not impartial; or (3) that the appraisers' report ought to have been rejected, because it did not show the plans on which they proceeded, or as of what time the value of the Dimock was taken, or because the appraisers did not personally examine her; or (4) that the stipulation should have been broad enough to cover not merely what the appraisers estimated to be the value of the company's interest in the Dimock and her freight, but also what the damage claimants asserted the value of such interest to be, so that if, on final hearing, the issue tendered in the company's libel and petition as to such value was determined in favor of the damage claimants, the court would have some means of compelling the company to pay the adjudicated value into court for distribution; or (5) that the sureties on the stipulation were insufficient; or (6) the court might have been convinced that, for the reasons above stated, no injunction ought to issue, or else only on condition that the company bound itself, with sureties, to pay into court the value of its vessel and freight, as finally adjudicated; or that the rights of the parties could be more conveniently and justly determined by permitting the damage claimants to assert their claims in their own way, and allowing the steamship company to set up the apportionment proceedings as a plea, or that no injunction ought to issue until the value of the vessel and freight had been adjudicated, and paid into court, or secured to be paid.

It is further urged that the proceedings in Massachusetts were not, as matter of law, equivalent to a transfer of the Dimock and her freight by the company to a trustee under section 4285 of the Revised Statutes; that they were very far from being an equivalent in fact; that there is nothing in the statute which authorizes the owner of a vessel, at his option, either to transfer his interest in the vessel and freight to a trustee, or to pay into court the value thereof as determined by an ex parte appraisement, or which declares that it shall be a sufficient compliance with the statute on the part of the owner if he pays or secures to be paid into court the value so appraised, or which provides that after such payment all suits and proceedings against the owner shall cease; and that the act leaves the creation of a substitute in lieu of a transfer to a trustee, to a court which proceeds judicially.

It is further contended that the rights of the damage claimants against the company and the Dimock, arising out of the collision, remained precisely as they were before the company filed its libel and petition in Massachusetts; that those rights were never transferred from the company and the vessel to the fund represented by the stipulation; that said fund cannot be regarded as the fund to be apportioned among the damage claimants. as it had never been adjudicated or judicially established to be such; that if Morrison's right to proceed against the company and the

vessel in the southern district of New York had been taken away or suspended by the proceeding in Massachusetts, it must be for some other reason than (1) that the court in Massachusetts had adjudicated that damage claimants ought to be enjoined from proceeding in any other court; or (2) that such claimants had been incapacitated or rendered personally incompetent to sue; or (3) that the company and the Dimock had been released and discharged from liability to be sued; and that the only other way in which Morrison's right to proceed in New York could have been affected was that the jurisdiction of the court in Massachusetts over the subject-matter had somehow become exclusive, so that Morrison could proceed against the company and the vessel only in that forum.

It is also contended that the court in Massachusetts was not competent to adjudicate* the question whether or not the collision was caused by fault on the part of the Dimock, because it did not acquire personal jurisdiction of one or more of the damage claimants or jurisdiction in rem of the Dimock; that the fund represented by the stipulation had not been judicially substituted for the Dimock, and she had not been discharged from liability for the collision; that, as she still remained liable for it, nothing but possession and control of her would authorize any court to pronounce a judgment in rem as to her liability; that the court in Massachusetts had never actually assumed possession and control of her by the officers of the court, by seizure or otherwise, or jurisdiction of her; that, whatever jurisdiction that court acquired of her by her having been within the district when the company's libel and petition was filed, was lost, and all the rights of the company arising therefrom were abandoned, by the company's having taken the Dimock before the return day of the monition, out of the district, to the port of New York, without leave of the court or procuring any release or discharge of her, or entering into any obligation to bring her back; that the court in Massachusetts never acquired personal jurisdiction over Morrison or any other damage claimant; that, there having been no voluntary appearance of any damage claimant, service of process within the Massachusetts district was essential; and that no process had been served on Morrison or Vanderbilt within that district.

