The compromise between the City and the railroad company was consummated Sep. 8, 1857. This was more than ten years before the filing of the bill. Messrs. A. G. Porter & Harrison and S. Burke, in person, for appellees: The alleged compromise is utterly null and void, and constitutes no defense to the action. It is clearly void, upon the principle settled by this court in the case of Bell v. R. R. Co. (supra). The principle there settled is, that the officers of a municipal corporation, authorized by special statute and vote of the people to subscribe for stock in a railroad company, have no power to compromise such subscription and abandon the enterpise. The compromise was made, pending the suit to foreclose the mortgage and recover judg ment on the bonds. To redeem the eighty bonds pledged, the company gave up, besides the eighty bonds pledged, one hundred thirteen bonds of $1,000 each, that were not pledged, and canceled the city subscription for $200,000 more, thus giving up $393,000 in bonds and subscriptions, payable upon demand in bonds, to prevent eighty bonds being sold. These facts are undisputed, and we think clearly establish the charge of fraud in fact. The railroad company, at the time of the compromise, was embarrassed and unable to pay its debts without calling in its capital stock. The bonds and subscription of the City constituted a large part of its unpaid capital stock and nearly, if not all, its available means to pay its debts. That such a compromise, made under such circumstances, is void, is well settled by repeated reported adjudications in this country and in England. til January 29, 1868, when Stevenson Burke having purchased the interests of several of the equitable owners of the judgment, this bill was filed by him and the other equitable owners, whose interests he had not acquired, against the railroad company, the City of New Albany and others. It averred the ownership of the judgment by complainants, the failure of the company to put any portion of its railroad into operation, or to lay any part of the track thereof, and its having become insolvent about the 30th day of April, 1857. It charged further that the company, having expended all its means, abandoned all further efforts to build the road, and that its road-bed and right of way had been sold. It also charged that since the year 1858, it had not kept up its organization or elected any new officers. The bill then proceeds to charge that the City of New Albany was indebted to the company in the sum of $393,000 besides interest, growing out of a subscription to its capital stock, made on the 19th day of November, 1853, in part payment of which, two hundred bonds of $1,000 each had been delivered to the company, and that the other defendants were indebted in smaller sums in a similar manner. The bill further charged that none of these bonds except seven had been negotiated by the company; but that, on the contrary, one hundred and ninety-seven of them had been returned to the City in pursuance of an illegal compromise as alleged, and that the City subscription to the stock had been canceled. The complainants, therefore, charged that the City still remained a debtor to the company, and they prayed relief; that such indebtedness might be ascertained, and that so much thereof as was necessary to satisfy the judgment might be decreed to be thus applied. The capital stock of a moneyed corporation is a trust fund irrevocably pledged to the cred-up itors of the corporation. Curran v. Ark., 15 How., 304; Ogilvie v. Ins. Co., 22 How., 380 (63 U. S., XVI., 349); 2 Redf. Railw., 634; 1 Redf. Railw., 168, and cases cited; Ang. & Ames, Corp., 559; 27 L. & E., 572; 39 L. & E., 576; 20 Conn., 178; Adler v. Brick Mfg. Co., 13 Wis., 57; 48 Pa. St., 29; 46 Pa. St., 48; 16 Conn., 593; Mann v. Pentz, 2 Sandf. Ch., 257; Nathan v. Whitlock, 9 Paige, 152. Mr. Justice Strong delivered the opinion of the court: The complainants in the court below are equitable owners of the judgment recovered on the 14th day of November, 1857, in the Circuit Court of Floyd County, Indiana, against the New Albany and Sandusky City Junction Railroad Company, an insolvent corporation. The judgment was obtained in a suit brought by certain trustees, to foreclose a mortgage given by the company to secure the payment of one hundred and ten bonds of $1,000 each, and such proceedings were had in the suit that there was not only a decree of foreclosure and an order to sell the mortgaged property, but a personal judgment against the company. The mortgaged premises were sold under the order, and the proceeds of sale having proved insuf ficient to satisfy the judgment, an execution was issued for the residue, which was returned "Unsatisfied." Nothing further was done un To this bill the City of New Albany has set several defenses. The first of these is, that the circuit court had no jurisdiction of the case, inasmuch as it was a creditor's bill, founded upon a judgment of a state court of Indiana. A second defense urged is, that under