Louisiana, until the 23d of April, 1861, when the acceptance was made upon which this suit was brought. And, in determining this, the character of the war and the manner in which it was commenced ought not to be overlooked. No declaration of war was ever made. The President recognized its existence by proclaiming a blockade on the 19th of April, and it then became his duty as well as his right to direct how it should be carried on. In the exercise of this right he was at liberty to allow or license intercourse, and his proclamations, if they did not license it expressly, did, in our opinion, license it by very cogent implications. It is impossible to read them without a conviction that no interdiction of commercial intercourse, except through the ports of the designated states, was intended. The first was that of April 15, 1861. The forts and property of the United States had, prior to that day, been forcibly seized by armed forces. Hostilities had commenced, and in the light of subsequent events, it must be considered that a state of war then existed. Yet, the proclamation while calling for the militia of the several states, and stating what would probably be the first service assigned to them, expressly declared that “in every event, the utmost care would be observed, consistently with the repossession of the forts, places, and property which had been seized from the Union, to avoid any devastation, destruction of, or interference with propertr, or any disturbance of peaceful citizens in any part of the country."

*

state of insurrection against the United States; and thereupon, all commercial intercourse by and between the same and the citizens thereof, and the citizens of the rest of the United States, shall cease and be unlawful so long as such condition of hostility shall continue." Under authority of this act, the President did issue such a proclamation on the 16th of August, 1861, and it stated that all commercial interecourse between the states designated as in insurrection and the inhabitants thereof, with certain exceptions, and the citizens of other states and other parts of the United States, was unlawful. Both the act and the proclamation exhibit a clear implication that before the first was enacted, and the second was issued, commercial intercourse was not unlawful; that it had been permitted. What need of declaring it should cease, if it had ceased, or had been unlawful before? The enactment that it should not be permitted after a day then in the future, must be considered an implied affirmation that up to that day it was lawful, and certainly Congress had the power to relax any of the ordinary rules of war.

We think, therefore, the court of appeals was right in holding that the partnership of Brander, Chambliss & Co. had not been dissolved by the war when the acceptance upon which the plaintiff in error is sued was made. The judgment is affirmed.

Charter of Union Pacific Railroad Company, Right
of the Government to recover Five per Cent. of
the Net Earnings of the Company.

THE UNITED STATES v. KANSAS PACIFIC RAILWAY
COMPANY.

United States Circuit Court of Kansas, November Term, 1875.

Before Mr. Justice MILLER.

1. Under the act of Congress of July 1, 1862, 12 Stats. at Large, 489, (construing the charter of the Union Pacific Railroad Company and of the other companies therein named), the United States may recover of the companies receiving its bonds, and until such bonds and interest are paid, five per cent. of the net income, earned after the com2. Such recovery may be had in an action at law.

Manifestly, this declaration was not a mere military order. It did not contemplate the treatment of the inhabitants of the states in which the unlawful combinations mentioned in the proclamation existed, as public enemies. It announced a different mode of treatment—the treatment due to friends. It is to be observed that the proclamation of April 15, 1861, was not a distinct recognition of an existing state of war. The president had power to recognize it (Prize Cases), but he did not prior to his second proclamation of April 19th, in which he announced the blockade. Even then, the war was only inferentially recognized, and the measures proposed were avowed to be "with a view to * the protection of the public peace, and the lives and property of quiet and orderly citizens pursuing their lawful occupations, until Congress should have assembled." The reference here was plainly to citizens of the in-pletion of the roads. surrectionary states, and the purpose avowed appears to be inconsistent with their being regarded as public enemies, and consequently, debarred from intercourse with the inhabitants of states not in insurrection. The only interference with the business relations of citizens in all parts of the country, contemplated by the proclamation, seems to have been such as the blockade might cause. And that it was understood to be an assent by the executive to continued business intercourse, may be inferred from the subsequent action of the government (of which we may take judicial notice), in continuing the mail service in Louisiana and the other insurrectionary states long after the blockade was declared. If it was not such an assent or permission, it was well fitted to deceive the public. But in a civil, more than in a foreign war, or a war declared, it is important that unequivocal notice should be given of the illegality of traffic or commercial intercourse; for in a civil war, only the government can know when the insurrection has assumed the character of war.