It is further contended that the court in Massachusetts did not acquire jurisdiction to determine any of the other questions presented by the two libels; that what the steamship company ought to have done was to make in its libel an unconditional offer, substantially in the terms of the statute, to pay into court for partition among the damage sufferers whatever the court should determine was the value of the company's interest in the Dimock and her freight; that the only offer which could be implied from the libel was one to pay or secure to be pald

the amount at which the court might cause the value of the vessel and her freight to be duly appraised; that such offer was insufficient, because it did not mean the amount which the court should adjudicate, after hearing the parties adversely interested, to be such value; that, such offer of the company having been complied with to the expressed satisfaction of the court, no power was left to that court to compel the company to pay anything more than the appraised amount, even if the court should find, on the proofs, that the value of the Dimock and her freight was greater; that, as the vessel had been taken out of the Massachusetts district, there was nothing left within the reach or control of the Massachusetts court, except the stipulation for an amount which Morrison and Vanderbilt allege was less than one half the true amount; and that, even if they should appear in the Massachusetts court, and establish by proof that the liability of the company was not less than $200,000, that court could do nothing against the will of the company.

We are of opinion that none of the views above stated are sufficient to show that this is a proper case for a writ of prohibition. The only question involved is that of the jurisdiction of the district court of Massachusetts. Ex parte Gordon, 104 U. S. 515; Ex parte Ferry Co., Id. 519; Ex parte Slayton 105 U. S. 451; Smith v. Whitney, 116 U. S. 167, 6 Sup. Ct. Rep. 570; Ex parte Garnett, 141 U. S. 1, 11 Sup. Ct. Rep. 840; Ex parte Cooper, 143 U. S. 472, 495, 12 Sup. Ct. Rep. 453.

Under rule 57 in admiralty, prescribed by this court, (130 U. S. 705, 9 Sup. Ct. Rep. iii.,) the Dimock not having been libeled to answer for the loss resulting from the collision, and no suit therefor having been commenced against her owner, the proceedings were instituted lawfully in the district court in Massachusetts, that being the district in which the vessel was at the time the proceedings were instituted, and she being at that time subject to the control of that court for the purposes of the case, as provided by rule 54, (137 U. S. 711, 11 Sup. Ct. Rep. iv.,) and rules 55 and 56, (13 Wall. xiii.)

As to the contention that, in order to retain jurisdiction, the Massachusetts court should have kept possession of the Dimock until Morrison or Vanderbilt, or both of them, should have chosen to appear in the cause, and that, by allowing her to go to New York, in the ordinary course of her business, after the stipulation had been given, the district court in Massachusetts lost such jurisdiction as it had acquired, there are several sufficient answers:

(1) The proceeding to limit liability is not an action against the vessel and her freight, except when they are surrendered to a trus tee; but is an equitable action.

(2) It was not necessary, in order to sustain the proceeding for limiting liability, that

Morrison or Vanderbilt should have been personally served with notice thereof within the district of Massachusetts, or that the Dimock should have been taken and held by the court. The decisions of this court have established the power of congress to pass the statute, and of the courts of admiralty jurisdiction to enforce it; and its enforcement would be impracticable under the restrictions which Morrison seeks to impose. wich Co. v. Wright, 13 Wall. 104; The Benefactor, 103 U. S. 239; Providence & N. Y. S. S. Co. v. Hill Manuf'g Co., 109 U. S. 578, 3 Sup. Ct. Rep. 379, 617; The City of Norwich, 118 U. S. 468, 6 Sup. Ct. Rep. 1150; The Scotland, 118 U. S. 507, 6 Sup. Ct. Rep. 1174; Butler v. Steamship Co., 130 U. S. 527, 9 Sup. Ct. Rep. 612.

Nor

(3) The filing of the libel and petition of the steamship company, with the offer to give a stipulation, conferred jurisdiction upon the court, and no subsequent irregularity in procedure could take away such jurisdiction.

(4) Although some prior notice of the holding of the appraisement might very well have been served upon Vanderbilt, even if he was out of the jurisdiction of the Massachusetts court, he having been named in the libel and petition as a respondent, yet the appraisement ex parte was not void, because rule 54 does not require prior notice of the appraisement to be given to any one, and only requires a monition to be issued after a stipulation has been given or a transfer has been made to a trustee.

