,
NIPP V. PARRISH.
($77
stock ot goods and selling them through an agent specially appointed for that purpose. Good Hope Co. v. Railway Barb-Fencing Co., 22 Fed. 635, and Golden v. Morning News, 42 Fed. 112, followed.
This was an action by the American Wooden-Ware Company against Arthur Stem and the Oval Wood-Dish Company. Motion to vacate service of summons. The papers on this motion disclosed substantially the following state of facts: The action was originally commenced in the supreme court for the city and county of New York by the service of a summons upon defendant company's treasurer while temporarily within the state in attendance on United States court in charge of one of the company's causes, and in expectation of testifying as a witness. Defendant company appeared on motion to vacate said service on the circumstances stated, but said motion was denied. Tbereafter defendant company removed the cause to the United States circuit court, and there renewed the motion upon additional facts. The papers before the court disclosed that prior to the action the defendant compan:v had bought in, on execution sale, a stock of goods belonging to its judgment debtor, and sold the same to various customers, in the regular course of business, .through an agent especially appointed for that purpose, and residing in the state of New York. Also that the defendant company bad for many years previously obtained in said state orders for its goods through a traveling salesman resident in Ohio. but that the company had no office or regular place of business. not did it transact business within the state of New York, except as aforesaid.
Walter D. Edmonds, for defendant company, appearing specially for the purpose of the motion. . Cited Good Hope Co. v. Railway Barb-Fencing Co., 22 Fed. 635, 637; Golden v. Morning News, 42 Fed. 112; Atchison v. Morris, 11 Fed. 582; McGillin v. Cla.1iin, 52 Fed. 657; Ahlhauser v. Butler, 50 Fed. 705; Bentlif v. Ifinance Corp., 44 Fed. 667.
Edward Schenck, for complainant. Cited Bryant v. Thompson, 27 Fed. 881, 883; Duncan v. Gegan, 101 U. S. 812; Estes v. Belford, 22 Fed. 275; Davis v. Railway Co., 25 Fed. 788; Carrington v. Railroad Co., 9 Blatchf. 468, 469, Fed. Cas. No. 2,448; Sweeney v. Coffin, 3 Am. Law T. Hep. U. S. Cts. 18. Fed. Cas. No. 13,686; Jones v. Andrews, 10 Wall. 327; Pope v. Manufacturing Co., 87 N. Y. 137; Ex parte Schollenberger, 96 U. S. 377.
LACOMBE, Circuit Judge. This case is within the principle of Good Hope Co. v. Railway Barb-Fencing Co., 22 Fed. 635; Golden ... Morning News, 42 Fed. 112. Motion to vacate service of process is granted. mpp et al. v. PARRISH et
at October 8, 1S94.)
(Circuit Court of Appeals, Eighth Circuit. No. 448.
PLEADING-SUFFICIENCY OF ANSWER-ACTION ON GUARANTY.
An answer to a complaint upon an alleged contract of guaranty, though loosely and inartificially drawn, and pleading the evidential instead of the ultimate facts, held to be sutlicient, in substance, where the allegations and denials led to the conclusioD that it denied that the written con. tract of guaranty was ever completely executed, so that it became an
iex1lJUng"agreement. and that Itavetred that.ther:loonirset ·torth In the .J,,'IeoJDplalnt were negotiated under a 'conditional 'guaranty, the terms of which had not been compiied with· by the plaintiffs;' ,
'Ifii:Error to theOircuit Cou'Ftof 'the United States for the Dis11irll::t; of Kansas. . 'i!I "
Ben s. Henderson and J. for in error. John D.--.S. Oook (A. N. Gossett, on the brIef), for defendants in error.' ." ' OALDWELL, SANBORN: and THA/YER; Circuit Judges. , .,:1, .;,' ,'_' " ,,_.'
CirCl,litJlldge. writ Qfel'i'or in' this case Wa& sll.e(tQutto reverse a.judgment.upon a guaranty alleged to' have been. InadebyJ.B. Nip{l 8Jlld Coe, the plaintiffs in elTOr, of the paY;m-etltof certain. n:x0rtgage Joans' made. by Dillwyn. Parrish Potter, the defe)idants in to certain clients of the.plilintiffs in error·. !'rhedetendlm,ts in error made the necessary ju.risdlctiQnal allegations in their complaint, and then averred that were. in loa*ing money on and estate In Irallsa,s; t1;l.a,t :Edward Austm and Charles TIndal, who formed a copartnership styled' Austin & Co., were their agents. to negotiate such loans, and to take. notes, mortgages, and guaranties to secure'the loans for them; that on June 1,1887, the J. B. Nipp Land, Loan & Trust Company, which wa:J!l a copartnership compolJedof the plaihtiffs in error, wereengnged in the business of soliciting obtainin;gloans for1;lQrrowers;' that on that day they made a Written agreement with Austin & Co. to gparanty to them, for the benefit of their principals, the payment of the principal and interest .of all mortgage loans negotiated by them through Austin & Co., gparanty not to be considered. in (lefault until after de.fault for 6 months in payment of the principal,or default for 60 days in.the payment of the and the mortgage bonds, notes, .and coupons ·representing the principl,tl of, any such loan to be assigned Without recourse to them upon payment of ,the principal, interest, and charges upon it in full under the guaranty; that under the plaiIl,tiffs in error procured various loans, the and which ,are fully set out, to be amounts, in .error; that default was made by Au,stin & 00. f9r the made in the payment of principal and interest of each of them more than six months before this action was commenced; that the de. fendants in error offered to as'sign the securities representing them to the plaintiffs in error, and demanded pa;yment of the amounts dUE upon them under tllegliaranty,but they refused to pa;y. A, demurrer ,to ,this complaip:t was properly QWJ;'ruled.. The plaintiff in error J". B. Nipp then answereq. In his answer he admits that and his partner signed the wrltten' agreement of guaranty pleaded in the complaint; but lie avers that, at the'time they signed it, there .· was. agreement between them and Edward Au,stiIl, who procured their signatures, that .e.ach individual member ()f tbe ,copartnerships. of Austin & Co. and the J. B. Nipp Land, Loan "&Trust Company should sign the. agreement of gparanty, and that
679
it should be inoperative and of no effect until each of them haC signed it; that Austin afterwards notified them that his firm could not execute it for some time because his partner, Tindal, was ib London, where he resided; that, before it was executed by eithel' Austin or. Tindal, they discovered a verbal variance between the oral agreement they had made with Austin & 00. and the written contract of guaranty, and prevented its execution, "at which time it was understood and by all of said parties that said pardally executed contract was void and of no effect." He then that after the 1st day of June, 1887, and before the complete negotiation of any of the loans referred to in the complaint, Austin & 00. claimed that there was a misunderstanding on their part of the extent of the responsibility which the land company would assume as guarantors of the loans they might negotiate with Austin & 00.; and on June 29,1887, the plaintiff in error Charles Coe wrote Austin & Co. that the conditions on which the land company would guaranty such loans were "that upon the failure of any borrower for Loan & '1'rust Oompany had negotiated whom the J. B. Nipp a loan of money from the said Austin & 00. to pay his or their interest or principal when due, after the said Austin & 00. had used l'easonable diligence in maldng demand of said borower, and after failure to pay on demand, as aforesaid, said Austin & Co. were to immediately notify the said the J. B. Nipp Land, Loan & Trust Oompany of such failure to pay, and, in addition to such notice, said Austin & 00. were to transfer and assign all bonds or notes, interest coupons and all other papers connected with such loan in default, as herein alleged, to the said the J. B. Nipp Land, Loan & Trust Oompany, such transfer and assignment being for the purpose of collection, foreclosure, or such other action as the circumstances of each particular case required; that, upon and at the time of, the said transfer and assignment, said the J. B. Nipp Land, Loan & Trust Oompany, as evidence of their good faith, were to pay said Austin & 00. such sum or sums as were actually due at the time of said transfer and assignment and no more." He avers that in the same letter he notified them that, unless they accepted this offered guaranty with the conditions specified, the land company would at once place their business with some other company. He alleges that after they received this letter, and with such an understanding of the guaranty of the land company as the letter conveyed, Austin & 00. accepted the applications of the several borrowers named in the complaint, and the land company negotiated the loans and procured the securities; that Austin & 00. have failed to give to the land company immediate notice of the rlefaults of these borrowers as they occurred, and have failed to tr:msfer and assign to the land company the securities as provided in the conditions of the guaranty stated in the letter of June 2Uth, and that the real estate which secured these loans has depreciated in value one-half. There are other allegations and denials in the answer, but none that essentially modify the effect of those we have recited, or that it is important to consider in the d ltermination of the qUestion now before us. 'fhe defendants in error demurred to this answer, on the grounds that it did not
680
FEDERAL BEPORTES,
vol. 63.
