D. FREEMAN POOLE ET AL., Appts.,

v.

DANIEL TYLER, Claimant of the surplus and Remnants of the ship EDITH. (See S. C., "The Edith" 4 Otto, 518-523.) Lien for repairs of vessel-in home port-state law-bond.

1. Where repairs have been made upon a domestic vessel in her home port, there is no lien for them by the maritime law.

2. A person who claims a lien for such repairs under a state law which provides that the lien shall cease within a certain time, unless the vessel shall be absent from such port, must, after the expiration of such time, prove the requisite absence of the 3. Where a satisfactory bond has been given according to the provision of the lien law, the ship is discharged from the lien. [No. 187.]

vessel, in order to recover.

Argued Mar. 16, 1877. Decided Mar. 26, 1877.

APPEAL from the Circuit Court of the Unit ed States for the Southern District of New

York.

The petition of the appellants was filed in the District Court of the United States for the Southern District of New York, for the application of the proceeds of sale of the ship Edith, to the payment of an alleged lien of the petitioners. A decree having been entered denying the prayer of the petition, and affirmed upon appeal by the Circuit Court, the petitioners appealed to this court.

Mr. F. A. Wilcox and W. R. Beebe, for appellants.

Mr. Everett P. Wheeler, for appellee.

Mr. Justice Strong delivered the opinion of

the court:

Assuming that, by virtue of the provisions of the Statute of New York, of April 24, 1862 (4 Gen. Stat. 632), the appellants had a lien upon the ship for the repairs made and materials furnished by them, it is a vital question whether that lien remained in existence when the ship was sold on the 8th day of May, 1871. If it had expired, or if it had been discharged before that day, it is useless to examine the other questions raised in the case; for, however they might be determined, the decree made in the court below must necessarily be affirmed.

The repairs having been made upon a domestic vessel in her home port, there was no lien for them by the maritime law and, therefore, whatever right the appellants had to a lien is that which was given to them by the laws of the State. The statute undoubtedly gives a lien but not one of unlimited duration. The 1st section declares that debts contracted for work done or materials furnished in the State, for repairing sea-going or ocean-bound vessels, shall be a lien upon such vessels, and be preferred to all other liens thereon, except mariners' wages. But the 2d section declares that "Such debt shall cease to be a lien at the expiration of six months after the said debt was contracted, unless at the time when said six months shall expire such ship or vessel shall be absent from the NOTE.-Lien for repairs and necessaries for vessel and for supplies, salvage and freight; proceedings in rem for. See note to Blaine v. The Charles Carter, U. S. (4 Cranch), 328; note to The Palmyra, 25 U. S. (12 Wheat.), 1; and note to The General Smith, 17 U. S. (4 Wheat.), 438.

8

port at which such debt was contracted, in which case the said lien shall continue until the expiration of ten days after such ship or vessel shall next return to said port.

The repairs in this case were made upon the ship in the month of July, 1870, and on or before the 22d, for the ship cleared on that day, and sailed from the port a day or two afterwards. The lien, therefore, expired in January, 1871, unless the ship was then absent from the Port of New York. If she was then absent, the lien expired at the end of ten days after her next return. It does not appear in the record exactly at what time she did return; but, in the petition of the appellants for an appeal to this court, it is averred that she was libeled in the Southern District of New York, at the suit of another party, on the 1st of April, 1871, was duly attached, and was sold by virtue of a decree obtained in that case. It is the proceeds of that sale, made May 8, 1871, which are now in the registry of the District Court, and the petition of the appellants for payment out of the proceeds was not presented until May 17. How, then, can it be maintained that the statutory lien for the debt had not expired? It is argued the presumption is that the ten days next after the return of the ship had not elapsed when the appellants filed their petition. Were it possible that any such presumption could be accepted, it would be a presumption of fact, and there is quite enough in the case to overcome it. The ship was libeled in admiralty, as we have noticed, on the 1st of April, 1871. She was duly seized, a decree against her was made and under it she was sold on the 8th of May. It is hardly possible that the seizure, decree and sale could have been made within ten days. It could not have been, if in accordance with the usual course of admiralty practice. As the seizure was made in the Southern District of New York, it would be an inadmissible presumption that the ship had not returned to the Port of New York more than ten days prior to the sale, or certainly more than ten days prior to the 17th of May, when the appellants filed their petition. And this is not all. The evidence shows that, after the return of the ship, the appellants caused an attachment to be issued out of the Supreme Court of New York, in virtue of which the sheriff of the city and county seized the ship, and a satisfactory bond was given, as allowed by the statute of the State, and the ship was discharged. This must have been before the marshal had taken the ship into custody under the process of the Admiralty Court. The sheriff could not have attached her after the marshal's seizure. It is reasonably clear, therefore, that she had returned to the Port of New York more than ten days before she was sold. This is the result of affirmative proof.

