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sponsible as a trespasser as he who commits the trespass. Jordan v. Wyatt, 4 Gratt. 156. And although the act committed was done without malice, yet being unlawful, the party committing it, or aiding or abetting in its commission, is responsible in damages to the party injured. Parsons v. Harper, 16 Gratt. 64." As the plaintiff got a verdict for $8,000, this was better than a criminal prosecution. But the same practical joke would have been crimi

nal.

Thus, in Fenton's case, 1 Lewin C. C. 179, where the prisoners, in sport, threw heavy stones into a mine, breaking a scaffold, which fell against and upset a corf, in which a miner was descending into the mine, whereby he was killed, they were held guilty of manslaughter. Tindal, C. J., said: "In the present instance the act was one of mere wantonness and sport, but still the act was wrongful, it was a trespass. The only question, therefore, is, whether the death of the party is to be fairly and reasonably considered as a consequence of such wrongful act; if it followed from such wrongful act, as an effect from a cause, the offense is manslaughter; if it is altogether unconnected with it, it is accidental death." The prisoners were sentenced to three months' imprisonment. In Rex v. Powell, 7 C. & P. 641, a lad, as a frolic, without any intent to harm any one, took the trap-stick out of the front part of a cart, in consequence of which it was upset, and the carman who was in it, loading it, was pitched backward on the stones and killed. Held, manslaughter. The prisoner was fined one shilling and discharged. In Ewington's case, 2 Lewin C. C. 217, the prisoners covered and surrounded a drunken man with straw, and threw a shovel of hot cinders upon his belly, whereby he was burned to death. Paterson, J., charged that "if they believed the prisoners really intended to do any serious injury to the deceased, though not to kill him, it was murder; but if they believed their intention to have been only to frighten him in sport, it was manslaughter." Verdict, manslaughter. In State v. Roane, 2 Dev. 58, the defendant carelessly discharged a gun, intending only to frighten a supposed trespasser, really the servant of the prisoner, but killing him. Held, manslaughter. This case, although cited by Wharton under " 'practical jokes," does not answer that description; as also the case cited in 1 East's P. C. 236, where the prisoner ducked a thief, who had picked his pocket, and accidentally drowned him. In Rex v. Martin, 3 C. & P. 211, the prisoner ordered a quartern of gin to drink, and asked a child present if he would have a drop, at the same time putting the glass to the child's mouth, whereupon the child snatched the glass and drank the whole contents, which caused his death. Vaughan, B., said, as this was the act of the child, there must be an acquittal, "but if it had appeared that the prisoner had willingly given a child of this tender age a quartern of gin, out of a sort of brutal fan, and had thereby caused its death, I should, most decidedly, have held that to be manslaughter." Giving one physic, in sport, if fatal, is manslaughter. 1 East's P. C. 264. So, if

one in shooting at another's fowls, in mere wanton sport, kills a human being. Id. 255.

In Rex v. Conrahy, 2 Crawf. & Dix, 86, the prisoner and the deceased had been piling turf together, and the former, in sport, threw a piece of turf at the latter, hitting and killing him. Held, no crime. In Rex v. Waters, 6 C. & P. 328, there was testimony that the prisoner, in the course of rough and drunken joking, pushed a boat with his foot, whereby the deceased fell overboard and was drowned. There was also testimony that the push was given by another person. Park, J., said, "if the case had rested on the evidence of the first witness it would not have amounted to manslaughter," and there must be an acquittal. In Ann v. State, 11 Humph. 159, an indictment of a nurse for murder of an infant by administering laudanum, a charge that if the drug was administered to produce unnecessary sleep, and contrary to expectation it produced death, this would be murder, was held errroneous.

In State v. Hardie, 47 Iowa, 647; S. C., 29 Am. Rep. 496, the defendant was held guilty of manslaughter for killing a woman in an attempt to frighten her with a pistol which he supposed to be unloaded. The court said: "If it had been in fact unloaded no homicide would have resulted, but the defendant would have been justly censurable for a most reckless and imprudent act in frightening a woman, by pretending that it was loaded, and that he was about to discharge it at her." "Such conduct is grossly reckless and reprehensible, and without palliation or excuse. Human life is not to be sported with by the use of fire-arms, even though the person using them may have good reason to believe that the weapon used is not loaded, or that being loaded it will do no injury. When persons engage in such reckless sport they should be held liable for the consequences of their acts.”

