sequently sold the bonds for the railroad com-
pany for $54,337.50, paid their loan to the
amount of $49,591.67, and credited the com-
pany with a balance of $4,745.83. It does not
appear to whom they sold them, but it does
appear that they never took title to themselves.
It is significant in this connection that, in the
suit of Stewart v. Lansing, Mr. Elliott, the
senior member of the firm, stated: We did
not sell the bonds at all; . they were nego-
tiated by Mr. Delafield," (the treasurer of the
company) "either personally or by letter."
64] *3. John J. Stewart appears as the next
holder of these bonds. There is no evidence
whatever to show how Stewart, who lived in
New Orleans, became possessed of them, or
even that he paid value for them, or that he
took them without notice of their original in-
validity. It does appear, however, that a suit
against the town was brought in his name to
recover the amount of certain overdue cou-
pons; that judgment went for the defendant;
and that such judgment was affirmed by this
court in Stewart v. Lansing, 104 U. S. 505
[26: 866]. It was held by this court in that
case that it was clearly shown that, although
Elliott, Collins & Co. " parted with "the bonds,
they did not sell them, nor was the sale nego-
tiated by the firm, and that the bonds only
passed through their hands upon terms which
had been agreed upon by others; that Stew-
art, the plaintiff, was not known to any of the
wituesses examined; that no one had ever seen
him; and that the sale, if actually made, was
at an enormous discount. Under these cir-
cumstances, it was held that there was no such
evidence of bona fide ownership in the plaintiff
as would require the case to be submitted to
the jury.

The only additional testimony in this case with regard to the ownership of Stewart tends to show that he was an actual person, well known in New Orleans, and living there. Although he appears to have been living when the testimony was taken, no effort seems to have been made to secure his deposition. There is nothing tending to show that he was a bona fide purchaser for value.

that the bonds were invalid, and believed "they were like some San Antonio bonds that were held void in the state courts, but when sued on in the Federal courts they were declared legal and valid." He further stated that he had dealt heavily in Texas bonds, but had never bought any municipal bonds from other states until he bought these; and that he was not acquainted in Tompkins county before he purchased them. He was not able to state even the year he bought them of Stewart. He swears he did not open the package in which they were delivered to him, even after he had returned with them to San Antonio, and that he supposes the coupons were attached to the bonds. He subsequently cut off some of the coupons, and two actions appear to have been brought by him upon them. Upon his examination in one of these prior cases be stated that he purchased them upon the recommendation of Mr. Stillman of New York, and that, at the price at which they were offered, he thought they were a good purchase; that he did not know whether, in recommending the bonds, Stillman was serving himself or was serving him, and did not know whether they belonged to him or some one else; that his correspondence with Stillman was by letters, which he was unable to produce; that he gave $50,000 for the $75,000 of bonds with $26,000 of dishonored coupons attached; and that he thought he was buying a bond that was perfectly good in the Federal courts, but that recovery in the state courts would be doubtful. Upon this examination he stated that he left the bonds in the Louisiana National Bank for several months; then took them out personally, carried them to New York, took them to Mr. Stillman, who had recommended him to buy them, to know whether he bought them for his, Stillman's account, or for his own. "At the time I bought them I did not know whether it was for my account or whether he wanted some interest in them." Stillman assured him [66 the bonds were perfectly good, but would not say positively whether he should keep them for his own account or not. He says he wanted a definite understanding on the subject, but does not seem to have secured it. He subsequently put them in the hands of attorneys in New York to whom he had been recommended by Stillman.

4. George W. Brackenridge, president of the National Bank of San Antonio, Texas, claims to have purchased these bonds of John J. Stewart, giving him therefor a cheque for $50,000 on the Louisiana National Bank. It is somewhat singular that this cheque was The substance of this testimony is that Mr. payable to and indorsed by James J. Stewart, Brackenridge went through the form of purand no explanation is given why, if the sale chasing these bonds of Stewart, and gave him were made by John, the consideration was a check for $50,000 for them; but the testipaid to James. Nor was the cheque produced mony leaves but little doubt that the purchase by the witness himself, but by the cashier of was a mere form, and was made upon the adthe bank upon which it was drawn. In the vice of Stillman, and in pursuance of correordinary course of business cheques are respondence which was not produced. It is turned by the bank to the drawer, but in this case the cheque was produced by the bank five or six years after it was drawn. Mr. 65] *Brackenridge says there was no special agreement for the purchase of the bonds; that he understood they were for sale, and had been notified that he could purchase them; that at the time he gave the cheque the bonds were delivered to him in Stewart's office in New Orleans; that the conversation with Stewart made very little impression upon him at the time; and that he had not the slightest idea