But, were there no such proof, the burden of showing the contrary would rest upon the appellants. Six months having expired after the repairs were made to the ship, they had no lien, unless the ship was absent from the port at the expiration of that period, and then only during ten days after her next return. The lien during those ten days was a special privilege given to them by statute, an exceptional right. Hence, it was incumbent upon them to show that such a right existed, and, by proof, to bring themselves within the exception. This is always the

rule when a party claims a peculiar right given by a statute, a right not common to all, and which is given only when a prescribed state of facts shall exist. Such proof the appellants have not adduced and, therefore, they have failed to show that their statutory lien had not expired before they presented their petition for payment, and even before the ship was sold. And were this not so, still, on the facts of the case as exhibited by the record, it must be held that the lien was discharged.

It is almost superfluous to remark, that whatever lien the appellants ever had, they held it subject to all the provisions of the statute which gave it to them. They sued out an attachment against the ship, after her return to New York. for the recovery of the claim they now set up. The ship was seized by the sheriff of the city and county, and a satisfactory bond having been given according to the provisions of the lien law, the ship was discharged from the custody of the sheriff, and from the attachment. Upon that bond a suit has been brought which is now pending. The effect of such an attachment and bond is plainly declared by the statute. The 12th section enacts, that, "Upon such bond being executed and delivered to such attaching creditor or his attorney, *** no further proceedings against the said vessel so seized shall be had under the provisions of this title, founded upon any demand secured by such bond." The bond is thus made a substitute for the lien, and its purpose and effect are to work a discharge of the vessel. It matters not that the statutory provisions for enforcing the lien have been adjudged invalid, because beyond the power of the State Legislature. If they are invalid, it may be doubted whether all the provisions purporting to give a lien are not also invalid, because inseparable from the prescribed means of enforcing it. But, without deciding that, we may remark, that clearly the State had power to enact that the lien it created should terminate, if a bond was given in place of the vessel; and the creditor claiming the lien must take it, subject to the conditions imposed. It need hardly be added, that though a proceeding in rem and a petition for payment of a claim out of proceeds of a sale remaining in the registry are distinct things-the former proceed ing on the ground of a lien-yet no one except an owner is entitled to payment out of the registry, unless he has lien upon the fund there in. The court can marshal the fund only between lien-holders and owners.

The decree of the Circuit Court is affirmed. Cited 2 Flipp., 405, 411, 415, 419, 434; 3 Wood, 186.

NICHOLAS W. CASEY, as RECEIVER OF THE NEW ORLEANS NATIONAL BANKING ASSOCIATION, Piff.,

v.

COUNT GOFFREDO GALLI.

(See S. C., 4 Otto, 673-680.) Receiver of bank-order to bring suit-organiza tion of bank estoppel-order of Comptrollerinsufficient defense.

1. Where the Comptroller of the Currency has

ORIG

The case is fully stated by the court. Messrs. C. Case and Rouse & Grant, for plaintiff.

Messrs. J. M. Carlisle and J. D. McPherson, for defendant.

Mr. Justice Swayne delivered the opinion of the court:

The declaration avers as follows: on and before the 3d day of June, 1864, the Bank of New Orleans was a banking corporation organized under the laws of the State of Louisiana, and as such carried on the business of banking until about the first day of July, 1871, when the bank, by due proceedings under the Act of Congress, entitled "An Act to Provide a National Currency, Secured by a Pledge of United States Bonds, and to Provide for the Circulation and Redemption Thereof," approved June 3, 1864, 13 Stat. at L., 99, became a National Banking Association under said Act of Congress, and as such took the name and style of the New Orleans National Banking Associatian, and carried on the business of banking until the 4th day of October, 1873, when it failed and suspended payment.

Thereupon, the Comptroller of the Currency, after due proceedings had, appointed a receiver for the Association, and it was put in liquidation under the Act of Congress before mentioned and the Acts amending it, and the plaintiff is such receiver, being lawfully appointed under the said Act. By the conversion of the Bank of New Orleans into such Banking Association, every holder of the shares of the capital stock of said Bank of New Orleans became a shareholder of the capital stock of said New Orleans Banking Association to the amount of his shares, and as such subject to the liabilities imposed by said Act of Congress on such shareholders. There is owing by the Association to its creditors large sums of money. Its assets are insufficient to pay its debts. It has become necessary, in order to pay the debts, to enforce the liability of the shareholders. The Comptroller has decided that this shall be done. On the 7th day of June, 1875, by his order in writing, he required the plaintiff, as such receiver, to enforce such liability against each stockholder to the

amount of the par value of his stock, held at the time of the failure of the Association. The capital stock of the Association was $600,000, divided into twenty thousand shares of the par value of $30 each.