The

(5) The making of the appraisement ex parte, and the taking of the stipulation thereupon, were at most an irregularity which the district court could correct. The Thales, 3 Ben. 327, 330, 10 Blatchf. 203; The Benefactor, 103 U. S. 239, 247. The stipulation stands in the place of the vessel and her freight, leaving to the court its usual power to act, on proper application, in respect to giving a new or further *stipulation. Wanata, 95 U. S. 600, 611; U. S. v. Ames, 99 U. S. 35, 36; The City of Norwich, 118 U. S. 468, 489, 6 Sup. Ct. Rep. 1150. The district court for Massachusetts has the whole matter within its control, for the steamship company, by its libel and petition, has submitted itself to the jurisdiction of that court; and. if it should fail to comply with a future order of that court in respect to giving a new or further stipulation, on a further appraisement, that court could stay its further proceedings, deny it all relief, and dismiss its libel and petition.

Section 4285 of the Revised Statutes provides that it shall be deemed a sufficient compliance on the part of the owner of a vessel with the requirements of the statute relating to his liability for loss, if he shall transfer his interest in the vessel and freight for the benefit of the claimants to a trustee, and that, after such transfer, all claims and proceedings against the owner shall cease. Rule

54 of the rules in admiralty prescribed by this court provides that when a libel or petition is filed in the proper district court, as provided by rule 57, claiming a limitation of liability, and praying proper relief in that behalf, the court, having caused due appraisement to be bad, shall make an order for the payment of the amount into court, or for the giving of a stipulation, with sureties, to pay the same into court whenever ordered, or, if the owner so elects, make an order, without such appraisement, for the transfer by the owner of his interest in the vessel and freight to a trustee to be appointed by the court, and, upon compliance with such order, issue a monition notifying all persons claiming damages to make proof of their claims, and also make an order restraining the further prosecution of all suits against the owner in respect of any such claims.

The validity of the provision for a stipulation has been upheld by this court in Providence & N. Y. S. S. Co. v. Hill Manuf'g Co., 109 U. S. 578, 600, 3 Sup. Ct. Rep. 379, 617, in which it said: "The operation of the act in this behalf cannot be regarded as confined to cases of actual 'transfer,' (which is merely allowed as a sufficient compliance with the law,) but must be regarded, when we consider its reason and equity and the whole scope of its provisions, as extending to cases * in which what is required and done is tantamount to such transfer; as, where the value of the owners' interest is paid into court, or secured by stipulation, and placed under its control, for the benefit of the parties interested." To the same effect, see The City of Norwich, 118 U. S. 468, 502, 6 Sup. Ct. Rep. 1150.

*36

In fact, it is stated in the brief for Morrison that his counsel do not doubt that the operation of the limited liability act cannot be regarded as confined to cases of actual transfer to a trustee, but must be regarded as extending to cases in which what is done is tantamount to such transfer; as, when the value of the owner's interest is paid into court, or secured by stipulation, and placed under its control for the benefit of the parties interested. But what they contend for is that the value of such interest cannot be regarded as paid into court, or secured by stipulation, until such value has been judicially ascertained, after a hearing of the persons interested, and that only such a judicial ascertainment is equivalent to a transfer of the vessel and her freight to a trustee.

As the district court for Massachusetts has jurisdiction in the premises, we will not prohibit it from proceeding in the exercise of such jurisdiction. A writ of prohibition will be issued only in case of a want of jurisdiction either of the parties or of the subjectmatter of the proceeding. Ex parte Fassett, 142 U. S. 479, 486, 12 Sup. Ct. Rep. 295.

The foregoing views sufficiently dispose of the points urged in behalf of the writ. Both writs denied.

(147 U. S. 59)

LYTLE v. TOWN OF LANSING. (January 3, 1893.) No. 79.

