« ForrigeFortsett »
Kansas; and, in 1884, before the organiza-
I. It is contended that the attachment proceedings were void and that the court consequently was without jurisdiction, *because the order for attachment was signed by the probate judge, acting in the absence of the district judge, conformably to a power to that effect given by the territorial statute. The claim is that the statute conferring such power upon the probate judge was repugnant to the organic act and void, for the following reason: The organic act authorized the establishment of a supreme court and district courts to be vested with "chancery as well as common-law jurisdiction and authority for redress of all wrongs committed against the Constitution or laws of the United States or of the territory affecting persons or property." The grant of commonlaw jurisdiction, it is argued, embraced authority to issue attachments. Being then within the jurisdiction expressly vested in the courts named, it was incompetent for the territorial legislature to delegate to the probate courts, which the organic act authorized to be established, or to a judge of such a court, any jurisdiction in the premises, even although the organic act empowered the legislature to define and limit the jurisdiction to be exercised by probate courts.
Nor does section three of the act of Congress of December 21, 1893 (28 Stat. at L. 20), empowering the supreme court of the territory or its chief justice to designate any
A review of this contention is rendered un-judge to "try" a particular case in any disnecessary, because of the mistaken premise trict where the regular judge is for any reaupon which it rests. On the face of the Ok- son unable to hold court, constitute an imlahoma statute it is apparent that it is re- plied prohibition against the conferring by quired as a prerequisite to the issuance of an the legislature of authority upon one not a attachment that the affidavit, in support judge of the court in which the main action thereof, shall simply state the particular is pending to perform a ministerial act like ground for attachment mentioned in the act, that here considered. and therefore that the granting of an order for attachment does not involve the discharge of a judicial function, but merely the performance of a ministerial duty, that is, the comparison of the language of the affidavit with the terms of the statute. The text of the statute is stated in the margin.t  This statute is a reproduction *of a statute of
II. It is insisted that "under the organic act of the territory, the court could not acquire jurisdiction of the person of the defendant by constructive service by foreign attachment without its consent."
senting to the construction given by the
Although the court below based its conclusion only upon one of the grounds taken in the plea of the defendant to the jurisdiction, it nevertheless in the course of its opinion stated that the whole plea was before it, and that all the grounds therein stated were open for its consideration. We, therefore, shall briefly consider such of the remaining grounds stated in the plea to jurisdiction as have been urged in argument upon our at
† Sec. 4120. Where a debtor has sold, conveyed, or otherwise disposed of his property with the fraudulent intent to cheat or defraud his creditors, or to hinder or delay the collection of their debts, or is about to make such sale or conveyance or disposition of his property, with such fraudulent intent, or is about to remove his property, or a material part thereof,
The section of the organic act referred to requires that all civil actions shall be brought in the county where a defendant re
with the intent or to the effect of cheating or defrauding his creditors, or of hindering them or delaying them in the collection of their debts, a creditor may bring an action on his claim before it is due, and have an attachment against the property of the same debtor.
