52. ': ','
ages, itwooldseem: that th-eohamEl cotnplained of". whi.ch gives the rule of damages' dtl beingpuhffat Kildare, is not open t6the chMge of 6'r Mnjectural! If the court was right the liability of the defendant. and as to the right ofthe' plaintiff to'recover damages for beitlg put oft' at Kildare, then it seemS clear that the rule of damages given by the CO\lrt was ]the defendant,as authorizing a lessening of the actual damages'sufl'ered:ny the ,plaintiff in being put off at Kildare, and gives phiintiff inel"l'bf'Do:ground :forcomplaint.ih this court.: the, i'ooord; asbrought.:to this' court; we see no other course than.to affirm thejudgtnent"and it is so ordered.:
:BANK oFEDGEFlELD -" t1. FARMERS' "Co-OPERAT;IVE MANUF'G .... ·'L.' "', , ... -" ;'.''
(Oircuit Oourt 'Of Appeat8,' Ff,ftfh, Circui" .Tune 13, 1892.)
, in, a suit in 'a fede.ralcourt Oli certain notes, pleas filed alleging want of consider. ation; whicb: are "Verified by'an officer aUthorized under Code Ga. 53450, to admin· illwroatbs, to ,,,,it, justice tbe, p«illloQe"and afterwards:sw0!'H to at the trial belpre ,the clerk of the court ,and by'the direction of the court, aresufticielitly verified to niake ali illsUable defense; and'&uch -vel'Uication before a olerk at the trial is alQQdeGa. 58479 et seq., &lIweH as by Rev. St. U, S, § 954, providing the court "'may atany timeperinit either party to amend any defeot in process 'ol"'pleadhig tl on oertalnconditions.:' ,
,,:. Wbere abwtaj,[es three negotiable notes before maturity as collateralfor "moneyloaned, tog-ether 'with three"other past-due protested notes by the same makers an,d being on the face of the notes to indicate that ,they were, given for the same consideration ,or formed part of one tranBaction, mere knOWledge' of the dishonor of the pallt-due notes will not operate as notice to the bank that tbe,threli' nQtesnot yet due were tainted by defective consideration, or Of any equities existing between theorilrinal parties thereto, and the bank is entitled to recover the whoie of the indebteaXless of the borrower to it in a suit on such notes, " " I'
,SAME-COr.rr.rEI;tOUL ,LAWrSTATIlI FIDB BOLDEIW-NoTJCE OF EQUlTIES, "
When a bank adv!inces mon'ey on certain negotiable notes, some of which are past due, the quest,id"n, O,f' D"oti,ce of a,n,y ities eXisting between the original parties,arising from, knQwledge on Part of, the bank of such overdue notes, is ,not a question of tbe constr#,dtion of a, Contraot, which is usually determined by the loC'U8 contt'act1.is,:but:is governed by the rule of commercial law whioh affects subReguent hoiderllin the of notice, of prior equities, and not by tbe statutes, rules, or decisions Of the j1articular such notes were executed.