RAILROAD COMPANIES MUNICIPAL AID BONDSCANCELLATION-FEDERAL COURTS FOLLOWING STATE DECISIONS.

1. A judgment of the supreme court of New York, holding certain town bonds in aid of a railroad invalid as between the railroad and the town, can be avoided in a federal court, ia a collateral proceeding by the town to cancel the bonds, only by showing a total lack of jurisdiction in the state court.

2. A county judge, assuming to act under Act N. Y. May 18, 1869, permitting municipal corporations to aid in the construction of railroads, rendered a judgment appointing commissioners to execute bonds of a town. The bonds were accordingly executed and delivered to the railroad company, but before delivery a writ of certiorari issued from the supreme court to review the judgment, which was afterwards reversed. Held, in an action against a transferee of the bonds to compel their surrender for cancellation, that defendant had the burden of showing that he, or some one under whom he claimed, was a bona fide holder for value. 38 Fed. Rep. 204, affirmed.

3. The pledgee of such bonds, with authority from the railroad to sell them, though he would be protected to the amount of his advances, to secure which the bonds were pledged, is not such a bona fide holder as to entitle his transferee to recover upon the bonds.

4. Such a transferee took up the loan made by the first pledgee, and stood in the same position. Subsequently he sold the bonds, paid his loan out of the proceeds, and credited the railroad company with the balance. He never took title himself. Held, that he was not a bona fide holder, so as to entitle his transferee to recover on the bonds.

5. The next holder who appeared was one S., a resident of New Orleans. It was not shown how he became possessed of the bonds, nor was any effort made to secure his deposition. The sale by the second pledgee was at enormous discount, and this holder had failed to recover in a suit on overdue coupons, previously brought. Held, that he was not a bona fide holder, so as to entitle his transferee to recover on the bonds in a subsequent suit. 38 Fed. Rep. 204, affirmed.

an

6. The next holder, B., a resident of Texas, appeared from the testimony to have gone through the form of buying the bonds from S., giving a check for $50,000 therefor, the par value of the bonds being $75,000, besides $26,000 dishonored coupons. The check was produced, not by the drawee, but by the bank on which it was drawn, five or six years after the transaction, and the payee named therein was James J. S., instead of John J. S., from whom the bonds were purchased. B. did not look at the bonds, ror notice whether they were signed cr sealed, nor make any inquiries as to the responsibility of the town, the circumstances of the issue, or the title of the seller. He made the purchase on the recommendation of a friend in New York, and testified that he was at the time uncertain as to whether the purchase was made on his own account or for his friend. Held, that he was not a bona fide holder, so as to entitle his transferee to recover on the bonds. 38 Fed. Rep. 204, affirmed.

7. One L. claimed to have purchased the bonds from B. He gave a carelessly worded and inaccurate receipt, did not look at the bonds, nor make any inquiries about them, but was thereafter informed by his attorneys in New York of some difficulty concerning them, and learned from the seller that the latter had a suit pending about some of the coupons. He nevertheless, without further inquiry, and without any complaint that he was misled by the

seller, transferred the consideration for the bonds. Held, that he had notice at least before consummating the sale, and that such notice was equivalent to notice before the sale, and barred his recovery upon the bonds. 38 Fed. Rep. 204, affirmed.

Appeal from the Circuit Court of the United States for the Northern District of New York.

Suit by the town of Lansing against John T. Lytle, brought in the supreme court of the state of New York, for cancellation of certain bonds. The defendant removed the cause to the circuit court of the United States, and filed a cross bill. Decree for complainant. 38 Fed. Rep. 204. Defendant appeals. Affirmed.

Statement by Mr. Justice BROWN.

This was an appeal from a decree requiring the appellant to surrender for cancellation 75 bonds, of $1,000 each, purporting to have been executed by the town of Lansing, and dismissing a cross bill filed by Lytle to compel the payment of the overdue coupons attached to such bonds.

