besides, was neither wrong nor unnatural of it, we have seen, was not unnatural, and if itself. But it was further relieved from the indorsement of other notes was not question, and any challenge in the indorse-shown to be by him, it was not shown not to ments was satisfied by the circumstances.

It is to be remembered that the discounting the notes in controversy was not the only transaction between the banks. It was one of many transactions of the same kind. [146]They *justified confidence, and it was confirmed by the manner in which the notes were presented. It is conceded that the cashier had the power to rediscount the bank's paper, and it was he who solicited the accommodation on account of which the notes were sent to the New York bank. The notes themselves, it is true, were sent by Allis, but expressly on the part of the bank, and subsequent correspondence about them was conducted with the cashier, as we have And there could have been no misunderstanding. The letter of the New York bank which the cashier of the Little Rock bank answered was specific in the designation of the notes, their sum and the proceeds of the discount, and returned one of the notes not in controversy to be corrected. To this the cashier replied:


have been by him. The testimony of the officers of the New York bank was that the notes were received and discounted in the regular course of business, and in no way different from the other notes discounted by it for the Little Rock bank, and that they knew the notes were properly indorsed by one of the duly authorized officers of the First National Bank; but as the notes were not in their possession, they were unable to state the name of the officer. The testimony opposed to this, if it may be said to be opposed, is negative and of no value. Some of the directors testified that Allis did not have the power nor did they know of his having indorsed the bank's paper for rediscount. They knew, however, that the bank's paper was rediscounting in large amounts, and that money was borrowing continually, but they scarcely made an inquiry, and one of them testified that only in a single instance did Allis request the board for power to borrow money. The instance is not identified, except to say that it was in the fall of 1892. Of whom, in what amount, whether the request was granted or denied, what inquiry was made, what review of the business of the bank was made, there was absolute silence about. They surrendered the business absolutely to the president and cashier, and intrusted the manner of the execution to them. This court said by Mr. Justice Harlan, in Martin v. Webb, 110 U. S. 15 [28: 52]: "Directors cannot, in justice to those who deal with the bank, shut their eyes to what is going on around them. It is their duty to use[148] Notice was therefore brought to him and ordinary diligence in ascertaining the condito the bank of the transaction and almost in- tion of its business, and to exercise reasonevitably of its items. Was he deceived as to able control and supervision of its officers. the notes which had been sent? It is not They have something more to do than from shown nor is it suggested how such deception time to time to elect the officers of the bank was possible, and a presumption of ignorance and to make declaration of dividends. That cannot be entertained. Therefore, if the which they ought by proper diligence to have discounts he wrote about in his letter of the known as to the general course of business in 20th of December were not in pursuance of the bank, they may be presumed to have those he had requested in his letter of No-known in any contest between the corporation vember 25, he ought to have known and ought to have so said. If he had so said, the New York bank could have withdrawn the credit it had given, and Allis's wrong could not have been committed.

Dec. 20, 1892. United States National Bank, New York City. Gentlemen: We have your favor of the 10th inst., inclosing the Dickenson Hardware Company note for completion, which we herewith return.

We charge your account with $31,871.27 proceeds of $32,500.00 of discounts.

Yours very truly,

W. C. Denney, Cashier.

The strength of these circumstances cannot be resisted. Against them it would be extreme to say that the New York bank was put to further inquiry. Of whom would it have inquired? Not of Allis, the president [147] of the Little Rock *bank, because his authority would have been the subject of inquiry. Then necessarily of the cashier; but from the cashier it had already heard. He began the transaction; he acknowledged its close, accepting the credit which had been created for the bank of which he, according to the argument, was the executive officer. We can discover no negligence on the part of the New York bank. The dealing with the notes in controversy came to it with the sanction of prior dealings with other notes. It was conducted with the same officers. It was no more questionable. The relation of Allis to

and those who are justified by the circumstances in dealing with its officers upon the basis of that course of business."

Under section 5136, Revised Statutes, it was competent for the directors to empower the president or cashier, or both, to indorse the paper of the bank, and, under the eircumstances, the New York bank was justified in assuming that the dealings with it were authorized and executed as authorized. Briggs v. Spaulding, 141 U. S. 132[35: 662]: People's Bank v. Manufacturers' National Bank, 101 U. S. 181 [25: 907]; Davenport v. Stone, 104 Mich, 521; First National Bank of Kalamazoo v. Stone, 106 Mich. 367; Houghton v. The First National Bank of Elkhorn, 26 Wis. 663 [7 Am. Rep. 107]; Thomas v. City National Bank of Hastings, 40 Neb. 501 [24 L. R. A. 263].

