at any time to arise over the taxation of any of the other bridges across the river between the said states, now nine in number.

To the end, therefore, that the line between the states may be definitely fixed by the only court having jurisdiction to do so. the complainant prays that this court will take jurisdiction of this bill, and that the state of Illinois be summoned and requested?? to answer it, waiving such answer being on oath, and that upon the final hearing this court will definitely settle the boundary between the states at the said several bridges.

To this bill the state of Illinois appeared by its attorney general and filed its answer, which denied that the boundary line between the states of Iowa and Illinois is the middle of the Mississippi river, and insisted that it is the middle of the steamboat channel, or channel commonly used by boats in carrying the commerce of the river, whether east or west of the middle of the river. It admitted that the state and its municipalities claimed the right to tax and did tax bridges and other structures in the river to the middle of the steamboat channel or channel of commerce, whether such channel was east or west of the middle of the main body or arm of the river, and did assess and tax the Keokuk & Hamilton bridge to its draw, and west of the middle of the main body or arm of the river; and that the steamboat channel or channel of commerce is first near one shore. and then near the other, and at other places nearly across the river. But it denied the right of the state of Iowa to tax the bridges mentioned crossing the Mississippi river to any point east of the middle of the steamboat channel, or channel of commerce of that river.

To the answer a replication was filed by the state of Iowa.

At the time of filing its answer the state of Illinois filed also its cross bill, in which it alleges that there exist nine bridges across the Mississippi river between the states, the most southern of which is the Keokuk & Hamilton Railroad bridge, and the most northern the Dunlieth & Dubuque Bridge Company's railroad bridge.

That for the purposes of taxation the state of Illinois and its municipalities claim the right to assess and tax the respective bridges to the middle of the channel of commerce or steamboat channel,-that is, the channel usually used by steamboats and other crafts navigating the river; and that on the part of the state of Iowa and its municipalities it is claimed that each state has the right to as sess and tax to the middle of the main arm or body of the river, regardless of where the channel of commerce or steamboat channel may be.

*That the supreme court of Iowa, in the case of Dunlieth & D. B. Co. v. County of Dubuque, 55 Iowa, 558, 8 N. W. Rep. 443, held that the authorities in Iowa have the right to tax such structures to the middle of the main arm or body of the stream, and no further, though at the point where such structure is situated the channel or part of the river followed by steamboat men in navigating the river is far east of the middle of such main body of the stream.

That, following the decision in that case, the authorities in Iowa assess and tax such structures to the middle of the main body of the river.

That at the point of the location of the Keokuk & Hamilton bridge the main body of the river, before the construction of the bridge, was between the Iowa shore at Keokuk, Lee county, Iowa, and the west shore of Island No. 4, located in the city of Hamilton, Hancock county, Ill., a breadth of about 3,042 feet; that in constructing the bridge a solid approach is extended from the shore at Keokuk into the river 200 feet, and from the shore on Island No. 4, in Illinois, about 700 feet, and the main body of the river confined between the abutments to the bridge 2,192 feet apart, and the bridge consists of the east and west abutments, 11 piers, a draw next to the west or Iowa abutment of 380 feet, and 10 spans, together 1,812 feet.

That the middle of the steamboat channel, or that part of the river usually traversed by steamboat men in navigating the river, is at or near the east end of the draw or pivot span, about 380 feet from the west abutment and 1,812 feet from the east abutment.

That the assessor in Illinois, in assessing the bridge, values the bridge to the east end of the draw, and assesses the same against that part of the bridge in Illinois, and the authorities in Iowa value and assess the bridge to the middle thereof, 1,096 feet east from the west abutment, as in the state of Iowa; that thereby 716 feet of the bridge are valued and assessed both in Illinois and Iowa; that litigation is now pending in the lower courts between the bridge company and the authorities over the assessments; and that the same trouble and complications are liable to arise over the assessment of any other of the bridges.

To the end, therefore, that the boundary line between the states of Illinois and Iowa a said several bridges may be defined and settled, the state of Illinois prays that the state of Iowa be made defendant to this cross bill, and required to answer it, and that upon the final hearing the court will define and establish at each of the bridges the boundary lines between the states of Illinois and Iowa, to which points the respective states may tax. To this cross bill the defendant, the state of Iowa, answered, admitting | the existence of nine bridges across the Mississippi river, where it forms the boundary between the states of Illinois and Iowa, and v.13s.c.-16

that the state of Illinois and its several municipalities bordering upon the river claim the right to tax said bridges from the Illinois shore of the river to the middle of the channel of commerce or steamboat channel, and that the state of Iowa and its municipalities bordering on the river claim the right to tax, and do tax, the several bridges to the middle of the main arm or body of the river, regardless of where the channel of commerce or steamboat channel-that is, that part of the river usually traversed by steam or other vessels carrying the commerce of the river

may be. It therefore prays that upon the final hearing the boundary lines between the two states may be established, to which the respective states may tax.

By setting down the case for hearing on the bill, answer, and replication, without taking any testimony, and on the cross bill and the answer to it, all the facts alleged in the answer to the original bill, as well as those alleged in the cross bill and not denied in the answer, are thereby admitted.

מ'

When a navigable river constitutes the boundary between two independent states, the line defining the point at which the jurisdiction of the two separates is well established to be the middle of the main channel of the stream. The interest of each state in the navigation of the river admits of no other line. The preservation by each of its equal right in the navigation of the stream is the subject of paramount interest. It is there-* fore laid down in all the recognized treatises on international law, of modern times, that the middle of the channel of the stream marks the true boundary between the adjoining states up to which each state will on its side exercise jurisdiction. In international law, therefore, and by the usage of European nations, the term "middle of the stream," as applied to a navigable river, is the same as the middle of the channel of such stream, and in that sense the terms are used in the treaty of peace between Great Britain, France, and Spain, concluded at Paris in 1763. By the language, "a line drawn along the middle of the river Mississippi from its source to the river Iberville," as there used, is meant along the middle of the channel of the river Mississippi. Thus Wheaton, in his Elements of International Law, (8th Ed. § 192,) says:

"Where a navigable river forms the boundary of conterminous states, the middle of the channel, or thalweg, is generally taken as the line of separation between the two states, the presumption of law being that the right of navigation is common to both; but this presumption may be destroyed by actual proof of prior occupancy and long undisturbed possession, giving to one of the riparian proprietors the exclusive title to the entire river."

And in section 202, while thus stating the rule as to the boundary line of the Mississippi river being the middle of the channel, states

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