But it would have been no crime if both persons had supposed the pistol to be unloaded. Robertson v. State, 2 Lea. 239; S. C., 31 Am. Rep. 602. The court, however, admit that the prisoner would have been responsible if the act had amounted to an assault, under the circumstances of the Iowa

case.

LIMITED LIABILITY OF SHIP-OWNERS.

II.

The vice-chancellor concluded that the part of the statute which relates to the liability of British owners was intended to operate, even as against foreigners, throughout that portion of the sea which lies within three miles of the coast, and that the plaintiffs were therefore entitled to the relief sought.

After the decisions the act of Parliament was amended in 1862 by act 25 and 26 Vict., ch. 63, sec. 54, as already stated, so as to give the benefit of the limited liability under section 504 of the original act to "the owners of any ship, whether British or foreign.

Subsequently the question directly arose whether, under the act, the owners of a British ship could claim a limited liability in case of damage done to a Belgian ship in the Mediterranean, and beyond British territorial jurisdiction, in 1863. The Amalia, 1 Moore's P. C. C. (N. S.) 471.

Dr. Lushington said: "The cases under the law prior

to 1862 are valuable" as illustrations, but they are not precedents. Now I have always recognized the full force of this objection, that the British Parliament has no proper authority to legislate for foreigners out of its jurisdiction. No statute ought therefore to be held to apply to foreigners with respect to transactions out of British jurisdiction, unless the words of the statute are perfectly clear; but I never said that if it pleased the British Parliament to make such laws as to foreigners out of the jurisdiction, courts of justice must not execute them; indeed, I said the direct contrary, speaking of the Instance Court of Admiralty, reserving any particular considerations that might attach to the Prize Court.

"Now, fully recognizing the prima facie force of this objection, I do not think it is removed by the ingenious suggestion that this limited liability is a part of the proceedings, and a part of the lex fori.

"But however this may be, if the statute in question gives the right of limited liability to the British owner and the foreign ship-owner alike, if there be perfect reciprocity, then complete justice is done, and the former objection that it was unjust to give relief to the British owner, when a similar relief was denied to the foreigner, is removed."

After an examination of the statute and in view of the fact that the large majority of collisions occur on the high seas, he came to the conclusion that the act was intended to operate for and against both British and foreign vessels in all places, whenever their mutual rights and liabilities should come before a British court for adjudication.

An appeal was taken to the Privy Council, where the decision of Dr. Lushington was affirmed, Lord Chelmsford delivering the opinion.

He said that section 504 of the original act of 1854 clearly applied only to British ships. He then briefly reviewed the decisions under that section, noticing the fact that all the questions which could arise in cases of collisions between British and foreign ships, in which the British ship was in fault, had been decided under that section, except the case now in question; "but against the right of the British owner in such a case to a limitation of his liability, very strong observations had been made by Vice-Chancellor Wood in Cope v. Doherty, which his honor repeated in the General Iron Screw Colliery Co. v. Schurmanns.

"In this state of the decisions, the Merchant Shipping Act Amendment Act, 1862,' passed, and instead of the words, 'no owner of any sea-going ship,' in the 504th section of the original act, introduced the words in the 54th section, upon which all the difficulty has arisen, viz. the owners of any ship, whether British or foreign.'"

II. The act did not limit the liability of a foreigner in case of damage by tort to a British vessel or subject on the high seas, and it made no difference if a limited liability was allowed to British subjects, under the same circumstances in the foreign courts.

III. It was left undecided whether the act limited the liability of a foreigner in case of damage by tort to a British or foreign vessel within the three-mile limit.

IV. The act did not limit the liability of a British subject in a case of damage by tort to a foreigner or foreign vessel on the high seas beyond the three-mile limit.

V. But it did limit the liability of a British subject in a case of damage by tort to a foreigner or foreign vessel within the three-mile limit.

VI. In a case of damage by the tort of a foreigner or foreign vessel to another foreigner or foreign vessel of the same country, the British courts would, on due proof, apply and enforce a law of that country limiting the liability of the tort-feasor.

But when Parliament, in clear and precise language, declared that the limitation of liability should extend to foreign as well as British ships, the courts were bound to obey the law in all cases submitted to them for adjudication.

The only reported case found in this country on the application of the act of Congress to foreign vessels was before Judge Shipman in the United States Circuit Court for the Southern District of New York, in 1876. Levinson v. The Oceanic Steam Navigation Co., 17 Alb. L. J. 285. The opinion seems to have been given at nisi prius.