the laws of Indiana, a judgment creditor's suit to subject assets of an insolvent corporation to the payment of his judgment, will not lie; but that the remedy, both by common law and by the statute, is sequestration, and the appointment of a receiver. The defect of necessary parties is also alleged. The other defenses set up go to the merits. They are: first, that the complainants are concluded by a decree in a suit brought in 1863, in the Floyd County Circuit Court, in which they, the railroad company, and William Lindley, were parties; second, that, upon the facts disclosed in the pleadings, the City was indebted to the company when the bill was filed; that the adjustment by the City and the company was, at the time it was made (Sep., 1857) a compromise made in good faith, by which the City ceased to be indebted to the company, and that the adjustment was effective and valid as against all persons; and third, that if the complainants had rights against the City and might have impeached the validity of an arrangement by which the City recovered its bonds and obtained a cancellation of its subscription, they have slept so long upon these rights, that a court of equity will not afford them relief. We proceed to consider the last mentioned two of these defenses; for if they are sufficient, it will be unnecessary to say anything of the others. The railroad company had undertaken to build a railroad from New Albany to Sandusky City, and it had commenced the work, relying mainly upon the bonds of the City to raise the money necessary. It had, however, been disappointed. Suits had been commenced for injunctions to restrain the collection of a tax for paying the interest, and the consequence was that the bonds could not be sold without a ruinous sacrifice, if sold at all. These suits were still pending. Meanwhile the company had bor rowed $36,000, pledging the bonds to the amount of $80,000 as collateral security. The loan had fallen due, and the holders were demanding payment, and threatening to sell the collaterals. The company was utterly unable to redeem the pledge. Its available means were completely exhausted. It could neither go on with its work nor in any manner relieve itself. According to the weight of the evidence, the bonds pledged, together with all the others still held by the company, would not have sold for enough to have paid the $36,000 borrowed. more than twenty years and, of course, passing from hand to hand by delivery. Had the whole subscription been paid, it must have been with similar bonds. And the manifest Assuming that the subscription made by the design of the subscription was to create bonds City to the capital stock of the company in for sale in the market as the convenience or 1853, though undoubtedly invalid at first, be the necessities of the railroad company might came valid by the ratification ordinance adopted require. There was no restriction in the conMarch 7, 1855; that thereby the City came un- tract upon the power of disposition, and none der obligation to give its bonds to the company at law or in equity, unless it be that the comin payment for the stock, so far as they had pany could not part with the bonds in fraud of not already been given, and we come directly to its stockholders or its creditors. And it had the question: what was the effect of the ar- the right, which all other debtors had at the rangement made in August and September, time, to make preferences among its creditors 1857? Here the situation of the parties at the to pay one rather than another. It is not to time is of importance to be considered. be disputed that, situated as the company was at the time when the contract of August and September, 1857, was made, with the debt of $36,000 pressing upon it, and with no other means of relief, it might have sold the entire lot of two hundred and forty-three bonds which it held, or was entitled to call for, at the best price that could have been obtained, and might have applied the entire proceeds, had they been needed, to pay that single debt. Of this neither the stockholders nor the other creditors could have complained. What more has been done now? No doubt such a course would have involved an equal sacrifice to the company, and would, in the end, have been more disastrous to the City. Time has revealed that the bonds were worth more than they could have been sold for, but we are to look at the circumstances as they were when the transaction took place, in considering what was its nature and whether it was legal. But if a sale by the company at the market price, and an application of the whole proceeds to the payment of the $36,000 debt, would have been unimpeachable, why is it less so because the City became the purchaser? Beyond doubt, the City might lawfully buy its own bonds. Had the company sold to a stranger, and then the City become a purchaser from the stranger, it will not be contended that any creditor of the company could complain. And it can make no difference whether the purchase was made directly or