state facts 'sufficient: to 'consu'tute a defense to. the complaint, and that it was inconsistent ,'and insufficient ; and the court below sustained the demurrel'\;aqd 'ordered judgment for the defendants in error. This ruling, is "8ssignedas error. The answer is loosely andinartiftdally drawn. It pleads the e:ridential instead bf the ultimate facts, and no court would make itself obnOXious to any, just criticism if it became bewildered and losUn the wilderness of its words. But a careful examination and comparison of its seven, pages of closely printed allegations and deniAls has led us to the conclusion that it dOes ,deny that the written contract of guaranty on which the defendants in error count was ever completely executed, so' that it became an existing agreement, and that it avers that tP-eloans set forth in' the 'complaint were negotiated under a conditional guaranty, the terms of which have not been complied with by the defendants' in error. It goes without if no contl'aiCtof guaranty was ever made, or if the contract of guaranty under· which the loans were negotiated contained conditiOnS that were required to be complied 'with by the defendants in error or their agents before any liability would attach to in error. and those conditions have not been complied with, the plaintiffs in error have Ii, defense to this action. We are of the opinion that the plaintiff in error Nipp has pleaded such a defense,and the judgment is accordingly reversed, and the cause remanded, with directions to grant a new trial.
DUPUY v. DELAWARE INS. CO. OF PIDLADELPHIA. (Circuit Court, W. D. Virginia. 1. AUCTION-SALE OF CORPORATION'S REAL
21, 1804.) AS AUCTIONEER..
The, fact that the auctioneer who sells real estate of a corporation at pUblic auction Is a stockholder, director, secretary, treasurer, and a general manager of such corporation, does'not afl'ect the validity 'of the sale. Kearney Taylor, 15 How. 494, distinguished.
v.
2. SAME-PRIOR AGREEMENT BETWEEN AUCTIONEER AND PURCHASER-EFFECT.
Where the conditions of such sale are that the land shall be paid for with stock In such corporation at 80cents of the par value, an agreement by the auctioneer, made 'before the saJe,to let the purchaser have sufficient stock to make such payment, does not afl'ect the validity of the sale. Code Va. § 2840, which provides that no action shall be brought on a contract for the sale of real estate unless the contract, or some memorandum or note thereof, Is In writing, and signed by the party to be charged th&eby, or his agent, renders a parol contract for the sale of real estate voidable only,and not void. OF FRAUDS. '
,.
SALE 011' REAL
4.
FIRE INSURANCE-INSURABLE INTEREST.
A purcbaser in possesSion of real estAte under a parol contract of sale has an insurable Interest therein, though the contract provides that the vendee shall complete a building thereon within six months, and the title shall not pass until such building is completed, and the building burns before It Is completed; the purchase price being paid and deed execut.ed after the loss occurs, and the loss occurring before the expiration of the six months.
DUPUY V. DELAWARE INS. CO.
681
5.
SAME-CONDITIONS-FALSE STATEMENT OF ASSURED'S INTEREST.
Where a fire insurance agent has full knowledge.of assured's interest in property at the time he issues a policy on it which misstates assured's interest, and he issues the policy on his own knowledge, without any statement or repreS ntation by the assured, the policy is not rendered void by a condition that it shall be void if such interest be not truly stated.
6.
SAME-VACANOY OF PROPERTy-NEGLIGENOE OF AGENT.
In an action on a policy issued on a building not yet completed or fit for occupancy, it appeared that a vacancy permit for 30 days was indorsed on the policy, and defendant's agent promised assured, that he would indorse such a permit on the policy every 30 days until the work of completing the building should be commenced, or until assured was otherwise notified; that after indorsing such permit twice the agent failed to again indorse it at the proper time, by inadvertence; and that the property burned more than 10 days after the permit expired. Held, that the condition in the policy declaring it void if the building remained vacant for 10 days was waived.
'1.
SAME-CONDITIONS IN POLICy-MANNER OF PRINTING-STATUTORY REQUIRE' MENTs.
Code Va. § 3252, provid'es that a failure to perform any condition of an insurance policy issued after the statute takes effect shall not be a valid defense to an action on such policy, unless such condition is printed in type as large or larger than that known as "long primer," or is written with pen and ink in or on the policy. Held, that such statute is not in conflict with any prOVision of the constitution of the United States or of the state of Virginia, and is valid.
This was an action in assumpsit by J. A. Dupuy against the Delaware Insurance Company of Philadelphia on a fire insurance policy. Scott & Staples, for plaintiff. Peatross & Harris, for defendant. PAUL, Oistrict Judge. This action was originally brought in the circuit court of the state of Virginia for the county of Franklin, and removed into this court upon the petition of the defendant company; the plaintiff being a citizen and resident of the state of Virginia, and the defendant a corporation under the laws of the state of Pennsylvania, and having its principal office in that state. n is an action of assumpsit brought by the plaintiff upon a policy of insurance issued by the defendant on a dwelling house of the plaintiff situate in the city of Roanoke, Va. Its object is to recover damages for a loss caused by the destruction of the said dwelling bouse by a fire which occurred on the 14th day of October, 1892. By a stipulation between the parties, in writing, it is agreed that the issues of fact involved in this cause may be tried and determined without the intervention of a jury, a jury being expressly waived, and that the finding of the court upon the facts, wbether general or special, shall have the same effect in this cause as the verdict of a jury. The evidence, which is voluminous, discloses the case as follows: On the 1st day of July, 1892, the plaintiff purchased the house and lot involved in this action from the Janette Land Oompany, a corporation doing business in the city of Roanoke, Va. Several montbs prior to that date the stockholders of the said company, in general annual meeting, had passed a resolution directing the general managers of the company to offer for sale to the stockholders two houses
..682 in process Ofell!ction, with the lots on which they are situated, and to in for tne ,same the stock of the company at cent., of its par value; the,'l'>Ul'chaser to obligate himself to complete .said building or building ,within six months from the date of the sale according to the plans and specifications on file with the general managers of the company, the company to retain title to the .propertylltttil this condition had been complied with. In accordance with t?is general managers of the company fixed upon July 1, 1892, as tlie time, and the city of Roanoke as the place, for the sale of the two houses and lots mentioned in said resolution, and gave notice thereof to the stockholders by circulars i1-ddressed and mailed to each of them; and at this sale the plaintiff, company, became the purchaser of being a stockholder in one of the houses and lots mentioned in said reS'Olution, and it is the same that is involved in this action. The price bid and agreed t91:>epaid by the plaintiff for the property was $6,000, which was equ,h,/tlent .to $7,500 in the stock of the company. At the date of the sale there had been no scrip issued to the stockholders for the soock them, but the plaintiff had subscribed for, and paid ,the, ,on, ,37 shares, and had purchased from another stockholder 2 more shares, and was in fact the. owner of 39 shares of the stock of the the par value of which was $3,900. InOMer to make up the whole of the amount which he bid and agreed to pay in the stock of the company for the property, the plaintiff purchased of Taliaferro 4 shares, and ofW. P. Dupuy, to make. up the total of $7,500, plaintiff's brother, enough the amount in the stock of the company which the plaintiff bid and/tgreed to pay for the property. There was nO writing made Or signed by the plaintiff as purchaser, and no memorandum of the sale in writing at the time the sale was made. The sale was made by way of auction, and took place on the porch of the house sold. At the date of, the sale, the house was insured by the defendant in a policy issued by it in fayor of the Janette Land Company, but, this policy having but a day or two to run, the agent of the defendant, W. P. Dupuy, immediately after the sale, and before the plain· tiff had left the premises of the house where the sale took place, solicited from the plaintiff permission to insure the house as his (the plaintiiT's) property, and the plaintiff agreed that the same should be, done. And thereupon, on the same day, the policy formerlyis$ued by the defendant to the Janette Land Company on the house ..was canceled, and a new policy issued on the said house to the plaintiff, and for a larger amount than the former policy covered. NQ written application was made or signed by the plain· tiff for this policy, and he made no representation to the defendant as to his, title to the property, or his interest in it. W. P. Dupuy, of the fl.J.'rn:, of Dupuy & Taliaferro, who were the agents of the defendant, was the auctioneer who sold the house and lot to the plaintiff. He was also a stockholder in the Janette Land Company, a director in said company, and its secretary and treasurer. He was also a member of· the firm of Dupuy & Taliaferro, who were the 'general managers of the said company. He was fully acquainted
DUPUY V. DELAWARE INS. 00.'