e q "U"
In Error to the Circuit Court of. the United States for the Northern District of Georgia. ,,:' ,: Action by the Bank of Edgefield against the Farmers' Compauyon,threepl'oil1isBory notes held as ,collateral sebUlityfor a loan of $1,239.77. Verdict and $475.65 for plaintiff, who R,evorsed. Statement Circuit Judge:: The plaintiff in- error BIeda suit on the common·law side of the circuit court of the United States for the northern district of Georgia against the defendant in error, being anactiotl u,poJ;). threepromis8ory notes, ag-
BANK OF EDGEFIELD V. FARM.lTIRS'cb-OPERATIVE M.ANUF'G
EachQf said notes Was made at Griffin, Ga.,: the 28th by in error, payable to of Smith & Vaile Company,a corporation organized under the laws, aq'd being a citizeDjof the of Ohio. These three Dotes were afterwards, and before due, indorsed by Smith & Vaile Company to D. A. Tompkins, a citizenof,and residing in,thestate of North Carolina, who then, before the notes became due, indorsed them for value to the plaintiff in error, ,a citizen of, and residing in, the state 01 South Carolina.. The de-, fendant in error filed certain pleas setting up the failure of consideration, which said pleas weresworn to by W.. P. Walker, president of the defendant company, before a justice of the peace for Spalding county, in the state of Georgia. When the caEe waS called, for trial in the court below I plaintiff inerror moved for judgmeI;lt, ,because there was no issuable defense filed under oath, as provided by the statutes of 'the state of Georgia and rules of court, plaintiff contending that the affidavit to the plea, made before a justice of the peace, constituted no sworn defense in the circuit court of the United States. The court ruled (a) that the affidavit was sufficient; and (b) that if it was not sufficient the plea could be sworn to then in open court; and the plea was thereupon sworn to by W, E. H. Searcy, president of the defendant company, before W. C. Carter, deputy clerk of the circuit court of the United States for the northern district of Georgia. Plaintiff then renewed the motion for judgment, because there could be no affidavit to a. plea after the first term of the cotirt. The court overruled this motion, and declined to permIt the plaintiff to take judgment without a jury. The defendant then filed an additional plea, which was also sworn to before the deputy clerk, setting forth that, when the loan was made by the .Bank of Edgefield to D. A. Tompkins, upon the three notes as collateral, certain of the notes which had been given by defendant to Smith & Vaile Company, an" which were among those deposited as collateral security by Tompkins, were then due and unpaid; and that this was notice to the Bank of Edgefield; and that, if anything was due to plaintiff, it was only the ampunt first loaned to Tompkins, being $500. The other facts in the case sufficiently appear from the assignments of error, as follows:
"(1) That the court erred in not granting a jUdgment for plaintiff, as requestpd by its attorneys, upon the ground that tllere was no issuable defense filed under oath by defendant. "(2) Because the court erred in not granting jUdgment for plaintiff. as requested by its attorneys, aftt'r defendant had been allowed to swear to its pleas in open court at the time of the trial. "(3) Because the court erred in permitting the introduction of thedepositions of M. H. Mirns, cashier of plaintiff. which were offered by defendant at the trial. and objected to by plaintiff in open court and in presence of the jury. . "(4) Because the court erred in permitting W. E. H. Searcy, president of the defendant company, to testify in the cause over the objection of the plaintiff. made in open court in presence of the jury.
"(5) Becausethecourhrred in not ruling out from the jury the depositions of said M. H. Mims and the testimony of W. E. H. Searcy, when the same was requested by attorney for plaintUf in open court and in presence of the jury. "(6) Because the court erred in charging the jury as set forth in the transcript of the record. . "(7) Because ,the court erred in charging the jury as follows: -Now, these notes are held by the Bank of Edgefield,and the proofs show exactly what that transaction was. We hilVe the evidence of the cashier of the bank that these six thret\ notes sued on, and the three notes for $500 each, which were the first three to mature-were placed m August, 1890, in the Bank of Edgefield, and' that some notes were given by Mr. Tompkins after that, the first of which were given on the 18th Octobel". The three notes, however, were due at the time these notes were placed in the bank. In the opinion of the court, the dishonoring of the three notes, as it is called in law, -the failure to pay them when they were due,-was notice to the bank of all equities existing between the machinery company, Smith & Vaile Company, and the defendant corporation.' .. (l:l) Because the court erred in charging the jury as follows: 'So that being the case. in the opinion of the court, the bank would only be entitled to recover on these notes,undel," the evidence and the pleadings. the amountdue by the defendant to Smith & Vaile Company, which would be the amount as stated to you a While ago. the difference in the freight, and the interest which Mr. Searcy says was on the entire tranllaction up to the time they made the arrangement, at or about the time of the date of the letter.' "(9) Because the court'erred in chairging the jury as follows: 'About the date .ofthat letter which you have in evidence, 28th FebnlRry. 1890, I believe, there. w¥ an adj,ustment of. matter between Tompkins, agent or representative,of tile establishIqent tl;lat sold the machinery. and the president of the defendantcorporationf' there having been no evidence adduced at the trial to authorize or justi(yBuchcharge. . - "(10) Because thecou'rt erred in charging the JUTyas follows: 'The proof shows that these notes were given for the purchase of certain machinery, and that that machinery was not delivered ; that it was DOt to be delivered, however, until the five notes were paid·. and th!tt these notes somewhat indefinite about that;' it appearing were not paid. The from the evidence that W.E.H; Searcy. a witness for defendant. positively and without dispute. that neither of the said three five hundred dollar notes were paid', tbe eVidence not haVing iii' any wise been indefinite upon this point. "(11) Becauae the COtlTt erred in.charging the. jury as follows: - But Mr. Searcy stated they agreed he was to pay the interest on the entire transaction and the difference in freight. I do not believe that the bank is entitled to, recover any mpre thaI) thftt. 'I. think; however, they are entitled to re· CQver that;' there having noevid.ence to warrant such a charge, and the same being illegal and misleading. "(12) Becaulle the court erred in refusing to charge the jury, when so requested by counsel for plaintiff. as follows: 'If you find. as is admitted by the plaintiff, that the three notes for $500 each were past due when they were transferred ,by Tompkins to the plaintiff .bank. along with the three :p.otes sued Qn. then this is not to the bank of all the equities existing betweenthedefendllnt company and Smith & Vaile Company; nor was it evidence Df a want or failure of consideration of the three notes not then due. and now sued npon. But you may consider the fact of the three $500.00 notes being paatdue when the six notes were transferred to the plaintiff bank jn determining from the evidence if that fact showed bad faith in the bank in
BANK OF EDGEFIELD ". FARMERS' CO-OPERATIVE MANUF'G CO.