indirectly from the first holder of the bonds, assuming that there was no fraud. The transaction, or the arrangement of August and September, 1857, was, in substance, plainly nothing more than a purchase, by the City, of its own bonds, some of which had been issued and others of which it was under obligation to issue at the call of the vendor. The price paid was $36,000, besides some thousands more which the purchaser undertook to pay. Looking at it in the light of subsequent events, it was no doubt an advantageous purchase for the City and, if the uncontradicted evidence is to be believed, it was deemed at the time an advantageous sale or arrangement for the company. Certainly it did not place the company in any worse position than it must have held had it not been made. Turning now to the condition of the City, it had ratified its invalid subscription with an irrevocable engagement on the part of the company that not more than $250,000 should be called for until the railroad should be completed and put in running order at least to its junction with the Ohio & Mississippi Railroad, and then only for the purpose of furnishing the road with depots, rolling stock, etc. It had paid its bonds to the extent of $200,000 on the subscription, and it was liable to be called upon for $50,000 more. For the remainder it was liable only upon a contingency that has never happened, and that never can happen. The consideration for its subscription, it is true, had not failed, though the motive that induced it, namely: the construction of the railroad, no longer existed. The credit of the bonds which it had issued was gone, and had it issued the remaining $50,000, they could not have been sold for more than $8,000 or $10,000. It was in these circumstances that the company applied to the City, stating its own helplessness, and it was then that the arrangement was made by which the City assumed to pay the debt of $36,000 due by the company, and sundry other moneys, and in consideration thereof obtained from the company one hundred and ninety-three bonds, which had not been negotiated, and a cancellation of the stock subscription. Was this transaction valid? The bonds were negotiable instruments, payable to bearer in not less than ten and not It is, however, contended by the complainants, that the arrangement was fraudulent, both in law and in fact, and that neither the Common Council of the City nor the directors of the railroad company had power to make it. In support of the proposition, that the transaction was ultra vires, we are referred to Bell v. R. R. Co., 4 Wall., 598 [71 U. S., XVIII.,338], but that case is very unlike the present. There a popular vote, under legislative sanction. had instructed the police board to subscribe a defined amount, leaving to them no discretion. The police board were agents to carry out the popular will, with limited powers. It was not, therefore, for them to subscribe a less amount, or make any other contract, than the one they had been directed to make; and this court well said that a municipal corporation, like the board of police, could not modify or alter the stock subscription voted by the people in the absence of power from the Legislature. The decision, however, was placed upon other grounds. But in the present case the common council were free to exercise their own discretion. They were under no obligation to sub scribe at all, and they might take as little or as much stock as they pleased, not exceeding $600,000. Besides, as we have seen, the arrangement assailed by the complainants was not a modification of the subscription previous ly made, or a bonus given for a release. It was rather a purchase of the city debt. We think it was not beyond the power of the contracting parties. And we are not able to perceive that it was fraudulent, either in law or in fact. It may well be doubted whether the complainants can be heard in alleging fraud. It is clear the arrangement made is binding upon the railroad company, through which, as well as against which, they claim. They can, therefore, have no standing in court, unless the arrangement was absolutely null for want of power in the parties to make it, or unless it was fraudulent as against them and, therefore, voidable at their suit. We have already seen that it was not a nullity, and the bill does not charge that it was fraudulent. It avers that the arrange ment and compromise and attempted cancella tion of the subscription were entirely null and void, but it does not allege that they were fraudulently made. In urging fraud now the complainants are setting up a case not made by the pleadings. But it is not necessary to place our decision on this ground. No doubt the subscribed capital stock of a corporation is a fund held by it in trust for its creditors, as is also all its other property, and had the railroad company released, without equivalent consideration, or given it away, its action would have been fraudulent, and might have been set aside by a court of equity. But certainly it was in