Texas Railway, for the purposes of said con- | J. O. Richart. 1889 (25_Stat. at L. 955, chap. 382), referring to the subject of joint rates of tariffs over continuous roads of different carriers, and the seventh section of the original act, approved February 4, 1887 (24 Stat. at L. 382), which was designed to cause the carriage of freight to be continuous from the place of shipment to the place of destination. along the line, even although such lines are situated beyond the state in which the contract was made or the business originated This, it is insisted, is a direct burden im-[585) posed by the state upon interstate commerce, since it forbids a carrier from engaging in that commerce, unless it subjects itself to a liability for the faults of others, against which it cannot guard and for which it was not previously liable, and, moreover, by necessary effect, punishes the carrier for issuing The cattle were transported over the line a through bill of lading for interstate comof the Missouri, Kansas, & Texas Railway to merce, thereby tending to discourage the Hannibal, Missouri, and from that point the through transportation of merchandise from cars in which they were contained passed to state to state, and having a direct and inevi the line of the Wabash Railway destined for table tendency to defeat the portion of the Chicago. At or near Chicago an unreasona- provisions of the sixth section of the Act to ble delay was occasioned in the transporta-Regulate Commerce, as amended March 2, tion of the cattle by the negligence of employees of the Wabash Railway, resulting in damage, for which the shippers subsequently brought an action against the receivers of the Missouri, Kansas, & Texas Railway to [584]recover for the breach of the contract of ship ment. Judgment having been entered upon the verdict of a jury in favor of the plaintiffs, an appeal was prosecuted by the receivers to the supreme court of the state, and was heard in division No. 2. There was a judgment reversing the lower court, and a motion for a rehearing was denied. Between the time of the decision of the supreme court and the overruling of a motion for a rehearing both the receivers had died, and the railway company has resumed possession of its road. This fact having been called to the attention of the supreme court, the railway company was substituted as appellant instead of the receivers, and a rehearing was ordered. The case was transferred to the court in banc, and was argued before that tribunal. Thereafter a decision was rendered affirming the judgment of the trial court, and motion for a rehearing was denied. 133 Mo. 59 [35 L. R. A. 110]. The case was then brought by writ of error to this court. The contention advanced in these several propositions is, however, without foundation, from the fact that it proceeds upon an erroneous assumption of the purport of the Missouri statute in question, since the supreme court of Missouri, in applying that statute in the case before us, has, in the most positive terms, declared that it was not intended to and did not prevent a carrier engaged in interstate commerce traffic limiting his liability to his own line, and that far from doing this the statute left the carrier the amplest power to make such limitation in receiving goods for interstate carriage and in issuing a through bill of lading therefor. In commenting on the statute the court said: "The provision of the statute is that 'wherever any property is received by a common carrier to be transferred from one place to another.' This language does not restrict, but rather recognizes, the right of the carrier to limit its contract of carriage to the end of its own route, and there deliver the property to the connecting carrier. "There can be no doubt, then, that under the statute, as well as under the English law, the carrier can, by contract, limit its duty and obligation to carriage over its own route." Again, in summing up its conclusions, the court said: By the assignments of error it is asserted, and in the argument at bar it has been strenuously urged, that the Missouri statute above quoted is in conflict with the Constitution of the United States, because it is a regulation of commerce between the states, and that the supreme court of Missouri hence erred in giving effect to the statute in the decision by it rendered. The statute as interpreted by the supreme court is asserted to operate to deprive the railway of the power of making a through shipment of interstate commerce business over connecting *"We are unable to see, as contended by de- 586] lines, without becoming liable for the negli- fendant, that the construction we give this gence of the connecting carriers. In other statute makes it repugnant to the provisions words, the argument is that the effect of the of the Constitution of the United States, Missouri statute, as interpreted by the high- which gives to Congress alone the power to est court of that state, is to deprive a rail-regulate commerce among the states. way company, transacting the business of interstate commerce, of all power to limit its liability to its own line, and, hence, compels