4. Set-off is the discharge or reduction of one demand by an opposite one. That of plaintiff in error was so applied and the amount due on the notes reduced. He was entitled to no other relief.

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The information was based upon sections 3257, 3281, 3305, 3453, and 3456 of the Revised Statutes.

Boott v. Armstrong, 146 U. S. 499 [36: | 13, 1888, in the district court of the United 1059], does not apply. In that case it was States for the southern district of California held that a debtor of an insolvent national to obtain a decree declaring that certain bank could set off against his indebtedness real and personal property which had been to the bank, which became payable after the seized by a collector of internal revenue was bank's suspension, a claim payable to him forfeited to the United States. before the suspension. And it was further held that the set-off was equitable, and therefore not available in a common-law action. But in this case the plaintiff in error pleaded the set-off. His right to do so was derived from the law of Arkansas, and that law provided: "If the amount set off be equal to the plaintiff's demand, the plaintiff shall recover nothing by his action; if it be less than the plaintiff's demand, he shall 149]have judgment for the residue only." (Gould's Arkansas Digest of Statutes, 1020.) The law was complied with.

It follows that the Circuit Court did not err in instructing the jury to find for the plaintiff (defendant in error), and judgment is affirmed.

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The property in question once belonged to the Fruitvale Wine & Fruit Company, a corporation of California. The acts that were set forth as constituting the grounds of forfeiture were recommitted, if at all, while[150 that corporation owned the property. Subsequently, June 9, 1888, the property was purchased by Wolters, Helm, Austin, and Coffman at a public sale thereof by the assignee of the company-the consideration, $7,700, being paid in cash to the assignee. They appeared and filed a demurrer to the original information. The demurrer was confessed, and an amended information was filed January 11, 1889.

Wolters, Helm, Austin, and Coffman on the 19th day of April, 1889, filed an answer to the amended information, controverting its material allegations. The answer contained "That they these among other averments: [the claimants] have not sufficient information in regard to the several wrongful acts alleged to have been perpetrated by said corporation on which to found a belief; they therefore, on behalf of said corporation, deny all and singular the alleged fraudulent acts charged in said information as having been done and performed by said corporation."

On the 21st day of August, 1890, the claimants filed an amendment of their origi nal answer, in which they averred that in December, 1888, W. Moore Young, who was secretary of the Fruitvale Wine & Fruit Company, and one of the owners of the property in question when the acts complained of in the original and amended information were committed, was indicted in the same court, and was convicted and sentenced to jail. The claimants further averred that imprisonment for one year in the county

the acts complained of in this case were the 'N ERROR to the Circuit Court of the same as those relied on by the government United States for the Southern District in its prosecution against Young, and that of California to review a judgment of that because of the proceedings and judgment court affirming a judgment of the District against Young the United States ought not Court of the United States for the Southern to maintain its present action. The amendDistrict of California dismissing an informa- ed answer concluded: "These claimants tion filed in the last-named court to obtain aver the foregoing in addition to their ana decree that certain real and personal prop-swer already on file herein, and expressly reerty which had been seized by a collector of ly, not only upon this, but upon all of the internal revenue was forfeited to the United allegations and denials contained in said And having fully anStates. Judgment of the Circuit Court af- original answer. firmed. swered, they pray as they have heretofore prayed in said original answer."

See same case below, 43 Fed. Rep. 846.
The facts are stated in the opinion.
Mr. James E. Boyd, Assistant Attorney
General, for the plaintiff in error.

Messrs. Samuel G. Hilborn, and Fred-
eric W. Hall for defendant in error.

49] Mr. Justice Harlan delivered the opin-
ion of the court:

This was an information filed November
U. S., Book 43.

174 U. S.


The demurrer to the amended answer was overruled by an order entered October 20, 1890, and an exception was taken *by the[151; United States to the action of the court. 43 Fed. Rep. 846. On the next day the following decree was entered: "This cause came on regularly for trial before the court, sitting without a jury, a jury trial having been expressly waived in writing, the United


