Vol. II.]

MURDOCK v. CITY OF MEMPHIS.

[No. 3.

federal questions enumerated in the 25th section of the judiciary act, is wholly omitted in the new law.

Mr. Justice SWAYNE concurred in this dissent.

Mr. Justice BRADLEY dissenting. I feel obliged to dissent from the conclusion to which a majority of the court has come on the public question in this cause, but shall content myself with stating briefly the grounds of that dissent, without entering into any prolonged argument on the subject.

Meantime, however, it is proper to say that I deem it very doubtful whether the court has any jurisdiction at all over this particular case. The complainants claim the property in question under the terms, and what they regard as the true construction, of the trust deed of July, 1844, whereby the property was conveyed to the city of Memphis "for the location of the naval depot ;" and to Wheatley, trustee for the grantors," in case the same shall not be appropriated by the United States for that purpose.' This deed was acknowledged on the 19th of September, 1844, and (probably at the same time) a deed dated 14th of September, 1844, was executed by the city to the United States, conveying the land in fee without any conditions or uses expressed. Operations for erecting and establishing a navy-yard on the premises were commenced and were continued for several years, but were finally abandoned, and on the 5th of August, 1854, Congress, by an act, ceded the property to the city of Memphis for the use and benefit of the city. The defendants, the city of Memphis, claim both legal and beneficial title to the property under this act of Congress, and the supreme court of Tennessee sustained the claim, -or, at least, did not sustain the adverse claim of the complainants. The claim of the complainants was not based on this act of Congress, but on the original deed of 1844, which limited the estate in the lands to their trustee "in case the same shall not be appropriated by the United States for that purpose," i. e. the purpose of a navy-yard. They claim that by the true construction of this clause a right to the land accrued to them, as well by an abandonment of the project of a navy-yard as by its never being adopted. The conduct of the government in relation to the land, it is true, is claimed by them to be such as calls into operative effect the clause of the deed on which they rely. They construe that conduct as an abandonment of the enterprise. The act of cession by Congress to the city of Memphis is only one fact in a long chain of circumstances which they educe to show such abandonment.

It seems to me, therefore, that their claim is based entirely on the deed of 1844; and that the subsequent action of the government, so far as it has any effect in the case, is merely matter of evidence on the question of fact of abandonment; and that the failure of the government, from the beginning, to take any steps for establishing a navy-yard on the land would have been no more a mere fact in pais to be proved in order to support the claim of the complainants, than were all the acts of the gov ernment which did, in fact, take place. Proving that the government did not appropriate the land for a navy-yard is a very different thing from setting up a claim to the land under an act of Congress.

I think, therefore, that in this case there was no title or right claimed by the appellants under any statute of, or authority exercised under, the

Vol. II.]

MURDOCK v. CITY OF MEMPHIS.

[No. 3.

United States; and consequently that there was no decision against any such title; and, therefore, that this court has no jurisdiction.

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But supposing, as the majority of the court holds, that it has jurisdiction, I cannot concur in the conclusion that we can only decide the federal question raised by the record. If we have jurisdiction at all, in my judgment we have jurisdiction of the case, and not merely of a question in it. The act of 1867, and the 25th section of the judiciary act, both provide that a final judgment or decree in any suit in the highest court of a state, where is drawn in question certain things relating to the Constitution or laws of the United States, or to rights or immunities claimed under the United States, and the decision is adverse to such Constitution, laws, or rights, may be reëxamined, and reversed or affirmed in the supreme court of the United States upon a writ of error. Had the original act stopped here there could have been no difficulty. This act derives its authority and is intended to carry into effect, at least in part, that clause of the Constitution which declares that the judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made under their authority, not to all questions, but to all cases. This word "cases," in the residue of the section, has frequently been held to mean suits, actions, embracing the whole cases, not mere questions in them; and that is undoubtedly the true construction. The Constitution, therefore, would have authorized a revision by the judiciary of the United States of all cases decided in state courts in which questions of United States law or federal rights are necessarily involved. Congress in carrying out that clause could have so ordained. And the law referred to, had it stopped at the point to which I have quoted it above, would clearly have been understood as so ordaining. But the 25th section of the judiciary act went on to declare that in such cases no other error should be assigned or regarded as a ground of reversal than such as immediately respected the question referred to as the ground of jurisdiction. It having been early decided that Congress had power to regulate the exercise of the appellate jurisdiction of the supreme court, the court has always considered itself bound by this restriction, and as authorized to reverse judgments of state courts only for errors in deciding the federal questions involved therein.

