Sidebilder
PDF
ePub

cause, and, with Mr. Robert P. Frierson, filed a brief for appellee:

The judgment obtained against the Waters Pierce Company was collectable by execution.

Wasserman v. United States, 88 C. C. A. 582, 161 Fed. 722.

The judgment, being in the nature of a judgment debt, must be treated as a debt. Stockwell v. United States, 13 Wall. 531, 20 L. ed. 491; United States v. Claflin, 97 U. S. 546, 24 L. ed. 1082; Chaffee v. United States, 18 Wall. 516, 21 L. ed. 908; Adams v. Wood, 2 Cranch, 336, 2 L. ed. 297; United States v. Younger, 92 Fed. 672; Bishop, Crim. Proc. 3d. ed. § 1304; Wharton, Crim. Proc. 10th ed. § 1862; 3 Williams, Exrs. 7th ed. p. 240; Fink v. O'Neil, 106 U. S. 272, 284, 27 L. ed. 196, 200, 1 Sup. Ct. Rep. 325; United States v. Stacey, 155 Fed. 510; United States v. Dunne, 97 C. C. A. 420, 173 Fed. 258, 19 Ann. Cas. 1145.

A suit in the nature of a creditors' bill was a proper course to pursue to collect the amount of the judgment against the Waters Pierce Oil Company from the appellants.

Curran v. Arkansas, 15 How. 304, 307, 14 L. ed. 705, 707; Chicago, R. I. & P. R. Co. v. Howard, 7 Wall. 392, 409, 19 L. ed. 117, 120; Northern P. R. Co. v. Boyd, 228 U. S. 482, 502, 503, 57 L. ed. 931, 941, 942, 33 Sup. Ct. Rep. 554; Davies v. Corbin, 112 U. S. 36, 40, 28 L. ed. 627, 629, 5 Sup. Ct. Rep. 4; Jones v. Green, 1 Wall. 330, 332, 17 L. ed. 553, 555.

The contention that, even if the judgment is a debt, it became a debt or judgment debt after the reorganization of the Waters Pierce Oil Company, and hence, as a subsequent creditor, the United States has no rights in the premises, is unsound. Northern P. R. Co. v. Boyd, 228 U. S. 482, 57 L. ed. 931, 33 Sup. Ct. Rep. 554; Baltimore & O. Teleg. Co. v. Interstate Teleg. Co. 4 C. C. A. 184, 8 U. S. App. 340, 54 Fed. 50; Swan Land & Cattle Co. v. Frank, 148 U. S. 603, 37 L. ed. 577, 13 Sup. Ct. Rep. 691; Bronson v. La Crosse & M. R. Co. 2 Wall. 283, 301, 302, 17 L. ed. 725, 728, 729; Smith v. Vodges, 92 U. S. 183, 23 L. ed. 482.

The government's suit against the Pierce Oil Company in the western district of Louisiana was no election of remedies, barring the United States from bringing the present suit.

20 C. J. 8; Thomas v. Sugarman, 218 U. S. 129, 54 L. ed. 967, 29 L.R.A. (N.S.) 250, 30 Sup. Ct. Rep. 650; Zimmerman v. Harding, 227 U. S. 489, 57 L. ed. 608,

33 Sup. Ct. Rep. 387; William W. Bierce v. Hutchins, 205 U. S. 340, 51 L. ed. 828, 27 Sup. Ct. Rep. 524; Westervelt v. Mohrenstecher, 34 L.R.A. 477, 22 C. C. A. 93, 40 U. S. App. 221, 76 Fed. 124; Goodyear Dental Vulcanite Co. v. Caduc, 144 Mass. 85, 10 N. E. 483; Walden Nat. Bank v. Birch, 130 N. Y. 221, 14 L.R.A. 211, 29 N. E. 127; Emery v. Baltz, 94 N. Y. 408; White v. Smith, 33 Pa. 186, 75 Am. Dec. 589; Rankin v. Tygard, 119 C. C. A. 591, 198 Fed. 806; Nauman Co. v. Bradshaw, 113 C. C. A. 274, 193 Fed. 354; Slaughter v. La Compagnie Francaises Des Cables Telegraphiques, 57 C. C. A. 19, 119 Fed. 589; Brady v. Daly, 175 U. S. 148, 160, 44 L. ed. 109, 114, 20 Sup. Ct. Rep. 62.

