1 Dill. 372 | U.S. Circuit Court for the District of Arkansas | 1870
The execution of the bond and mortgage in the suit being admitted, the complainant is entitled to a decree of foreclosure, as prayed, unless some of the defences relied upon by the respondents have been established. To these we now turn our attention, and they will be separately considered.
I. As to the alleged agreement to take the collaterals in satisfaction. It is claimed by the respondent, Hiatt, that at the time the loan was made of the complainant, and the bond and mortgage, in suit, were executed, and the Kenyon note was delivered, and the Perkins judgment was assigned to the complainant, that it was verbally agreed (as stated by Hiatt in his testimony on this po;nt) “that, whenever he requested it, the plaintiff was to take the Kenyon note and mortgage and the judgment against Perkins, and release the mortgage from myself to him.” The respondent testifies that in 1802 he wrote to the complainant in Virginia, claiming the benefit of this agreement, and that the complainant, recognizing the agreement, wrote in reply, that he- would accede to his request The existence of such an agreement, the 'complainant positively denies. He also denies receiving from the respondent a letter making such a request, or writing to him a letter agreeing to accept the collaterals in satisfaction of his debt.
The alleged agreement is not satisfactorily proved. On the contrary, it is perfectly clear to our minds, that no such agreement was made. Such an agreement is not consistent with the language of the written assignment of the Kenyon mortgage, which, ini terms, states that it was assigned “as collateral security.” Again, assuming the Kenyon note and the Perkins judgment to be perfectly good, and worth their face, they do-not equal in amount, by several hundred dollars, the sum of money which the complainant actually loaned to the respondent, a circumstance strongly tending to show the intrinsic improbability that any such agreement, as the respondent now alleges, was in fact made.
Again, the letter which he says he received from the complainant, agreeing to take the collaterals in satisfaction of his debt, is not produced, and the writing of any such letter is positively, and on oath, denied by him. The respondent says this letter was mailed in Virginia, and fixes its date and receipt at a time when communication, by mail, between that portion of Virginia and the rest of the United States had entirely ceased. *
Again, the respondent’s conversations with others, as, for example, Judge Crozier, long after this alleged satisfaction of his debt, in which he distinctly admitted that he was indebted to the complainant in the amount of the bond for $2.400, now in suit, is irreconcilable with the theory the respondent now propounds, and which we are at present discussing. Without longer dwelling upon this point, we conclude by expressing it, as the opinion of the court, that this defence is not established.
*2. The Statute of Limitations. By the statute of limitations of the state of Kansas, it is provided that “an action upon a specialty, or any agreement, contract, or promise in writing,” shall be brought “within three-years” from the time the cause of action-accrued. Laws Kan. 1859, c. 3, p. 84, §§ 19, 20. Under the thirty-fourth section of the-judiciary act, this statute of limitations is-applicable to the present suit State statutes of limitation, in the absence of provision otherwise by congress, form the rule of decision in the national courts, which will give to such statutes the same effect that they have, or are entitled to, in the courts of the states. McCluny v. Silliman. 3 Pet. [28 U. S.] 270; U. S. Bank v. Daniels, 12 Pet. [37 U. S.] 32; Porterfield v. Clark, 2 How. [43 U. S.] 125; Hanger v. Abbott, 6 Wall. [73 U. S.] 532, 537.
During the whole period covered by the late Rebellion, as well as before and since,
So far as the court is advised, it is one which, in the form now presented, has never been determined in the supreme court. This circumstance, as well as the gravity and difficulty of the question, will justify, if it does not require, the somewhat extended discussion necessary to present the grounds of the conclusion at which we have arrived.