Now, Congress, in the act of 1867, when revising the 25th section of the judiciary act, whilst following the general frame and modes of expression of that section, omitted the clause above referred to, which restricted the court to a consideration of the federal questions. This omission cannot be regarded as having no meaning. The clause, by its presence in the original act, meant something and effected something. It had the effect of restricting the consideration of the court to a certain class of questions as a ground of reversal, which restriction would not have existed without it. The omission of the clause, according to a well settled rule of construction, must necessarily have the effect of removing the restriction which it effected in the old law.

In my judgment, therefore, if the court had jurisdiction of the case, it was bound to consider not only the federal question raised by the record, but the whole case. As the court, however, has decided otherwise, it is not proper that I should express any opinion on the merits.

The statute of limitations begins to run against detached coupons from their maturity.

MR. JUSTICE FIELD delivered the opinion of the court.

In 1856 Iowa City issued certain bonds in sums of five hundred dollars each, payable to bearer in the city of New York, on the 1st of January, 1876, with annual interest at the rate of ten per cent. a year, payable on the first day of January of each year. For the different instalments of interest coupons were annexed. The bonds were taken up and cancelled before the commencement of this action, but previous to such cancellation the coupons for interest due on the 1st of January, 1860, upon which the action was brought, were detached and negotiated to other parties until by purchase they came to the possession of the plaintiff. In bar of the action the defendant pleaded the statute of limitations of Iowa. That statute prescribes the limitation of ten years to actions on all written contracts, whether under seal or otherwise.

The simple question, therefore, presented for our determination is, whether the statute is a bar to an action upon the coupons detached from the bonds and transferred to parties other than the holders of the bonds, when it would not be a bar to an action on the bonds themselves had they not been cancelled.

The counsel for the plaintiff cites the case of The City of Kenosha v. Lamson, reported in the 9th of Wallace, and the case of The City of Lexington v. Butler, reported in the 14th of Wallace, as conclusive against the bar of the statute. There are expressions in the opinions of the court in those cases which, detached from the context, would seem to justify this conclusion. But the whole purport of the decisions in those cases was to the effect that the coupons, being given for interest on the bonds, partook of their nature and were equally high as security, and therefore the statute could only run against them when it would run against instruments of the dignity of the bonds. In other words, the decisions only established the doctrine that the coupons so far partook of the nature of the bonds that as the latter were specialties so were they specialties also, and not mere simple contracts. See also Commissioners of Knox County v. Aspinwall, 21 How. 539, 546.

The first case, that of The City of Kenosha v. Lamson, arose in Wisconsin, where actions upon sealed instruments are not barred until the lapse of twenty years, whilst actions upon simple contracts are barred in six years. The action was brought upon the coupons when more than six years but less than twenty years had elapsed after their maturity. And the court held that the coupons were substantially copies of the bond in respect to the interest, and were given to the holder of the bond for the purpose of enabling him to collect the interest at the time and place mentioned, without the trouble of presenting the bond every time the interest became due, and to enable the holder to realize the interest by negotiating the coupons in business transactions; and that the coupons, partaking

Vol. II.]

CLARK v. IOWA CITY.

[No. 3.

of the nature of the bonds, which was of higher security, were not barred by lapse of time short of twenty years. The court concluded its opinion by observing that it would be a departure from the purpose for which the coupons were issued, and from the intent of the parties, to hold that when they are cut off from the bonds the nature and character of the security changes and becomes a simple contract debt, and adds: "Our conclusion is that the cause of action is not barred by lapse of time short of twenty years."

The case of The City of Lexington v. Butler arose in Kentucky, where the statute prescribes fifteen years as the limitation for actions on bonds and only five years for actions on simple contracts. The action was upon coupons of certain bonds issued by the city, and the city pleaded the statute of limitations of five years; but the court answered that bonds were specialties not falling within the period prescribed; that suits on bonds might be maintained if commenced within fifteen years after the cause of action accrued ; and that a suit upon a coupon was not barred by the statute unless the lapse of time was sufficient to bar also a suit upon the bond, as the coupon, if in the usual form, was but a repetition of the bond in respect to the interest for the period of time therein mentioned, and partook of its nature.