By an act of the legislature of New York, passed in 1869, it was provided that whenever a majority of the taxpayers of any municipal corporation, owning or representing a majority of the taxable property, should make application to the county judge, stating their desire that such corporation should issue its bonds to an amount not exceeding 20 per cent. of the taxable property, and invest the same in the stock or bonds of such railroad company as might be named in the petition, it became the duty of such county judge to order a notice of such petition to be published, and to take proof as to the number of taxpayers joining in the petition, and the amount of taxable property represented by the petitioners. In pursuance of this act, in December, 1870, petitions of certain taxpayers of the town of Lansing were presented to the county judge of Tompkins county, who caused the proper notice to be published, proceeded to take proofs, and on March 20, 1871, adjudged and determined that the petition was duly signed by a majority of the taxpayers of the town of Lansing; that the petitioners represented a majority of the taxable property; that the sum of $75,000, mentioned in the petition, did not exceed 20 per cent. of the whole taxable property of the town; and that all the requirements of law respecting the issuing of town bonds to the amount of $75,000, and for the investment of the same in the stock or bonds, or both, of the "Cayuga Lake Railroad Company," had been fully complied with. He thereupon appointed three freeholders and taxpayers of said town as commissioners, whose duty it would be to execute such bonds, and to discharge all such other duties as should be required of them as such commissioners. On March 27, 1871, a writ of certiorari was sued out of the supreme court to review these proceedings, and in May, 1872, the general term of such court ordered

and adjudged that all the proceedings in relation to the issuing of these bonds should be reversed, annulled, and held for naught, for the reasons that the Cayuga Lake Railroad Company was not a legal corporation; that the articles of association failed to state the name of each county through or into which the road was intended to be made; that no valid charter was produced before the county judge; that the petition did not direct whether the money was to be invested in stock or bonds; and that it was not shown that a majority of the taxpayers had signed the petition. People v. Van Valkenburgh, 63 Barb. 105.

In some way-though exactly how did not clearly appear-the railroad company induced the commissioners to issue and deliver to them these bonds, for which they received a certificate for an equivalent amount of railroad stock. The allegation of the bill in this connection was that the officers of the railroad company fraudulently, and by false pretenses, procured the commissioners to deliver the bonds, by representing and inducing them to believe that their action would not in any way injure or affect the town, and also by presenting to them an undertaking of the company to indemnify and save them harmless from the consequences of their act. It was further alleged that the stock of the company received in exchange for these bonds was of no value, that the company had ceased to do business, and was insolvent, and that the town was ready to deliver up the stock in exchange for the cancellation of the bonds.

It appears that these bonds, when delivered to the railroad company, were pledged by it to Leonard, Sheldon & Foster, a banking firm in New York city, as collateral security for a loan of $50,000 to the railroad company; that this loan was afterwards transferred to Elliott, Collins & Co., bankers at Philadelphia, to whom the bonds were also turned over as collateral; that this latter company also had authority from the railroad company to sell them for the company at the price of from 70 to 80 cents on the dollar; and that in February, 1873, the firm sold them, deducted from the proceeds the amount of their loan, and left a balance of $4,745.83 to the credit of the railroad company. It did not appear to whom Elliott, Collins & Co. sold the bonds, but subsequently an action was brought in the United States circuit court against the town upon these bonds by one John J. Stewart, in which action a verdict was rendered on December 19, 1878, for the defendant. The judgment in favor of the town was afterwards, and on June 30, 1882, affirmed by this court. Stewart v. Lansing, 104 U. S. 505. In February, 1882, the bonds appear to have been sold by Stewart to one Brackenridge, who afterwards, and in May, 1884, sold them to Lytle, the plaintiff in this suit, for an interest in a ranch.

*This action was begun by the town of Lan

*62

sing in the supreme court of the state of New York in May, 1887, for the purpose of obtaining the annulment and cancellation of the bonds, compelling the defendant, Lytle, to deliver them up for cancellation, and also enjoining him from transferring them pending the suit. Lytle removed the action to the circuit court of the United States, and filed a cross bill to compel the payment of the bonds. In March, 1889, the court rendered a decree in favor of the town of Lansing, (38 Fed. Rep. 204,) from which Lytle took an appeal to this court.