The action was at common law for personal injuries to the plaintiff and loss of baggage. The plaintiff was a resident of New York; whether he was a citizen does not appear. The defendant was a foreign corporation, and it pleaded in bar, proceedings under the act of 1851, in exoneration of further liability.

Judge Shipman said that the statute of 1851 seemed to him to have been a limitation of the common-law liability of common carriers by sea. "The statute which was passed was the adoption by legislative authority of a new principle of law, so far as this country is concerned, but one which has been the rule in the admiralty courts of foreign countries.

"The question then is, whether this limitation of the liability of common carriers by sea applies only to American vessels, and was merely a municipal regulation, or whether it was the adoption of a general principle.

"Now neither from the statute of 1851, nor upon principle, can I see that this limitation of liability was local, or that the legislation was municipal.

"There was nothing local or municipal in its charThe statute was not in terms confined to American vessels. It had a wider scope, and was a modification by legislative enactment of the common law in regard to a subject over which Congress had jurisdiction.

He considered that the intention of the Legislature, so far as it could be collected from the language'em-acter. ployed, seemed to be, to place British and foreign ships on the same footing. With respect to the objection that such legislation would restrict "the common natural rights of foreigners," he said: "What breach of international law, or interference with the natural rights of foreigners is produced by the Legislature saying that all suitors having recourse to our courts, to obtain damages for an injury from a person not actually in fault, but being responsible for the acts of his servant, shall recover only to the value of the thing by which the loss or damage was occasioned, estimated in a particular mauner?"

The results of the English cases may be summed up in the following propositions, applicable when the act made no express mention of foreign vessels or foreign

owners:

I. The act did not limit the liability of a foreigner, in case of damage by tort to a foreigner or foreign vessel, on the high seas, although the injured party commenced proceedings for redress in a British court.

"If a modification of the common-law liabilities of carriers by land was provided by the statute of the State that had jurisdiction over such corporations, it would have been binding upon all the courts of the State; it would have been the lex fori, the modification would have been a general one, and when an action was brought before a court of the State, the court would have been prohibited from exceeding the liabilities which the Legislature of the State had limited.

"So, this statute being a modification of the common law of a general and universal character, it is binding upon all the courts in this country, and they are limited or restrained from proceeding to give judgment beyond the limit of liability which the Legislature had prescribed in 1851. In other words, the adoption of a

principle of admiralty law cannot be considered as merely local or municipal legislation."

This decision seems to be in conflict with Propositions I and II, above. So far as it proceeds on the ground that the lex fori applies, it is opposed to the express opinion of Vice-Chancellor Wood, Lord Justice Turner, and Dr. Lushington, and to the necessary implication in all the cases where relief was refused to or against foreigners.

In determining the cases to which the United States statute applies, it must be constantly borne in mind that Congress has not the omnipotence of legislation conceded to the British Parliament by the British courts. Its constitutional power over the subject under consideration rests on the power given "to regulate commerce with foreign nations, and among the several States." The act can apply only to vessels which are engaged in such commerce. Per Neilson, J., 24 How. (U. S.) 39.

The question has been raised whether the owners of a steam vessel plying between several ports of the same State, carrying merchandise and passengers partly in transit to foreign countries and between different States of the Union, and partly in transit only between the termini of the vessel's route, can have the benefit of the act, as against passengers and the owners of merchandise of the latter description. It has been held by Circuit Judge Sawyer, in the District of California, that the act applies to such a case. Lord v. Goodall, etc., S. S. Co., 4 Sawy. 298.

The argument is that, within the decision in The Daniel Ball, 10 Wall. 565, the vessel was engaged in both inter-State and foreign commerce; that Congress has, by acts of 1838 and 1852, imposed onerous regulations on owners of steam vessels for the safety of merchandise and passengers, to which regulations this vessel was subject, and the act of 1851 may fairly be considered a counterpoise for the benefit of the owners; that upon the whole, the security afforded by the provisions of the statute, if properly enforced, notwithstanding the limitation of liability, is greater than it would be under the full common-law liability of owners without the security provided by Congress. Any party using the vessel for the purposes of domestic commerce enjoys all the benefits afforded by the regulations prescribed, for they inhere in the vessel, and cannot be separated from it. If a party avails himself of those benefits, by the use of the vessel, he must also suffer the inconveniences incident to such use. It would be impracticable for two sovereignties to regulate the same instrument used at the same time in different branches of commerce. The regulation as to all must necessarily fall to that sovereignty which is supreme or paramount as to any part, and having control of the instrument employed. The power to prescribe the conditions upon which the vessel shall be employed as an instrument of inter-State or foreign commerce necessarily carries with it the power to modify the rights of those who use it as well those who at the same time make use of it for the purposes of domestic commerce, as those who employ it in interState or foreign commerce.