the power of the directors to apply the subscription on bonds taken in payment to the extinguishment of debts and, if thus applied in good faith, all being obtained for it that it was worth, no one has been wronged. It is, therefore, a question of fact to be determined by the evidence, whether the bonds and the balance of the City's subscription were thus applied. Upon this subject we have already remarked at considerable length. We may add the evidence is convincing that the contract be tween the City and the company was made in the utmost good faith, with no intention to wrong creditors of the latter; that it was at the time considered advantageous to the company, and it is not proved that all was not paid for the bonds issued and to be issued that they could have been sold for in the market. We will not pursue this branch of the case further. Were it even conceded that the arrangement of August and September, 1857, might have been set aside at the instance of the creditors of the company, the laches of the complainants is fatal to their bill. This suit was not brought until the 29th day of January, 1868. The contract assailed was consummated September 8, 1857. It was not made in secret. There was no attempt at concealment. On the contrary, the ordinance of the City was published at the time. The insolvency of the company, as well as its abandonment of its work on the railroad, was known. It is asserted in complainants' bill. Injunction suits were then pending against the City. The return of nulla bona to the complainants' execution against the railroad company was made on the 1st of December, 1858. Then their right, if any they had, to attack the compromise as fraudulent was perfect. Yet they remained inactive more than nine years, and it was not until after a speculator had purchased a large part of the judgment that this bill was brought. An attempt has been made to excuse this long delay, by the testimony of one of the complainants that he had never heard of the compromise of the City's subscription until a time which was subsequent to the commencement of the suit. But he does not say that he had not full possession of the means of detecting the fraudulent arrangement, if it was fraudulent, or that there had been any concealment; and the possession of such means of knowledge is, in equity, the same as knowledge itself. Farnam v. Brooks, 9 Pick., 212; 2 Story, Eq., 1521. Moreover, the other evidence in the case is ir reconcilable with this statement of the witness. He had attorneys who knew of the compromise from the first. He himself went to New Albany, in the spring of 1858, for the purpose of making a thorough examination of the affairs of the company, and another witness thinks he was then informed of the arrangement. There is not the slightest evidence that any other one of the complainants was not fully apprised of what had been done from the time of the transaction, and certainly they all had the fullest means of knowledge. No excuse is, therefore, shown for their long delay, and it is difficult to see why they are not barred by the rule in equity analogous to the Statute of Limitations. Upon this subject it is unnecessary to cite authorities. They are to be found in numbers in the decisions of this court, as well as elsewhere. It is not to be questioned that a direct suit at law, founded upon alleged fraud in making the compromise, would have been barred by the Indiana statutory limitation of six years. It cannot be maintained that supine negligence and lapse of time are less efficient in a court of equity. These views of the case render it unnecessary to consider the other defenses set up against the complainants' right to recover. The decree of the Circuit Court is reversed, and the cause remanded with instructions to dismiss the complainants' bill as against the City of New Albany. 148; 5 Dill., 87, note; 22 Am. Rep., 208 (80 Ill., 459); 37 Cited-17 Wall., 620; 105 U. S., 154: 9 Bank. Reg., Am. Rep., 136 (97 Ill., 550). SUPREME COURT OF THE UNITED STATES. WESTERN TRANSPORTATION PANY, Plf. in Err., V. SAMUEL A. DOWNER. (See S. C., 11 Wall., 129-135.) " DEC. TERM, COM- that it was the duty of the master to do one of 'Dangers of lake navigation," shallowness of *1. The term "dangers of lake navigation," in- 2. When a defendant transportation company shows that a loss of goods which it had contracted to carry from one port to another, was occasioned by a danger of lake navigation, from losses by which it had exempted itself by its bill of lading. the plaintiff may show that the danger and consequent loss might have been avoided by the exercise of proper care and skill on the part of the defendant; in which case the defendant will be liable, notwithstanding the exemption in the bill of lading. The burden of establishing the absence of such care and skill on the part of the defendant, rests with the plaintiff. 