incredible that a man should purchase this large amount of bonds for half their face value without looking at them or even noticing whether they were signed or sealed, without making any inquiries with regard to the responsibility of the town, or the circumstances under which the bonds were issued, the nonpayment of the overdue coupons, or the title of the person (to him an entire stranger through whom he purchased them. His subsequently taking them to New York and asking Stillman whether he purchased them for his, Still

man's account, or on his own, indicates very clearly that this was never intended as a bona fide investment by Brackenridge. If the bonds were valid at all, he must have known they were worth very nearly, if not quite, their face value, and the very fact that bonds to this large amount were offered for sale at this large discount, at a place two thousand miles from where they were issued, was of itself a circumstance calculated to arouse suspicion of their validity in the mind of any person of ordinary intelligence.

of Lytle & Co., *a partnership. The Frio[ 68 ranch cost Lytle and McDaniel $66,000, and was deeded to the San Antonio Ranch Company, a corporation with a capital stock of $500,000, of which Brackenridge took one third, less $60,000, which was taken out in the matter of the purchase of the property that belonged to Lytle and McDaniel before the formation of this company, in which Brackenridge had no interest.

Mr. Brackenridge swears that he wanted an interest in the Frio ranch, as it was one of the 5. John T. Lytle, the plaintiff. Lytle pur- best in the country, and told plaintiff it would chased the bonds of Brackenridge. He is, and be better for him to take a third interest, and has been since 1860, a stock raiser in Medina offered to give him these bonds; that he concounty. Texas, and prior to May, 1884, had ac-sidered them good and worth as much as the quired a tract of forty thousand acres of land property. He finally accepted the proposion the Frio river, where he pastured some tion. He gave practically the same account of 2,500 cattle. The tract was worth $4 per what took place at the time that the plaintiff acre, and he owned a half interest with one did; that the property was subsequently McDaniel. He had been intimately acquainted turned over to the San Antonio Ranch Comwith Brackenridge since 1871, and, in a conver-pany, in which he received stock to the 67] sation in 1884, agreed to sell him one amount of $60,000. His testimony also third of his interest in the Frio property for these indicates that, prior to the purchase of the $75,000 of bonds. He made no inquiry with Frio property, he had a third interest in catregard to the bonds, but was told by Mr. tle worth $180,000, having assisted Lytle Brackenridge that they were good. The and McDaniel to purchase the same by a conbonds were delivered to him at the Sun Antribution of $60,000. These cattle, as well as tonio National Bank, and Lytle gave him a the Frio ranch, made up the capital of the receipt for the one third interest in the prop- Ranch Company, which was valued at $500,erty. This was six or eight weeks after the 000. agreement was made. He cut off the July coupons in time for presentation for payment, and the January coupons as they became due, and sent them to the attorneys in New York to whom Mr. Stillman had recommended Mr. Brackenridge. This was the last time he saw the bonds. The Frio property was subsequently conveyed to the San Antonio Ranch Company. It does not appear upon what day the deed was made, but as the company was not organized or chartered until January 29, 1885, it must be presumed that it was not before that time. One third of the stock in this company was issued to Mr. Brackenridge, who was made president. Brackenridge, he says, retained no interest in the bonds.