683
with the condition of the properly, with respect to the title and in- ' terest of parties iii. it, and especially with the title and interest of the Janette Land Company prior to and at the time of the sale, and with'the interest of the plaintiff in the property at the time he insured it. The policy was placed, together with other papers be· longing to the plaintiff, in a compartment used by him in the safe of Dupuy & Taliaferro, the agents of the defendant. It was qever seen by the plaintiff until a short time before the fire occurred,' when he examined it to ascertain the amount of the insurance, and the character of the roof, as described in the policy, which he did with a view of giving some information to a party with whom he was endeavoring to negotiate a sale of the property. When this policy was issued to the plaintiff, there was attached to it what is called a "builder's permit" for the period of 30 days. A few days before this builder's permit expired by limitation, the defendant, by its same agents, issued to the plaintiff on this policy what is called a "vacancy permit" for the, period of 30 days, and agreed to renew the same every 30 days until work on the uncompleted house should be resumed, or until the plaintiff. should be notified otherwise. 'l'his vacancy permit was first indorsed on the policy on the 1st day of August by W. S. Ficklen, a clerk in the office of Dupuy & Taliaferro, the agents of the defendant, and on the 1st day of September it was renewed for the period of 30 days. But, in the latter part of September, Ficklen left the employment and office of· Dupuy & Talifei*ro, the agents of the defendant, and by inadvertence the renewal for another 30 days was not indorsed on' the policy on the 1st of October. No notice was given to the plaintiff or to the defendant by that such indorsement had not been made. The plaintiff and the defendant's agents both supposed that it had been made until after the fire occurred. It is further shown that on the day he purchased the property, and before leaving the premises after making the purchase, the plaintiff consulted H. H. Huggins, the architect and superintendent of the house, in regard to completing the building, and that he, some time after he had made the purchase, applied for and obtained the keys of the house, and accompanied a prospective purchaser to and through the house, exhibiting the same to him, with a view of inducing him to purchase it. It is further shown that the sale of the house and lot to the plaintiff was reported to the stockholders of the Janette Land Company at their next general annual meeting by the general agents of the company, Dupuy & Taliaferro, and that the sale was ratified by the stockholders, and a deed executed, conveying the property to the plaintiff. The action is defended on the following grounds: First. That J. A. Dupuy, the plaintiff, had no insurable interest in the property when the policy was issued, and none when the property was burned; that the policy was therefore a wagering policy, and void. Second. That the interest of the plaintiff in the property Was not truly stated, and ,the character of the property not truly deBcribed,when the insurance was obtained, and that there Wa.$ a breach of warranty in this failure, and hence the policy was avoid·
684
FEDERAL REPORTER,
ed., .Third. That the house was insured only while occupied asa dwelling; that permission was only given, if at all, for it to remain vacant· until 1st of October, 1892; that it was burned after that date,and while vacant; and that, therefore, the policy was void: It was further,contended in the argUment of counsel for the defendant that whereas W. P. Dupuy, the auctioneer who made the sale, was a sto.ckholder in the vendor company, and hence part owner of the property sold; that he was also a general manager, director, and treasurer of the said companY,-therefore the sale of the property made by him, and his memorandum of such sale, were void. It is not· necessary to discuss this question, so far as it relates to any memorandum of the sale made by the auctioneer, for it is conceded by counsel for the plaintiff that no memorandum in. writing was made of the sale by the auctioneer at the time of the sale, or afterwards, so as to bring the sale within the requirements of the statute of frauds. The question as to the validity of a memo· randum in writing made by the auctioneer is therefore eliminated from this case. As to the: other oontention of the defendant, to wit, that the sale was void because the auctioneer was a stockholder, director, secretal'J, ahd treasurer, and a general manager, of the company whose property he was selling, the court is of opinion that such a position is untenable. There is no principle of law which inhibits a man who is interested in any property, either as sole or part owner, from selling the same, either privately or at public auction. Counsel for· the defendant have cited no authority for the position taken,nordoes the court think any can be adduced. The evidence clearly shows that the auctioneer had no interest in the purchase of the property. All the authorities quoted by counsel for the defendant are to the effect that the auctioneer cannot be a purchaser of, or interested in the purchase of, the property which he is selling. This is the doctrine laid down in Kearney v. Taylor, 15 How. 49!l, which is a leading case relied on by counsel for defendant. In that case it was sought to set aside a sale as void on the ground that the auctioneer who sold the property was a member of or interested in a company that became the purchaser. The failure of the case cited .toapply to the case at bar is seen in its statement. Counsel for the defendant, in their brief, do not apply the doctrine to an auctioneer who is interested in a purchasing company, but to one who is interested in the company which is selling the property. . Equally untenable, in the opinion of the court, is. the position taken by the defendant, that W. P. Dupuy was disqualified to aet as auctioneer to sell the property because of the agreement made between bim and the plaintiff, prior to the sale, that in the event the plaintiff become purchaser of the property ilie auctioneer would let himhaveeno'11gh of his stock in the selling company to make up tberequisite'amount of such stock to pay for the property. This agreement was DO more than any auctioneer might make with pur<lhaser,-that, if such prospective pnrcha.ser had a not" moneyenongh in hand to make up the purchase price,he {the
DUPUY 'V. DELAWARE INS. CO.
685
auctioneer) would lend him enough for the purpose. An agreement of this kind would by no means give the auctioneer an interest in the purchase, but would simply establish between him and the purchaser the relation of creditor and debtor. It seems unnecessary to discuss this question further. The principal question in this case is whether the plaintiff had an insurable interest in the property which was insured. The defendant contends that because there was no contract in writing, signed by the purchaser or his authorized agent, the sale of the house and lot to the plaintiff was absolutely void, and cites in support of this contention the Virginia statute, as follows, from the Code of Virginia: "Sec. 2840. No action shall be brought * * * upon any contract for the sale of real estate * * * unless the contract * * * or some memorandum or note thereof be in writing and signed by the party to be charged thereby or his agent. * * *"
A void contract is defined as follows: "An act is void which, when done, was bad or against the law in respect to the whole community, and nobody is bound by it. But it is voidable if only bad as to a particular person, who mayor may not avoid it. When void it may be so treated by any person, and without a special plea or motion, but when voidable it is generally otherwise, if it has been executed." 8 Myer, Fed. Dec. § 874.