"Owners of any canal boat, barge or lighter, and any vessel of any description whatsoever, used in rivers or inland navigation," are expressly excluded from the benefits of the United States Statute. Rev. Stats., § 4289.

The connection in which this term "inland navigation" is used in the act has been considered as throwing some light upon the intent of the law-makers, and as indicating to some extent the class of vessels in their mind. The word used means in this connection employed, and doubtless in the mind of Congress was intended to refer to vessels solely employed in rivers or inland navigation. It was this species of navigation, that is, on rivers and inland, which was intended

to be withdrawn from the limitation of the liability of the owner; and the addition of the term "inland navigation," as an alternative to rivers, was doubtless designed, speaking in a general sense, to embrace all internal waters, either connected with rivers, but which did not, in a geographical or popular sense, fall under that name, or which might not be connected with rivers, but fell within the reason or policy of the exception, such as bays, inlets, straits, etc. Vessels, whatever may be their class or description solely employed upon these waters, are usually employed in the trade and traffic of the localities, carried on chiefly by persons residing upon their borders, and connected with the local business, and without the formalities and precautions observed in regular commercial pursuits with a view to guard against accidents and losses, such as insurance, bills of lading, etc. It was fit and proper, therefore, in this description of trade and traffic that the common-law liabilities of the carrier should remain unaltered.

But the business upon the great lakes lying upon our northern frontiers, carried on between the States and with the foreign natious with which they are connected (and this is the only business which Congress can regulate), is of a very different character. They form a boundary between a foreign country and the United States for hundreds of miles, and considering their great size, the magnitude of their commerce, and the well-known perils incident to lake navigation, Congress could not have classed it with inland navigation, but would have used a more specific designation if it was to be excluded from the limitation of liability. Besides, the decision in the case of the Lexington, burned upon Long Island Sound, led to this act of 1851, and the act was designed to promote the building of ships and to encourage persons engaged in the business of navigation.

For these reasons it is held that the owner of a vessel plying between Buffalo and Detroit, on the great lakes, is not within the exception of section 4289, but is entitled to the benefit of the act. Moore v. American Transportation Co., 24 How. 1; Chisholm v. Northern Transportation Co., 61 Barb. 363.

And the owner of a tug towing a boat from the New York to the Canadian shore of the St. Lawrence is entitled to the benefit of the act. Baird v. Daly, 4 Lans. 426 (reversed on other grounds, 57 N. Y. 236).

So is the owner of a vessel navigating Long Island Sound between two ports in different States, although the loss is caused by a fire at dock. Knowlton v. Prov. & N. Y. S. S. Co., 1 Jones & Sp. 370. See, also, Headrick v. Va. & Tenn. Air Line R. W. Co., 48 Ga. 545.

But the owner of a vessel plying on the Mississippi river, although between two termini in different States, is within the very words of the exception, and is not entitled to the benefit of the act. The War Eagle, 6 Biss. 354.

There is another limitation of the class of persons entitled to the benefit of the act. They must be the owners or charterers who man, victual and navigate the vessel at their own expense or by their own procurement. §§ 4282, 4283, 4286.

Accordingly, where a carrier in the course of transportation pursuant to his contract places the merchandise on a vessel which he neither owns nor charters, and while on board such vessel goods are lost or damaged in the manner specified in the act, he is liable to the full extent of the loss, and cannot claim the benefit of the statute. Rice v. Ontario Steamboat Co., 56 Barb. 384; Hill Mfg. Co. v. Boston & Lowell R. R. Corp., 104 Mass. 122.

But of course a railroad company owning a vessel is entitled to the benefit of the act equally with any other corporation or individual. London & S. W. R. W. Co. v. James, L. R., 8 Ch. App. 241; Headrick v. Va. & Tenn. Air Line R. W. Co., 48 Ga. 545.