3. A presumption of negligence, from the simple occurrence of an accident, seldom arises, except when the accident proceeds from an act of such a character that, when due care is taken in its performance, no injury ordinarily ensues from it in similar cases; or where it is caused by the mismanagement or misconstruction of a thing over which the defendant has immediate control, and for the management or construction of which he is responSubmitted Mar. 2, 1871. Decided Apr. 10, 1871. [No. 98.] ERROR to the Circuit Court of the United States for the Northern District of Illinois. Suit was brought in the Superior Court of Chicago, by the defendant in error, to recover for damages to a certain quantity of coffee. Upon the petition of the defendant, the case was removed to the court below. Judgment having been given for the plaintiff in that court, the defendant sued out this writ of error. The case is fully stated in the opinion of the court. sible. INE Messrs. J. N. Jewett and George B. Hibbard, for plaintiff in error: The counsel for the defendant requested the judge to charge the jury that, if they believed from the evidence that the loss of the coffee was within one of the exceptions contained in the bill of lading, that is to say, if it was occasioned by a peril of navigation, of the lakes or rivers, then the burden of showing that the loss might have been avoided by the exercise of proper care and skill, was upon the plaintiff it was for him to show that the loss was the result of negligence. The court refused to so charge, and the defendant's counsel excepted. This refusal was error. is most clearly stated by this court in Clark v. The whole doctrine Barnell, 12 How., 272; see, also, Hunt v. The Cleveland, Newb., 221; The Neptune, 6 Blatchf., 193; Am. Law R., Jan. 1871, p. 212. The court charged the jury, substantially, *Head notes by Mr. Justice FIELD. sea or to " Certainly that was not a question of law. This part of the charge was plainly erroneous. v. Crawford, 3 Wall., 175 (70 U. S., XVIII., Greenleaf v. Birth, 9 Pet., 292; Blackburn 186). Mr. James T. Mitchell, for defendant in error: struction complained of. If the acceptance of the goods was special, show, not only the cause of the loss was within the burden of proof is still on the carrier to the terms of the exception, but also that there was, on his part, no negligence or want of due care." 2 Greenl. Ev.,sec. 219; Whitesides v. Russell. 8 Watts & S., 44. Lowrie, Ch. J., says: "He must prove, not only So. also, in Hays v. Kennedy, 41 Penn., 378; an accident which the law admits as inevitable in its character, but also that he was guilty of no fault in falling into the danger, or in his efforts to extricate himself from it. Davis, 4 Ohio St., 362. Graham v. This rule is well established, also, in other States. Brinson, 9 Rich., 201; Berry v. Cooper, 28 Ga, The decision was expressly left to the jury. 127. the court: This was an action against the Western Transfour bags of coffee, belonging to him, which portation Company to recover damages sustained by the plaintiff from the loss of eightyNew York to Chicago. The Company was a common carrier, and in the course of the transthe Company had undertaken to transport from portation had shipped the coffee on board of the propeller Buffalo, one of its steamers on the lakes. The testimony shows that the steamer was seaworthy and properly equipped, and was under the command of a competent and experienced master; but on entering the harbor of Chicago in the evening, she touched the bottom, and not answering her helm got aground, pounding, and thus caused the hold to fill with and during the night which followed, kept water. The result was, that the coffee on board was so damaged as to be worthless. the Transportation Company at New York, ex- NOTE. From what liability a contract that a common carrier is not responsible for loss or damage will ception. exonerate. See note to New Jersey Steam Nav. Co. v. Merch's B'k, 47 U. S. (6 How.), 344. Liability of carrier by water for loss or damage of On the trial the plaintiff made out a prima facie case by producing the bill of lading, show goods. See note to Moore v. Trans. Co., 65 U. S., ing the receipt of the coffee by the Company at 160 road companies were bound to keep their roads, carriages, and all apparatus employed in working them, free from any defect which the utmost knowledge, skill and vigilance could discover or prevent, if it appeared that an accident was caused by any deficiency in the road itself, the cars or any portion of the apparatus belonging to the Company and used in connection with its business, a presumption of negligence on the part of those whose duty it was to see that everything was in order immediately arose, it being extremely unlikely that any defect should exist of so hidden a nature that no degree of skill or care could have seen or discovered it. It is plain that the grounds stated in these cases, upon which a presumption of negligence arises when an accident has occurred, have no application to the case at bar. The grounding of the propeller and the consequent loss of the coffee may have been consistent with the highest care and skill