The court' is of opinion that the contract in this case was not void, but only voidable at the option of one of the parties to it; that it remained in full force until one of the parties should take some action or proceeding by which it would be avoided. The language of the statute relied on by the defendant is not that a contract for the sale of real estate shall be void unless made in writing, but that no action shall be brought thereon. The language is similar to that which is used in the Oode of Virginia for the limitation of personal actions generaIly. See Oode Va. § 2920. It is well settled that the statute of limitations does not affect the validity of contracts, but only the remedy for their enforcement. By analogy the validity of the contract here is not affected by the failure to reduce it to writing, but only the remedy is affected, and the defense to the binding effect of the contract can be made by no one except one of the parties to it. The current of authorities fully sustains the court in this position: "Where the terms of the statute are not complied with, no action can be brought to charge a contracting party by reason of the contract, but the statute does not make the contract void." 3 :Minor, lnst. p. 156. "The plea of the statute of frauds is a personal privilege, which the party may waive, and no other can plead for him, or compel him to plead it, as, if he chooses to do so, the party may voluntarily perform the contract." Wood, St. Frauds, p. 877. "As to what amounts to an insurable interest, there has been much discussion in the courts, without hitherto arriving at any satisfactory definition. It may be said generally, however, that whilc the earlier cases show a disposition to restrict it to a clear, substantial, vested, pecuniary interest, and to deny its applicability to a mere expectancy without any vested right, the tendency of modern decisions is to relax the stringency of the earlier cases, and to admit to the protection of the contract whatever act, event, or property bears ·such a relation to the person seeking insurance that it can be said with a reasonable degree of probability to have a bearing upon his· prospec-
FEI;lERAL
vol. 63.,
condition. . interest is 61).1 generis, and peculiar operation.·" n, sometimes exists where there is not any presentJ;lroperty,-any jus'lnrEl'orjus ad rem. , Yet such a connection must be established between the subject-matter insured lind the party in whose beinsurance has as may ,be, sufiicieJ:!.t for the purpose of aeducing the existence of a: )OS8 to him from the of an injury to it." 2, May, Ins. § 76·., ,"But insurable interest does not at all depend upon the completeness or the title by which the insured property is heIil.Tlius possession under'&' 'contract of sale,: upon which partial payment has, been made, may give an insurable interest, alth01;1gh the conditions of the C9D,1;ract have been so that if the preach be insisted on the contract caJ:!.not be enforced, sin,ce the contract, notwithstanding, the breach of its <l()nJlitions, may be carHedhito effect by the parties in interest. And this Is 'friue though the vendor, avaf!l1ng himself of theviollitions of the conditions by the vendee, has resold the property, and is resisting a proceeding in equity bl'QjJght bY the vendee to llOmpel a conveyance. If this were not so, the propertY mlg.ht be destroyed pen,P.iJilg the litigation, to the prejudice of the vendee, wtimately Id. § 87.. ,.,. "The fact that the assured does not hold the absolute titie to the property insured does not necessarily prevent him from recovering the full value of the property insured. Thus, a persoJ:!. :who has into possession of the lLcontracf top,urchase, ,but, who has ,not paid all the purchase hali! an In,surable Interest, to the extent of the full value. and mlty ,the same,llpon the poUcy.", 2 Wood,. Ins. § 483. being one Itfollowlil, 'a$ a matter of course, that the person'mSUred must all Intere'st in the property, and be so situated withre(erence to it that an Injury 'thereto, or its(}estruction,would result in a pecuniary loss to him. An immediate pecuniary loss need not exist. It is sufflcieIlj).1ftherelsa expedtation itheinsured derive a therep:.p,m." 1 Wo()d,Ins.§ 263. HIt is uqt necessary that should haye, either a legal or interest, or indeed any in Insured. ' It is enough if he holds sueh a relation to the property that itBi'destruction by the, peril insured to hi' '. or those for whom he acts. It need not be IW" jus in re!lOt: jus aq. rem." ..p; 645; '''But t() purchase was not void or lllegal by reason of the statQ.te, "Indeed;' the statute: pre/luPPoses" an existing lawful contract.. 1t'l1lfects the remedy only as between the parties, and not the validity of the contract itself; and, when the contract ha,s ,actually been performed, the partl,es, tllemselves·. lt. standi> .unaffected by the statute. even as. It is therefore. to be treated as a valid, ,suqsisting contract" when it comes in question other parties for purposes otJiertban,it recovery upon it." " Amsinck v. Insmance Co." 129 Mass. 185. "Thepol!CY: contained a wan:anty on the part :ofthe assured that he was the sole anll owner of the property covered by the policy, and provided thl\-t MY breach of the warranties therein contained should render void.' The plaintiff was not the unconditional owner of the real estate, but held therefor only a contract for a deed. The contract of insurance .walj\,JM«e,,@thepart of defendant by its recording agents at Algona, they issued the policy, When the contract was made, plaintiff fully infol,'med Mr. Hoxie, one of the agents, of the character of his title; anli it ,was fully understood by the agents, and their daily report ro the defendAAtf\hoWed the fads in regard to it. Yet, with knowledge of such facts, the Issued tl;1e policy in its: ,prei>ent form, and the defendant accepted the premium, and permitted the poUcy to stand. The failure of the pollcy ,tQsfllte 'com-ectlytbt:litftle of the plaintiff was due Wholly to the fault of not escape liability on account of it.". MqMWAAY Co. (IoW8!)!ii !'f. W" 3fj4. in, tJ:le,:thing i!;l' ll.otralwaysindiswnsable to an insurable interest. ' ,Inilllryitrom its loss or ben,e.1lt ,fr<»;tl its llreservatioD,ito,ll.Ccrue to the · .m8,y;be,sufficient, interest thus arising may be made policy." 98 U.S. 528.' "['!lat; ,eliLU\tllble interest may be insured ,iii! admitted. Wll CIl,Ilperceive an ex ecutory.C0Qt;raCt. Whllefti
tire,
ltil texture. and
will
We
DUPUY V. DELAWARE IRS. CO.
687
the contract subsists the person claimIng under It has undoubtedly a substantial interest in the property. If it be destroyed, the loss, in contemplation of law, is his. If the purchase money be paid, it is his in fact. If he owes the purchase money, the property is its equivalent:, and is still valuable to him. The embarrassment of his affairs may be such that his debts may absorb all his property, but this circumS'tance has never been considered as proving a want of interest in it. Tbe destruction of the property is a real loss to the person in possession, who claims title under an executory contract, and the contingency that his title may be defeated by subsequent events does not prevent this loss. We perceive no reason why he should not be permitted to insure against it." Insurance Co. v. Lawrence, 2 Pet. 48; Marshall, C. J .· delivering the opinion of the court.
But in this case the question of insurable interest seems to be put 'at rest by the possession of the property by the plaintiff from the day of its purchase by him to the time of its destruction by fire. He, and he alone, exercised acts of ownership over it, and the property was susceptible of no other possession than that which he did exercise over it. The facts, as stated, show this. In addition to this it may be noted that the contract has been fully carried out by both parties to it. The consideration for the property haA passed from the purchaser to the seller, and the latter has executed a deed conveying the property to the The plaintiff directed the cancellation of the stock which he held in the land company from which he made the purchase, thus surrendering to the seller its obligation, the surrender and cancellation of which was the consideration. for which the land company had offered and agreed to convey the property to the purchaser; such purchaser being a holder of its stock, and obligating himself to complete the building within six months from the date of the purchase. It is true that the last-named condition was not complied with, but it had not been violated at the time the fire occurred. It could not be complied with because of the burning of the house, and was released because it was not possible to comply with it. In the second place, as to whether the policy was void because the plaintiff's interest in the property was not truly stated, and the 'character of the property not truly described, when the insurance was obtained. The provision. of the policy under which this defense is made is as follows: "This policy shall be void · · · if the interest of the insured in the property be not truly stated therein, . , . · or if the interest of the insured be other than unconditional and sale ownership, or if the subject of the insurance be a bUilding on ground not owned by the insured in fee simple."