T. G. Shearman and E. P. Wheeler, for appellant. H. V. Howland, for appellee.

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

As the bonds in this case, though good upon their face, were undoubtedly void as between the railroad company and the town of Lansing, it is incumbent upon the defendant, Lytle, to show that he, or some one through whom he obtained title to them, was a bona fide purchaser for a valuable consideration. Orleans v. Platt, 99 U. S. 676.

The judgment of the supreme court of the state of New York, holding these bonds to be invalid, must be respected by this court, not only because it passed upon the validity of acts done in alleged pursuance of a statute, but because in a collateral proceeding of this kind its binding effect could only be avoided by showing a total lack of jurisdiction on the part of the court. When these bonds were before this court in the case of Stewart v. Lansing, 104 U. S. 505, it was held that the judgment of the supreme court reversing and annulling the order of the county judge invalidated them, that if they had not been delivered before, they could not be afterwards, and that the judgment of reversal was equivalent between those parties to a refusal by the county judge to make the original order. It was further held that, the actual illegality of the paper being established, it was incumbent upon the plaintiff to show that he occupied the position of a bona fide holder before he could recover. In such a case, however, the plaintiff fulfills all the requirements of the law by showing that either he, or some person through whom he derives title, was a bona fide purchaser for value without notice. Commissioners v. Bolles, 94 U. S. 104; Montclair v. Ramsdell, 107 U. S. 147, 2 Sup. Ct. Rep. 391; Scotland Co. v. Hill, 132 U. S. 107, 10 Sup. Ct. Rep. 26.

We proceed to examine the title of the several holders of these bonds from the time they were delivered to the railroad company, which, of course, was not a bona fide holder, to the time they came into possession of the plaintiff.

1. Leonard, Sheldon & Foster. These were New York bankers, to whom the bonds were pledged as security for a loan of $50,

000 to the railroad company. They also received them with power and instruction from the company to sell them. It is sufficient to say, in this connection, that this firm never purchased the bonds, that they continued to be the property of the railroad company while in their hands, and that while, doubtless, they would have been protected as bona fide holders to the amount of their advances, they never took title to the bonds, and when they transferred them to Elliott, Collins & Co., and received from them the amount of their advances, they transferred them as the property of the railroad company, and their interest in them from that time wholly ceased.

2. Elliott, Collins & Co. took up the loan of the prior firm upon the written order of the treasurer of the company, and stood in the same position they had occupied. They subsequently sold the bonds for the railroad company for $54,337.50, paid their loan to the amount of $19,591.67, and credited the company with a balance of $4,745.83. It does not appear to whom they sold them, but it does appear that they never took title to themselves. It is significant, in this connection, that in the suit of Stewart v. Lansing Mr. Elliott, the senior member of the firm, stated: "We did not sell the bonds at all.

They were negotiated by Mr. Delafield [the treasurer of the company] either personally or by letter."

3. John J. Stewart appears as the next* holder of these bonds. There is no evidence whatever to show how Stewart, who lived in New Orleans, became possessed of them, or even that he paid value for them, or that he took them without notice of their original invalidity. It does appear, however, that a suit against the town was brought in his name to recover the amount of certain overdue coupons, that judgment went for the defendant, and that such judgment was affirmed by this court in Stewart v. Lansing, 104 U. S. 505. It was held by this court in that case that it was clearly shown that, although Elliott, Collins & Co. "parted with" the bonds, they did not sell them, nor was the sale negotiated by the firm, and that the bonds only passed through their hands upon terms which had been agreed upon by others; that Stewart, the plaintiff, was not known to any of the witnesses examined; that no one had ever seen him; and that the sale, if actually made, was at an enormous discount. Under these circumstances, it was held that there was no such evidence of bona fide ownership in the plaintiff as would require the case to be submitted to the jury.

The only additional testimony in this case with regard to the ownership of Stewart tends to show that he was an actual person, well known in New Orleans, and living there. Although he appears to have been living when the testimony was taken, no effort seems to have been made to secure his deposition. There is nothing tending to show