The defendant is an alien, a subject of the Kingdom of Italy, and Vice-Consul, etc. At the date of the failure of the Association he was the owner of fifty shares of the capital stock of the par value of $30 for each share. By reason thereof he is liable to pay the sum of $1,500. He has been specially requested to pay that sum, and has refused to do so. The plaint iff is, therefore, entitled by force of the statute to recover the said sum of $1,500, with interest at the rate of five per cent. per annum.

It was agreed by the parties, that demurrers, pleas, replications and other pleadings might be filed without reference to the order in which they were properly pleadable.

The defendant demurred to the declaration, and assigned the following causes:

1. That the defendant is bound to contribute ratably, and that the proper amount can be ascertained only in equity.

2 That the defendant is bound to contribute ratably to pay a large sum; that this sum is not stated in the declaration, and hence what would be ratable and proper does not appear.

3. That the obligation of the defendant is to pay into the hands of the Comptroller of the Currency a ratable portion of the debts of the Association proved before him, and that the declaration does not show that any debts had been so proved.

plaintiff was appointed such supposed receiver of the New Orleans Banking Association, nor before nor since that time, any such corporation in existence, because the owners of two thirds of the capital stock of the Bank of New Orleans did not authorize the Bank to be converted into a national banking association under the laws of the United States, nor to accept an organization certificate as such banking association; wherefore it was prayed that the declaration be quashed.

The plaintiff filed a joint demurrer to all these pleas. At the argument the first plea was abandoned. The other two remain to be considered.

The pleas were properly framed in abatement, and not in bar. Jones v. Bk., 8 B. Mon., 122; Woodson v. Bk., 4 B. Mon., 203.

The second plea is clearly bad. No authority from the State was necessary to enable the Bank so to change its organization. The option to do that was given by the 44th section of the Banking Act of Congress. 13 Stat. at L., 112. The power there conferred was ample, and its validity cannot be doubted. The Act is silent as to any assent or permission by the State. It was as competent for Congress to authorize the transmutation as to create such institutions originally.

The third plea is also bad.

In regard to the first three of these objections, it is sufficient to say that Kennedy v. Gib son, 8 Wall, 498 [75 U. Š., XIX., 476], is conclusive against them. It is there said that the amount to be paid rests in the judgment and discretion of the Comptroller; that his determination cannot be controverted by the stockholders in suits against them; and that, when the order is to collect the full amount of the par of the stock, the suit must be at law. It is unnecessary to reproduce the reasoning of the court in support of these propositions. The sum to be paid being liquidated, and due and payable when the Comptroller's order was made, it follows that the amount bears interest from the date of the order. Otherwise there would be no motive to pay promptly, and no equality between those who should pay then and those who should pay at the end of a protracted litigation. The defendant filed three pleas in abatement:

business except such as is incidental to its organization, and necessarily preliminary, until authorized by the Comptroller of the Currency to commence the business of banking." 13 Stat. at L., 101. A like examination and certificate are required by the 44th section where an existing bank organizes under the Act. That section provides That when the Comptroller shall give to such association a certificate, under his hand and official seal, that the provisions of this Act have been complied with, and that it is authorized to commence the business of banking under it, the association shall have the same powers and privileges and shall be subject to the same duties, responsibilities and rules, in all respects, as are provided in this Act for associations organized under it." 13 Stat. at L., 113.

The declaration avers that the Association became such, by due and regular proceedings under the Act. The plea denies the regularity of the proceedings in the single particular that the owners of two thirds of the capital stock of the Bank did not authorize the directors of said Bank to convert it into a national banking association, nor to accept an organization certificate as such Banking Association. According to the law of pleading, what is not denied is conceded. The giving of the Comptroller's certificate is covered by the averment in the declaration, is not denied by the plea, and is, therefore, to be taken as admitted. The plea proposes to go behind the certificate and contradict it. This cannot be done. The Comptroller was clothed with jurisdiction to decide as to the completeness of the organization, and