Sec. 4121. The attachment authorized in the last section may be granted by the court in
distinction between a resident and a nonresident is so broad as to authorize a classification, in accordance with the suggestion just made, is conceded, and, if it were not, is obvious. The reasoning, then, is that, although the difference between the two classes is adequate to support the allowance of the remedy in one case and its absolute denial in the other, yet that the distinction between the two is not wide enough to justify allowing the remedy in both cases, but accompanying it in one instance by a more onerous prereIII. The only remaining contention to be quisite_than_ is *exacted in the other. The  considered is the claim that the territorial power, however, to grant in the one and deny statute authorizing the issue of an attach-in the other of necessity embraces the right, ment against the property of a nonresident if it be allowed in both, to impose upon the defendant in the case of an alleged fraudu-one a condition not required in the other, for lent disposition of property is repugnant to the lesser is necessarily contained in the the Fourteenth Amendment to the Constitu- greater power. The misconception consists tion of the United States and in conflict with in conceding, on the one hand, the power to the civil rights act. The law of the terri- classify residents and nonresidents, for the tory, it is said, in case of an attachment for purpose of the writ of attachment, and then the cause stated against a resident of the ter- from this concession, to argue that the power ritory requires the giving of a bond by the does not exist, unless there be something in plaintiff in attachment as a condition for the the cause of action, for which the attachment issue of the writ, whilst it has been construed is allowed to be issued, which justifies the to make no such requirement in the case of classification. As, however, the classificaan attachment against a nonresident. This, tion depends upon residence and nonresi.  it is argued, *is a discrimination against a dence, and not upon the cause of action, the nonresident, does not afford due process of attempted distinction is without merit. law, and denies the equal protection of the laws. The elementary doctrine is not denied that for the purposes of the remedy by attachment, the legislative authority of a state or territory may classify residents in one class and nonresidents in another, but it is insisted that where nonresidents "are not capable of separate identification from residents by any facts or circumstances other than that they are nonresidents-that is, when the fact of non residence is their only distinguishing feature-the laws of a state or territory cannot treat them to their prejudice upon that fact as a basis of classification."
sides or can be found. In a proceeding by attachment of property, which is in the nature of an action in rem, it is elementary that the defendant is found, to the extent of the property levied upon, where the property is attached. It would be an extremely strained construction of the language of the act to hold that Congress intended to prohibit a remedy universally pursued, that of proceeding against the property of nonresidents in the place in the territory where the property of such nonresident is found.
The foregoing considerations dispose, not only of the grounds passed upon by the court. below, but those pressed upon our attention and which were subject to review in that court; and as from them we conclude there was error in the judgment of the lower court, its judgment must be reversed and the case be remanded for further proceedings.in conformity to this opinion. And it is so ordered.
which the action is brought or by the judge thereof, or in his absence from the county by the probate judge of the county in which the action is brought; but, before such action shall be brought or such attachment shall be granted, the plaintiff or his agent or attorney shall make
SIOUX CITY TERMINAL RAILROAD &
When the exception, thus stated, is put in juxtaposition with the concession that there TRUST COMPANY OF NORTH AMERICA. is such a difference between the residents of a state or territory and nonresidents as to justify their being placed into distinct classes for the purpose of the process of attachment, it becomes at once clear that the exception to the rule, which the argument attempts to make, is but a denial, by indirection, of the legislative power to classify which it is avowed the exception does not question. The argument in substance is that where a bond is required as a prerequisite to the issue of an attachment against a resident, an unlawful discrimination is produced by permitting process of attachment against a ncnresident without giving a like bond. 2. But the difference between exacting a bond in the one case and not in the cther is nothing like as great as that which arises from allowing processes of attachment against a nonresident and not permitting such process against a resident in any case. That the
(See S. C. Reporter's ed. 99–113.)
Interpretation of a state statute-bonds of Iowa corporation in excess of statutory limit-estoppel of corporation.
This court in interpreting a state statute will construe and apply it as settled by the court of last resort of the state, and hence will only form an independent judgment as to the meaning of the state law when there is no binding construction of such state statute by the court of last resort of the state.
Bonds of an lowa corporation in excess of the maximum limitation stated in its charter and of the statutory limit fixed by Iowa Code 1897, § 1611, are not void in the hands of innocent purchasers for value.
Under the decisions of the supreme court of Iowa, the act of a corporation in contracting a debt in excess of the statutory limit is not an oath in writing showing the nature and amount of the plaintiff's claim, that it is just, when the same will become due, and the existence of some one of the grounds for an attachment enumerated in the preceding section.
void, but merely voidable, and for this rea-
said premises are free from all encumbrances
Argued January 23, 24, 1899. Decided of one million two hundred and fifty thou-
part, its successors
against all persons whomsoever claiming the same, subject to the lien of the said prior deed of trust."
N WRIT OF CERTIORARI to the United
of a certain mortgage held by the Trust Com-
See same case below, 69 Fed. Rep. 441, and 49 U. S. App. 523.