States being represented by Willoughby Cole, it would then be necessary to consider
Esq., United States attorney, and the claim- whether the conviction of Young precluded
ants by Messrs. Brousseau and Hatch, and the United States from proceeding by infor-
Henry C. McPike, Esq. Whereupon the mation against the property. But the claim-
United States attorney announced to the ants did not take that course. They were
court that the facts set forth in the amended careful in the amended and supplemental
and supplemental answer heretofore filed by answer to say, not only that the facts there-
the claimants in this action, and to which a in alleged were in addition to those set forth
demurrer had been interposed by the United in their original answer, but that they relied
States and overruled by the court, might be upon the denials contained in the original
considered by the court and taken as true answer.
for the purposes of this trial, as if the said Without considering the merits of the
facts had been proved by competent witness-question raised by the amendment of the an-
es, but that they were insufficient in law to swer, we affirm the judgment of the circuit
constitute a defense to this action. There- court upon the ground that there was no
upon the United States, by their said attor- proof in the case to overcome the denials in
ney, and the claimants by their attorneys the original answer or the averments of the
aforesaid, submitted the cause to the court information, and to show, as against the
for its decision upon the pleadings in said claimants, that the property had been for-
cause and the said amended and supplemen- feited. Affirmed.
tai answer, the facts as to the matter, as al-
ready stated, being taken as true, the court,
after considering the same, orders and de-
crees that the libel herein be, and the same is AMEDEE D. MORAN et al., Purchasing[153)
hereby, dismissed."

The case was carried to the circuit court, and was pending there at its January term, 1891. On the 23d day of February, 1897, the judgment of the district court was affirmed.

It is contended on behalf of the government that the amended and supplemental answer did not present a valid defense, and therefore that the circuit court erred in affirming the judgment of the district court. But if, independently of the particular question raised by the amended and supplemental answer, the judgment of the district court dismissing the information was right upon any ground disclosed upon the record, the judgment of the circuit court affirming the judgment of the district court should not be held to have been erroneous.

It cannot be doubted that by the information and the original answer the distinct is

[152]sue was presented, whether the property *in

Trustees, Petitioners,



(See S. C. Reporter's ed. 153-158.)

When judge before whom cause is heard is
disqualified to sit on appeal.

A judge who appointed a receiver in a foreclo-
sure suit, and made an order allowing him a
monthly sum for services, and also rendered
the final decree of foreclosure and decrees for
delivery of possession, is disqualified, by the
act of Congress of March 3, 1891, chap. 517,
§ 3, to sit in the circuit court of appeals, on
an appeal from the decree of another judge
concerning the monthly compensation of the
receiver after a certain compromise between
him and the purchasers on the foreclosure.

[No. 243.]


States Circuit Court of Appeals for the Fifth Circuit to review a decree of that court sustaining exceptions to the master's report, and reversing the decree of the Circuit Court of the United States for the Northern District of Texas, etc. Decree of Circuit Court of Appeals set aside and quashed, and the case remanded to that court to be heard and determined by a bench of competent judges.


question was forfeited to the United States Submitted April 17, 1899. Decided May 1,
by reason of the wrongful and fraudulent
acts specified in the information. The an-
swer put the government upon proof of those
acts. No proof was however made by the
government to establish the alleged grounds
of forfeiture. Nevertheless, the cause was
submitted for decision, not only upon the
facts set forth in the amended and supple-
mental answer, taking them to be true, but
upon the pleadings. So that even if the dis-
trict court had been of opinion that the
amended and supplemental answers were in-
sufficient in law, it still remained for it to
determine the rights of the parties upon the
information and the original answer. As
the original answer controverted the mater-
ial allegations of the information, and as
the cause was submitted for decision upon
the pleadings, without any proof to sustain
the allegations of fraudulent acts forfeiting
the property, the final order dismissing the
information was proper. If the claimants
had withdrawn their denials of such allega-
tions of the information as set forth the
grounds upon which the government asserted
the forfeiture of the property in question,

See same case, 52 U. S. App. 425, and 169
U. S. 737.

The facts are stated in the opinion.
Mr. L. W. Campbell for petitioners.
Messrs. George Clark and D. C. Bolinger
for respondent.

*Mr. Justice Gray delivered the opinion[153] of the court:

This is a writ of certiorari heretofore granted by this court under the act of March 3, 1391, chap. 517, § 6, to review a decree made by Judge Pardee and Judge Newman

in the circuit court of appeals for the fifth | tral Railway Company to this court, which circuit upon an appeal to that court from on November 24, 1890, affirmed that decree. the circuit court of the United States for the 137 U. S. 171 [34: 625]. northern district of Texas.

The leading question presented by the writ of certiorari is whether Judge Pardee was disqualified to sit at the hearing of that appeal by the provision of § 3 of that act, "that no justice or judge before whom a cause or question may have been tried or heard in a district court or existing circuit court shall sit on the trial or hearing of such cause or question in the circuit court of appeals." 26 Stat. at L. 827.