If, however, the proclamations, considered by themselves, leave it doubtful whether they were intended to be permissive of commercial intercourse with the inhabitants of the insurrectionary states, so far as such intercourse did not interfere with the blockade, the subsequent act of Congress passed on the 13th of July, 1861, ought to put doubt at rest.

The act was manifestly passed in view of the state of the country then existing, and in view of the proclamation the President had issued. It enacted that in a case therein described, a case that then existed, it should and might be lawful for the President, by proclamation, to declare that the inhabitants of such state, or any section or part thereof, where such insurrection exists, are in a

DEMURRER TO PETITION. The defendant, formerly the Leavenworth, Pawnee and Western Railroad Company, was one of the roads aided by the act of Congress of July 1, 1862, and the amendatory act of July 2, 1864, relating to the Union Pacific Railroad, and other companies therein named. Bonds of the government were delivered to the defendant as provided in said act, amounting in all, as alleged, to $6,303,000, payable in thirty years, with interest at six per cent., payable semi-annually. The defendant's road is averred to have been completed November 2, 1869, and that since then to the 31st day of October, 1874, the net earnings of the road have amounted to $6,176,602.60, and that five per cent. of said net earnings during said period amount to $308,830.13. The act of Congress of July 1, 1862, provides as follows:

Sec. 6. "The grants aforesaid are made upon condition that * * * and all said company shall pay said bonds at maturity compensation for services rendered for the government shall be applied to the payment of said bonds and interest until the whole amount is fully paid. Said company may also pay the United States, wholly or in part, in the same or other bonds, treasury notes or other evidences of debt against the United States to be allowed at par; and after said road is completed, until said bonds and interest are paid, at least five per cent. of the net earnings of said road shall also be annually applied to the payment thereof."

This is a suit at law to recover the said five per cent. of the net earnings. The petition alleges the foregoing facts, and a demand and refusal to pay. A demurrer to the petition was filed under which the following points were made by the defendant, and

argued, and submitted to the court at the May term, 1875, before the plaintiff to the railroad company was inoperative and conMiller, Circuit Justice, viz :

1. That the provision of the act of 1862, set forth in the petition, does not impose any obligation on the company to pay money to the government, but is merely a directory provision, regulating the management of the internal affairs of the company.

2. That if the provision in question does create an obligation binding the company to pay a proportion of its net earnings to the government, such right is of an equitable nature, enforceable only by proceedings for account, and can not be made the foundation of an action at common law.

The cause was taken under advisement, and at the November term, 1875, an order was directed to be entered overruling the demurrer.

veyed no title, and that the real title to the land still remained in the plaintiff. Whilst laboring under this mistaken view of the purport of the decision in the Seely case, the defendant conceived the idea of purchasing from the plaintiff the twenty acre tract which had previously been conveyed to the railroad company. Several interviews were had between the parties, and the whole matter was canvassed; both were equally cognizant of all the facts, and finally a bargain was consummated by which plaintiff agreed to sell to defendant, by quit-claim, the twenty acre tract previously sold to the railroad company, and a thirty-four acre tract of land lying in a different place, and also to assign to him a judgment against one McKinson for about five hundred dollars. The consideration which the defendant was to pay for the whole was eleven thousand

7. P. Usher, C. E. Bretherton, for the demurrer; Geo. R. Peck, nine hundred dollars, to be paid as follows: two thousand dollars District Attorney, for the United States.

in money at the time; two thousand five hundred dollars on the first of April next ensuing; and the remainder in four equal amounts of eighteen hundred and fifty dollars each, to be paid respectively in three, six, nine and twelve months. In accordance with this agreement the plaintiff executed a quit-claim conveyance for the twenty acre tract, assigned the judgment and gave titlebond obligating himself to make a conveyance for the thirty-four acre tract. The consideration has all been paid except the last two notes, which are the ones herein sued upon.