On the 10th day of October, 1893, in the United States circuit court for the northern district of Iowa, a bill was filed by certain national banks, citizens of other states than the state of Iowa, against the Terminal Company, E. H. Hubbard, as assignee of the Union Loan & Trust Company, and othere, having for its object the foreclosure of the second mortgage above referred to. Without fully recapitulating the averments of the bill, it suffices to say that it alleged that the notes which were secured by the second mortgage had been placed in the hands of the Union Loan & Trust Company in part for the benefit of certain claims against the Terminal Company held by the complainants; that the Union Loan & Trust Company had, in April, 1893, made an assignment to E. H. Hubbard for the benefit of all its creditors, and that Hubbard had succeeded to the rights and obligations of the company of which he was assignee, and in which capacity he held the notes secured by the second mortgage, and the benefit of which the complainants were entitled to invoke for the purpose of procuring the payment of their claims. A receiver was prayed for and was appointed.
Statement by Mr. Justice White:  *The facts which are relevant to the controversy arising on this record are as follows: The Sioux City Terminal Railroad & Warehouse Company (hereafter designated as the Terminal Company) was, in 1889, incorporated under the general laws of the state of Iowa, with an authorized capital of one million dollars. In January, 1890, the corporation, by authority of its board of directors authorized by its stockholders, mortgaged in favor of the Trust Company of North America its "grounds, franchises, liens, rights, privileges, lines of railway, side tracks, warehouses, storage houses, elevators, and other terminal facilities within the corporate limits of the city of Sioux City," all of which property was more fully described in the deed of mortgage. The purpose of the mortgage was to secure an issue of negotiable bonds, with the interest to accrue thereon, the bonds being for the face value of one million two hundred and fifty thousand ($1,250,000) dollars. The form of the bonds was described in the deed, and they were numbered from 1 to 1250 inclusive. The deed contained a statement that the corpo-hands of the Union Loan & Trust Company ration "has full power and authority under for the benefit of such creditors; that the the laws of the state of Iowa to create this company had made an assignment to Hubpresent issue of bonds and to secure the same bard, assignee, and in that capacity he had by mortgage of all its property, leases, and received the notes in question; that in a suit franchises." The bonds thus secured were pending in the Northern District of Iowa, negotiated to an innocent purchaser for to foreclose said second mortgage, a question value, and the proceeds were applied to the had arisen whether such creditors were encredit of the company. titled to avail themselves of the benefit of
Or the 23d of December, 1893, the Terminal Company, reciting the fact that the notes which were secured by the second mortgage for $750,000 had been drawn and the mortgage given for the benefit of certain outstanding creditors whose claims amounted to $728,000, and that the notes covered by the second mortgage had been placed in the
In 1893 the Terminal Company also mortgaged in favor of the Union Loan & Trust Company, an Iowa corporation, the property previously mortgaged, as above stated, this second mortgage being to secure one hundred and ninety promissory notes, fifty whereof were for one thousand dollars each, and one hundred and forty whereof were for five thousand dollars each, the total aggregating seven hundred and fifty thousand ($750,000) dollars. All the notes referred to in this mortgage bore the date of the deed,  which contained the following covenant: "The said party of the first part (that is, the mortgagor) hereby covenants that the
the second mortgage, therefore, in order to allay any such question, and to give the creditors intended to be covered by the second mortgage an undoubted right to claim under it, the deed conveyed absolutely to Hubbard, trustee, the property covered by the mortgage, giving to the trustee full power to realize and apply the property and rights to the discharge of the debts secured or intended to be secured as above stated. It suffices, for the purpose of this case, to give this outline of the deed in question, without stating all the various clauses found in it intended to accomplish the purpose which it had in view. The deed, however, contained