taking the notes not due, and, if it did, then the plaintiff cannot recover anything. But if you fiDd from the evidence that, when the bank took the six notes, it took the three notes sued on before due, in good faith and for a valuable considf'ration, to wit, as collateral security for debt of D. ·A. Tompkins, then the plaintiff is entitled to recover the full amount called for by the three notes sued on.' "(13) Because the court erred in taking a wholly erroneous view of the real issues aud merits of the cause, and in permitting the defendant to introduce evidence of the equities existing between the defendant and Smith & Vaile Compau)', to whom the notes sued on were given, without there being any pleadings to justify the introduction of such evidence, and without there being any legal right on the part of the defendant to introduce testimony as to such equities; it not having been shown that the plaintiff took the three notes sued on without any knowledge of any failure of consideration or infirmity in the said notes,nor that plaintiff took said notes in bad faith." Henry B. Tompkins, for plaintiff in error. Hall & Hammond and Dismukes & Mills, (John I. Hall and F. D. Dismukes, of counsel,) for defendant in error. " Before PARDEE and MCCORMICK, Circuit Judges, and LOCKE, District Judge. PARDEE, Circuit Judge. The first and second assignments of error are not well taken. The plea in this case was sworn to originally before one of the officers mentioned in section 3450 of the Georgia Code, and in accordance with the Georgia practice, which we are inclined to think was sufficient verification to the plea filed in the circuit court; but, whether this be so or not, when the plea was afterwards sworn to in open court at the time of the trial, by the direction of the court, we have no doubt the plea was sufficiently verified. Code Ga. § 3479 et seq., is very liberal with regard to the allowance of the amendments, and sufficiently broad, in our opinion, to cover this case. And section 954 oithe· Revised Statutes of the United States provides that the court" may, at any time,permit either of the parties to amend any defect in process or pleadings, and upon such conditions as it shall in its discretion and by its rules prescribe." The seventh assignment of error seems to he well taken. It islJ,s 101lows: "(7) Because the court erred in charging thejury as follows: · Now, these notes are held by the Bank of Edgefield, and the proofs show exactly what that transaction was: We have the evidence of the cashier of the bank that these six notes-the three notes sued on, and the three notes for $500 each, which were the first three to mature-were placed in August, 1890, in the Hank of Edgefield, and that some notes were given by Mr. Tompkins after that. the first of which were given on the It\th of October. The three notes, however, were due at the time these notes were placed in the bank. In the opinion of the court. the dishonoring of the three notes-as it is called in law, the fallure to pay them when they were due-was notice to the bank of all the equities f'xisting between the machinery company, Smith & Vaile Company, and the defendant corporation.' " There was nothing 011 the face of the notes to indicate that the three notes for $500 each, which were past due when they, with the three
deposited as collateral security with the plaintiff, or referred in any way to the same whicl1Jhe three upon any of them is8ue(:l. case,tepding tosho'Ythat the plaintiff had any knowledge whatever'of the transaction or contract between the defendant and Smith & Vaile Company, or that the six notes constituted or formed part of one transaction. "Where more than one note is executed upon the same consideration, 'they are not all to be regarded as dishonored when One is overdue and unpaid." Daniel, Neg. Inst. § 787. The, was ·before the supreme court of the state ofWisconsin in thecasepf BO$8 v. Hewitt, 15 Wis. 260. In that case the court said: "Upon thtlq'uestion whether the purchaser should be chargeable with notice of any defects in the consideration of the notes subsequently to become due by reason of the first overdue at the time, no authority was cited by either counsel,and we have found none. The notes were all secured by one mortgagE', and. if it had appeared onthe face of the papers that they were all given for one