In view of the fact that a prior suit was brought upon coupons of these bonds, which was unsuccessful, and that an effort has undoubtedly been made by some one who is or was interested in them to get them into the hands of a bona fide purchaser, it is natural that their alleged ownership should be looked upon with some suspicion, and the circumstances under which they came into the hands of the present holder should be critically examined, and all the testimony upon the subject of his bona fides carefully scanned. It is certainly an unusual proceeding for a stock farmer to trade the bulk of his property for bonds about which he knows nothing, and which he does not take the trouble to look at, Upon cross-examination, he says the bargain upon the bare assurance of his vendor that was consummated at the first interview; that they are good, though such vendor be his own ten or fifteen days thereafter he gave Brack- banker, with whom he had been on intimate enridge a receipt for the bonds in payment terms for years. According to his story, the for the one third interest in the ranch, and sale was merely an off-hand affair, not prethey were then transferred to his credit, though ceded by any of the negotiations which usually not actually produced. Upon the same day, accompany purchases of large amounts [69 and some two or three hours thereafter, he saw of land-the whole thing being a mere sugges the bonds for the first time; there were cou- tion on the part of Brackenridge that he would pons upon them, but none that were matured; like an interest in the ranch, and an instant he gave them to the cashier, and told him to acceptance of the proposition by Lytle. In his take care of them for him, and he has not own words: "He said he had so many bonds seen them since he cut off the coupons for he said he had $75,000 of bonds that he transmission to his attorneys. In the summer would give me for a third interest in my ranch or fall of 1884 he received a letter from his at--in the Frio ranch. He said the bonds were torneys, informing him of some difficulty with regard to the bonds, when Mr. Brackenridge told him he had a suit pending about the coupons. He says he first learned that the town claimed to have a defense to these bonds at the time he cut off the coupons, which was about six weeks or two months after the bonds were delivered to him by Brackenridge; he further states that Brackenridge had an interest with him in another ranch, or rather cattle, worth $180,000, the title to which stood in the name

good. I told him all right; I would sell him the third interest. He said all right; consider it a trade." "That was all that was said."

It is significant of the carelessness with which the trade was conducted, that a receipt was given for "county bonds" as "part payment for a one third interest in our Frio ranch and stock located on the Frio river," and was signed by "Lytle and McDaniels," when the bonds were not county bonds, the payment was in full, the sale did not include the stock, and

the transaction was with Lytle alone. After | him of the particular facts showing the inva-
he had cut the coupons off he returned the lidity of the bonds, he was informed that the
bonds to the bank, where he supposed they town was contesting its liability, and that
remained ever since, though, at the time he Brackenridge himself was in litigation with it
was sworn in New York, they were produced over the payment of the coupons. Receiving
by his attorneys and identified by him.
this information as he did, not only from his
vendor, *but from his own attorneys, from [*71
whom he could have learned all the facts by
inquiry, it is mere quibbling to say that he had
no notice that the bonds were invalid. While
purchasers of negotiable securities are not
chargeable with constructive notice of the pend.
ency of a suit affecting the title or validity of
the securities, it has never been doubted, as
was stated in Scotland County v. Hill, 112 U.
S. 183, 185 [28: 692, 693], that those who buy
such securities from litigating parties with ac-
tual notice of a suit, do so at their peril, and
must abide the result the same as the parties
from whom they got their title. Under the
circumstances, it was bad faith or willful ig-
norance under the rule laid down in Goodman
v. Simonds, 61 U. S. 20 How. 343 [15: 934],
and Murray v. Lardner, 69 U. S. 2 Wall. 110
[17: 857], to forbear making further inquiries.
No rule of law protects a purchaser who will-
fully closes his ears to information, or refuses
to make inquiry when circumstances of grave
suspicion imperatively demand it.

Granting that all these peculiarities may be explained by the confidence which an inexperienced farmer might repose in a friend of long standing, his own testimony shows that, in the latter part of the summer or in the fall of 1884, he heard from his attorneys in New York that there was some difficulty about the bonds, and that he then talked the matter over with Mr. Brackenridge, who told him that he had a suit pending about some of the coupons. And again he says: "We have talked the matter over, as I have said, at different times. I expect he explained it all to me." While he does not state fully the scope of his informa tion, he was undoubtedly apprised of the fact that the town claimed a defense to the bonds, and that a suit upon the coupons was being contested.

It is singular as matter of fact, and fatal to a recovery as matter of law, that the plaintiff did not act upon the information thus received and at once repudiate the transaction, and refuse to cousummate the sale by a deed of the property to the Ranch Company. Instead of that, he 70] seems to have received* the announce ment with the utmost unconcern, as if it were a inatter in which he had no interest, and, some time subsequent to the 28th of January following, he made a deed of the property to the Ranch Company. He made no complaint of having been misled by Brackenridge, although no court, under the circumstances, would have enforced the contract of May 24, 1884, even if it were valid under the statute of frauds.