this declaration: "This conveyance is made, the suit for foreclosure brought by the Trust however, with full notice of the assertion of Company of North America relied upon the following claims against the said prop- many defenses, only one of which need be erty, to wit, a certain mortgage or trust referred to, that is, that the bonds and the deed to the Trust Company of North Amer- mortgage in favor of the said Trust Company ica, of Philadelphia, Pennsylvania, as trus- of North America were ultra vires. Howtee, to secure certain bonds for the sum of one ever it may be observed that the Terminal million two hundred and fifty thousand ($1,- Company by its answer asserted that the 250,000) dollars, and also certain mechanics' rights of those entitled to claim *under the liens to the amount of about $55,000, and second mortgage or the conveyance made for also certain judgments to the amount of their benefit to Hubbard, trustee, were parabout $20,000. Nor shall said first party amount to the claims of the Trust Company (that is, the transferrer) be understood to of North America, or the bondholders under Covenant that there are not other claims the first mortgage in favor of that company. than those hereinbefore expressly mentioned, The Credits Commutation Company internone of which, however, are to be considered vened in the foreclosure proceedings, averand assumed by said second party (Hub-ring that the bonds secured by the deed in bard, trustee); nor by the acceptance of this favor of the Trust Company of North Amerdeed is he in anywise held to admit the va- ica were void, because the Terminal Comlidity of said trust deed liens, judgments, or pany at the time the bonds were executed of any claims made or that may arise there- was without lawful power to issue them or under; nor shall this deed be held in any to secure them by mortgage. It was also manner to operate as the merger of said claimed that in virtue of the judgment renmortgage to said Union Loan & Trust Com- dered in the state court the Credits Commupany, but said mortgage shall at all times be tation Company was a creditor of the Terkept in full force until all persons and corpo- minal Company to the amount of the judg rations entitled and claiming benefits there- ment, and was entitled to avail itself of the under shall consent to its discharge, or so rights accruing to it from the deed of conlong as it may be necessary to keep said veyance made by the Terminal Company to  mortgage in force for the protection of the Hubbard, trustee, and therefore that the title herein conveyed, or any interest claimed Credits Commutation Company was entitled by virtue hereof." to be paid from the proceeds of the property sought to be foreclosed before the holders of the bonds secured by the deed which had been made in favor of the Trust Company of North America.
Default having taken place in the payment
The trial court decided in favor of the validity of the bonds issued to the Trust Company of North America and of the mortgage securing the same. 69 Fed. Rep. 441. On appeal to the circuit court of appeals for the eighth circuit, the judgment of the trial court was affirmed. 49 U. S. App. 523. The case then, by the allowance of a writ of certiorari, was brought to this court.
Messrs. Henry J. Taylor and John C.
Messrs. Asa F. Call and Joseph H. Call for respondent.
*Mr. Justice White, after making the  foregoing statement, delivered the opinion of the court:
The errors assigned and the discussion at the bar confine the question to be decided solely to the validity of the negotiable bonds of the Terminal Company which were issued to the Trust Company of North America, and which were sold in open market to innocent purchasers for value, and the proceeds of which inured to the benefit of the Terminal Company. The issue for decision is restricted to this question, since all the errors assigned and the contentions based upon them depend on the assertion that the bonds issued to the Trust Company of North America, and the mortgage by which their payment was secured, were wholly void. This complete want of power in the Terminal Company is predicated upon certain requirements of the law of the state of Iowa, existing at the time of the incorpo
ration of the Terminal Company, and of a |
As the sum of the bonds which were issued "Such articles must fix the highest amount and secured by the mortgage in favor of the of indebtedness or liability to which the cor- Trust Company of North America exceeded poration is at any one time to be subject, the statutory limit and the amount stated which in no case, except risks of insurance in the charter, the question which arises first companies, and liabilities of banks not in for consideration is this: Did this fact renexcess of their available assets, not includ-der them void; and, secondarily, was the issue ing their capital, shall exceed two thirds of of bonds taken from out the operation of the its capital stock. But the provisions of this general rule laid down in the statute by the section shall not apply to the bonds or oth- exceptions