The leading, and up to this time, the only, decision of the supreme court as to the effect of the late conflict upon state statutes of limitations, is that of Hanger v. Abbott, 6 Wall. [78 U. S.] 532. This judgment holds when a creditor, being a citizen of a loyal state, brings an action on a contract against his debtor, a citizen of and residing in a state which went into the Rebellion, that the period during which the creditor was prevented by the conflict from asserting his rights, is not to be included in the computation of time fixed by statutes of limitation. The case just cited is, as to parties, the reverse of the present one, for here we have a creditor who is a citizen of a state which . was in insurrection, bringing his action against his debtor, a citizen of a loyal state, and claiming the benefit of the same rule of law, to which, in the case referred to, it was adjudged that the loyal creditor was entitled. To the case just mentioned (Hanger v. Abbott), we shall again have occasion to refer, and to discuss the point whether, in principle, it can be discriminated from the case at bar. On assumption that the question in this case may be different from that determined in the case mentioned, we 'proceed to an independent examination of the question as to the effect of the war of the Rebellion upon the complainant’s rights under his contract with the respondents.
Properly to understand the effect of the war upon contract rights, it is necessary to inquire into the nature of the conflict. In view of the doctrines laid down by authoritative writers on public law; of the nature, extent, and duration of the struggle, and of the character of the legislative acts of congress, and the action of the executive respecting it, there can be no doubt that it was a civil war, attended in law with all the general consequences of such a war, except where congress has otherwise provided, and where such consequences are inapplicable to the peculiar nature of the struggle, and of our government. “A civil war,” Vattel says, “is when a party arises in a state which no longer obeys the sovereign, and is sufficiently strong to make head against him, or when, in a republic, the nation is divided into two opposite factions, and both sides take up arms.
“Civil war breaks the bonds of society and of the government; it gives rise in a nation to two independent parties, who acknowledge no common judge. They are in the position of two nations who engage in disputes, and not being able to reconcile them have recourse to arms. The common laws of war are in civil wars to be' observed on both sides. The same reasons which make them obligatory between foreign states render them more necessary in the unhappy circumstances where two exasperated parties are destroying their common country.” Vattel, 3, 54, ec 18, secs. 290-295. This language is quoted by Grier, J., in delivering his opinion in the Prize Cases, 2 Black [67 U. S.] 635. Riquelme says: “When a faction is formed in a state which takes up arms against the sovereign in order to wrest from him the supreme power, or impose conditions on him, or when a republic is divided into two parties which mutually treat each other as enemies, this war is called ‘civil war.’ Civil wars frequently commence by popular tumults, which in no wise concern foreign nations; but when one faction or party obtains dominion o*er an extensive territory, gives laws to it, establishes a government in it, administers justice, and, in a word, exercises acts of sovereignty, it is a person, in the law of nations; and however so much one of the two parties gives to the other the title of rebel or tyrant, the foreign powers which desire to maintain their neutrality ought to consider both as two states, independent as respects one another and other states, who recognize no judge of their differences.” Bello Principios de Derecho International, c. 10. 267. Bluntscbli, in his Code of International Law, a recent and
The late Rebellion, tested by these principles, was undoubtedly what is regarded as a civil war — something more than a mere commotion or civil disturbance. The various proclamations of the president, and the various acts of congress in reference to the war, clearly show that it was treated both by the legislative and executive departments of the government as a civil war, and those in rebellion were accorded all the usual rights of belligerents. Indeed, each house of congress, by the resolutions of July 22 [12 Stat. 268, ch. 9], and July 25, 1861 [12 Stat. 274, ch. 17], in terms, referred to the conflict as a civil war.
And the contest also has constantly been regarded and treated as a civil war by the supreme court of the United States. This subject first came before the court in the Prize Cases. 2 Black [67 U. S.] 635 (A. D. 1862), and it was held that there existed, in the sense of international law, a state of civil war between the states in rebellion and the United States, and that it was attended with all the usual incidents of a war between independent nations, such as the right of the government to blockade the ports of the in-surrectionary states, to treat their inhabitants as enemies, and to capture their property. In those cases, and in many others since decided, the supreme court has uniformly held that the general rules and principles of international law are applicable to this conflict, and to the legal questions arising out of it, unless modified by congress. The Venus, 2 Wall. [72 U. S.] 258; Mrs. Alexander’s Cotton, Id. 494; The Hampton, 5 Wall. [69 U. S.] 372; The William Bagley, Id. 377; The Ouachita Cotton, 6 Wall. [73 U. S.] 521; Hanger v. Abbott, Id. 532; Coppell v. Hall, 7 Wall. [74 U. S.] 542; McKee v. U. S., 8 Wall. [75 U. S.] 163; The Grapeshot, 9 Wall. [76 U. S.] 129.