it, if interstate commerce is engaged in or a through bill of lading for such traffic is is sued, to become responsible for the articles carried throughout the entire route, thereby entailing upon the carrier receiving the goods the risk of negligence by other carriers The act in no way operates as a regula tion of trade and business among the states. No burden or restriction on transportation is imposed. Carriers are left free to make their own contracts in regard to compensa tion for their services for transportation be tween the states, subject to congressional regulations." The reasoning now relied on then is, that although the supreme court of the state of Missouri has interpreted the statute of that state as not depriving a carrier of power, on receiving an interstate shipment, to limit its liability to its own line, that this court should disregard the interpretation given to the state statute by the court of last resort of the state, and hold that the statute means the very contrary of its import, as declared by the supreme court of the state, and upon such construction decide that the state law is repugnant to the Constitution of the United States. But the elementary rule is that this court accepts the interpretation of the statute of a state affixed to it by the court of last resort thereof. Sioux City Trust Company v. Trust Company, 172 U. S. 642 [probably intended for Sioux City Terminal & Warehouse Co. v. Trust Co. of N. A. 173 U. 8. 99, ante, 628], and authorities there cited. It is urged, however, that even although it be conceded that the supreme court of Missouri has interpreted the statute in question, in an abstract sense, as not depriving a railway company of the power to limit its liability to its own line when receiving goods for interstate shipment, the court has nevertheless given the statute practical enforcement as if it meant exactly the contrary of the interpretation affixed to it. In other words, the proposition is, although the supreme court of Missouri has declared that the statute did not deprive a carrier of its right to limit its liability to its own line, yet it has, as a necessary consequence of its application of the statute to the bill of lading in controversy in this cause, given to the statute the very meaning which it expressly declared it [587]*had not. An examination, however, of the opinion of the supreme court of Missouri demonstrates that it is not justly susceptible of the construction thus placed upon it. Analysing the opinion of the court, it results that the court decided that whilst the statute left a railway company ample power to restrict its liability by contract, both as to carriage and as to liability for negligence, to its own line, the purpose embodied in the statute was to regulate the form in which the contract should be expressed, so as to require the carrier to embody the limitation directly and in unambiguous terms in the portion of the agreement reciting the contract to transport, and not to import or imply such limitation by way of exception or statements of conditions and qualifications, requiring on the part of the shipper a critical comparison of clauses of the contract, in order to reach a proper understanding of its meaning. That is to say, that the restraint imposed by the statute was not a curtailment of the power to limit liability to the line of the carrier accepting the freight, but a regulation of the form in which the contract having that object in view should be drawn. Considering the statute as thus interpreted by the supreme court of the state of Missouri, it cannot be held to be repugnant to the Constitution of the United States. The subject of the power of the states to legislate as to the mere form of contracts for interstate commerce carriage was fully considered in Richmond & Alleghany Railroad Co. v. R. A. Patterson Tobacco Co. 169 U. S. 311 [42: 759]. In that case the court said (p. 314 [42: 761]) : "The distinction between a law which forbids a contract to be made and one which simply requires the contract when made to be embodied in a particular form, is as obvious as is the difference between the sum of the obligation of a contract and the mere instrument by which their existence may be manifested. The contract is the concrete result of the meeting of the minds of the contracting parties. The evidence thereof is but the instrument by which the fact that the will of the parties did meet is shown. "Of course, in a latitudinarian sense any restriction as to the evidence of a contract, re-[588] lating to interstate commerce, may be said to be a limitation on the contract itself. But this remote effect, resulting from the lawful exercise by a state of its power to determine the form in which contracts may be proved, does not amount to a regulation of interstate commerce. The principle on this subject has been often stated by this court, and, indeed, has been quite recently so fully reviewed and applied that further elaboration becomes unnecessary." But it is pressed that, conceding the stat ute to have the purport given it by the Missouri court, nevertheless it does not come within