MILLER, Circuit Justice, in directing the entry of an order overruling the demurrer, in substance observed that he had never had any doubt that the demurrer must be overruled, but he had held it up on suggestion of counsel that the argument of the case of the Union Pacific Railroad Company v. The United States, on appeal from the court of claims might involve propositions affecting this case. That was a suit brought by the company against the United States, to recover the one-half of the freight earned by the company for carrying mails, etc., for the United States-the gov- As a defence the answer alleged that the transaction was illeernment claiming, that all such earnings should go to pay the inter-gal, and that there was a failure of consideratton for the execution est on the government bonds. That case was recently argued in the of the notes. On a trial before the court the judgment was for the Supreme Court of the United States, and nothing was developed | defendant. touching the right of the government to recover the five per cent. of the net income, after the completion of the road, a right given in the original charter of July 1, 1862, and which in this respect has never been repealed or modified. Let the demurrer be overruled.

ENTERED ACCORDINGLY.

The only point in the case about which there is any controversy, is the sale and conveyance of the twenty acre tract. It is insisted, first, that the transaction was illegal by the statute law of this state; and secondly, that it was fraudulent and against public policy; and therefore an action will not lie upon it. The provision of the statute invoked to sustain this view, is the 52d section of the

Second Conveyance
Conveyance without reciting Previous 3d article in regard to crimes and punishment. 1 Wagner's Stat-

One-Construction of Missouri Statute.

J. M. ARMSTRONG v. CALEB WINFREY.
Supreme Court of Missouri, November, 1875.

Present, Hon. DAVID WAGNER,

T. A. SHERWOOD, Judges.
WARWICK HOUGH,

A statute of Missouri makes it a misdemeanor to give, with intent to defraud, a deed or mortgage of land which has been previously conveyed, unless the second deed recite the

former. 1 Wag. Stat., p. 462,2 52. The plaintiff conveyed land to a railroad company and, afterwards, under a mistaken impression of the purport of a decision of the supreme

court, conveyed the same property by quit-claim deed to the defendant, the second deed not mentioning the first. But the defendant was fully cognizant of the previous conveyance, entered into the transaction as a speculation, and was eager to make the purchase. Held, in an action on some of the notes given for the purchase-money, that it was not a good defence to urge that the conveyance was void, because denounced by a statute of

the state. The statute denounces only conveyances made with an intent to defraud, and not those where the purchaser has full knowledge of the previous conveyance.

Error to the Circuit Court of Cass County.

Boggess & Sloan and Comingo, for plaintiff in error; Hicks & Adams, for defendant in error.

WAGNER, J., delivered the opinion of the court. From the record it appears that in 1858 the plaintiff was the owner of twenty acres of land adjoining the town of Pleasant Hill, in Cass county, and that in the same year he sold and conveyed the same by deed of general warranty to the Pacific Railroad Company, and that the deed was duly placed upon record. The railroad company laid out an addition to the town on the tract of land, erected their depot thereon, sold lots, and in consequence it has become valuable. At the January term, 1870, of this court, a decision was rendered in the case of the Pacific Railroad v. Seely et al., from which the conclusion was deduced that the deed from

utes, p. 462. The following is the section:

"Every person who shall make, execute or deliver any deed or writing for the conveyance or assurance of any lands, tenements or hereditaments, goods or chattels, which he had previously, by deed or writing, sold, conveyed, mortgaged, or assured, or convenated to convey or assure, to any other person, such first deed being outstanding and in force, and shall not in such second deed or writing recite or describe such former deed or writing, or the substance thereof, with intent to defraud; and every person who shall knowingly take or receive such second deed or writing, shall, on conviction, be adjudged guilty of a misdemeanor."

The object of the statute was obviously intended to prevent fraud, and its penalty is denounced against the making of the deed with a fraudulent intent. The simple making of a second deed, whilst a former one is outstanding and in force, without reciting the same, does not constitute the offence, if there is no intention to defraud, and the deed does not have that effect. There must be a fraudulent intent designed to operate to the injury or detriment of some person.

In the case of Gilmore v. Cook (33 Mo. 25), which was an action on promissory notes given for the purchase-money for land which had been conveyed to the defendant by a quitclaim deed, the defence was set up that the plaintiff fraudulently concealed from defendants, at the time of the sale and conveyance, the fact that he had previously granted to the North Missouri Railroad Company the right of way through the land. At the trial it was shown that the deed to the defendants made no allusion to the prior grant, but it was proved that the defendants were fully aware of, and had knowledge of that fact, and it was held that the matter set up in the answer constituted no defence; that a grantee, by quit claim deed, who at the time of his purchase, had notice of previous grant by his grantor,

could not allege that he was defrauded on the ground that the no- The bills of exchange were drawn by cotton brokers residing in tice was not of a particular kind, as by recital in the deed.