The evidence shows that Dupuy & Taliaferro were the agents of the defendant, and that W. P. Dupuy, a member of that firm, solie, ited ftom the plaintiff the insurance of the property for the defendant, and issued the policy on behalf of the defendant; that said W. P. Dupuy was the auctioneer who sold the property to the plaintiff; that he was a stockholder in the land company, the owner of the property; that he was a director, secretary, and treasurer of the company; and that the firm of Dupuy & Taliferro, -of which he was a member, were the general agents of the said company. He was fully acquainted with the condition of the property, with respect to the titI& and interest of all parties, and
land company"prio!: to and at the time of the sale, the interest, of the, plaintiff in the property at the time in'sured it. This brings home to the defendant full knowledge of all the facts in connection with the ownership of the property at tlie time it issued its policy of insurance upon it to the plaintiff. Besides, it appears from the evidence that the plaintiff made no representation whatever, either in 'Yriting or otherwise, as to his interest in the property, but that the,agent of the defendant, when SQliciting the insurance of the plailltiff, relied upon his own full knowledge of all the facts and circumstances relating to the title and owner-ship of the property, and issued the policy of insurance to the plaintiff upon his (the agent's) own knowledge of the interest which the plaintiff had in the property at that time, the agent's knowledge being ,as fUll and particular as that of the plaintiff. Sun Mut. Ins. Co. v. Ocean Ins. 00.,107 U. S. 485, 1 Sup. Ot. 582. "To deliver a policY' with full knowledge of facts upon which its validity maybe undJsputed, and then to insist upon these facts as ground of avoidance, is to attemPt a fraud. This the courts will neither aid nor presume; and when the alternative is to find this, or to find that, in accordance with honesty and fair dealing, there was an intent to waive the known ground of avoidance, they will :choose the Illtter. · · · Such an issue is tantamount to an assertion that- the policy is valid at the time of the delivery, and is a waiver of the known ground of inValidity. So is the issue of a policy upon an application toaquestion in which i1.o answer is given." May, Ins. § 497. "It is well settled by the weight of authority that where a polley is issued oontainingconditions inconsistent with the facts, and the agent knew the facts when the pQlicy was issued, the conditions are waived, so far as they conflict with the facts known to ,the agent; and this is} peculiarly the case when the agent fllls up the application erroneously when the facts were correctly stated to him: 1)y the assured. In stIch cases the doctrine of estopp is a very just l application, as, if it was not permitted to apply, an innocent party could be made to'suffer." 2 Wood, Ins. § 90.
The doctrine of the liability of insurance companies for the acts of their agents is so ,well established that the court deems it unnecessary to discuss the question, or to cite authorities to sustain it The court finds nothing in the facts of this case to distinguish it from the reported caaes this firmly-settled principle. There was a provision in the policy making it void if the building "be or become vacant or unoccupied, and so remain for ten days," unless otherwise prQvided by agreement indorsed on the policy, or added to it. It. is claimed by the defendant that under this provision tbepolicyis void, because the building was vacant, and so remained for 10 days and longer, without permission of the insurancecompany indorsed on the policy, or added to it., The evi· dence shows that at tbe time the b'ij.ilding was insured it had been completed, and was not fitfor occupancy. Because of this fact, there was indorsed on the policy when it was originally issued a builder'spennit for period of 30 days. When this builder's permit was about to expire, the building still incomplete and no work uponit being in progress, a vacancy permit, instead of the builder's permit, was indorsed upon the policy for tlie period of 80 days; and it was promised the plaintiff by the agent of the defen,dant that such vacancy permit should be
"
DUPUY '1'. DEL A.WARE INS. CO.
689
upon the policy by the agent of the defendant at the expirationof every 30 days until the work of completing the building should be commenced, or until the plaintiff should be notified otherwise. This was done in fact for each 30 days up to October 1st, when it was not done only because, through inadvertence, the agent of the defendant failed to do it, and the building was burned within the period of the 30 days next ensuing. Had the agent of the defendant made the indorsement upon the policy of the vacancy permit on the 1st of October, as he promised the plaintiff he would do, and as the plaintiff in good. faith relied upon him to do, this question could not have arisen in this case. The evidence clearly shows that the agent of the defendant promised the plaintiff that this indorsement should be made upon the policy every 30 days; that the agent of the defendant had ready access to the policy for the purpose of making such indorsement; that for two of the periods of 30 days each the agent of the defendant did actually make such indorsement upon the policy; and that he failed to do it for the third of such periods only through his own inadvertence, which was his own fault, and for which the plaintiff is in no wise to blame. The agent of the defendant solicited the insurance and issued the policy with full knowledge that the house was not completed, and must remain vacant for an indefinite period. He was fully aware that the house had remained vacant from the day he insured it, and his promise to keep the insured protected from loss or risk by indorsing upon the policy a vacancy permit every 30 days must be taken as a waiver of the condition contained in the policy. His failure to make the indorsement upon the policy as he promised the plaintiff he would do, whether such failure was through inadvertence or otherwise, cannot be used to defeat the plaintiff in seeking the indemnity which the defendant had contracted to secure to him: "If, at the time the agent ot the company received the premium of insurance and delivered the policy, he had kno.wledge of the vacation of the property, and did not then avoid the policy, but treated it as valid and subsisting, such conduct of the agent was a waiver of the condition, and a breach of it could not be relied on by the defendant to defeat the plaintiff's recovery." Georgia Home Ins. Co. v. Kinnier's Adm'x, 28 Grat. lOG, 107. "Such waiver or estoppel (for the terms 'waiver' and 'estoppel' may be indifferently used in application to the subject we are now considering) may take place either pending the negotiation for the policy, or after such negotiation has been completed, and during the currency of the policy, and ',either before or after forfeiture incurred. Such waiver may be made by a general agent, acting within the scope of his powers, needs no consideration to support it, and may be by parol, although the written consent of the insurer is required by the terms of the policy. Nor will the party insured be bound, nor ought he to be bound, by any instructions given by the insurer to his agent, limiting the general powers possessed by the latter in relation to the subject of the agency, unless such instructions are made known to the assured." Id. 108.
Further citation of authorities on this point is unnecessary. The court has discussed and disposed of all the material questions in the case presented in the pleadings and the arguments, except one, which was raised by counsel for the plaintiff, arising under section 3252 of the Code of Virginia. This statute, in brief, provides that the conditions of an insurance policy shall be printed v.63F.no.5-44
. J!'EDERAf. ll.:iW'ORTER,
"1ft. ''ttpeluJ"large or larger than 'thatcommollly kliO";,,nllS "long preamble and the act, as originally enacted (see Acts Assem. Va. 1877.$78, pp. 80, 81), are as follows :
p:t:!ttlet;" or be written with pEm'iand ink in or on tM'policy; The
"WhM'eas, it is the custom of many' insurance companies to issue policies of insurance with conditions and :other restrictive provisions' printed in' small type,14ifficult to be read and lilrelyto:t:lscapethe attention of the insured: "(1) Belt enacted by thegeneraL!!'ssembly of Virginia, that in .any action insurance company or other insurer, founded upon a policy of inafter the first day of July,elghteen hundred and seventy-eight, no failure to perform any condition of the polic3T, nor violattonof any restrictive provision thereof, shaH be a valid defense to such action, unless it appears that such condition or restrictive provision is printed in type as large or larger than that in which this act of assembly is printed, to-Wit: that commonly known as long primer type, 01' ill' written with pen and ink in or on thepoI1cy." ,
The conditions. and restrictive provisions in the policy sued on here al'E.' D.ot printed inc,ompliance with the requirements of the statute"and the policy is ,dated subsequent to the.1st of July, 1878. The of counsel on this statute has not been' by any means exhaustive. Counsel for plaintiff contend for its application to all the grounds raised by the except as to ilie, question of an insurable interest. Counsel for tbedefendant insisted in the oral argument of the case,thattlie 'statute is i.llegill, as being in conflict with that provision of the' c()ustitution of the United States which in)J.ibits a state from pl1Ssing any act impairing the obl1gation of a contract, but they' do notJ.'efer to it in their written brief. The court, as at present advised,sees no ground to question the ralidity of 'the act. It is not in conflict with any provision of the constitution of the.. United States, being prospective in its operation, nor is it in conflict with the of the state of Virginia. Its enactment is within the legislative powers of the state government. The reaSOn recited in the preamble of the act ,for its pas£l8ge is a sOUIid one, and the in accord with a wise public policy, realionable and just in its requirements. It is applicable to the conditions of the policy on which this action is based. The comt has decided the case on other gr()unds, but if it were uecessary to pass upon this question the court would hold that the said conditions are invalid as a defense to this action, because they do not confoI'Il1 to the requirements of the statute. Judgment will be entered for the plaintiff In the sum of $3,170.54 with interest from the 20th day of December, 1892, until paid, and the costs of this action.