There was no necessity of bringing suit in Missouri.

Toland v. Sprague, 12 Pet. 300, 328, 9 L. ed. 1093, 1104; State v. Lynch, 28 R. I. 404, 68 Atl. 315.

The question as to whether interest upon the judgment was properly awarded, not having been raised in the court below, will not be passed on here.

Waters-Pierce Oil Co. v. Texas, 212 U. S. 112, 53 L. ed. 431, 29 Sup. Ct. Rep. 227; Mallers v. Commercial Loan & T. Co. 216 U. S. 613, 54 L. ed. 638, 30 Sup. Ct. Rep. 438; Cleveland & P. R. Co. v. Cleveland, 235 U. S. 50, 59 L. ed. 127, 35 Sup. Ct. Rep. 21; Keokuk & H. Bridge Co. v. Illinois, 175 U. S. 626, 44 L. ed. 299, 20 Sup. Ct. Rep. 205; Virtue v. Creamery Package Mfg. Co. 227 U. S. 8, 38, 57 L. ed. 393, 406, 33 Sup. Ct. Rep. 202; Lloyd v. Preston, 146 U. S. 630, 36 L. ed. 1111, 13 Sup. Ct. Rep. 131; Brown v. Clarke, 4 How. 4, 15, 11 L. ed. 850, 855; Roemer v. Bernheim (Roemer v. Newman) 132 U. S. 103, 106, 38 L. ed. 277, 279, 10 Sup. Ct. Rep. 12; Lagrange v. Chouteau, 4 Pet. 287, 288, 7 L. ed. 861; Giles v. Heysinger, 150 U. S. 627, 630, 37 L. ed. 1204, 1205, 14 Sup. Ct. Rep. 211.

Mr. Justice Brandeis delivered the opinion of the court:

In 1907 the Waters Pierce Oil Company, a Missouri corporation, was indicted in the district court of the United States for the western district of Louisiana under the Elkins Act (February 19, 1903, chap. 708, § 2, 32 Stat. at L. 847, Comp. Stat. § 8598, 4 Fed. Stat. Anno. 2d ed. p. 564), for receiving rebates. In 1913 the company sold and transferred all its property to the Pierce Oil Corporation, all the proceeds were paid to Henry S. Priest and Clay Arthur Pierce as trustees, and they distributed the

336, 340, 2 L. ed. 297, 298); and then certain incidents of civil proceedings attach (Hepner v. United States, 213 U. S. 103, 53 L. ed. 720, 27 L.R.A. (N.S.) 739, 29 Sup. Ct. Rep. 474, 16 Ann. Cas. 960).

same among the stockholders. Of these ceedings, and specifically by the action Henry Clay Pierce and the Pierce In- of debt (Lees v. United States, 150 U. vestment Company received millions in S. 476, 37 L. ed. 1150, 14 Sup. Ct. Rep. cash and stock, and Clay Arthur Pierce 163; see Adams v. Woods, 2 Cranch, a small amount. In 1914 the case under the Elkins Act was tried. The company was convicted and sentenced to pay a fine of $14,000, and in the following year the judgment was affirmed by the circuit court of appeals. 137 C. C. A. 293, 222 Fed. 69. An execution issued thereon By § 1041 of the Revised Statutes to the marshal for that district and was (Comp. Stat. § 1705, 3 Fed. Stat. Anno. returned nulla bona. Thereafter this 2d ed. p. 327), it is provided (in addibill in equity was brought by the United tion to the power existing by general States in the Federal district court for usage to commit a defendant to jail unthe eastern district of Missouri against til his fine has been paid, see Ex parte the Waters Pierce Oil Company, the Barclay, 153 Fed. 669) that the judgtrustees, and these three stockholders, ments for penalties "may be enforced by to obtain satisfaction of the judgment execution against the property of the out of the money remaining in the hands defendant in like manner as judgments of the trustees and that received by in civil cases are enforced." The statthese stockholders. The district court entered a decree dismissing the bill as against the Waters Pierce Company and the trustees, but granted, as against the stockholders [401] named, the relief prayed by the government. The decree was affirmed by the circuit court of appeals for the eighth circuit, one judge dissenting. The case is brought here by these defendants, under § 241 of the Judicial Code. Reversal is sought on several grounds.