In the case of The Grapeshot, supra, Chase, C. J., remarks that it has often been declared by the supreme court that the Rebellion was accompanied by all the general incidents of a regular war.
Having thus seen that the late conflict is to be considered as a civil war, and the legal questions arising out of it are to be decided, in the absence of controlling congressional action, by the principles of public law, we . next inquire into the effect of this war upon the pre-existing contracts between parties respectively resident in the two hostile sections.
The well-settled doctrine of international law is that contracts made before the war are only suspended by it, and the right and the remedy revive on the termination of it, while contracts made between citizens ■ of the opposing belligerents, during the war, are utterly void.
This doctrine has been repeatedly recognized by the supreme court as applicable to contracts and transactions between the inhabitants of insurrectionary and loyal states in the recent war. McKee v. U. S., 8 Wall. [75 U. S.] 163, 166; U. S. v. Lane, Id. 185; Coppell v. Hall, 7 Wall. [74 U. S.] 542; and Hanger v. Abbott, supra. See Phillips v. Hatch, post [Case No. 11,094].
In arriving at this conclusion, namely, that unlicensed intercourse during the war was unlawful, and that pre-existing contracts are only suspended by it, the supreme court has frequently had occasion to refer to the legislation of congress, and particularly to the important act of July 13, 1861 [12 Stat 255, c. 8], the essential prohibitions of which continued in force during the whole period of the Rebellion.
It is important to notice with care the provisions of the fifth section of this statute. 12 Stat. 255, 257. It authorizes the president to proclaim and declare “the inhabitants” of certain states “or any section or part thereof, to be in a state of insurrection against the United States, and thereupon all commercial intercourse, by and between the same and the citizens thereof and the citizens of the rest of the United States, shall cease and be unlawful so long as such condition of hostility shall continue; and all goods, etc., coming from said state or section into the other parts of the United States, and all proceeding to such state or section, by land or water, shall, together with the vessel or vehicle conveying the same, or conveying persons to or from such state or section, be forfeited to the United States.” Then follows a proviso authorizing the president, in his discretion, and.for the public interest, to permit intercourse under regulations to be prescribed by the secretary of the treasury.
This statute is a valid exercise of legislative power; for the congress of the United States was not, by the Rebellion, deprived of the authority to legislate in this manner with a view to its suppression.
Its prohibition of intercourse is as broad as the prohibition, by the laws of nations, in the case of a war between independent states. By recurring to the act, it will be
It ddmits of no exceptions as to persons; for it prohibits intercourse, not simply between citizens of the insurrectionary states who were, in fact, disloyal, and citizens of loyal states, but it makes unlawful all unlicensed intercourse between all citizens of the hostile states or sections. All goods are prohibited to come from the insurrectionary sections into the other parts of the United States, and all goods are prohibited, likewise, from being sent from loyal to disloyal states. Vessels and vehicles are prohibited from conveying persons to or from the respective states or sections.
It is obvious that this act contemplates a condition of entire non-intercourse, of a pacific character, between the two opposing sections, except such as should be authorized by the president “for the public interest.” What is the necessary effect of this condition? It is the same as when war exists between independent nations.
All existing contracts between citizens of the different sections are suspended. This from necessity, because the act forbids all intercourse, and intercourse is essential in order to fulfil, or perform, or enforce contracts. The courts of the one section are shut, by act of congress, to the people of the other, for the citizens of the insurrectionary states are forbidden to come into the other states, or hold any intercourse with their people; and, without this, suits cannot be instituted or carried on, and the same is true as to citizens of the loyal states.