the rule announced in the case just referred to, because the requirement of the Missouri statute, as interpreted, is so unreasonable as to amount in substance to a denial of the right of a carrier to confine by contract his duty of carriage and his liability for negligence to his own line. If the regulation of the statute be equivalent to a denial of the right to so limit, this court, it is asserted, must consider its substantial results, and not its mere theoretical significance. This contention, however, is also without a solid basis to rest upon. The requirement as to form held to be valid in Richmond & Alleghany Railroad Co. v. R. A. Patterson Tobacco Co., supra, was that every contract confining the liability upon an interstate shipment to the line of the receiv ing carrier should be signed by the shipper or be invalid. The manifest intent of such a regulation was to protect the shipper, by having it clearly manifested by his signature that his attention had been directed to the contract limitation of liability, so that no question might arise of inadvertence on his part in delivering the merchandise and accepting the contract for its carriage, which is usually prepared by the railroad company receiving goods for transportation. Whilst differing in form of requirement, the exaction that the carrier, in unambiguous terms, in the portion of the contract acknowledging the receipt of the goods and expressing the obligation to transport should state the limitation of his obligation as a carrier to his own line, but effectuates the purpose designed by the Virginia statute, which was upheld in the Patterson Case. If the bill of lading in the case before us did not contain a positive statement of an[589] obligation by the receiving carrier to trans quired the signature, the contract, unsigned by the shipper, was ineffective to relieve the carrier from a liability stipulated against, it is true, but which was inoperative because not expressed in legal form. Such is, in substance, the situation here presented. Judgment affirmed. port from the point of shipment to the ul- liability, a contract not signed by the ship- Mr. Justice Harlan dissents. บ. LEA BROTHERS & COMPANY. (See S. C. Reporter's ed. 590-599.) ers and there to be delivered to a connecting GEORGE M. WEST COMPANY, Appt., to stipulate that they were "to transport General assignment is act of bankruptcy— insufficient plea. fit of creditors constitutes in itself an act of 2. A plea that the party against whom the [No. 755.] Submitted May 1, 1899. Decided May 22, 1899. Circuit Court of Appeals for the Fourth Circuit desiring instructions from this court upon a question certified to it in a bankruptcy case brought by Lea Brothers & Company in the District Court of the United States for the Eastern District of Virginia against the George M. West Company for the purpose of having it adjudicated a bankrupt. Question answered in the nega N CERTIFICATE from the United States tive. The facts are stated in the opinion. *Mr. Justice White delivered the opinion[591] of the court: The facts stated in the certificate of the circuit court of appeals are substantially as follows: Lea Brothers & Company and two other firms filed, on December 18, 1898, a petition in the district court of the United States for the eastern district of Virginia, praying that an alleged debtor, the George M. West Company a corporation located in Richmond, Virginia, be adjudicated a bankrupt, because of the fact that it had, on the date of the filing of the petition, executed a deed of general assignment, conveying all its property and assets to Joseph V. Bidgood, trustee. The George M. West Company pleaded denying that at the time of the filing of said petition against it the corporation was insolvent, within the meaning of the bankrupt act, and averring that its property at a fair valuation was more than sufficient in amount to pay its debts. The prayer was that the petition be dismissed. The court rejected this plea, and adjudicated the West Company to be a bankrupt. The cause was referred to a referee in bankruptcy, and certain creditors secured in the deed of assignment, who had instituted proceedings in the law and equity court of the city of Richmond, under which that court had taken charge of the administration of the estate and trust under the deed of assignment, were enjoined from further prosecuting their proceedings, in the state court, under said deed of assignment. From this decree an appeal was allowed to the circuit court of appeals for the fourth circuit. On the hearing of said appeal the court, desiring instructions, certified the case to this court. The certificate recites the facts as above stated, and submits the following question: [592] *"Whether or not a plea that the party against whom the petition was filed 'was not insolvent as defined in the bankrupt act at the time of the filing of the petition against him' is a valid plea in bar to a petition in bankruptcy filed against a debtor who has made a general deed of assignment for the benefit of his creditors." The contentions of the parties are as follows: On behalf of the debtor it is