First. The ground for reversal most strongly urged is that the judgment imposing a fine on the Waters Pierce Company is not a debt on which a creditor's bill will lie. The argument is that a judgment for a definite sum of money does not necessarily endow the holder with all the rights of a creditor; that a court will look behind a judgment, and will grant or deny relief according to the nature of the original cause of action, as it did in Wisconsin v. Pelican Ins. Co. 127 U. S. 265, 32 L. ed. 239, 8 Sup. Ct. Rep. 1370; Louisiana ex rel. Folsom v. New Orleans, 109 U. S. 285, 27 L. ed. 936, 3 Sup. Ct. Rep. 211, and Westmore v. Markoe, 196 U. S. 68, 49 L. ed. 390, 25 Sup. Ct. Rep. 172, 2 Ann. Cas. 265; and that, since liability for a penalty is criminal in its nature, and not strictly a debt, a creditor's bill cannot be brought upon a judgment for a penalty. It is true that to the liability for penalties imposed by the United States certain incidents of a criminal proceeding attach; see Boyd v. United States, 116 U. S. 616, 29 L. ed. 746, 6 Sup. Ct. Rep. 524; United States v. Stevenson, 215 U. S. 190, 199, 54 L. ed. 153, 157, 30 Sup. Ct. Rep. 35. But the liability is often enforced by civil pro

ute applies to all judgments for penalties, whether recovered by civil or criminal proceedings. A judgment creditor's bill is in [402] essence an equitable execution comparable to proceedings supplementary to execution. See Ex parte Boyd, 105 U. S. 647, 26 L. ed. 1200. The law which sends a corporation into the world with the capacity to act imposes upon its assets liability for its acts. The corporation cannot disable itself from responding by distributing its property among its stockholders, and leaving remediless those having valid claims. In such a case the claims, after being reduced to judgments, may be satisfied out of the assets in the hands of the stockholders. There is no good reason why the rule should be limited to judgments arising out of civil proceedings. To the contention that the statute has not made this process available for the government in enforcing a penalty, it may be answered, as was done by the King's bench a hundred years ago, in Rex v. Woolf, 2 Barn. & Ald. 609, 611, 106 Eng. Reprint, 488, when it was insisted that a fine due to the Crown was not a judgment debt for which execution could be levied :

66 . . mischievous consequences would ensue to the Crown and the regular administration of justice, from a

1 Wood v. Dummer, 3 Mason, 308, Fed. Cas. No. 17,944; Chicago, R. I. & P. R. Co. v. Howard, 7 Wall. 392, 19 L. ed. 117; Northern P. R. Co. v. Boyd, 228 U. S. 482, 502, 57 L. ed. 931, 941, 33 Sup. Ct. Rep. 554; Kansas City Southern R. Co. v. Guardian Trust Co. 240 U. S. 166, 60 L. ed. 579, 36 Sup. Ct. Rep. 334; Johnson v. CanfieldSwigart Co. 292 Ill. 101, 126 N. E. 608; Hastings v. Drew, 76 N. Y. 9.

1920.

PIERCE v. UNITED STATES.

rant of the government's claim. They
were officers of the corporation, and the
indictment was pending when the trans-
fer of the assets was made. See Balti-
more & O. Teleg. Co. v. Interstate Teleg.
Co. supra.

delinquent withdrawing all his property, the position of volunteers; and there is
from the effect of a judgment; and that not even the excuse that they were igno-
the preventing that will not be a mis-
chievous consequence to anyone but
himself. Here there is a judgment that
the defendant do pay to the King a fine
of a certain sum. By that judgment the
debt becomes a debt to the King, of
record; and it is payable to the King
if we were to say
instanter.
that the Crown shall not be at liberty
to issue an immediate execution for its
own debt, we should place the Crown in
a worse situation than any subject."