NATIONAL BANK OF COMMERCE OF BOSTON v. MER- time bill, without further instructions, would not he justified in re

fusing to surrender the property against which the bill was drawn, after its acceptance, and thus disable the acceptor from making

Supreme Court of the United States, No. 15, October Term, 1875. payment out of the property designated for that purpose.

A bill of lading of merchandise, deliverable to order, when attached to a time draft, and forwarded with the draft to an agent for collection, without any special instructions, may be surrendered to the drawee by the agent on his acceptance of the draft, and in case of non-payment of the draft,the agent will not be liable The agent would not be justified in refusing to surrender the bill of lading, because this would disable the acceptor from making payment out of the property assigned for that purpose. It would be otherwise, if the agent had special instructions to hold the bill of lading until payment of the draft. [Acc. Lanfear v. Blossman, 1 La. An. 148; Wis. M & F. Ins. Co. v. Bank of British North America, 21 Up. Can. Rep., Q. B., 284; s. c., on review, 2 Up. Can. Error & Ap. Rep. 282; Case in 14 Hunt's Merchant's Mag. 264; and other cases. Distinguishing Gilbert v. Guignon, Law Rep. 8 Chan. 16; Seymour v. Newton, 105 Mass. 272; Newcomb v. Boston & Lowell R. Co., 115 Mass. 230; Stollenwerck v. Thatcher, 115

Mass. 224; and Bank v. Bayley, Ibid., 228.]

In error to the Circuit Court of the United States for the District tract for payment. This would not be doubted if, instead of an acof Massachusetts.

promise of the consignor to deliver? If the latter, the consignor may be wholly irresponsible. If the bill of lading be to his order, he may, after acceptance of the draft, endorse it to a stranger, and thus wholly withdraw the goods from any possibility of their ever coming to the hands of the acceptor. Is, then, the acceptance a mere purchase of the promise of the drawer? If so, why are the goods forwarded before the time designated for payment? They are as much after shipment under the control of the drawer as they were before. Why incur the expense of storage and insurance? And if the draft with the goods or with the bill of lading be sent to a bank for collection, as in the case before us, can it be incumbent upon the bank to take and maintain custody of the property sent during the interval between the acceptance and the time fixed for payment? (The shipment in this case were hundreds of bales of cotton). Meanwhile, though it be a twelvemonth, and no matter what the fluctuations in the market value of the goods may be, are the goods to be withheld from sale or use? Is the drawee to run the risk of falling prices with no ability to sell till the draft is due? If the consignment be of perishable ar

entitles the purchaser to immediate possession of the property sold, unless there be a special agreement that it may be retained by the vendor, and such is the well recognized doctrine of the law. The reason for this is that very often, and with merchants generally, the thing purchased is needed to provide means for the deferred payment of the price. Hence, it is justly inferred that the thing is intended to pass at once within the control of the purchaser. It is admitted that a different arrangement may be stipulated for. Even in a credit sale it may be agreed by the parties that the vendor shall retain the subject until the expiration of the credit, as a security for the payment of the sum stipulated. But if so, the agreement is special, something superadded to an ordinary contract of sale on credit, the existence of which is not to be presumed. Therefore, in a case where the drawing of a time draft against a consignment raises the implication that the goods consigned have been sold on credit, the agent to whom the draft to be accepted and the bill of lading to be delivered have been entrusted, can not reasonably be required to know, without instruction, that the transaction is not what it purports to be. He has no right to assume and act on the assumption that the vendee's term of credit must expireticles, such as peaches, fish, butter, eggs, etc., are they to remain before he can have the goods, and that he is bound to accept the draft, thus making himself absolutely responsible for the sum named therein, and relying upon the vendor's engagement to deliver at a future time. This would be treating a sale on credit as a mere executory contract to sell at a subsequent date.