consideration, upon olle transaction, it might be urged, with considerable force, that, as the law charged the purchaser with notice of any defect in the consideration of the first note, it must also charge him with like all were giv,enfor oue consideration. But how that question should decided, if it ever,f\rises,. can be then determined. But there was nothing on the face of the papers to show that the notes were all given for one consideration. It is true they bore the same date, and were secured by one mortgage. But it is frequently the caSe that parties, in gi ving securities, include debts arising out of many different transactions, as to some of which there have been defenlJes not affecting the others; and,we do not think that a of negotiable notes uefore maturity can be beld chargeable with notice ()f any defect in their consideration from the Ulere fact that another note, secured by the same mortgage, was overdue, and had not been paid."
B088 v, Hewitt was affirmed in the supreme court of Wisconsin, 45 Wis. 110, citing Bank v. Kirby, 108 Mass. 497, and OromweU v. County of Sac, 96 U. S. 51. In Ormnwell v. Oownty of Sac, affirmed in Railway Co. v. Sprague, 103 U. S. 756-762, and also in case of Morgan v. U. S., 113 U. S. 476-502, 5 Sup. Ct. Rep. 588, it is held that the fact that installments of interest are overdue and unpaid is not sufficient to affect the position of one taking bonds and subsequent coupons before matufor value, as a bonafide holder. The defendant in errot .contends that the rule given in the judge's charge was correct, because section 2786 of the Code of Georgia provides as follows: "If the holder receives it ,after it is due, its nonpayment at maturity is notice to him of dishonor, aM he takes it subject to all the equities existing be,tween the original parties thereto; and ifthere be several notes constituting one transaction, but due at different times, the fact that the one is overdue and unpaid shall be notice the purchaserof' all, and put him on his guard. "
And he cites the case of HarreU v. Broxton, 78 Ga. 129, 3 S. E. Rep. 5, to the same
BANK OF EDGEFIELD 11. FARMERS' CO-OPERA1'IV'E MANUF'G
The plaintiff in error contends that the question of notice of equities existing between original parties in the case of ()ommercial paper is regulated and determined by the commercial law, and not by the rule or decisions in any particular state; relying upon Swiftv. Tyson, 16 Pet. 1; Oates v. Bank, 100 U. S. 239; Railroad Co. v. National Bank, 102 U. S. 14; Pana v. Bowler, 107 13. S. 529-541, 2 Sup. Ct. Rep. 704; Burge88 v. Sdigman, 107 U. S. 33, 2 Sup. Ct. Rep. 10' King v. Doane, 189 U. S. 173: 11 Sup. Ct. Rep. 465. There is no doubt that the law of the place where the contract was made usually governs in the construction and enforcement thereof, and that the validity and effect of all writings or contracts are determined by the laws of the place where executed. Thequestion presented here, however, is not with regard to the construction of the contract or its validity, but, rather,with regard to the rule of commercial law which affects subsequent holders in the matter of notice of prior equities. We are of the opinion that the general commercial law prevails, and not any particular rule or decision established in the state of Georgia either by the decisions of the supreme court of that state or by statute announcing a rule. It has been settled in the courts of the United States since the leading case of Goodman v. Simonds, 20 How. 343, that one who acquires mercantile paper before maturity from another, who is apparently the owner, giving a consideration for it, obtains a good title, though he may know facts and circumstances that would cause him to suspect, or would cause one of ordinary prudence to suspect, that the person from whom he obtained it had no interest in or authority to use it for his own benefit, and though by ordinary diligence he could have ascertained those facts. Swift v. Smith, 102 U. S. 442; King v. Doane, 139 U. S. 166, 11 Sup. Ct. Rep. 465. It follows that, although the three notes of the same date as those acquired by the plaintiff were past due, and that the plaintiff was informed of that fact, still that would not be notice that the three notes not yet due were in any wise tainted by defective consideration, or for any other cause. The eighth