If Judge Pardee was so disqualified, the decree in which he took part, even if not absolutely void, must certainly be set aside and quashed, without regard to its merits. [154]American Construction Co. v. Jacksonville, T. & K. W. Railway Co. 148 U. S. 372, 387 [37: 486, 492].

The material facts bearing upon the question of his disqualification, as appearing by the record now before this court, are as follows:

Upon a bill in equity, filed April 2, 1885, in the aforesaid circuit court of the United States, by the Morgan's Louisiana & Texas Railroad & Steamship Company against the Texas Central Railway Company, to foreclose a mortgage of its railroad and other property, Judge Pardee, on April 4, 1885, made an order, appointing Benjamin G. Clark and Charles Dillingham joint receivers of the property, and appointing John G. Winter special master as to all matters referred or to be referred to him in the cause. Upon a petition filed in that cause by Dillingham, representing that he had been the active receiver for seventeen months, and praying for an allowance for his services as such, Judge Pardee, on December 4, 1886, made an order "that the receivers be authorized and directed to place Charles Dillingham upon the pay roll of the receivers for the sum of one hundred and fifty dollars per month, as an allowance upon his compensation as receiver in this cause; this allowance to date from the possession of the receivers, and to continue while Mr. Dillingham gives his personal attention to the business of the company or until the further order of the court."

On April 12, 1887, Judge Pardee made a final decree in the cause, for the foreclosure of the mortgage; for the sale of the mortgaged property by auction; and for the payment by the purchasers of "all the indebtedness of the receivers incurred by them in this cause, including all the expenses and costs of the receivers' administration of the property," "and also the compensation of the receivers and their solicitors;" appointing Dillingham and Winter special master commissioners to make the sale, and to execute and deliver a deed to the purchasers; and reserving the right to any party to the cause, as well as to the receivers and master commissioners, to apply to the court for orders necessary to carry that decree into execution. Appeals from that decree were taken by the [155]Morgan's Louisiana & Texas Railroad & Steamship Company and by the Texas Cen

Pursuant to that decree, on April 22, 1891, all the property mortgaged, except some not immediately connected with the railroad, was sold to Moran, Gold, and McHarg, trustees for bondholders. On their petition filed in the cause, Judge Pardee, on August 28, 1891, made a decree directing Dillingham and Clark, receivers, to execute and deliver a deed, and to deliver possession, to the purchasers, of all the property, real and personal, of the Texas Central Railway Company, in the state of Texas, used for and pertaining to the operation of its railway; and providing "that nothing in this decree contarned is intended to affect, or shall be construed as affecting, the status of any pending or undetermined litigation in which said receivers appear as parties; such litigation shall continue to determination in the name of said receivers, with the right reserved to said purchasers, should they be so advised, to appear and join in any such litigation; and nothing in this decree contained is intended to affect, or shall be construed as affecting, the receivership of any of the property of the defendant railway company other than the property so transferred to said purchasers, possession of which said property other than that so transferred is retained for further administration, subject to the orders of this court;" and "that said purchasers or said receivers may apply at the foot of this decree for such other and further relief as may be just.' The proper ty was accordingly delivered to the purchasers in September, 1891. On November 6, 1891, on like petition of the purchasers, Judge Pardee made a similar decree, except in directing the deed to the purchasers to be executed and delivered by Dillingham and Winter, special master commissioners, and in other particulars not material to be mentioned.

Dillingham afterwards, and until April, 1895, continued to draw and pay to himself the sum of $150 a month, and returned quarterly accounts to the master crediting himself with those sums. On August 25, 1891, he presented a petition, entitled in the cause, to the master, praying him to "make to him such an allowance for his services as[156] receiver in the above-entitled cause, from the date of his appointment until his discharge, as to said master may seem just and proper." About the same time, a compromise was made between him and the purchasers, pursuant to which he was paid, in addition to the allowance of $150 a month for the past, the sum of $20,000 for services as receiver; and he signed a paper, entitled in the cause, acknowledging that he had received from them the sum of $20,000 "in full of my fees and charges as receiver of the Texas Central Railway Company, as per agreement." At the hearings before the master upon Dillingham's accounts it was contested between him and the purchasers whether he was entitled to $150 monthly since the compromise. The master reported that he was; and exceptions by the purchasers to his report were referred

on April 8, 1895, by order of Judge McCormick, to Abner S. Lathrop, as special master, who by his report, filed September 26, 1896, found that Dillingham was entitled to the monthly allowance of $150 until April, 1893, but was not entitled to it from April, 1893, to April, 1895. That report, on exceptions taken by the purchasers and by Dillingham, was confirmed by the decree of Judge Swayne on December 5, 1896; and from that decree Dillingham took an appeal to the circuit court of appeals..

