whole of their road, together with the lands,, court, his application to intervene in the above etc., all the tolls, issues, etc., all the cars, engines, etc., to Francis M. Drexel, Joseph H. Seal and Frederick Klett, to secure the pay ment of bonds to the amount of $1,000,000 and the interest thereon. Drexel and Klett afterwards died and the Supreme Court of Pennsylvania appointed Workman and Hughart in their stead. The trustees in this mortgage were also trustees in three other supplemental mort gages made to them on after acquired personal property, dated respectively Oct. 10, 1856, Nov. 9, 1856, and Feb. 5, 1857.

The following is a Resolution passed by the Legislature of Pennsylvania, approved Jan. 21,

1843.

"Resolved, by the Senate and House of Representatives of the Commonwealth of Pennsylvania in General Assembly met, that from and after the passage of this Resolution it shall not be lawful for any company incorporated by the laws of this Commonwealth, and empowered to ⚫ construct, make and manage any railroad, canal or other public internal improvement, while the debts and liabilities, or any part thereof, incurred by the said company to contractors, laborers and workmen employed in the construction or repair of said improvement, remain unpaid, to execute a general or partial assignment, conveyance, mortgage or other transfer of the real or personal estate of the said company, so as to defeat, postpone, endanger or delay their said creditors, without the written assent of the said creditors first had and obtained; and any such assignment, conveyance, mortgage or transfer, shall be deemed fraudulent, null and void as against any such contractors, laborers and workmen, creditors as aforesaid."

An Act of the same Legislature of Apr. 4, 1862, contains the following:

proceedings in the Supreme Court of Pennsylvania, which application contained a history of the origin, amount and character of his claim against the Hempfield R. R. Co. The plaintiff also at the sale on Mar. 30, 1871, gave written notice of his claim to the bidders. Upon the trial of the issue in this case, i. e., the issue arising upon the pleas of Seal, Workman and Hughart and the W. P. & B. R. R. Co., to the sci. fa., and the replication of Fox, the plaintiff in error, the plaintiff offered in evidence the record and files of case No. 32, of May Term, 1855, and of case No. 23, of May Term, 1867. These were received and partly read, when, upon objection of the attorneys for the defendants, the court ordered and directed the plaintiff to embrace all his record and documentary evidence in one offer; whereupon the plaintiff offered the following:

First.

Certified copy of mortgage from the Hempfield R. R. Co. to Drexel and others, trustees, dated June 27, 1855, and recorded, etc. Second. Certified copies of the record of the Supreme Court for the Eastern District of Pennsylvania at No. 18, of January Term, 1860, Nisi Prius. Third. Copy of written notice given publicly by the plaintiff at the time and place of the sale of the franchises, etc., of the Hempfield Railroad Co., under the proceedings in the case last mentioned. Fourth. Resolution of the General Assembly of the Commonwealth of Pennsylvania, approved Jan. 21, 1843. Fifth. Act approved May 15, 1850, incorporating the Hempfield' Railroad Company. This offer of testimony was made, as stated, for the purpose of showing in connection with records already offered:

First. The date of the commencement of the original action, and the amount of plaintiff's claim in this suit.

Second. The nature and character of plaintiff's claim.

Third. That the plaintiff's claim is within the protection of the Resolution of Jan. 21, 1843. Fourth. That the mortgage was subsequent in date to the commencement of the original action.

"That, whenever any incorporated company subject to provisions of the above Resolution, shall devest themselves of their real or personal estate, contrary to the provisions of the said Resolution, it shall and may be lawful for any contractor, laborer or workman, employed in the construction or repair of the improvements of said company, having obtained judgment against the said company, to issue a scire Fifth. That the sale by decree of the Sufacias upon said judgment, with notice to any preme Court of Pennsylvania under said mortperson or to any incorporated company claim-gage, was made subsequent to the payment of ing to hold or own said real or personal es- the plaintiff's claim in this case. tate, to be served in the same manner as a summons, upon the defendant, if it can be found in the county, and upon the person or persons or incorporated company, claiming to hold or own such real estate, and if the defendant cannot be found, then upon the return of one nihil and service as aforesaid, on the peror persons or company claiming to hold or own as aforesaid, the case to proceed as in other cases of scire facias on judgment against

son

terre-tenants."