Section 4282 in terms applies only in case of fire happening "to or on board the vessel." Therefore the ship-owner is not protected by that section if goods be destroyed by fire on a lighter conveying them from the shore to the ship. Morewood v. Pollock, 1 Ell. & Bl. 743. Nor if they be destroyed by fire on the dock after landing. Per Curtis, J., Salmon Falls Mfg. Co. v. The Tangier, 11 Law Rep. (N. S.) 6.

Section 4283 is not so precise on this point. We are not aware of any reported case in which it has been decided whether, under that section, the loss or damage must have occurred on the vessel itself.

Under section 4283, the destruction, injury, etc., must have occurred "without the privity or knowledge" of the owners.

The English courts have shown a disposition to construe the words "privity and knowledge" strictly in favor of ship-owners.

Thus, if the loss is occasioned by the actual fault of one of several part owners, his co-owners are not thereby precluded from the benefits of section 4283. See The Spirit of the Ocean, Br. & Lush. 336. This case was perhaps anticipated, as would appear from the provision that the liability shall not exceed "the amount or value of the interest of such owner in such vessel and her freight then pending."

If a collision occur while the master, who is also part owner, is on board, but not on deck, his duty not calling him there, he can have the benefit of the act. The loss occasioned by the collision is not, under the circumstances, with his "fault or privity." The Obey, L. R., 1 Adm. & Ecc. 102.

When the owner is a corporation, tho privity or knowledge of the managing officers of the corporation must be regarded as the privity and knowledge of the corporation itself. Lord v. Goodall, etc., S. S. Co., 4 Sawy. 292; Hill Mfg. Co. v. Prov. & N. Y. S. S. Co., 113 Mass. 495, 500.

If such managing officers, or an individual owner fails to select a competent master and crew, and to have the ship seaworthy when she sails, and loss ensues in consequence of such neglect, such loss is chargeable to the owners as occurring with their privity and knowledge. Lord v. Goodall, etc., S. S. Co., supra.

Can there be a loss by fire caused by the neglect of the owner, and so not within the total exemption allowed by section 4282, and yet within the limited liability of section 4283, because occasioned without the "privity or knowledge of the owner?"

On the one hand it is argued that special provision is made in section 4282 for this peculiar single loss, and even though the general language of subsequent sections might include the loss in that section provided for, yet where they may be fully applied to other cases of loss, they should be so applied and be satisfied with such application, thus leaving each and all provisions in force a cardinal rule in the construction of statutes. Again, by no code of law was an owner of a ship limited in his liability where the loss occurred by his own "design or neglect; " the provisions would have to be very plain and clear that would justify such an interpretation. Knowlton v. Prov. & N. Y. S. S. Co., 53 N. Y. 76.

On the other hand it is said that the solution of the question must depend on the facts of the case as developed by judicial process. In re Prov. & N. Y. S. S. Co., 6 Ben. 124. To the same effect is Chisholm v. Northern Transportation Co., 61 Barb. 363, 390, which as an authority must be considered overruled by the case in 53 N. Y. 76.

In a case within section 4283, if the owner claims the benefit of that section he must take proceedings himself (unless some claimant does so), under sections 4284 or 4285, at least where there is more than one claimant. Otherwise the owner might reduce the compensation to be made to those claimants who

should prosecute him, to their proportionate share of the value of the vessel and freight (§ 4284), and at the same time retain the balance without paying the other injured parties. Besides, it is necessary that the total amount of losses should be ascertained in order that the proportion to be paid to each claimant may be determined. Norwich Co. v. Wright, 13 Wall. 104, 124; Dyer v. National S. S. Co., 14 Blatchf. 483; The Niagara v. Cordes, 21 How. 7, 26.

In a case where only one person sustained loss it was said that the ship-owner must take the same proceedings in order to have the benefit of the act. Per Dwight, Com., Baird v. Daly, 57 N. Y. 236, 252. But to the contrary is the opinion of Grover, J., in Dougan v. Champlain Trans. Co., 56 N. Y. 1, 6, and the reasoning in Norwich Co. v. Wright would seem not to apply.

The rules prescribed by the Supreme Court allow the owner to take these proceedings and at the same time to contest his liability to any extent whatever by inserting proper allegations in his libel or petition. Adm. Rule 56. But literal compliance with section 4285, and a transfer in trust for the benefit of the claimants, would seem hardly consistent with reserving the question of liability. Of course, whero a stipulation is given on appraisement or money deposited under Admiralty Rule 54, there would be no difficulty. The Annie Childs, Lush. 509.