V.
UNITED S1'ATES. October 1, 1894.)
(Circuit Goutt, D. Washington,E. D.
1.
DI8TRIOTATTORNEYS-CoMPEN8ATION-WHEN FIXED BY STATUTE.
.
Notlxed rate of compensation is provided by law fot the services of attorneys in cases involving the title to land occupied. by the United as a, garrison and military post. cases on appeal to the circuit court of appeals agalnst or by ,the United States, or against a colleCtor to recover money exacted by him as a penalty under a statute of
wrnsToN V. UNITED STATES.
691
the United States, or cases, against Ind,ian agents and military officers involving the right of the government to prevent the building of a railroad across the lands allotted to Indians. 2.
A district attorney cannot re<'Over, on the basis of a quantum meruit, a sum In excess of the amount allowed by the attorney general, for services rendered, for which no fixed rate of compensation or fees is provided by law. DETERMINATION BY TREASURY
BY ATTORNEY GENERAL-CONCLUSIVENESS.
S. SAME - EARNINGS OF DISTRICT ATTORNEY DEPARTMENT.
The treasury department. in determining whether a district attorney has received earnings in excess of the ma-'(imum of personal compensation and emoluments allowed by law for a particular year, cannot include compensation for travel allowed by law on a mileage basis. 4. SAME-REFERENCE OF CLAIM TO COURT OF CLAIMS-EFFECT. Where a particular item 0," claims for services by a district
attorney, for which the statute fixes no fees, has been allowed by the attorney general, and is part of a case by the district attorney against the government, a recovery for such item will not be denied on the ground that it has been referred to the court of claIms by the comptroller of the treasury, under Rev. St. § 1063, and that he desires that court's decision on the questions involved for 'future guidance, especially where it does not appear that such claim has been regularly transmitted to such court.
Ii. SAME-SF..RVICES AFTER REMOV AL- EMPLOY>IENT.
Where a district attorney renders services after removal from office, pursuant to arrangements made before notice of his removal, and the attorney general allows him a certain sum, to pay which congress makes a special appropriation, recovery of such sum by the district attorney cannot be defeated on the ground that he was not lawfully authorized to act.
This was an action by Patrick Henry Winston against the United states to recover compensation alleged to be due him for services rendered defendant as United States district attorney. Alexander M. Winston, for plaintiff. William H. Brinker, U. S. Atty. HANFORD, District Judge. The, plaintiff held the office and performed the duties of United States district attorney for the district of Washington from the 19th day of February, 1890, to the 30th day of May, 1893; and he has brought this action against the United States, under the provisions of the act of March 3, 1887, entitled "An act to provide for the bringing of suits against the government of the United States" (1 Supp. Rev. St., 2d Ed., 559), to recover compensation for special services rendered by him under the direction of the attorney general, and fol' mileage in addition to payments made to him. His claim is itemized as follows:, (1) For .services as attorney for the defendants upon the trial in this court at the July term, 1890, held at Tacoma, of the case of the Catholic Bishop of Nesqually v. General John Gibbon et aI., involving the title, to the land occupied as a garrison and military post at Vancouver, in this state, $2,500 in addition to $2,500 paid to him for said services. (2) For services as attorney for the United States upon the hearing in the United States circuitcQurt of appeals for the ninth circuit, at San Francisco, in April, 1892, of the case of the United States v. The Steam Tug PiIot,on appeal from the district court for this district, '287.21
692
in., to $212.79 paid to him for said set'Vices. (3) For seriices' as attorney for the defendant upon the hearing on appeal in the said United States circuit court of appeals in April, 1892, of the case of Dunsmuir v. Bradshaw, as collector of customs for the collection district of Puget Sound, which was an action to recover It sum of money which had been exacted by said collector as a penalty under a statute of th,e United States, $500. (4) For services as attorney for the United States upon the hearing in said United States court of appeals in April, 1892, of the case of the United States v. Gee Lee, appealed from the United States district court for this district, $250.. (5) For set'Vices as attorney for the defendants in the superior court of the state of Washington for King county, and in this court at term' held at Seattle in March, April, May, and June, 1893, in two cases against Edwin Eells, as United States Indian agent, and certain officers of the United States army, involving questions as to the right of the government to prevent the building of a railroad across lands which had been allotted and patented to certain Indians pursuant to a treaty made by the United States with the Puyallup tribe (see Ross v. Eells, 56 Fed. 855), $1,500. (6) For actual and neceSsary traveling in going from his place of abode to the several places at, which terms of the United States courts are held in this district, and returning, and in going to and returning from examinations before United States commissioners of persons accused of violations of laws of the United States, between January 1 and May 30, 1893, a balance of $1,379.84. (7) For fees and emoluments fixed by statute, earned between February 19 and December 31,1890, a balance of $799.71. (8Y For the year 1891, a balance of $810. (9) For the jear 1892, a balance of $490.83. That the plaintiff rendered the services charged for, as alleged by him, is not denied, and he has proved the value thereof as alleged. If the law authorized a recovery upon a quantum meruit, I should have no hesitancy is awarding to plaintiff the first five items claimed. I hold that the plaintiff's services in the several easel!! above enumerated were not of the kind for which a fixed rate of fees Of compensation is provided by law. In protecting the interests of the government the attorney general often finds occasion to require the district attorneys to take charge of impor'tant litigation, and incur expenses in connection therewith, for which the law provides no compensation. It has been usual, however,' for the treasury department to audit and pay accounts for such services and expenditures in amo"\Ints authorized by the attorrecogI!.ized the practice ney general" and since 1889 bY' includirigin each of the annual appropriation bills for sundry civil expenses an item for ,such special compensa,tion of district att()rneysas may be fixed by the attorney general for services not covered bY" ealary, or fees. There, is .no other autIlority given by for district t9 the government III his PrQ'fessumal capacIty, notcoV'ered by hIS. salary or fees. T\le plaintijI therefore precluded from recoverin,g any sum in excess ofllie alnount fixed by the attorney geneI'm as compensa-
WINSTON II. UNITED STATES.