As early as 1823, it was held by this court in Wormley v. Wormley, 21 U. S. 8 Wheat. 421, 419 [5: 651, 658], to be "a settled rule in equity that a purchaser without notice, to be entitled to protection, must not only be so at the time of the contract or conveyance, but at the time of the payment of the purchase money." Such is undoubtedly the law. Swayze v. Burke, 37 U. S. 12 Pet. 11 [9: 980]; Tourville v. Naish, 3 P. Wms. 306; Paul v. Fulton, 25 Mo. 156; Dugan v. Vattier, 3 Blackf. 245; Patten v. Moore, 32 N. H. 382; Blanchard v. Tyler, 12 Mich. 239; Palmer v. Williams, 24 Mich. 328; Jackson v. Cadwell, 1 Cow. 622. It is insisted, however, that this principle has no application to the purchase of negotiable instruments like the bonds in question. We know of no such distinction, however, and in the case of Dresser v. Missouri & 1. R. Construction Co., 93 U. S. 92 [23:815], the rule was expressly applied to the purchaser of negotiable paper. In this case the plaintiff purchased the notes in controversy, and paid $500 as part of the consideration before notice of any fraud in the contract; and it was held that if, after receiving notice of the fraud, he paid the balance due upon the notes, he was only protected pro tanto; that is, to the amount paid before he received the notice; citing Wearer v. Barden, 49 N. Y. 286; Crandall v. Vickery, 45 Barb. 156; Allaire v. Hartshorne, 1 N. J. L. 665.

While the notice received by the plaintiff may not have gone to the extent of informing

Upon the whole, it is impossible to avoid the conclusion that the purchases of these bonds by Brackenridge and Lytle were never made in good faith, but were merely fictitious and that their real ownership is still in some one, who is affected with notice of their invalidity, and has endeavored by feigned transfers to get them into the hands of some one who can pose before the court as a bona fide purchaser.

The judgment of the court below is therefore affirmed.

JOHN E. ALEXANDRE ET AL., Appt.,

v.

JOHN MACHAN ET AL.

(See S. C. Reporter's ed., "City of New York.")

Findings of fact in admiralty causes conclusive
-refusal to find incidental facts-refusal to
NOTE. As to collision, measure of damages for,
see notes to Smith v. Condry, 11: 35; Williamson v.
Barrett, 14: 68.

with reference to each other, and in passing and
As to collision; rights of steam and sailing vessels
meeting: instances, see note to St. John v. Paine,
13: 537.

As to collision: vessel overtaking another, see note
to The Abbotsford v. Johnson, 25: 168.

As to collision; rules for avoiding; steamer meeting steamer; instances, see note to Williamson v. Barrett, 14: 68.

As to collision; damages where two vessels are at fault for injury to a third, see note to Hartford v. Rideout, 24: 930.

As to damages for marine torts, see notes to The

Amiable Nancy, 4: 456: United States v. The Neu

stra Senora de Regla, 27: 662.

As to collision; rules of navigation; steam vessels meeting; steam vessel and sail vessel meeting: speed, liability for collision, see note to The E. A. Packer v. New Jersey Lighterage Co. 35: 453.

1

(The City of New York.")

find a material fact-exceptions-collision this decree the owners of the steamship apbetween vessels-fog horn-fault of one vessel. pealed to this court. The following facts and conclusions of law were found by the circuit

1. Under the Act of 1875 in regard to admiralty causes, the facts found by the court below are conclusive; the bill of exceptions cannot be used

to bring up the evidence for a review of these findings: the only rulings, upon which this court is authorized to pass, are such as might be presented by a bill of exceptions prepared as in actions at law; and the findings have practically the same effect as the special verdict of a jury. It is only the ultimate facts which the court below is bound to find, in admiralty causes, and this court will not take notice of a refusal to find the mere incidental facts, which only amount to evidence from which the ultimate fact is to be obtained.

& If the court below neglects or refuses to make of a material fact, which has been established by uncontradicted evidence, or if it finds such a fact when not supported by any evidence whatever, and an exception be taken, the question may be brought up for review in that particular; both of these are questions of law, and proper subjects for review in an appellate court.

a finding one way or the other as to the existence

Exceptions dependent upon the construction to be given to the several findings made by the court, and not to the findings themselves, are impertinent.