By virtue of proceedings in the Supreme Court of Pennsylvania at Nisi Prius (No. 18, Jan. Term, 1860) the trustees in the above named mortgage sold the property mortgaged by the said Hempfield R. R. Co. "Subject to any lawful claims or rights which may exist prior or paramount to said mortgage," to John King, Jr. The W. P. & B. R. R. Co. was the successor of King.

The plaintiff in this case filed, by leave of

Sixth. That the defendants hold the property of the Hempfield R. R. Co., subject to the payment of the plaintiff's claim, to be followed by evidence showing:

1. That the claim embraced in said judg ment No. 52, May Term, 1855, was a debt and liability incurred by the Hempfield R. R. Co., to Richard Fox as a contractor in the construction of the railroad of said Company prior to the date of the said first mortgage given by said Company; that said mortgage was executed without the written assent of the said Richard Fox or any authorized person for him; and that the said mortgage postponed, endan gered and delayed the said Richard Fox and his representatives in the collection of his said claims.

2. That, in pursuance of the terms of said mortgage, the trustees named therein took possession of the said railroad, etc., Feb. 26,

1857, and carried on the business of the Company from that time until about Mar. 30, 1871. Third. That Richard Fox, by declaration filed in his said action, at No. 52, May Term, 1855, on June 12, 1855, gave notice of his cause of action before the execution.

4. That Richard Fox was never a stockholder of the Hempfield R. R. Co.

5. That the W. P. & B. R. R. Co. purchased the property of the Hempfield R. R. Co., subject to the payment of plaintiff's claim.

6. That by an Act of the General Assembly of Pennsylvania, approved Apr. 4, 1862, plaintiff is entitled to follow the property of the Hempfield R. R. Co.

Defendant's counsel objected to the above

evidence as follows:

Generally, that it was irrelevant and incompetent; and especially: 1. That the record of this court embraced in the offer is not evidence as against these defendants, they not having been parties thereto or notified of the proceedings therein.

2. That the record of the Supreme Court of Pennsylvania does not show in point of fact that the sale under the decree of said court was subject to the payment of plaintiff's claim.

3. That the evidence offered does not show, or tend to show what plaintiff specifies as the sixth purpose for which it is offered.

4. That any lien or prior right which plaintiff may have acquired by virtue of his original judgment, expired or was lost, so far as affecting these defendants, by lapse of time. 5. That any lien or priority of payment which plaintiff may have had from the nature of his original contract with the Hempfield Railroad Company, expired or was lost by lapse of time before the present scire facias. 6. That any supposed claim or right possessed by the plaintiff under the Resolution of 1843, has been waived and lost by reason of the failure of the plaintiff to revive the same by scire facias within five years after the date of the original judgment.

in one offer, and then rejected it all. In effect the objections urged by the defendants were treated as a demurrer, and the offer was overruled because the evidence was regarded as insufficient in law to sustain the action.

If the rights of the plaintiff have not been lost by failure to prosecute them in the proper mode, and in due time, the Joint Resolution of 1843, in our opinion, protects him against the mortgage, and all persons claiming thereunder.

That Resolution declared that from and after its passage "It should not be lawful for any company incorporated by the laws of the Commonwealth and empowered to construct, make and manage any railroad, canal or other internal public improvement, while the debts and liabilities, or any part thereof, incurred by the said company to contractors, laborers and workmen employed in the construction or repair of said improvements remain unpaid, to execute a general or partial assignment, conveyance, mortgage or other transfer of the real or personal estate of the saiù company, so as to defeat, postpone, endanger or delay their said creditors, without the written assent of said creditors first had and obtained; and that any such assignment, conveyance, mortgage or transfer should be deemed fraudulent, null and void, as against any such contractors, laborers and workmen, creditors as aforesaid." Pamph. L. 1843, p. 367.

That the plaintiff's testator was a contractor with the Hempfield Railroad Company, and that the debt due to him was incurred by the Company for the construction of their railroad, it was the direct tendency of the evidence offered to prove, and these facts are uncontroverted now. That debt, therefore, was within the protection, whatever that may be, of the Resolution. What, then, was the nature and extent of that protection? It is unnecessary to assert that the Company was rendered incapable of making a mortgage, or any transfer of its property, so long as the debt due to its contractor remained unpaid. But the language of the Resolution is too clear to admit of question that the Legislature intended to give to an unpaid contractor a priority of claim *to the Company's property, [*438 over every right that could be acquired by a mortgagee, or acquired under a mortgage, if 8. That plaintiff's do not offer to show by the mortgage was made after the debt to the evidence that the mortgage under which de- contractor was incurred. It was at least infendant's claim tended to defeat, postpone, en-tended that the property, into whosesoever danger or delay the plaintiff as a creditor of hands it might come, should remain subject the Hempfield R. R. Co.