693
tion for any particular servicEr. No allowance can be made by the court upon the basis of a quantum meruit, as the law gives to the attorney general power to pass upon the question as to the value of the service, and his determination is final and con· elusive upon the government as well as the claimant. U. S. v. Bashaw, 152 U. S. 436, 14 Sup. Ct. 638; U. S. v. Shields, 153 n. S. 88, 14 Sup. Ct. 735. On this ground, judgment must go against the/plaintiff as to the first item, the sum allowed to him by the attorney general for his services in the Bishop of Nisqually Case, viz. $2,500, having been paid. The attorney general allowed in the Pilot Case $400, of which $212.79 has been paid, and the bal· ance of $187.21 was credited and retained by the treasury department on account of excess of earnings above the maximum of personal compensation and emoluments which- the law permitted the plaintiff to receive for the year in which the money was earned. The attorney general also allowed in the Gee Lee Case $250, and the same was credited and withheld upon the same account. From the uncontradicted evidence I find that the plaintiff's emoluments, as stated, included compensation for travel allowed by law on a mileage basis, amounting in each year of his incumbency to more than the several sums deducted from his earnings as excess. The opinion of the court of claims, by Chief Justice Richardson, in the case of Smith v. U. 8., 26 Ct. C1. 568, affirms that mileage "is a commutation or substitute for expenses estimated to be necessary for travel, and is :fixed by law at ten cents a mile, which ordinarily, or on the average, it is supposed, will cover the actual amount required. It relieves public officers from the trouble of keeping itemized accounts of small disbursements, and avoids controversies between them and the accounting officers upon insignificant mat· ters. The commutation for such expenses can no more be regarded as fees and emoluments than would be items of actual expendi· tures, if required to be included in the emolument return, which latter, we apprehend, nobody would claim to be either fees or emoluments." I concur in that opinion, and consider all the de· ductions from the plaintiff's earnings on account of excess above his lawful maximum to be erroneous. Therefore, my findings as to the two items for $187.21 and $250 will be for the plaintiff. The attorney general fixed the amount of the plaintiff's compensation in the case of Dunsmuir v. Bradshaw at $310. and that sum has been neither paid nor credited to the plaintiff. I hold that he is entitled to recover the same in this action. In behalf of the government the court is urged to refuse to consider this item, on the ground that plaintiff's claim has been referred to the court of claims, under section 1063, Rev. St., and the comptroller of the treasury desires to have the decision of that court upon the questions raised by his objections, to guide him in passing upon other claims of a similar kind. This argumeJ;lt would have greater weight if the comptroller would accept the decisions of the court of claims which have not been reversed nor overruled by the supreme court, and follow their guidance in passing upon similar questions. I find, however, from the record in this case,
· 694 that
F])DERAL REPOR1;ER,
()f
his own iW htQh are at vaxiance with: tIre, decision in the Smith Case, abo:ve to. It does not' appear' that this claim has been reg!ll3,lj"\Ytr,&Jlsmitted ,to the court of claims by the, secreiary of the treasury, or the, head of any departnient; and, if it were, the item naJrtJofa case of which this court ha.s acquired jurisdiction, aIJ.4 I,tcl;tn find :po warrant for sending the plaintiff to' litigate one part ,his case 'in another forum without his conin tbePllyaUup Indians Cases the attorney of work done while' in and $600 fot continuation of his work uncl;er his,!'lpepiall'employmentll,fte;l'his removal from, office. 'Upon groundsalreft4Y gQne overin thiaopinion, I hold that the plaintiff is .entitled to reCo.vel' in thisactiou the amount of $400 soaUowed by ,the ,attorll.eygeneral. The otheli'"palj; of the, allowance is objected to on the ground that not lawfuny, authorized to represent his clients connection with the government had been severed. 1:'be ,conrtdid ,not, permit'pending proceedings to be in· terrqpted,by 'of the political axe, and the plaintiff earpedthe,cornpensation alhrwed by the attorney general by reat .M% pOl1t, discharging his professional duty, under his attorney for the defendants, during the actuaJ, trial of th,(il to arrangements made previous to noticeot hisren,:lOYAl. Congress, at the last session, ha$ made a special to pay this $600, and thereby: :removed all douJ>ts,as to of allowing the same. The findings will be thep1amt1ff,on of this item, for ihefull sum of $1,QQO, general; but, as i the $600 approby for the.pu.. has been already paid, that be from th:e amount of the judgment. 4,s to the sq.th,)tem, I find that the total earnings in 1893, including the :$l,O@,1Jpecial· comp,ensation for the Puyallup Indians and mileage amounting to $1,629.60, is the sum of $5,164.60. TIle. plaintiff i$ . laWfully entitled· to .receive and retain the following: MaxiIl).um colD,pensation in the way of fees and em/?IuJDents, ,$2,465.75; mileage, $1,629.60; commissions on proceedfi'l of forfeited; 9pium, $11.60iclerk hire, printing, and other incid.ental approved by· the attorney general, $776.60 i aggregating ffli,m 'of $4,883..55. He has been paid, including th,e$600 specialllY appropriated for' his services in the Puyallup IndiaJils,Case.s, so that there. is a balance yet due him of I deduct frolllthis the $400 on his aw,artled on accQunt, of the Puyallup Indians Cases and find in favor, item in the sum of ,$641.20. The. items may be disposed of in a bu.nch. monf3Ts"earned during theiyears 1890 and 1891, there· was as excess of the maximum, the following: In 1890, $566.38; in 1891, $750. In each of said years there was an amount· of mileage in .excess of said sums carried into the emolument
iJJ., construing"tbe law according to
a}1owed,:by law todistcict attor-
IN BE SCHECHTER.
695
account, without which there would have been no BurpIu'B of earnings above the maximum. I therefore find in favor of thE' plaintiff upon the seventh item in the sum of $566.38, and upon the eighth item in the sum of $750. I do not find that any part of the earnings for 1892 was withheld, except part of the special compensation for services in the Gee Lee and Pilot Cases, which amounts will be made up to the plaintiff by the award on account of the second and fourth items. I therefore find in favor of the government on the ninth item.
In re SCHECHTER.
(Circuit Court, D. Minnesota, 'l'hird Division. October 13, 1894.) L CONSTITtJ,TIONAL LAW-INTERSTATE COMMERCE-STATUTORY REGUI,ATION :BY BTATES.
A state statute requiring every person selling fruit trees or other nursery stock grown outside the state to file an atlidavit with the secretary of state, and a bond of $2,000, and to exhibit to each purchaser a certificate of the secretary that he has complied with these provisions (Laws Minn. 1887, c. 196; §§ 1-3), is unconstitutional, as imposing vexatious and annoying restrictions upon interstate commerce (article 1, § 8, ct. 3), and cannot be upheld on the ground that it is intended to protect the citizens of the state.from the fraudulent representations of such dealers.
2.
BAME-SPECIAL PRIVILEGES.
"When a sta,te undertakes by statute to deprive citizens of other states who deal in sound articles of commerce produced in those or that presumption of honesty and good intent which it indulges in favor of its own citizens Who deal in Its own prodUCts, and which the law raises in favor of every man, it effectually deprives the citizens of those states of some of the most valuable privileges and immunities its own citizens enjoy."