All the proceedings above stated were filed in and entitled of the cause of Morgan's Louisiana & Texas Railroad & Steamship Company v. Texas Central Railway Company.

The appeal of Dillingham was heard in the circuit court of appeals by Judge Pardee and Judge Newman, who, for reasons stated in their opinion, delivered by Judge Newman, sustained Dillingham's exceptions to the master's report, reversed the decree of Judge Swayne, and remanded the cause to the circuit court "with instructions to overrule and discharge the motions attacking the receiver's accounts." 52 U. S. App. 425, 432. Moran, Gold, and McHarg, the purchasing trustees, thereupon applied for and obtained this writ of certiorari. 169 U. S. 737.

The intention of Congress, in enacting that [157]no judge before *whom "a cause or question may have been tried or heard," in a district or circuit court, "shall sit on the trial or hearing of such cause or question," in the circuit court of appeals, manifestly was to require that court to be constituted of judges uncommitted and uninfluenced by having expressed or formed an opinion in the court of the first instance. Whatever may be thought of the policy of this enactment, it is not for the judiciary to disregard or to fritter away the positive prohibition of the legislature.

The enactment, alike by its language and by its purpose, is not restricted to the case of a judge's sitting on a direct appeal from his own decree upon a whole cause, or upon a single question. A judge who has sat at the hearing below of a whole cause at any stage thereof is undoubtedly disqualified to sit in the circuit court of appeals at the hearing of the whole cause at the same or at any later stage. And, as "a cause," in its usual and natural meaning, includes all questions that have arisen or may arise in it, there is strong reason for holding that a judge who has once heard the cause, either upon the law or upon the facts, in the court of first instance, is thenceforth disqualified to take part, in the circuit court of appeals, at the hearing and decision of the cause or of any question arising therein. But, however that may be, a judge who has once heard the cause upon its merits in the court of first instance is certainly disqualified from sitting in the circuit court of appeals on the hearing and decision of any question, in the same cause, which involves in any degree matter upon which he had occasion to pass in the lower court.

In the present case, all the decrees and orders of Judge Pardee in the circuit court,

as well as the decree of Judge Swayne from which the appeal in question was taken, were made in and entitled of the original cause of the bill in equity to foreclose the mortgage of the Texas Central Railway Company. The order appointing Dilling ham and Clark receivers upon the filing of the bill, the order allowing Dillingham for his services as receiver the sum of $150 a month from his taking possession and "while he gives his personal attention to the business of the company or until the further order of the *court," the final decree of fore-[158] closure and sale, and the decrees for delivery of possession to the purchasers, were all made by Judge Pardee; and the appeal, in the hearing and decision of which he took part, from the decree of another judge concerning the compensation of Dillingham as receiver, involved a consideration of the scope and effect of his own order allowing that receiver a certain sum monthly.

The necessary conclusion is that Judge Pardee was incompetent to sit on the appeal in question, and the decree in which he participated was not made by a court constituted as required by law; and therefore this court, without considering whether that decree was or was not erroneous in other respects, orders the

Decree of the Circuit Court of Appeals to be set aside and quashed, and the case remanded to that court to be there heard and determined according to law by a bench of competent judges.

MAUDE E. KIMBALL, Piff. in Err.,


HARRIET A. KIMBALL, John S. James, and Harriet I. James.

(See S. C. Reporter's ed. 158-163.)

When writ of error to state court will be dismissed this court will not decide moot questions.



Where one claiming to be the widow applied to be appointed administratrix of the estate of a deceased person and to revoke letters of administration issued to others, and the surrogate decided that she was not the widow of the intestate, and that her marriage was void by reason of the invalidity of a decree of divorce rendered in another state purporting to dissolve a former marriage, and the surrogate's decision was affirmed by the appellate courts of the state, a writ of error from this court to the state court will be dismissed, if a will of the deceased is subsequently found, which is admitted to probate, and letters testamentary issued thereon by the surrogate, and the letters of administration revoked, although such dismissal will leave plaintiff in error bound by the adjudication of the state courts that she was not the widow of the deceased.

This court cannot decide moot questions: and neither laches nor consent of parties can authorize this court to exercise jurisdiction over a case in which it is powerless to grant relief.

[No. 248.]

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