It is evident from this examination of the cases cited that it was not the intention of the court to decide that an action upon a coupon detached from the bond, and negotiated to other parties, was not subject to the same limitations as an action upon the bond itself; much less to hold that the coupons remained a valid and existing cause of action not only for the period prescribed for actions on the bond after its maturity, but for the additional period intervening between the maturity of the coupon and the maturity of the bond, however great that might be. The question before the court in those cases was only whether the time the statute ran against the coupons was the longest or shortest period- was it six or twenty years in the Wisconsin case, or was it five or fifteen years in the Kentucky case; and the court held that the statute ran for the longest period, because the coupons partook of the nature of the bonds, and the statute ran for that period as to them.

Most of the bonds of municipal bodies and private corporations in this country are issued in order to raise funds for works of large extent and cost, and their payment is, therefore, made at distant periods, not unfrequently beyond a quarter of a century. Coupons for the different instalments of interest are usually attached to these bonds, in the expectation that they will be paid as they mature, however distant the period fixed for the payment of the principal. These coupons, when severed from the bonds, are negotiable and pass by delivery. They then cease to be incidents of the bonds, and become in fact independent claims; they do not lose their validity, if for any cause the bonds are cancelled or paid before maturity; nor their negotiable character; nor their ability to support separate actions; and the amount for which they are issued draws interest from its maturity. They, then, possess the essential attributes of commercial paper, as has been held by this court in repeated instances. Thompson v. Lee County, 3 Wallace, 327; Aurora City v. West, 7 Ib.. 105. See also County of Beaver v. Armstrong, 44 Pa. 63, and National Exchange Bank v. Hartford, Providence & Fishkill R. R. 8 R. I. 375.

Vol. II.]

FIRST NATIONAL BANK OF CLARION v. JONES.

[No. 3.

Every consideration, therefore, which gives efficacy to the statute of limitations, when applied to actions on the bonds after their maturity, equally requires that similar limitations should be applied to actions upon the coupons after their maturity.

Coupons, when severed from the bonds to which they were originally attached, are in legal effect equivalent to separate bonds for the different instalments of interest. The like action may be brought upon each of them, when they respectively become due, as upon the bond itself when the principal matures; and to each action- to that upon the bond and to each of those upon the coupons - the same limitation must upon principle apply. All statutes of limitation begin to run when the right of action is complete, and it would be exceptional and illogical to hold that the statute sleeps with respect to claims upon detached coupons, whilst a complete right of action upon such claims exists in the holder.

We answer therefore the question certified to us, that the statute of Iowa, which extends the same limitation to actions on all written contracts, sealed or unsealed, began to run against the coupons in suit from their respective maturities; and accordingly affirm the judgment.

CLIFFORD, J. I dissent from the opinion of the court, upon the ground that the case is governed by our prior decisions.

BANKRUPTCY.

FRAUDULENT PREFERENCE.

- JUDGMENT NOTE.

FIRST NATIONAL BANK OF CLARION v. JONES.

Two notes were discounted by plaintiff in error. Before their maturity, upon urgent request, defendant in error took them up, and gave, in lieu of them, a single judgment note equal in amount to the two. A few days afterwards judgment was entered for the amount of the new note, and a levy and sale made. The defendant in error, having been adjudged a bankrupt, suit was instituted by his assignee to recover the value of the property sold, on the ground that the giving of the judgment note was a fraudulent preference, the debtor being at the time insolvent. The court below gave certain instructions appropriate to the case, upon which a jury found for the plaintiff on the question of insolvency. The several instructions, which were the alleged grounds of error, are here examined and approved, the appellate court refusing to disturb the decree, which was to the effect that the giving of the judgment note was a preference.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

Assignees of the bankrupt's estate may recover back money or other property paid, conveyed, sold, assigned, or transferred contrary to the provisions of the bankrupt act, if such payment, pledge, assignment, transfer, or conveyance was made within four months before the filing of the petition by or against the debtor, and with a view to give a preference to one or more of the creditors of the bankrupt, or to a person having a claim against him, or who was under any liability on his account, provided the debtor was insolvent or in contemplation of insolvency, and the person receiving such payment or conveyance had reasonable cause to believe that a fraud on the bankrupt act was intended or that the debtor was insolvent. 14 Stat. at Large, 536.