It is manifest from the foregoing, that the complainant, was he never so loyally disposed toward the Union, had, by reason of his domicil in a state declared to be in insurrection, no right to institute or maintain, during the war, a suit in the courts of the United States, or of Kansas, for the recovery of his debt against the respondent. In a proceeding of this nature, the courts cannot, under the act of July 13, 1861, inquire whether the particular plaintiff wras loyal to the Union, or aided the Rebellion; for, if he was a citizen of a rebellious state, he is regarded as an enemy, irrespective of his personal sentiments, sympathies, or acts. Mrs. Alexander’s Cotton, 2 Wall. [69 U. S.] 404; The Venus, 8 Cranch [12 U. S.] 253; The Indian Chief, 3 C. Rob. Adm. 26; The Friendschaft, 4 Wheat [17 U. S.] 105. We may observe that it has been accordingly held by courts and judges of great respectability, that citizens of rebellious states could not, during the recent war, maintain suits in the courts of other portions of the United States. Norris v. Doniphan [4 Metc. (Ky.) 385], A. D. 1863, Ct. App. Ky.; U. S. Dist. Ct. D. Mo., by Treat, J., in U. S. v. One Hundred Barrels of Cement [Case No. 15,945]; U. S. Cir. Ct. D. Conn., Semmes v. Insurance Co. [Id. 12,651]; Connecticut Mut. Life Ins. Co. v. Hall, 7 Am. Law. Reg. (N. S.) 606; Jackson v. Insurance Co. [s. c. Semmes v. Insurance Co., supra].
Whether we apply to the question before us the legislation of congress, or the general rule of the public law, the conclusion is the same, viz.: That, during the war, the complainant was, as a necessary consequence of it, disabled to institute or maintain the present suit, and was so by reason of his citizenship, or domicil, alone, though ever so friendly to the government' of the United States. It seems to follow, from these considerations, that the rule settled by the supreme com;t in Hanger v. Abbott [supra], is equally applicable, whether the creditor who brings suit was, during the war, a citizen of a state which engaged in the Rebellion, or of a state which adhered to the Union, and, in either case, the period covered by the war, during which the inability to sue continued, is not to be included in the computation of the time within which actions are, by the statute of limitations, required, to be brought.
If the case just referred to be examined, it will be seen to rest on reasoning which makes it applicable to all creditors unable to sue, irrespective of their citizenship or domicil.
The principle of that case was adhered to and applied, in the subsequent case of The Protector, 9 Wall. [76 U. S.] 687, which holds that the period during which the war continued is not to be included in the computation of the five years’ time allowed by the judiciary act for bringing writs of error; but, in this case, also, the creditor was a resident of a state which did not engage in the Rebellion.
The decisions of other courts tend to support the correctness of the views above expressed. To some of these we will now briefly refer. In Semmes v. Insurance Co. [supra], the United States circuit court for Connecticut held that the Rebellion had the effect to suspend the right of a citizen of Mississippi to sue on a policy issued by a Connecticut insurance company, and that the time when the right to sue was suspended, should be excluded from the computation of the limitation period.
So, in the fourth circuit, it has been decided in a case where a Tennessee corporation owed a bill of exchange, which matured before the war, against a Maryland debtor, that the conflict was a civil war, and imposed upon both parties the usual consequences of public wars, among which was the suspension of the right to sue, and, as a consequence of this, a suspension of the statute of limitations. Jackson Ins. Co. v. Stewart [Case No. 7,152], Judge Redfield, in a note to the case last cited, adds his approval of the doctrine it holds, saying: “Since the late civil conflict practically interrupted all intercourse and all commerce between the different sections, we see no ground upon which, as respects the statute of limitations,
The principle that the effect of war is to suspend the running of the statute of limitations, has been held by other courts. Wall v. Robson, 2 Nott & McC. 498. See, also, Ogden v. Blacklege, 2 Cranch [6 U. S.] 272; Hopkirk v. Bell, 3 Cranch [7 U. S.] 464; 1 Am. Lead. Cas. 528, and cases cited; Bigler v. Waller [Case No. 1,404), opinion per Chase, C. J.