There is another ground upon which both pleas must be held bad. Where a shareholder of a corporation is called upon to respond to a liability as such, and where a party has contracted with a corporation and is sued upon the contract, neither is permitted to deny the existence or the legal validity of such cor poration. To hold otherwise would be contrary to the plainest principles of reason and of good faith, and involve a mockery of justice. Parties must take the consequences of the position they assume. They are estopped to deny the reality of the state of things which they have made appear to exist, and upon which others have been led to rely. Sound ethics require that the apparent, in its effects and consequences, should be as if it were real, and the law properly so regards it. Eaton v. Aspinwall, 19 N. Y., 119; S. C., 6 Duer, 176; Cooper v. Shaver, 41 Barb., 151; Camp v. Byrne, 41 Mo., 525; R. R. Co. v. Wilson, 22 Conn., 435; Ellis v. Schmoeck, 5 Bing., 521; McFarlan v. Ins. Co., 4 Den., 392; Rector, etc. v. Lovett, 1 Hall, 191; Topping v. Bickford, 4 Allen, 120; Dooley v. Wolcott, 4 Allen, 407; Eppes v. R. R. Co., 35 Ala., 33; Hamtramck v. Bk., 2 Mo., 169; Jones v. Type Foundry, 14 Ind., 89, Med. Inst. v. Harding, 11 Cush., 285; Hughes v. Bk., 5 Litt., 47; Nav. Co. v. Neal, 3 Hawks, 520.

The demurrer is sustained and, unless leave to plead further is asked, judgment will be rendered in favor of the plaintiff for the amount claimed in the declaration, with interest.

Cited-102 U. S., 426; 107 U. S., 263; 5 Dill., 837; 85 Ill., 99.

THOMAS COLLINS, Piff. in Err.,

v.

WILLIAM L. GILBERT ET AL.

(See S. C., 4 Otto, 753-762.)

Bona fide holder of promissory note-possessioneffect of, as evidence.

1. In order to defeat the rights of a bona fide holder for value, of a promissory note, which it is claimed was procured by fraud, it must be shown; either directly or by circumstances, that he had notice of such infirmity.

2. Actual possession of a negotiable instrument, payable to bearer or indorsed in blank, is plenary evidence of title in the holder, until other evidence is produced to control it.

RROR to the Circuit Court of the United States for the Western District of Pennsylvania.

Suit was brought by the defendants in error, in the court below, upon an accepted draft, and judgment given for the plaintiffs. Whereupon the defendant sued out this writ of error. The case is fully stated by the court. Messrs. Edgar Cowan and R. T. Merrick, for plaintiff in error.

Mr. Hill Burgwin, for defendants in error: The case of Hamilton v. Marks, just published, 16 Am. Law. Reg., 37, reviews very fully this whole question; citing among many other cases the opinion of Mr. Justice Clifford in Goodman v. Simonds, 20 How., 343 (61 U. S., XV., 934), also the Bk. v. Neal, 22 How,, 96 (63 U. S., XVI., 323), and Murray v. Lardner, 2 Wall., 110 (69 U. S., XVII., 857).

Mr. Justice Clifford delivered the opinion of the court:

Transferees of a negotiable instrument, such as a bill of exchange or promissory note payable subsequent to its date, hold the instrument clothed with the presumption that it was negotiated for value in the usual course of business at the time of its execution, and without notice of any equities between the prior parties to the instrument.

Instruments of the kind are commercial paper in the strictest sense, and must ever be regarded as favored instruments as well on account of their negotiable quality as their universal convenience in mercantile affairs. They may be transferred by indorsement, or, when indorsed in blank or made payable to bearer, they are transferable by mere delivery. Goodman v. Harvey, 4 Ad. & E., 870; Goodman v. Simonds, 20 How., 365 [61 U. S., XV., 941]; Wheeler v. Guild, 20 Pick., 551; Noxon v. DeWolf, 10 Gray, 346; Magee v. Badger, 34 N. Y., 249.

Possession of such an instrument payable to bearer, or indorsed in blank, is prima facie evidence that the holder is the proper owner and lawful possessor of the same; and nothing short of fraud, not even gross negligence, if unattended with mala fides, is sufficient to overcome the effect of that evidence, or to invalidate the title of the holder supported by that presumption. Story, Bills, 4th ed., sec. 416; Byles, Bills, 10th ed., 119; Chit. Bills, 12th ed., 257; Millis v. Barber, 1 Mees. & W., 425; Murray v. Lardner, 2 Wall., 110 [69 U. S., XVII., 857]; Bk. v. Neal, 22 How., 96 [63 U. S., XVI., 3231.

Apply that rule in a suit in the name of the transferee against the maker, and it is clear that he has nothing to do in the opening of his case except to prove the signatures to the instrument, and introduce the same in evidence, as the instrument goes to the jury clothed with the presumption that the plaintiff became the holder of the same for value at its date, in the usual course of business, without notice of anything to impeach his title. Bk.v. Leighton, L. R., 2 Exch., 61; Pettee v. Prout, 3 Gray, 503; Way v. Richardson, 3 Gray, 413.