[ocr errors]

a

[404] Third. It is contended that the bill should have been dismissed because the execution issued to the marshal for the eastern district of Missouri was not returned unsatisfied until after the commencement of the suit. It has been held Second. It is contended that the right that, in litigations between private para Federal court upon to bring a creditor's bill did not exist, ties, a creditor's bill cannot be mainbecause the judgment against [403] the tained in company was not entered in the trial judgment recovered in a state other than court until a year after the company had that in which suit is brought (National devested itself of the property sought to Tube Works v. Ballou, 146 U. S. 517, be reached in this suit; and the govern- 523, 36 L. ed. 1070, 1072, 13 Sup. Ct. ment did not become a creditor; at all Rep. 165), and that a return unsatisevents, until after its claim for penal- fied of the execution issued on the judgBut ment sued on is held essential to the ties had ripened into a judgment. when a corporation devests itself of all maintenance of the creditor's suit (Tayits assets by distributing them among lor v. Bowker, 111 U. S. 110, 28 L. ed. the stockholders, those having unsatis- 368, 4 Sup. Ct. Rep. 397). But this strict fied claims against it may follow the rule is not applicable where the United assets, although the claims were con- States is the judgment creditor. Under tested and unliquidated at the time when § 986 of the Revised Statutes (Comp. the assets were distributed. It is true Stat. § 1632, 3 Fed. Stat. Anno. 2d ed. that the bill to reach and apply the 230), an execution issued in favor of the of the Unitassets distributed among the stockhold- United States by any of its courts in every part ers cannot, as a matter of equity juris- runs diction and procedure, be filed until the ed States; just as, under § 985, an a judgment obtained in claim has been reduced to judgment and execution on the execution thereon has been returned favor of any party in a district court, unsatisfied (Hollins v. Brierfield Coal & where the state is divided into two or I. Co. 150 Ú. S. 371, 37 L. ed. 1113, 14 more districts, may run and be executed Sup. Ct. Rep. 127); but, as a matter of in any part of the state. Toland v. substantive law, the right to follow the Sprague, 12 Pet. 300, 328, 9 L. ed. 1093, distributed assets (see Chicago, R. I. & 1104. Here the execution issued to the P. R. Co. v. Howard, 7 Wall. 392, 409, 19 Louisiana marshal had been returned L. ed. 117, 120; Northern P. R. Co. v. nulla bona before this suit was brought; Boyd, 228 U. S. 482, 57 L. ed. 931, 33 and it is agreed that when this suit was Sup. Ct. Rep. 554; Kansas City Southern begun the Waters Pierce Oil Company R. Co. v. Guardian Trust Co. 240 U. S. had no property in Missouri or else166, 60 L. ed. 579, 36 Sup. Ct. Rep. 334) where out of which the judgment could applies not only to those who are credi- be satisfied at law. To hold that, under tors in the commercial sense, but to all such circumstances, the suit must fail, A corpo- because the return of nulla bona was not who hold unsatisfied claims. ration cannot, by devesting itself of all made by the marshal for the eastern property, leave remediless the holder of district of Missouri until after the filing case not within its a contingent claim, or the obligee of an of the original bill, would apply a wellexecutory contract (Baltimore & O. settled rule to a Teleg. Co. v. Interstate Teleg. Co. 4 C. Fourth. It is contended that the bill C. A. 184, 8 U. S. App. 340, 54 Fed. 50), or the holder of a claim in tort (Hast- should have been dismissed because the ings v. Drew, 76 N. Y. 9; Jahn v. Cham-government had an adequate remedy by pagne Lumber Co. 157 Fed. 407); and suing the Pierce Oil Corporation, and, there is no good reason why the United indeed, had commenced such claim for penalties, That corporation assumed, as part of the States, with should be in a worse plight. Here the purchase price of the Waters Pierce Oil stockholders receiving the assets are in Company, its "debts, obligations, and

a

scope.

a suit.