argued that under the bankrupt act of 1898 two things must concur to authorize an adjudication of involuntary bankruptcy, first, insolvency in fact, and, second, the commission of an act of bankruptcy. From this proposition the conclusion is deduced that a debtor against whom a proceeding in involuntary bankruptcy is commenced is entitled, entirely irrespective of the particular act of bankruptcy alleged to have been committed, to tender, as a complete bar to the action, an issue of fact as to the existence of actual insolvency at the time when the petition for adjudication in involuntary bankruptcy was filed. On the other hand, for the creditors it is argued that whilst solvency is a bar to proceedings in bankruptcy predicated upon certain acts done by a debtor, that as to other acts of bankruptcy, among which is included a general assignment for. the benefit of creditors, solvency at the time of the filing of a petition for adjudication is not a bar, because the bankrupt act provides that such deed of general assignment shall, of itself alone, be adequate cause for an adjudication in involuntary bankruptcy, without reference to whether the debtor by whom the deed of general assignment was made was in fact solvent or insolvent. A decision of these conflicting contentions involves a construction of section 3 of the act of 1898. 30 Stat. at L. 546. The full text of the section in question is printed in the margin.t + Sec. 3. Acts of Bankruptcy.-a. Acts of bankruptcy by a person shall consist of his having (1) conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, *It will be observed that the section is di-[593] vided into several paragraphs, denominated as a, b, c, d, and e. Paragraph a is as follows: *"Sec. 3. Acts of Bankruptcy.-a. Acts of [594] bankruptcy by a person shall consist of his having (1) conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, delay, or defraud his creditors, or any of them; or (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground." It is patent on the face of this paragraph that it is divided into five different headings, which are designated numerically from 1 to 5. Now, the acts of bankruptcy embraced in divisions numbered 2 and 3 clearly contemplate, not only the commission of the acts provided against, but also cause the insolvency of the debtor to be an essential concomitant. On the contrary, as to the acts embraced in enumerations 1, 4, and 5, there is no express requirement that the acts should have been committed while insolvent. Considering alone the text of paragraph a, it results that the nonexistence of insolvency, at the time of the filing of a petition for adjudication in involuntary bankruptcy, because of the acts enumerated in 1, 4, or 5 (which embrace the making of a deed of general assignment) does not constitute a defense to the petition, unless provision to that effect be elsewhere found in the statute. This last consideration we shall hereafter notice. The result arising from considering the paragraph in question would not be different[5951 if it be granted, arguendo, that the text is ambiguous. For then the cardinal rule requiring that we look beneath the text for the purpose of ascertaining and enforcing the intent of the lawmaker would govern. Applying this rule to the enumerations contained in paragraph a, it follows that the making of a deed of general assignment, referred to in enumeration 4, constitutes in itself an act of bankruptcy, which per se authorizes an adjudication of involuntary bankruptcy entirely irrespective of insolvency. This is clearly demonstrated from considering the present law in the light afforded by previous legislation on the subject. Under the English bankruptcy statutes (as well that of 1869 as those upon which our earlier acts were modeled), and our own bankruptcy statutes down to and including delay, or defraud his creditors, or any of them; or (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted, ding assignments with "intent to delay, defraud, or hinder" creditors, and from the provision avoiding certain acts done to delay, defeat, or hinder the execution of the act. Rev. Stat. 5021, 11 4, 7. Now, when it is considered that the present law, although it only retained some of the provisions of the act of 1867, contains an express declaration that a deed of general assignment shall authorize the involuntary bankruptcy of the debtor making such a deed, all doubt as to the scope and intent of the law is removed. The conclusive result of a deed of general as acts, as well as under the English bankrupt laws, and the significant import of the incorporation of the previous rule, by an express statement in the present statute have been lucidly expounded by Addison Brown, J. Re Gutwillig, 90 Fed. Rep. 475, 478. the act of 1867, the making of a deed of gen- from a deed of that description, as a legal reeral assignment was deemed to be repugnantsult of the clause, in the act of 1867, forbidto the policy of the bankruptcy laws, and, as a necessary consequence, constituted an act of bankruptcy per se. This is shown by an examination of the decisions bearing upon the point, both English and American. In Globe Insurance Co. v. Cleveland Insurance Co. 14 Nat. Bankr. Reg. 311, 10 Fed. Cas. 488, the subject was ably reviewed and the authorities are there copiously collected. The decision in that case was expressly relied upon in Re Beisenthal, 14 Blatchf. 