It is held that great delay in taking the necessary proceedings will deprive the owner of the benefit of the act. Dyer v. Nat. S.S. Co.,14 Blatch.483, 487. Our practice in this respect differs from the English courts, where proceedings to limit liability may be taken after an adverse decree in admiralty. Leycester v. Logan, 3 K. & J. 446.

The value of the interest of the owner of the vessel was in some cases of collision computed on the value of the vessel immediately before the disaster. Walker v. Boston & Hope Ins. Co., 14 Gray, 288, 303; Barnes v. Steamship Co., 6 Phila. 479 (per Grier, J.) But the Supreme Court, in view of section 4285, allowing a transfer to trustees in full exoneration of the shipowner, which must necessarily be made after the disaster, held the value of the interest at that time to be the limit of liability, even if the vessel were entirely destroyed. Norwich Co. v. Wright, 13 Wall. 104, 126; Waltson v. Marks, 2 Am. Law Reg. 157, 165.

Nor can insurance be included in this value. It is a distinct, independent subject of property. The assignment of the ship passes no interest in it. Waltson v. Marks, 2 Am. Law Reg. 157, 167. (Per Kane, U. S. D. J.)

The owner must answer not only to the amount of his interest in the vessel but also in the freight pending. And for this purpose a reasonable freight upon his own goods is to be included. Allen v. Mackay, 1 Sprague, 219; The Glaucus, 1 Low. 366. But a whaling voyage is special in its character, and on such a voyage as ordinarily prosecuted there is no "freight pending' within the meaning of the act. The Ontario, 2 Lowell, 40, 52; affirmed as Swift v. Brownell, 1 Holmes, 467.

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If there be a decree against two vessels, A and B, as in a case of collision whero both are found in fault, that the owners of A pay 2,000l. to the owners of B, and that the owners of B pay 14,000l. to the owners of A, and the owners of B take proceedings to limit their liability under the act, which result in the payment of a fund into court for distribution, the owners of A cannot retain the 2,000l. by way of set-off against the amount due to them by the owners of B, proving against the fund in court for the balance only, but they must pay the 2,000l. in full to the owners of B, and prove against the fund in court for the 14,000l. Otherwise the owners of B, instead of having their liability limited pursuant to the statute, would suffer, an additional loss of 2,000l., and would be in exactly the same position as if they had been condemned in Ad

miralty to bear all their own loss. Chapman v. Royal Netherlands S. N. Co., L. R., 4 Prob. Div. 157.

Finally it is always competent for the ship-owner by contract to waive the benefit of any or all the provisions of the statute. The original act of 1851 contained an express proviso to this effect, at the end of the first section. This is omitted in the Revised Statutes; but it is believed that on general principles, as no rule of morality or public policy forbids, such a contract would be binding without the aid of the proviso.

But the contract must be express, and no mere implied contract can be alleged against the express exemption or limitation of the statute. Walker v. The Trans. Co., 3 Wall. 150.

J. F. MOSHER.

NEGOTIABLE INSTRUMENT-HOLDER FOR VALUE-BAR TO ACTION-ESTOPPEL - CONFLICT OF LAW.

SUPREME COURT OF THE UNITED STATES-OCTOBER TERM, 1879.

BROOKLYN CITY & NEWTOWN RAILROAD Co., Plaintiff in Error, v. NATIONAL BANK OF THE REPUBLIC. 1. The judgment in an action instituted by the holder of negotiable paper against the indorsers is not a bar to a subsequent action by the holder against the maker, the latter not having been made a party to the first action, nor notified of its pendency.

2. An estoppel arising out of the judgment of a court of competent jurisdiction is equally conclusive upon all the parties to the action and their privies. It may not be invoked or repudiated at the pleasure of one of the parties as his interest may happen to require.

3. The transfer, before maturity, of negotiable paper, as security for an antecedent debt merely, without other circumstances - if the paper be so indorsed that the holder becomes a party to the instrument — although the transfer is without express agreement by the creditor for indulgence, is not an improper use of such paper, and is as much in the usual course of commercial business as its transfer in payment of such debt. In either case the bona fide holder is unaffected by equities or defenses between prior parties of which he had no notice.