mentioned in the latter portions er railway or street-railway securities is- thereof? As the claim that the bonds were sued or guaranteed by railway or street-rail- void is based on the statutory provisions way companies of the state in aid of the lo- above referred to, it follows that we are comcation, construction, and equipment of rail-pelled to primarily ascertain the meaning ways or street railways, to an amount not and operation of the state law. In making exceeding sixteen thousand dollars per mile this inquiry we are constrained in the first of single track, standard-gauge, or eight place to inquire what construction has been thousand dollars per mile of single track, placed upon the lowa statute by the supreme narrow-gauge, lines of road for each mile of court of that state; for it is an elementary railway or street railway actually con- principle that this court in interpreting a structed and equipped. Nor shall the pro- state statute, will construe and apply it as visions of this section apply to the deben- settled by the court of last resort of the tures or bonds of any company incorpo- state, and will, hence, only form an inderated under the provisions of this chapter, pendent judgment as to the meaning of the the payment of which shall be secured by an state law when there was no binding conactual transfer of real-estate securities for struction of such state statute by the court the benefit and protection of purchasers of last resort of the state. Nobles v. Georgia, thereof; such securities to be at least equal 168 U. S. 398 [42: 515]; First National in amount to the par value of such bonds or Bank v. Chehalis County, 166 U. S. 440 [41: debentures, and to be first *liens upon unen- 1069]; Morley v. Lake Shore & M. S. Railcumbered real estate worth at least twice way Co. 146 U. S. 166 [36: 928], and authe amount loaned thereon." thorities there cited.
which this (Terminal) company shall at any time subject itself shall not exceed two thirds of the paid-up capital stock of said company, aside from the indebtedness secured by mortgage upon the real estate of the company."
The part of the foregoing section commanding the insertion in the charter of incorporated companies of the amount of inability for which the corporation could at one time be subject, and limiting such amount to two thirds of the capital stock, originated in the state of Iowa in the year 1851, and was continuously in force from the time of its adoption in the year in question up to the period when it was embodied in the Code of 1897. Iowa Code 1851, § 676; Iowa Code 1873, § 1061. The subsequent portions of the section creating exceptions as to certain classes of railway bonds, and as to bonds secured by an actual transfer of realestate securities, originated, the one in 1884 and the other in the year 1886, and continued in force until they were also incorporated in the Iowa Code of 1897. 20 Iowa Laws, chap. 22; 21 Ib. chap. 54. And section 1622 of the Iowa Code also contains the following cognate provision: "If the indebtedness of any corporation shall exceed the amount of indebtedness permitted by law, the directors and officers of such corporation knowingly consenting thereto shall be personally and individually liable to the creditors of such corporation for such excess."
The portion of the charter of the Terminal
The subject-matter of the creation by an Iowa corporation of a debt in excess of the maximum amount fixed in its charter in accordance with the requirement of the statute, and also in excess of the sum limited by the state law, was considered by the supreme court of the state of Iowa in Garrett v. Burlington Plow Co. and Others (1886) 70 Iowa, 697 [59 Am. Rep. 461]. The case was this: An action was brought in chancery to foreclose a mortgage executed by the Burlington Plow Company, an Iowa corporation, to the plaintiff as a trustee for certain of its creditors upon real estate and personal property. The authorized capital stock of the corporation was fifty thousand dollars. The maximum limit imposed by the articles of incorporation was the maximum imposed by the statute, that is, two thirds of the amount of the capital stock. The corporation had contracted an indebtedness in excess of the limitation fixed by the statute and fixed by the charter; that is, with an authorized capital stock of fifty thousand dollars it had contracted an indebtedness exceeding fifty thousand dollars, of which total indebtedness the sums pressed in the foreclosure suit were a part. The defense to the suit was twofold: First, that the total debt of the corporation, including that sued on, was in excess of the two-thirds limitation; and, second, that the mortgage was void because it had been granted to protect certain directors of the corporation to the prejudice of its general creditors. The fact that the debt