of the master, or it may have resulted from his negligence and inattention. The accident itself, irrespective of the circumstances, furnished no ground for any presumption one way or the other. If, therefore, the establishment of the negligence of the defendant was material to the recovery, the burden of proof rested upon the plaintiff. For the error in the refusal of the instruction prayed and in the instruction given, the judgment must be reversed, and the cause remanded for a new trial. tation to Chicago, and by proving the arrival of the coffee at the latter place in the propeller Brooklyn in a ruined condition, and the conse quent damages sustained. The Company met this prima facie case by showing that the loss was occasioned by one of the dangers of lake navigation. The term, dangers of lake navigation," include all the ordinary perils which attend navigation on the lakes, and among others, that which arises from shallowness of the waters at the entrance of harbors formed from them. The plaintiff then introduced testimony to show that this danger, and the consequent loss, might have been avoided by the exercise of proper care and skill on the part of the defendant. If the danger might have been thus avoided, it is plain that the loss should be attributed to the negligence and inattention of the Company, and it should be held liable, not withstanding the exception in the bill of lading The burden of establishing such negligence and inattention rested with the plaintiff, but the court refused an instruction to the jury to that effect, prayed by the defendant, and instructed them that it was the duty of the defendant to show that it had not been guilty of negligence. In this respect the court erred. In Clark v. Barnwell, 12 How., 272, the precise point was involved, and the decision of the court in that case is decisive of the question in this. And that decision rests on principle. A peril of navi gation having been shown to exist, and to have occasioned the loss which is the subject of com plaint, the defendant was prima facie relieved from liability, for the loss was thus brought within the exceptions of the bill of lading. There was no presumption, from the simple fact of a loss occurring in this way, that there was any negligence on the part of the Company. A presumption of negligence from the simple occurrence of an accident seldom arises, except where the accident proceeds from an act of such a character that, when due care is taken in its performance, no injury ordinarily ensues from it in similar cases, or where it is caused by the mismanagement or misconstruction of a thing over which the defendant has immediate con Where confiscation proceedings do not come betrol, and for the management or construction of fore this court on a writ of error, to correct any irregularities or mere errors of law, but collaterally which he is responsible. Thus, in Scott v. Dock as the foundation of the defendant's title, no error Co., 3 Hurls. & C., 596, the plaintiff was in- can be regarded here that does not go to the exjured by bags of sugar falling from a crane intent of showing a want of jurisdiction in the court which they were lowered to the ground from a property. which rendered the judgment condemning the warehouse by the defendant, and the court said: "There must be reasonable evidence of negli gence; but where the thing is shown to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from want of care.' So in Curtis v. R. R. Co., 18 N. Y., 543, the Court of Appeals of New York held that the mere fact that a passenger on a railroad car was injured by the train running off a switch, was not of itself, without proof of the circumstances under which the accident occurred, presumptive evidence of negligence on the part of the Company. The court said that carriers of passengers were not insurers, and that many injuries might occur to those they transported, for which they were not responsible; but as rail Cited-3 Biss., 319; 2 Dill., 23; 17 Blatchf., 422. HENRY B. TYLER, Piff. in Err., v. JOHN D. DEFREES. (See S. C., 11 Wall., 331-356.) Confiscation proceedings can be collaterally questioned, only for want of jurisdiction-powers of Congress are the same in civil war as in other wars-seizure gives jurisdiction. Congress to which is confided the power to make war, to suppress insurrection, to levy taxes, to is not deprived of these powers when the necessity make rules concerning captures on land and on sea, for their exercise is called out by domestic insurrection and internal civil war. demnation, and had made known that fact to the Argued Mar. 29, 1870. Re-argued Feb. 13, 1871. IN ERROR to the Supreme Court of the Dis trict of Columbia. This was an action of ejectment brought in the court below, in which judgment was given for the defendant, upon a special verdict. The plaintiff thereupon sued out this writ of error. The case is sufficiently stated by the court. Messrs. R. J. Brent and R. T. Merrick, for plaintiff in error: There was no appraisement made of the prop |