Sufficient appears to show that the drawers of the draft described in the declaration were subcontractors to grade seven miles of a railroad referred to in the affidavit of defense, and that they were to be paid monthly for work done, subject to a certain deduction to be retained as a security for the completion of their contract. Moneys received from the monthly payments being insufficient for the purpose, they were unable to complete their undertaking without an advance from the principal contractor. What they wanted was an advance of $8,000; and it appears that the contractor was willing to make it, if they would give him the acceptance of the defendant in the same amount, as a security that they would perform their contract. Pursuant to that arrangement, they drew their draft upon the defendant in that amount, payable to the order of their senior partner; and the record shows that the draft was accepted by the defendant, and was duly indorsed by the payee.

Beyond doubt, the draft was duly executed and delivered to the contractor as security for the performance of the contract of the drawers of the instrument. By its terms it was payable in ninety days from date; and it must be assumed, in the absence of proof to the contrary, that the plaintiffs became the holders of the same before maturity.

Payment being refused, the plaintiffs instituted the present suit to recover the amount. Process was served, and the defendant appeared and pleaded that he never accepted the draft, and that he never promised in manner and form as alleged in the declaration. Subsequently the parties went to trial, and the verdict and judgment were for the plaintiffs. Exceptions were filed by the defendant, and he sued out the present writ of error.

Six offers of proof were made by the defendant in the course of the trial, all of which were excluded by the court, subject to the exception of the defendant. Four of the rulings of the court in that regard are now assigned for error, and they present the only matters of controversy exhibited in the record. Rulings of the kind, not assigned for error, may be dismissed without remark; nor would the other two exceptions have required much examination, even if they had been assigned for error, as they involve substantially the same questions as those presented by the other rulings of the court.

1. Testimony having been introduced by the defendant that one of the plaintiffs was informed, before the draft came into their hands, that the contractor had agreed to advance money to enable the subcontractors to pay their employés, they, the subcontractors, giving the defendant an acceptance as security in lieu of retained percentage, the defendant proposed to ask the witness what was the arrangement between the subcontractors and the contract

ance was obtained; to which the plaintiffs objected, and the court excluded the question. 2. Evidence having been given by the same witness that there was an arrangement between the subcontractors and the contractor, to the effect that the latter would advance money to the former to pay their men, upon their giving to the contractor the defendant's acceptance, to be retained by him in lieu of the stipulated percentage, the defendant proposed to show by the same witness that the work was finished by the defendant, and that by the terms of the contract all of the percentage retained became due and payable when the contract was completed; which offer of proof was objected to by the plaintiffs, and was ruled out by the court. 3. Complete execution of the draft is not denied; but the theory of the defendant is, that the contractor took the same of the subcontractors in lieu of retained percentage; and he proposed to show that the subcontractors subsequently abandoned their contract, and that the defendant, at the suggestion of the contractor, finished the same, he agreeing that if the defendant would complete the work, he, the contractor, would return the acceptance; and that the defendant never got either the percentage or the acceptance; to which the plaintiffs objected, and the court excluded the testimony.

4. Finally, the defendant proposed to show that the contractor, when the acceptance was delivered to him, was indebted to the subcontractors for retained percentage in excess of the amount of the acceptance; which was also objected to by the plaintiffs, and was excluded by the court.

Properly analyzed and construed, it is quite obvious that these several offers of proof present but a single question, and that they serve to illustrate very fully the different theories of law maintained by the respective parties in respect to such commercial instruments. Throughout the trial the plaintiffs contended that they were the bona fide holders for value of the acceptance, having received the same before maturity in the usual course of business, and that they held a good title to the instrument, unless the defendant could show that they had notice of such facts as were sufficient to impeach the title between the antecedent parties, or that the consideration of the instrument was illegal, or that it was fraudulent in its inception, or that it had been lost or stolen before it came to their possession. Swift v. Tyson, 16 Pet., 15.

Due delivery of the executed draft to the contractor indorsed in blank is admitted; but the theory of the defendant is that the contractor received it merely as security that the subcontractors would perform their contract, and that the contractor caused it to be discounted without authority. Neither illegality of consideration or fraud in the inception of the instrument is charged or pretended; nor is it alleged that the acceptance had been lost or stolen before the plaintiffs received it for discount. Instead of that, the theory of the defendant assumes that the contractor became the lawful holder of the acceptance indorsed in blank for the specified purpose, which is an implied admission that the acceptance was one of a class of commercial instruments which may be transferred by delivery. Suppose that is so; still it is insisted by the