And this point must be noticed. The debt to the complainant, accrued May 29, 1861. The respondent claims that the war had not then commenced, and did not, in law, commence until the president’s proclamation of the 16th of August, 1861, declaring -Virginia in a state of insurrection, and therefore, the statute began to run against the debt before the war, and, if so, continues to run, notwithstanding the subsequent disability to sue. The views of a majority of the judges in the Prize Cases would perhaps authorize us to hold that the war existed before the August proclamation, and before the bond in suit matured. But we do not place our decision upon this ground, but upon the ground that even if the statute of limitations did begin to run, the effect of the act of July 13, 1861, and of the proclamation of August 16, 1861, was to suspend its operation. Where a statute continues to run, notwithstanding a subsequent disability, it is in cases where it is not unlawful to bring suit, and, perhaps, in cases only where it is possible to sue, as in the case of an infant or married woman, by next friend. The rule does not apply to the disability occasioned l>y a state of war. In Hanger v. Abbott, the plaintiff’s debt accrued before the war, and yet the period covered by the war was deducted. So, also, in Jackson Ins. Co. v. Stewart, Semmes v. Insurance Co., and Wall v. Robson, before cited. And so, also, in The Protector, supra, the statute had begun to run before the war commenced, and yet, the period occupied by the war was not included in computing the time allowed to take an appeal. In this connection, it is proper to answer an argument strenuously insisted upon by the respondent’s counsel, viz. that courts cannot add to the exceptions of the statutes. Ordinarily, it is undoubtedly true, that courts cannot put into the statutes of limitations exceptions which the legislature has not seen fit to adopt, or has omitted to put there. It is a sufficient answer to this objection, to say that the laws of war, especially those enacted by congress, are the paramount law, and, by suspending the right of action, they suspend also the running of the statute. This seems to be the view of the court in Hanger v. Abbott, 6 Wall. [73 U. S.] 532, 541, 542.
Counsel have made no reference to the act of congress of June 11, 1864. 13 Stat. 123. We have, nevertheless, considered its bearing upon the question.now under consideration. If it be admitted that it was intended by this act to refer to other limitation laws besides those which had been -enacted by congress, and that it was competent for congress thus to do; and if it be further admitted that in its passage congress had in mind the case of citizens of loyal states who were creditors of citizens of disloyal states, still there is nothing in it which expressly or by any fair implication undertakes to furnish or declare a rule for any other than the cases mentioned, or for such a case as the one at bar. The result is that it is the opinion of the court that the statute of limitations is not available to the respondents as a bar to the complainant’s bill. We proceed next to consider the other defences made by the respondents. The time -devoted to the preceding discussions will induce us to dispose of the remaining questions, though important, with all practicable brevity.
Contemporaneously with the execution of the bond and mortgage in suit, the respondent. as collateral security, delivered to the complainant a note and mortgage made by Kenyon, and assigned to him a judgment against Perkins. The respondent claims that these have been lost to him by reason of the fault or neglect of the complainant. Different considerations apply to these two securities and they will be considered separately.
1. As to the Perkins judgment. This was assigned on the record to the complainant, but we find it to be the understanding of the parties, that whatever was necessary to be done to collect or prevent loss on the securities, was to be looked after by the respondent, who lived near his debtors, and not by the complainant, who lived in Virginia. Accordingly, the respondent caused a sale of the property which secured the Perkins judgment, to be made thereunder. His attorney did the business; he paid the costs, or agreed to, and he directed the sale to be made to the complainant Afterwards the property was swept away from both the complainant and the respondent by a prior mortgage. For this the complainant is without blame and without liability. We perceive no ground whatever, in the proof, on which to hold the complainant chargeable with the amount of the Perkins judgment, or the amount for which the property was bid off in his name. It was all the doings of the respondent. The property was lost because the mortgage from Perkins to the respondent was defectively acknowledged.