7. That the Resolution of 1843 has been repealed, so far as related to the mortgage under which defendants claim by the charter of incorporation and supplemental Act of 1851, creating the Hempfield R. R. Co., and conferring powers thereon.

The court sustained the objections of the defendants to the evidence offered by the plaintiff, and the plaintiff excepted.

Judgment having been rendered for the defendants, who pleaded to the scire facias, the plaintiff sued out this writ of error.

Messrs. J. W. Kirker, H. D. Bean and Jas. M. Breden, for plaintiff in error.

Mr. Hill Burgwin, for defendants in er

ror.

Mr. Justice Strong delivered the opinion of the court:

We think there was error in the rejection of the evidence offered by the plaintiff. Some of it may have been immaterial to the issues pending, but the court directed that all the record and documentary evidence be embraced

to a paramount claim of the contractor so long as the debt due to him remained unpaid. That this was substantially giving to him a lien of indefinite duration seems quite plain. It was not a "jus in re,” nor a “jus ad rem,” but it was a charge upon the property, a right to prevent any disposition of it, by which it could be withdrawn from the creditor's reach and, therefore, in a very legitimate sense an equitable lien. The Resolution, in effect, declared that while his claim against the Company ex ists, a subsequent mortgage or transfer cannot be set up to defeat the contractor's resort to the property and his superior right to have it applied to the payment of the debt due him. It is true the mode of that resort is not prescribed. It can only be by suit, judgment and execution, but whenever judgment and execution are obtained, the lien is made to

precede the lien of any mortgage or the effect | sonal, of the Hempfield Railroad Company, as of any conveyance; more accurately, it has the a security for the debt due him, and which effect it would have were there no mortgage was paramount to the mortgage made to the or conveyance in existence. The property may be levied upon and sold, and the proceeds of the sale may be applied to the satisfaction of the debt due the contractor, without possible interference by the mortgagee, though the mortgage preceded the judgment in time. We cannot regard the Resolution as no more than a partial re-enactment of the Statute of 13th Elizabeth invalidating mortgages and transfers only when there is an actual or constructive intent to hinder, delay or defraud creditors. If that was all the Resolution intended it was unnecessary and unmeaning. But it declares null and void every mortgage the effect of which is to defeat, postpone, endanger, or delay contractors, laborers and workmen. The mortgage may be good as against other creditors, but it is a nullity as to them.

It has been argued that it is against the policy of Pennsylvania to allow secret liens, 439] or liens not of record, or liens *on land created by parol, and undoubtedly there are evils attendant upon the allowance of such incumbrances. But that is a matter for legislative consideration. The supposed policy of the State cannot, in a judicial tribunal, prevail over a plain statute. And, notwithstanding the disinclination judges have manifested to sustain liens not of record, there are many such liens known to the statute laws of that State and upheld by the courts. A mechanic, or material man, is given a lien, and he is not required to put his claim on record until within six months after his work has been done, or his materials have been furnished. Yet his lien has priority over every lien (other than a mechanic's) which attached to the building or curtilage subsequent to the commencement of such building. So liens are given by statutes to laborers, miners and clerks, and they are valid against subsequent mortgages, though the liens do not appear upon any record. Act of March 30, 1859, Pamph. L., 318. It is not, then, against the policy of the State to create a statutory lien in favor of laborers or work

Company, has been lost or extinguished. And we think it has not. The debt remains due and unpaid. In 1855, Richard Fox, the contractor, commenced a suit for its recovery, and he obtained a judgment in 1860. That judgment did not extinguish the right which he had from the time the debt was incurred to have the property of his debtors first applied to the satisfaction of the debt. It did not cause to be merged in itself the original lien, any more than a judgment obtained upon a bond secured by a mortgage absorbs the lien of the mortgage. In whatever shape the debt was, it had the benefit of the statutory privilege. It matters not, then, that more than five years elapsed after the judgment was recovered before it was revived, for if it be conceded that the lien of the judgment expired, that of the debt remained.