This was a writ of habeas corpus to procure the release of C. H. Schechter from imprisonment under commitment of a justice of the peace. :N. Kingsley and W. E. Todd, for petitioner. Henry A. Morgan and A. L. IIoppaugh, for the State. SANBORN, Circuit Judge (orally from the bench). The prlsoner, a citizen of the state of Iowa, is deprived of his liberty under the commitment of a justice of the peace of the state of Minnesota, on the sole ground that, as the agent of citizens of the state of Illinois, he sold fruit trees that were grown in the state of Illinois in the state of Minnesota, without complying with the provisions of sections 1-3 of chapter 196 of the Laws of Minnesota for the year 1887. There is no claim that any false representations were made or any fraud committed in this sale. Section 1 of this chapter pr(). vides that it shall be unlawful for any person to sell or offer for sale any tree, plant, shrub, or vine, not grown in the state of Minnesota, without first filing with the secretary of state an affidavit setting forth his name, age, occupation, and residence, and, if an agent, the name, occupation, and residence of his principals, and a statement
vol. 63. aE! ,to nursery stock to ,be sold is grown, together with a bo'Jid:t9"tlte state of Minnesota, in .the penal sum of $2,000, conditionedto save harmless any citizen of this state who shall be defrauded by any false or fraudulent representations as. to the place where.$ucb, stock sold by such person was grown, or as to its harfli.Desator climate. Section 2 provides that the secretary of state, on compliance with the provisions of section 1, shall give to the applicant a.certificate setting forth the facts that show a full compliance by the applicant with the provisions of the act, and that said applicant shall exhibit this certificate, or a copy of it, to any person to whom stock is offered for sale. Section 3 provides that any person, whether as principal or agent, who shall sell or offer fol' sale any foreign-grown nursery stock within this state, shall furnish to the purchaser a duplicate order, with a contract specifying that such stock is true to name, and as represented. Section 4 imposes a penalty of not less than $25 nor exceeding $100, or of imprisonment in the county jail for a term. not less than 10 nor more than 60 days, in the discretion of the court, for the sale by any person of any foreign-grown nursery stock within t:p.is state without complying with the first three sections of the act. There is no law :If the state of Minnesota which imposes any such restrictions upon the sale of any tree, plant, or vine grown in this state. The third clause of section 8 of article 1 of the constitution of the United States provides that "the congress shall have power .· * * .to regulate commerce with foreign nations, and among the several states, and with the Indian tribes." The effect of this provision of the constitution has been so frequently and forcibly declared ';by the supreme court of the United States that it is sufficient for the purposes of this case to state a few of the propositions that the decisions of that court have established. The power to regulate commerce among the states wl;ts carved out of the general sovereign power held by each state, and granted by the constitution to the congress of the United States. This power was thus vested in congress exclusively, and no state, by virtue of any power not thns granted, whether under the name of the "police power," or under any other name, can lawfully infringe upon this grant. This power to rf>fwlate commerce, thus granted to congress, is not subordiuate to any of the powers not granted, but paramount to all the powers of the state, and any act of the state which interferes with interl'ltate commerce in a well-known and sound article of commerce is unconstitutional and void. Now, while there are certain subjects in their nature local, such as harbor pilotage, beacons, bridges, etc., l'eg'arding which a state may legislate when congress has not, yet ·when the sUbject-matter is the sale of a well-recognized article of . commerce, such as vines, trees, or shrubs; or any other well-known artiCle of commerce, the product of another state,· the subject is in its nature national, sus'Ceptible of regulation by rules uniform throughout the nation, and <>bviously susceptible of wise regulation by such uniform national rules only; and in such a case there can, of necessity, be only one system or plan of regulation, and that congress alone can prescribe. In all cases where congress has passed
IN RE SCHECHTER.
697
no law regulating interstate commerce in any well-recognized article of commerce, that fact is conclusive evidence that it intends such commerce to be free, and any law of the state which prohibits or restricts it must be held to be in violation of the constitution. I do not intend to hold that valid quarantine and sanitary laws may not be passed by the legislature of the state. There is no such question presented in this case. It is not claimed that these trees that were grown in the state of Illinois were deleterious to the health or- the comfort, or dangerous to the lives or property, of the citizens of this state. Nor do I intend to hold that a proper inspection law may not be passed by the legislature of this state to prevent the introduction here of any diseased or dangerous article which might interfere with the health, comfort, well-being, or happiness of the people of this state. No questions of that kind are presented in this case. This law imposes a restriction upon the sale of foreign-grown trees by its very terms; and any law which imposes any vexatious or annoying restriction upon the sale of articles that are themselves sound articles of commerce must be held to be an interference with commerce, and thus in violation of the clause of the constitution to which I have referred. To provide that every man who sells a foreign product shall be required -to file an affidavit with the secretary of state, and a bond of $2,000, and to exhibit to every man who purchases the article a certificate of the secretary of state that he has complied with these provisions, certainly imposes a vexatious and annoying obstruction to commerce in the article mentioned. For that reason I think that this law is in violation'of this clause of the constitution. Moreover, article 4, § 2, of the constitution of the United States, provides that "the citizens of each state shall be entitled to all privi: leges and immunities of citizens in the several states." This' provision of the constitution, in my opinion, gives to the citizens of other states the right to introduce and sell the products of thol'le states in Minnesota on the same terms that her own citizens sell like products of this state. The Illinois tree, the Wisconsin vine, the Iowa shrub, that is sound, and is of the same character as that grown in the state of :MInnesota, seeking sale in this state, is entitled to be sold by those who deal in it on the same terms and with no greater restrictions than the like article produced in the state of Minnesota; and any restriction which imposes upon the dealers in foreign articles that are themselves sound, burdens that are not imposed on the dealers in like articles produced in the state of Minnesota, in my opinion, violates that provision of the constitution to which I have last referred. :rt is said that the bond required here is to prevent the dealers in foreign trees from perpetrating fraud in their sale, and that it is competent for the state to protect its citizens against the fraudulent representations of such dealers. The answer is that when a state undertakes, by statutory regulation, to deprive citizens of other states, who deal in sound articles of commerce produced in other states, of that presumption of honesty and innocence of wrong which it indulges in favor of the dealers in its own products, andwhich
FEDERAL
v<». 63.
tllerJtUvL fij.Yov. of,Wery it very effectuall.:Y ,qepL'ives tbei¢itiZftnsrof other states ,of. valuable im· citizens enjoy. . '. . . '. ' , I tl;lJ.nk the priaoner must be disoharged. Let an Q:l'll@,Ue that effect. OONSOLtriATED VAPOR-STOVE CO: v. ELLWOOD GAS';'STOVE & , STAMPI<NGOO. i Court,W... . , : Pennsylvll-nill. September 17, 1894.) D. , ," -...., . . ... . I I
." " O:F.
No. 8.
, STovEs; .'
'The patent:, No. 235,600, for a gasoline stove, if valid, 'is stiietly;'limited by 'the' terms of its . specifications, and by the prior art, to a'stove having, a bumer plate with the v.aporizing ·cha):Qbel'llpr,ojecting therefrom, and"ponnected by the under side thereof, and is not infringe" by 1\ iStqve'luwliich fhefixing chamber Is located on the under side of the bUl'11er plate. . i,
This' wa., the alleged of a patent. 'GeorgeH. ,Christy and"Royt & Dustin, for complainant. 'John R.' Bennett, Harold Binney, and Lyon, McKee & .Sanderson, for defendant. ' The Consolidated Vapor-Stove; patent), file this bill against the Ellwood Gas-Stove 81; Stamping Company of Ellwood, Pa., for i"frip,gement in the. manufacture of gasoline stoves of letterspateP,tNo. 235,!W,O, issued December 14, 1880, to Charles a;nd Joseph The answer denies patentability and infringement The device described in the Whittingham patent is,in the partlJ needfpl to now consider,describedas follows: From elevated oHJount.a pfpe leads to one of two chambered ears or opposite a burner plate, and connected by a ,conduit ;8,cross the lower side and at one side of the central tube .of said From the second chamber depends a pipe having a sQcket,in which a valve stem is screwed for controlling: a ,Jet orifice, wl;lich is located directly under, and a ejllort the, central tube. SUrlDountip,g,the plate is a burner cap,' pf<?,videdwith two rows of jet holes, the lower one being just fl,pqvetpe uppernsurface of the After the burner is initiall.}"; !started,""Tthe mode .Qf doing whiehis not material to the present inquiry,-':"'its workings are as follows: The upper !mrface of thf\ cqambers being highly. heated by of the dam,es row ci(jet holes and by cop,ductlOn th.f()PS'll the heater plate, the OIl passes to the first or whe,re'it is vapori;zed. This vapor then passes the4;:op,duit, whereit is superheated, and into the second or "hing" chaml;ler, where it 'ts .still further superheated, and becomes "fixed," or a sort' of fixed gas. It then pasl:les through to the jet orifice, and spurts il}to' the ceritral tube, carr;ying with it a supply i
I'
. I:.,:
DistrictJudge.