6. There is no such certainty of the exact position of a horn blown in a fog as will justify a steamer in speculating upon the probability of avoiding it by a change of the helm, without taking the additional precaution of stopping until its loca

tion is definitely ascertained. 6. Where fault on the part of one vessel is established by uncontradicted testimony, and such fault is of itself sufficient to account for the disaster, it is not enough for such vessel to raise a doubt with regard to the management of the

other vessel.

[No. 61.]

Argued Nov. 30, and Dec. 1, 1892. Decided
Jan. 3, 1893.

PPEAL from a decree of the Circuit Court

A of the United States for the Southern Dis trict of New York, reversing the decree of the district court finding both vessels, the barque Helen and the steamship City of New York, in fault for a collision. The decree of the circuit court adjudged the City of New York to have been solely in fault, and found damages for the owners of the Helen. Affirmed. See same case below, 15 Fed. Rep. 624, 35 Fed. Rep. 604.

Statement by Mr. Justice Brown:

73] *This was a libel by the owners of the British barque Helen against the American steamship City of New York for a collision, which occurred on the evening of June 28, 1879, off the New Jersey coast between Barnegat and Absecon, and resulted in the sinking of the Helen, and the total loss of the vessel and cargo. The district court found both vessels to have been in fault, and decreed an apportionment of damages. 15 Fed. Rep. 624. Both parties appealed to the circuit cour, by which the decree of the district court was reversed, the City of New York found to have been solely in fault, and a final decree entered for the libelants for $60,223.12, including costs. Machan v. City of New York, 35 Fed. Rep. 604. From 147 U. S. U. S., Book 37.

court:

"1. The British barque Helen, an iron vessel of 282 tons register, while on a voyage from Havana to New York city, loaded with sugar, was sunk by collision with the steamship City of New York, June 28, 1879, about 10.50 P. M. The captain and three of the seamen of the barque were drowned when the vessel sank.

2. The collision took place at a point off the coast of New Jersey six and one quarter miles from the shore, in 10 fathoms of water, 12 and miles from Barnegat lighthouse and 9 miles from Tucker's Beach lighthouse.

steamship 242 feet long and 1,715 tons register, "The City of New York was a wooden having a left-handed propeller, and was bound on a voyage from New York to Havana. Her full speed was about 12 knots an hour, and when going at full speed her head way could not be stopped by reversing her engines within a distance of an eighth of a mile.

"3. On the night in question the wind was blowing strong *from the south west or the [74 south-southwest. About half an hour preceding the collision the night became foggy; so much so that vessels could not discover one another at a distance of one eighth of a mile. During this time and until within about three or four minutes before the collision the vessels had been approaching each other, the course of the steamer being about S. by W. W. and the course of the barque being about N. E. The steamship was going about 11 knots an hour, which was all the speed she could make against the wind. The barque was going about 4 knots an hour, and each vessel kept her respective course until she heard the fog-signal

of the other.

"4. During the half hour preceding the collision three seamen were on the deck of the barque besides the mate, one seaman being at the wheel, and two on the lookout forward,

alternately blowing the fog boru,
barque's lights were properly set and burning.
During the same time the navigation of the
steamer was in charge of her second mate, her
quarter-master was at the wheel, her engine
was in charge of a competent engineer, she
had a lookout on the forward deck, and her
regulation lights were properly set and burn-
ing. The lookout on each vessel was vigilant.
Each vessel observed the proper fog-signals.
The steamer maintained her full speed against
the wind until her engines were reversed, just
before she struck the barque.

"5. Before either vessel discovered the other those in charge of each heard the fog-signals of the other. At about two minutes prior to the collision those in charge of the steamer first heard the fog-horn of the barque, and from the apparent direction of the sound thought she was one point off the steamer's starboard bow. Immediately upon hearing the fog-horn the mate ordered the wheel of the steamer put to starboard and hard-a-starboard. The order was promptly executed and the steamer proceeded on under full speed until those in charge discovered the sails of the barque. The steamer had run under hard-astarboard helm at least a minute before the