And if the lien of the judgment recovered in 1860 ceased at the end of five years from the time of its rendition, still it is undeniable that the revived judgment of 1867 gave a new lien which followed the property into whosesoever hands it came, until the present scire facias was sued out in February, 1871. The only possible answer to this, is that before the revived judgment of 1867 was obtained, the property of the Hempfield Railroad Company had passed from its ownership, had become vested in its mortgagees, and that the trustees of the mortgage were not notified of the scire facias, or made parties to it. To this there are two replications, each of which, in our opinion, is quite sufficient. The first is that the Company was, by the Resolution of 1843, deprived of the power to make a mortgage or any conveyance by which its property could be withdrawn from the reach of the plaintiff, and the mortgagees or trustees could acquire no rights which the mortgagors were unable to confer. The second replication is that the mortgage to Seal and others was not a grant of the ownership of the property described in it. It was but the creation of a lien for the security of "the bonds issued under it. True, the [*441 And if we have correctly interpreted the trustees of the bond holders, pursuant to its Legislative Resolution of 1843, if the debt due provisions, took possession of the mortgaged from the Hempfield Railroad Company to the property in 1857, and carried on the business plaintiff's testator was a lien upon the prop-of the Company until 1871, but even as against erty of the Company from the time it was them the Company remained the owners of created, so far, at least, as to have priority the road, subject only to a lien to secure the over any subsequent mortgage or conveyance, payment of the mortgage debt. The trustees it is plain the lien would have continued a were not terre-tenants. They were mere ocprior incumbrance, so long as the debt it was cupants. Terre-tenants, against whom, by the given to secure remained, had there been no laws of Pennsylvania, it is necessary that a such subsequent mortgage. But the express scire facias to revive a judgment be sued out, declaration of the Resolution is that the mort-in order to preserve its lien, are those who gage shall have no effect as against such a have seisin of the land, those who are owners, debt or claim. And this must mean that neither or claim to be owners by title derived from the the mortgage itself nor any sale made under it shall have the effect of defeating, postponing, endangering or delaying the contractor; for if a sale made under the mortgage discharges the contractor's lien and removes the property from his reach, effect is given to the mortgage itself, and precisely the effect which the statute denied to it.

men.

defendant in the judgment. There can be no terre-tenant, such as intended by the Act of 1798 (3 Smith, L., 331), who is not a purchaser, mediately or immediately, from the debtor while the land was bound by the judg ment. Dengler v. Kiehner, 13 Pa. St., 41; Chahoon v. Hollenback, 16 Serg. & R., 432; In re Dohner, 1 Pa., 104. Such has always been We are thus brought to the question whether held to be the law in Pennsylvania, and such 440*] the lien or claim which the plaintiff's are terre-tenants in England. Jefferson v. Mortestator had upon the property, real and per-ton, 2 Saund., 9 n. 8. A mortgagee has never

been regarded as a terre-tenant entitled to no- | plainly it was not intended that such a lien tice of the revival of a judgment. There has, must exist. The Resolution of 1843 prohibited therefore, been no failure or neglect in this transfers, assignments and mortgages of percase to make the necessary parties to all the sonalty as well as of realty, and a judgment judicial proceedings commenced by the plain- creates no lien upon personalty. But the Resotiff or his testator. The law did not require lution recognizes the right of a contractor to notice of the scire facias sued out, to revive follow both into the hands of a claimant or the judgment of 1860, to be given to the trus- owner holding under such an assignment, tees of the mortgage, and if the lien of that transfer or mortgage, without regard to the judgment had expired, the revived judgment question whether the property is real or perfastened a new lien upon the property. That sonal. It, therefore, recognizes the existence lien was a security for the debt which, by the of a lien in favor of those protected by it, Resolution of 1843, was made paramount to independent of the lien of any judgment they the mortgage, and against which, while it re- may recover. This must be so, for if it is esmains unpaid, the mortgage cannot be set up. sential to a right to proceed by scire facias This, however, relates to the ordinary judg- against the property in the hands of a grantee ment lien, but it is not essential to the plain- of the indebted company that the judgment of tiff's case, as exhibited by the evidence he of the creditor shall be a lien upon that property, fered, that the judgment which he now seeks what is to be said of the case where the into enforce is a lien upon the property claimed debted company has conveyed before the reand held by the trustees of the mortgage and covery of any judgment? In such a case the 442*] by the Wheeling, Pittsburgh *and Balti- judgment can be no lien. Yet it will not be more Railroad Company. It would be were it claimed the property could not be followed by not for the Legislative Resolution of 1843, and scire facias against the grantee. And [*443 for the enactment of April 4, 1862, Pamph. L., if it could it must be, not because of the lien 1862, p. 235. But the first of these, as we of the judgment, but because of the lien of have seen, made the debt due to the contractor, the debt, a lien which, as there is no statutory itself a lien without a judgment, and prescribed limitation to it, remains so long as the debt no limits to its duration. The second (the remains unsatisfied. Act of April 4, 1862, sec. 1) manifestly recog nized the existence of such a lien, and pointed out a mode for making it available to the creditor.