146, where it was held that a voluntary assignment, without preferences, valid under the laws of the state of New York, was void assignment under all our previous bankruptcy against an assignee in bankruptcy, and this latter case was approvingly referred to in Reed v. McIntyre, 98 U. S. 513 [25: 173]. So, also, in Boese v. King, 108 U. S. 379, 385 [27: 760, 763], it was held, citing (p. 387 [27: 763]) Reed v. McIntyre, that whatever might be the effect of a deed of general assignment for the benefit of creditors, when considered apart from the bankrupt act, such a deed was repugnant to the object of a bankruptcy statute, and therefore was in and of itself alone an act of bankruptcy. The foregoing decisions related to deeds of general assignment made during the operation of the bankrupt act of 1867 (14 Stat. at L. 536, chap. 176), or the amendments thereto of 1874 and 1876 (18 Stat. at L. 180, chap. 390; 19 Stat, at L. 102, chap. 234). Nei[596]ther, however, the act of 1867, nor the amendments to it, contained an express provision that a deed of general assign ment should be a conclusive act of bankruptcy. Such consequence was held to arise, while insolvent, any creditor to obtain a pref- b. A petition may be filed against a person who is insolvent, and who has committed an act of bankruptcy within four months after the commission of such act. Such time shall not expire until four months after (1) the date of the recording or registering of the transfer or assignment when the act consists in having made a transfer of any of his property with intent to hinder, delay, or defraud his creditors, or for the purpose of giving a preference as hereinbefore provided, or a general assignment for the benefit of his creditors, if by law such recording or registering is required or permitted, or, if it is not, from the date when the beneficiary takes notorious, exclusive, or continuous possession of the property unless the petitioning creditors shall have received actual notice of such transfer or assignment. C. It shall be a complete defense to any proceedings in bankruptcy, Instituted under the first subdivision of this section, to allege and prove that the party proceeded against was not insolvent, as defined in this act, at the time of the filing the petition against him, and if solvency at such date is proved by the alleged bankrupt, the proceedings shall be dismissed, and, under said subdivision one, the burden of proving solvency shall be on the alleged bankrupt. But it is argued that whatever may have been the rule in previous bankruptcy statutes, the present act, in other than the particular provision just considered, manifests a clear intention to depart from the previous rule, and hence makes insolvency an essential prerequisite in every case. To maintain this proposition reliance is placed upon paragraph c of section 3, which reads as follows: "c. It shall be a complete defense to any proceedings in bankruptcy instituted under the first subdivision of this section to allege and prove that the party proceeded against was not insolvent as defined in this act at the time of the filing the petition against him, and if solvency at such date is proved d. Whenever a person against whom a petition has been filed, as hereinbefore provided under the second and third subdivisions of this section, takes Issue with and denies the allegation of his insolvency, it shall be his duty to appear in court on the hearing, with his books, papers, and accounts, and submit to examination, and give testimony as to all matters tending to establish solvency or Insolvency, and, in case of his failure to so attend and submit to examination, the burden of proving his solvency shall rest upon him. e. Whenever a petition is filed by any person for the purpose of having another adjudged a bankrupt, and an application is made to take charge of and hold the property of the alleged bankrupt, or any part of the same, prior to the adjudication and pending a hearing on the petition, the petitioner or applicant shall file in the same court a bond with at least two good and sufficient sureties, who shall reside within the jurisdiction of said court, to be approved by the court or a judge thereof, in such sum as the court shall direct, conditioned for the payment, in case such petition is dismissed, to the respondent, his or her personal representative, all costs, counsel fees, expenses, and damages occasioned by such seizure, taking, and detention of the property of the alleged bankrupt. If such petition be dismissed by the court, or withdrawn by the petitioner, the respondent, or respondents, shall be allowed all costs, counsel fees, expenses, and damages occasioned by such seizure, taking, or detention of such property. Counsel fees, costs, expenses, and damages, shall be fixed and allowed by the court, and paid by the obligors in such bonds. |