2. As to the Kenyon note and mortgage. In 1862 the respondent went to the U. S. •district attorney for Kansas, and informed him that he owed the complainant the amount of $2,400 on bond and mortgage; said it was liable to confiscation, and that •he would rather pay the government than Brown. The attorney commenced proper proceedings to confiscate this bond, but they •were dismissed because the respondent claimed and produced a letter purporting to 'be from Brown, showing that the bond was to be cancelled in consideration of the Perkins judgment and the Kenyon note. After this proceeding was dismissed, the attorney ■for the government commenced new proceedings, in 1863, to confiscate the Kenyon note, as the property of, or as a credit belonging to, the complainant The record of ■that proceeding shows that an information -was filed in the U. S. district court for Kansas, on the 10th day of September, A. D. 1863, on behalf of the United States, against •the Kenyon note and mortgage, properly describing them, and the assignment to Brown. Kenyon was notified to show cause why he -should not pay to the United States. A warrant and citation issued commanding the •marshal “to attach the said note and mortgage and credits, and all the interests therein belonging to said Edward S. Brown.” The marshal returned on the warrant that 'he had attached, as the property and credit of the said Brown,' the Kenyon note, and had notified Hiatt, Kenyon, and all other persons having any right, title or interest therein, to appear as commanded, and that Tie had also published notice of the seizure, etc., in a newspaper, and posted the same •on the court house door. At the November -term, 1863, such proceedings were had that the court entered a decree condemning the -note as forfeited to the United States, and ■ordering Kenyon to pay the same to the clerk of the court, and in default thereof, ordering a sale of the mortgaged property. 'Under this decree one half of the mortgaged •estate was sold on a writ of execution, by -the marshal, in July, 1864. for $542.76, to one Powell, and the money received from him by the marshal. In March, 1865, on an alias writ, the marshal sold the residue of the property to one George, for $668, and received from him the amount of his bid.
The proceedings on behalf of the United •States against the Kenyon note and mortgage were taken under the act of congress -of July 17, 1862 (12 Stat. 589). A libel of information was regularly exhibited, a warrant or writ of monition issued, and was returned by the marshal that he had attached •the property as commanded. The proceedings are not void on their face, and the complainant under that act had an interest in this note and mortgage which, if he were guilty .of the acts charged, would make it liable to condemnation. It may be that he was not guilty'of any act which would authorize the decree of condemnation, and it may be that the decree is in some respects irregular or defective, but apparently it is not void; and there is no evidence that it has ever been reversed or set aside; and the present is not a suit to impeach it or have it set aside, or otherwise directly to attack it. It is by no means very fully or satisfactorily shown by the complainant that his relations to the Rebellion were such as that his property or interest in the Kenyon note was not liable to condemnation.
To avoid the effect of the decree of condemnation the complainant should have clearly shown his status during the war; that he had done no act which subjected his property to be seized and confiscated; and also that this unjust decree was brought about by the fraud of the respondent
If these facts were shown, then in adjusting the rights of the two parties we would not allow the respondent to take any advantage of his own fraudulent acts. But these facts have not been satisfactorily established, and the complainant, in stating the account between the parties, will be charged with the full amount of the Kenyon note.
It may be said that the evidence in this suit shows that the Kenyon note was, during the whole war, in Brown’s possession, and hence the marshal’s return that he had attached it, cannot be true. See Pelham v. Rose, 9 Wall. [76 U. S.] 103. If untrue, it may be that he would be liable for a false return; at all events the decree pronounced cannot be collaterally assailed.
There is some conflict of opinion as to whether interest should be allowed during the war. That it should be, see opinion of Chase, C. J., in Shortridge v. Mason (Case No. 12,812]; but the same distinguished judge, under similar circumstances, afterwards disallowed it in Bigler v. Waller, supra. That it should not be. allowed because the debtor is prohibited from paying, see Tucker v. Watson, 6 Am. Law Reg. (N. S.) Feb., 1867, and cases cited; 1 Am. Lead Cas. 528, and authorities cited. Without now undertaking to discuss or decide which is the true rule, there are special circumstances in the case at bar not necessary to be enumerated, which induce the court to consider it most equitable to direct the disallowance of interest during the war.
In Ward v. Smith, 7 Wall. [74 U. S.] 452, it was held, that under the circumstances interest did not cease, but Mr. Chief Justice Chase says: “The opinion of the court was put upon circumstances creating an exception to the general rule, that interest does not accrue during war between citizens or subjects of belligerent states; the general rule was neither affirmed or denied.” Bigler v. Waller, supra. In computing interest, the time between April 19, 1861, and May 26,
Let a decree be drawn up in conformity with this opinion.
Decree accordingly.