Such being, in our opinion, the true meaning of the Joint Resolution of 1843, and of the Act of the Legislature of 1862, the evidence offered by the plaintiff and rejected by the We quote the Act entire: court should have been received. It tended "Section 1. Whereas, it frequently happens to prove inter alia, that the plaintiff's claim that incorporated companies, by assignment, was within the protection of the Joint Resoluconveyance, mortgage or other transfer, devest tion; that the mortgage under which the dethemselves of their real and personal estate, fendants hold was invalid as against him; that in contravention of the provisions of the Reso- his case was embraced in the remedial Act of lution of January 21, 1843; therefore, Be it enact- 1862, and that the defendants had bought uned, That, whenever any incorporated com-der a decree of foreclosure of the mortgage, pany, subject to the provisions of the above which expressly directed that the property Resolution, shall devest themselves of their should, notwithstanding the sale, remain subreal or personal estate, contrary to the ject to the claim of the plaintiff. provisions of said resolution, it shall and may It has been contended, however, in support be lawful for any contractor, laborer or work- of the ruling of the court below, that the sale man employed in the construction or repair which was made of the property in March, of said company, having obtained judgment 1871, under a decree of the Supreme Court of against the said company, to issue a scire Pennsylvania in the suit to foreclose the mortfacias upon said judgment, with notice to any gage, devested the plaintiff's lien, and that person, or to any incorporated company, claim- thereafter his only remedy was a resort to the ing to hold or own said real or personal estate, proceeds of that sale. This might be so if the to be served in the same manner as a sum- only lien he had was that of his judgment. mons, upon the defendant, if it can be found But, as we have endeavored to show, he had a in the county, and upon the person or persons, lien independent of his judgment and prior to or incorporated company, claiming to hold or the mortgage. The decree of the Supreme own such real estate; and if the defendant can- Court ordered the property to be sold subject not be found, then upon the return of one nihil to that. The plaintiff petitioned to be allowed and service as aforesaid, on the person or per- to intervene "pro interesse suo" in the suit sons, or company claiming to hold or own for foreclosure, or, if that was not allowed, as aforesaid, the case to proceed as in other that he might be paid out of the proceeds of cases of scire facias on judgment against terre-sale; but his petition was refused, and the tenants." court ordered that the purchaser at the sale

This Act makes special provision for such should hold the whole of the estate and propcases as the present. Under it, all that is nec-erty, real, personal and mixed, of the Hempessary to enable a contractor, laborer or work- field Railroad Company, "subject to any lawman to proceed by scire facias against a per-ful claims or rights which may exist prior or son or company claiming to hold or own the paramount to said mortgage." The plaintiff's real or personal estate of the debtor to such lien, therefore, was undisturbed by the sale contractor, laborer or workman, by virtue of and, hence, he had no right to look to the proa mortgage made in contravention of the Res- ceeds of the sale for payment. olution of 1843, is that he has obtained a judg ment against the indebted company which gave the mortgage. It is not required that his judgment shall be a lien on the property. And

This disposes of the case.

*It is hardly necessary to add that [*444 the Act of the Legislature of April 12, 1851, empowering the Hempfield Railroad Company

to borrow money and pledge its property and income to secure the payment thereof, cannot be regarded as exempting that Company from the operation of the Resolution of 1843.