703

liabilities." Before [405] commencing case. In allowing interest from January this suit the government had brought, in 29, 1907, the district court was clearly a Federal district court for Louisiana, a under the misapprehension that that was suit against the Pierce Oil Corporation the date of the judgment, for the decree to subject to the satisfaction of its judg- so recites; whereas, in fact, judgment ment certain parcels of land conveyed to was not entered until March, 1914. But the corporation by the Waters Pierce interest was not even allowable from Oil Company. But in the Louisiana suit that time. At common law judgments the Pierce Oil Corporation denied liabil- do not bear interest; interest rests solely ity, insisting that the government was upon statutory provision. Perkins v. not a creditor of the Waters Pierce Oil Fourniquet, 14 How. 328, 14 L. ed. 441; Company. The United States could not Washington & G. R. Co. v. Harmon have been required to accept in lieu of (Washington & G. R. Co. v. Tobiner) its claim against the judgment debtor 147 U. S. 571, 584, 585, 37 L. ed. 284, even an admitted obligation of the new 289, 290, 13 Sup. Ct. Rep. 557. The only corporation to pay it. The existence of applicable statute of the United States that possible remedy did not bar the is § 966 of the Revised Statutes (Comp. government from following by a cred- Stat. § 1605, 4 Fed. Stat. Anno. 2d ed. itor's bill the assets of the corporation p. 604), which provides that "interest into the stockholders' hands. Nor did shall be allowed on all judgments in the suit against the Pierce Oil Corpora- civil causes. . . ." Since the penalty tion amount to an election of remedies was not recovered by civil process, but which should have led the lower courts by judgment in a proceeding initiated to dismiss this bill. The two remedies by a criminal indictment, it obviously were consistent. See Zimmerman v. Harding, 227 U. S. 489, 494, 57 L. ed. 608, 610, 33 Sup. Ct. Rep. 387.

does not fall within the terms of the statute. Interest, therefore, is allowable only on the judgment from the date when it was entered against the defendants in this case; namely, March 11, 1918.

The judgment of the Circuit Court of Appeals, as modified, is affirmed.

[407] UNITED STATES OF AMERICA

EX REL. MILWAUKEE SOCIAL DEMOCRATIC PUBLISHING COMPANY, Plff. in Err.,

Fifth. The contention is faintly made that the decree should be reversed because the district court dismissed the bill as against the Waters Pierce Oil Company, a necessary party; citing Swan Land & Cattle Co. v. Frank, 148 U. S. 603, 610, 37 L. ed. 577, 580, 13 Sup. Ct. Rep. 691. The argument ignores the fact that this judgment, being in favor of the United States, is, under § 986 of the Revised Statutes, effective, and may be made the basis of an execution running in a state and district other than | ALBERT S. BURLESON, Postmaster Gen that in which the judgment was rendered. It was doubtless for this reason that the district judge concluded that it was unnecessary, if not improper, to enter in this suit judgment against Waters Pierce Oil Company. The objection is purely technical. Since it was not set up among the many errors as signed in the court of appeals and in this court, it cannot be availed of here.

Sixth. It is urged that the district court erred in allowing interest on the penalty ($14,000) from the date [406] of the indictment, January 29, 1907. This was not assigned as error in the circuit court of appeals, and for this reason that court refused to consider it on a petition for rehearing. In the assignment of errors filed in this court the objection was properly raised. Under Rule 24 of the circuit court of appeals for the eighth circuit the court may "notice a plain error not assigned or specified, and we think it should have done so in this

V.

eral of the United States.

(See S. C. Reporter's ed. 407–438.)

Constitutional law - due process of

law notice and hearing - revocation of second-class mail privileges. class mail privileges have been revoked for 1. A newspaper publisher whose secondthe publication of articles that offended against the Espionage Act of June 15, 1917. was accorded a hearing which, if fairly conducted, satisfies the requirements of due process of law, where due notice was given of the time and character of the hearing, the publisher was represented thereon by that it desired to say or offer was heard its president, and, so far as appears, all and received.

[For other cases, see Constitutional Law, 764-773, in Digest Sup. Ct. 1908.] Postoffice second-class privileges

[ocr errors]
[blocks in formation]

made, satisfactory to him or his authorized, obstruct its recruiting and enlistment servassistants, tha! it contains and will continue to contain only mailable matter, and that it will meet the various statutory and other requirements.