4. The courts of the United States, in determining questions of general commercial law, are not controlled by the decisions of a State court, even in an action instituted by a National bank, located in the State rendering such decision, against one of its own citizens, upon a negotiable note there executed and payable. Such decisions, not based upon local legislative enactments, are not "laws" within the meaning of the Federal statute, which provides that "the laws of the several States, except where the Constitution, treaties or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law in the court of the United States, in cases where they apply." Swift v. Tyson, 16 Pet. 1, reaffirmed.

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N error to the Circuit Court of the United States for the Southern District of New York. The opinion states the case.

HARLAN, J. The case, as made by an agreed statement of facts, is this: The plaintiff in error, the Brooklyn City & Newtown Railroad Company, a corporation organized under the laws of New York, executed, at Brooklyn, in that State, on 9th May, 1873, its promissory note for the sum of $5,000, payable four months after date to the order of Wm. V. LeCount, [its] treasurer, at the Atlantic State Bank of Brooklyn. It was indorsed in blank, first by LeCount, treasurer, and then by Falmer & Co., a firm composed of Thomas Palmer, Jr., and Anson S. Palmer, the former being the president and the latter the financial agent of the company, and together owing the larger portion of its stock. The note was made for the purpose only of

Neither

raising money thereon for the company. LeCount nor Palmer & Co. received any consideration for their respective indorsements. The note thus indorsed was, with others, placed by the company in the hands of Hutchinson & Ingersoll, a firm of note-brokers in Wall street, for negotiation and sale.

Prior to the execution of the note Hutchinson & Ingersoll had frequently borrowed money from the defendant in error, the National Bank of the Republic of New York. They however kept no account with that institution, and had no transactions with it other than those to which reference will now be made.

In the month of October, 1872, the bank first made them a call loan, at seven per cent interest, of $25,000, on collaterals. Subsequently, in 1873, it made to them other call loans on collaterals, at the same rate of interest, as follows: March 11th, $15,000; March 15th, $10,000; April 11th, $10,000; May 16th, $10,000; May 20th, $20,000; May 23d, $10,000; June 4th, $15,000; June 6th, $12,000; June 12th, $10,000; June 19th, $36,000; and July 11th, $10,000. Each of these loans was a separate one, upon a particular and distinct lot of collaterals. Hutchinson & Ingersoll were in the habit of borrowing money from various banks and from individuals or firms upon specific lots of collaterals.

The loan of $36,000 on 19th June, 1873, was upon several notes as collateral security, among them the above-described note for $5,000, executed May 9th, 1873. All the loans by the bank, prior to the one of $36,000, had been paid off before that loan was made.

The loan of $10,000 on the 11th July, 1873, was upon the following notes as collateral security: Two notes of Howes, Hyatt & Co. for $2,605.98 and $3,540.15, and two of H. L. Ritch & Co. for $3,320.17 and $2,146.92.

On the 22d July, 1873, Howes, Hyatt & Co. having become insolvent, Hutchinson & Ingersoll executed and delivered to the bank, at its request, antedated to June 19th, 1873 (which was the date of the $36,000 loan), a written instrument whereby they agreed with the bank "that all securities, bonds, stocks, things in action, or other property or evidences of property whatsoever, which have been or may at any time hereafter be deposited or left by us or on our account, with said bank, whether specifically pledged or not, may be held by said bank, and shall be deemed to be and are hereby pledged as security for the payment of any and every indebtedness, liability or engagement on our part, held by said bank, and that on the non-payment, when due and payable, of any sum or sums of money which have been or may hereafter be by said bank lent, paid or advanced to or for the account or use of us, or for which we are or may become in any way liable or indebted to said bank, the said bank, or its president or cashier, may immediately thereupon, or at any time thereafter, sell, etc., * and apply the net pro

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ceeds of sale to the payment of any sum or sums duc and payable from us to said bank, and hold any surplus of such net proceeds, together with any and all remaining securities, property, or evidences of property, then held by said bank and not sold, as security for the payment of any and all other of our then existing and remaining liabilities and engagements to said bank."

When that writing was executed no agreement was made to extend the loan or to refrain from calling it in. The bank knew that Hutchinson & Ingersoll were note-brokers, but until August 8, 1873, had no knowledge or information of the connection of the Palmers with the railroad company, or of the circumstances attending the making or indorsement of the note in suit, or of the purpose thereof, or of any relations, dealings or communication between Hutchinson & Ingersoll, and the parties to the note (except that they knew Hutchinson & Ingersoll to be note-brokers), or that the note was any thing else than ordinary business paper, or that there was any question as to the

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