assignment of error seems also to be well taken. It is as follows: "(8) Because the court erred in charging the jury as follows: -So that being the case, in the opinion of the court, the bank would only be entitled to recover on these notes, under the evidence and. the pleadings, the amount due by the defendant to Smith & Vaile Company, which would be the amount as stated to you a while ago. the difference in the freight, and the interest which Mr. Searcy says was on the entire transaction up to the time they made the arrangement, at or about the time of the date of the letter.' " The proof in the case shows without dispute that the three promissory notes sued upon by plaintiff were held by it as collateral security to secure loans and discounts from time to time thereafter to D. A. Tompkins, whose total indebtedness to the plaintiff at the time suit was brought amounted to $1,239.77. This evidence was produced by the defendant, and, as there is no evidence to the contrary, it is certainly
binding, upon the defendant. .11 When it appears that the bill or note was :acquired by the holder as collateral security fora debt, and he is deemed entitled to recover upon it. he is still limited to the amount of the debt which it secures if there be a valid defense against his transferrer, being regarded as, at events, a bonafide holder, and entitled to upon a better footing only pro tanto. Thus the holder could redover,againSlt an accommodation party no more than the consideration actually advanced; but. in the absence of proof. he will be deemed to have advanced the full amount of the paper." Daniel, Neg. Inst. § 832. To the same effect see Stoddard v. Kimball, 6 Cush. 469; President, etc., v. Ohapin, 8 Mete. (Mass.}4Q; F'i8her v.F'i8her. 98 Mass. 303'; Bank v. Roberts, 46 Wis. 373; Bank v. Werst, 52 Iowa, 684, 3 N. W. Rep. 711; v.BanJc, 79 Ga.M7jo S; E. Rep. 111, and cases there cited. The ohargeof the court, based on the theory that the plaintiffwas not a bona fidehqlder, limiting .pla;intiff's right to recover to the amounts due by the defendant to Smith & Vaile Company, was probably correct, if the theory Upon which it was based had been the correct theory of the case; but, ll.swe have shown in considering the seventh assignment of error, that theory was wrong, and it follows that the charge of the court limiting the plaintiff's right to recover an amount less than the indebtedness of Tompkins to plaintiff was erroneous. A consideration of the other assignments, of error is unnecessary. The judgment of the circuit court is reversed. with c.osts, and the cause is remanded, with instructions to order a new trial.
(Circuit Court, 8. D. Ohio,
W. D. August 4, 1892.)
HABEAS CORPUS-PRISONER HELD 1I0R REMOVAL TO ANOTHER DISTRICT.,...INDICTMENT.
On habeas corpus to release a person held under a warrl'\-nt of a United States commissioner to li-wait an order of the district judge for his removal to another district to answer' an indictment, it is the right and duty of the circuit court to examine the indictment to ascertain whether it charges any offense against the United States, or whether the offense comes within the jurisdiction of the court in which the is pending. There are no common-law offenses against the United Htates. and the offenses cognizable in the federal courts are only such as the federal statutes define, provide a punishment for, and confer jurisdiction to try; but when congress adopts or creates a common-law offense the courts may properly look to the common law for the true meaning and definition theFeof, 'in the absence of a clear definition in the act creating.·it.
CRIMINAL LAW-OFFl!:NBES AGAINST UNITED STA'!'ES-COMMON-LAW DEFINITIONS.
Under the act of ;ruly 2, 1890, "to protect trade and commerce against unlawful Testraintsand IlIonop6lies," an indictment simply following the language of the statute would be wholly insufficient, for the words of the act do not themselves fully, directly, and clearly set forth all the eLements necessary to constitute the o1fense'j and the indictment must, therefore, be tested by the specific facts alleged ·to have been done or committed.
CONSTITUTIQNAL LAW-INTERSTATE COMMERCE-MoNOPOLIES.
Congress has no authority, under the commerce clause 01' any other provision of thE! constitution·. to Umit the rignt of a corporation cre.ated by. a. state in the acqui-