The judgment of the Circuit Court is reversed, and a venire de novo is awarded.

for the guarantee which their guarantee capital affords to the depositors, but out of said portion enough shall be set aside from time to time to form a reserve fund which, although belonging to the stockholders, shall not be withdrawn or paid to them until the dissolution of the Corporation; but it may be converted new reserve fund provided for.

L. H. CARY, Collector of Internal Revenue, into guarantee capital and the formation of a

IN

June 30, 1870, the Board of Directors of the defendant in error met and ascertained the net earnings for the preceding six months, and after deducting one tenth for the stockholders, declared a dividend of twelve per cent. per annum on the capital stock, reserve fund and term deposits, and ten per cent. per annum on ordinary deposits. These dividends were paid without deducting the five per cent. or any tax. June 10, 1871, the Assessor of Internal Revenue assessed this Corporation five per cent. upon the sum of $149,649, which assessment was listed and certified to the plaintiff in error as Collector on Internal Revenue, De

Collector seized certain property of the Corporation and threatened to sell the same; whereupon the tax was paid. In due time after the assessment aforesaid, the Corporation appealed to the Commissioner of Internal Revenue, who decided that the tax was legally as sessed, and this suit was brought within six months thereafter.

IN ERROR to the Circuit Court of the Unit-mand was made and refused; whereupon the ed States for the District of California. This was an action brought by the defendant in error, in the District Court of the State of California, for the City and County of San Francisco, to recover back certain sums which had been collected by the defendant, Cary, as Internal Revenue Collector, under section 120 of the Act of June 30, 1864, 13 Stat. at L., 283 a amended July 13, 1866. 14 Stat. at L., 138 The case was removed to the court below, where judgment was rendered in favor of the plaintiff.

a

Mr. C. H. Hill, Asst. Atty. Gen., for plaintiff in error.

Messrs. H. J. Tilden and C. E. Whitehead, for defendant in error.

Mr. Chief Justice Waite delivered the opinion of the court:

or as dividends of profits. All the other questions have been settled by the Barnes cases, 17 Wall., 294, 21 L. ed. 544; Stockdale cases, decided at the last Term, ante, 348, and Oulton v. Savings Institution, 17 Wall., 109, 21 L. ed. 618.

The San Francisco Savings Union was Corporation organized under the Statute of Califorria approved Apr. 11, 1862 (Cal. Stat., 1862, p. 199), and subsequent Acts amendatory There is only one question presented in this thereof. This Corporation received deposits, case which needs our attention, and that is, loaned them out and repaid them with the div- whether the payments to depositors upon iderds arising from interest on loans. Two which part of the taxes in controversy were classes of deposits were received ordinary de-assessed and collected, were made as interest post and term deposits; the latter being received on an agreement not to withdraw them except o a much longer notice than was required of the ordinary depositor The dividends were paid according to the following article contained in the agreement on which the deposits were received: "At the expiration The Act of Congress provided for a tax on of every six months ending June 30 and Dec. dividends payable to depositors in savings in31, of each year, the Board of Directors shall stitutions, but at the same time declared that a certain the net profits of the Corporation, the annual and semi-annual interest allowed and not less than nine tenths of the same will and paid to depositors in such institutions, be appropriated for a dividend to be declared should not be considered as dividends. and payable upon the guarantee capital, capi-tinction is thus expressly recognized between tal stock, the reserve fund and all deposits, interest and dividends.

A dis

dends. If this was correct, the judgment must be reversed under the rulings in the cases just cited.

The question, then, is, whether this finding was correct.

at such monthly or yearly rate as the total The circuit court found that the payments amount of net profits may permit. The amount to the depositors in this case were for diviof dividend apportioned upon each account shall be in proportion to the time during which the several amounts represented by such account shall have formed part of the funds of the Corporation, except that deposits will not begin to draw dividend until one month after they are made, and the rate of dividend upon ordinary deposits shall be increased by twenty per cent., to form the rate upon funds remain ing permanently in the hands of the Corpora tion, including term deposits. The remaining portion of net profits shall belong to the stock holders of the Corporation in compensation

We think it was. This institution had a capital stock. Its business was to receive deposits, and in the contract under which they were received, provision was made for the accumulation of a reserve fund out of the prof its earned, which was to be the property of the Company. The capital stock, reserve fund and deposits were also made, by the same con