[For other cases, see Postoffice, V. in Digest Sup. Ct. 1908.] Postoffice

second-class privileges revocation by Postmaster General.

3. The power of the Postmaster General to suspend or revoke second-class mail privileges is a necessary incident to his power to grant such privileges.

[For other cases, see Postoffice, V. in Digest Sup. Ct. 1908.]

[blocks in formation]

5. Authority to revoke the second-class mail privileges of a newspaper which, contrary to the Espionage Act of June 15, 1917, systematically contained false reports and false statements, published with intent to interfere with the success of the military operations of the Federal government, to promote the success of its enemies, and to

Note.-On notice and hearing required generally to constitute due process of law -see notes to Kuntz v. Sumption, 2 L.R.A. 657; Chauvin v. Valiton, 3 L.R.A. 194; and Ulman v. Baltimore, 11 L.R.A.

225.

On validity of legislation directed against social or industrial propaganda | deemed to be of a dangerous tendencysee note to State v. Moilen, 1 A.L.R. 336.

On constitutional freedom of speech and of the press-see note to Cowan v. Fairbrother, 32 L.R.A. 829.

As to constitutional right of trial by jury-see notes to Thompson v. Utah, 42 L. ed. U. S. 1061; Perego v. Dodge, 41 L. ed. U. S. 113; Gulf, C. & S. F. R. Co. v. Shane, 39 L. ed. U. S. 727; Eilenbecker v. District Ct. 33 L. ed. U. S. 801; and Justices of Supreme Ct. v. United States, 19 L. ed. U. S. 658.

As to exclusion of seditious matter from the mails under the Espionage Act-see note to Masses Pub. Co. v. Patton, L.R.A. 1918C, 89.

On power of courts to interfere with rulings of the Postoffice Departmentsee notes to United States ex rel. Reinach v. Cortelyou, 12 L.R.A. (N.S.) 166, and National L. Ins. Co. v. National L. Ins. Co. 52 L. ed. U. S. 808.

ice, was conferred upon the Postmaster General, not merely as to a single issue of such paper, but until a proper application and showing shall be made for a renewal of such privilege, by the provision of title 12 of that act, that any newspaper published in violation of any of its terms shall be "nonmailable," and shall not be "conveyed in the mails or delivered from any postoffice or by any letter carrier," when read in connection with the declaration of U. S. Rev. Stat. § 396, that it is the duty of the Postmaster General to superintend regularly all the business of the Postoffice Department, and to execute all laws relating to the postal service, and with the Federal legislation classifying the mails, which deals only with "mailable matter."

[For other cases, see Postoffice, V. in Digest Sup. Ct. 1908.] Constitutional law freedom of speech and press due process of law right to jury trial executive revocation of second-class mail privileges. 6. Federal legislation conferring upon the Postmaster General power to revoke the second-class mail privilege enjoyed by a newspaper which that official finds, after a hearing fairly conducted, systematically to have contained false reports and false statements published with intent to interfere with the success of the military operations of the Federal government, to promote the success of its enemies, and to obstruct its recruiting and enlistment service, in violation of the Espionage Act of June 15, 1917, is not unconstitutional, either as not affording the publisher a trial in a court the constitutional freedom of speech and of competent jurisdiction, or as infringing press, or as taking property without due

process of law.

For other cases, see Constitutional Law,

IV. b. 4; IV. d; Jury, I. d, in Digest Sup. Ct. 1908.]

[blocks in formation]

7. The conclusion of the Postmaster General that the second-class mail privileges of a newspaper should be revoked, which rests upon his finding, after a hearing fairly conducted, that such newspaper has systematically contained false reports and false statements published with the intent to interfere with the military operations of the Federal government, to promote the success of its enemies, and to obstruct its recruiting and enlistment service, in violation of the Espionage Act of June 15, 1917, will not be disturbed by the courts unless they are clearly of the opinion that his conclusion is wrong.

[For other cases, see Courts, I. e, 4, in Digest Sup. Ct. 1908.]

[merged small][ocr errors][merged small]
« ForrigeFortsett »