And, if the inference to be drawn from a time draft accompanied by a bill of lading is not that it evidences a credit sale, but a request for advances on the credit of the consignment, the consequence is the same. Perhaps it is even more apparent. It plainly is that the acceptance is not asked on the credit of the drawer of the draft, but on the faith of the consignment. The drawee is not asked to accept on the mere assurance that the drawer will at a future day deliver the goods to reimburse the advances. He is asked to accept in reliance on a security in hand. To refuse to him that security is to deny him the basis of his requested acceptance. It is remitting him to the personal credit of the drawer alone. An agent for collection having the draft and attached bill of lading can not be permitted, by declining to surrender the bill of lading on the acceptance of the bill, to disappoint the obvious intentions of the parties, and deny to the acceptor a substantial right which by his contract is assured to him. The same remarks are applicable to the case of an implication that the merchandise was shipped to be sold on account of the shipper.

Nor can it make any difference that the draft with the bill of lading has been sent to an agent (as in this case) "for collection." That instruction means simply to rebut the inference from the endorsement that the agent is the owner of the draft. It indicates an agency. Sweeny v. Easter, 1 Wallace, 166. It does not conflict with the plain inference from the draft and accompanying bill of lading that the former was a request for a promise to pay at a future time for goods sold on credit, or a request to make advances on the faith of the described consignment, or a request to sell on account of the shipper. By such a transmission to the agent he is instructed to collect the money mentioned in the drafts, not to collect the bill of lading. And the first step in the collection is proccring acceptance of the draft. The agent is, therefore, authorized to do all which is necessary to obtaining such acceptance. If the drawee is not bound to accept without the surrender to him of the consigned property or of the bill of lading, it is the duty of the agent to make that surrender, and if he fails to perform this duty, and in consequence thereof acceptance be refused, the drawer and endorsers of the draft are discharged. Mason v. Hunt, I Douglas, 297.

The opinions we have suggested are supported by other very rational considerations. In the absence of special agreement, what is the consideration for acceptance of a time draft drawn againt merchandise consigned? Is it the merchandise, or is it the

in a warehouse until the term of credit shall expire? And who is to pay the warehouse charges? Certainly not the drawees. If they are to be paid by the vendor, or one who has succeeded to the place of the vendor by endorsement of the draft and bill of lading, he fails to obtain the price for which the goods were sold.

That the holder of a bill of lading, who has become such by endorsement, and by discounting the draft drawn against the consigned property, succeeds to the situation of the shipper, is not to be doubted. He has the same right to demand acceptance of the accompanying bill, and no more. If the shipper can not require acceptance of the draft without surrendering the bill of lading, neither can the holder. Bills of lading, though transferrable by endorsement, are only quasi negotiable. I Parsons on Shipping, 192; Blanchard v. Page, 8 Gray, 297. The endorser does not acquire a right to change the agreement between the shipper and his vendee. He can not impose obligations or deny advantages to the drawee of the bill of exchange drawn against the shipment which were not in the power of the drawer and consignor. But were this not so, in the case we have now in hand, the agents for collection of the drafts were not informed, either by the drafts themselves or by any instructions they received, or in any other way, that the ownership of the drafts and bills of lading was not still in the consignors of the cotton. On the contrary, as the drafts were sent " for collection," they might well conclude that the collection was to be made for the drawers of the bills. We do not, therefore, perceive any force in the argument pressed upon us that the bank of Memphis was the purchaser of the drafts drawn upon Green and Travis, and the holder of the bills of lading by endorsement of the shippers.

It is urged that the bills of lading were contracts collateral to the bills of exchange which the bank discounted, and that when transferred they became a security for the principal obligation, namely, the contract evidenced by the bills of exchange; for the whole contract, and not a part of it, and that the whole contract required not only the acceptance, but the payment of the bills. The argument assumes the very thing to be proved, to-wit: that the transfer of the bills of lading were made to secure the payment of the drafts. The opposite of this, as we have seen, is to be inferred from the bills of lading and the time drafts drawn against the consignments, unexplained by express stipulations. The bank, when discounting the drafts, was bound to know that the drawers on their acceptance were entitled to the cotton, and, of course, to the evidences of title to it. If so, they knew that the bills of lading could not be security for the ultimate payment of the drafts. Paymant of the drafts by the drawees was no part of the contracts when the discounts were made. The bills of exchange were then incomplete. They needed acceptance. They were discounted in

the expectation that they would be accepted, and that thus the bank | lection, a bill drawn by A., at Milwaukee, on B. at Toronto, paywould obtain additional promissors. The whole purpose of the transfers of the bills of lading to the bank may, therefore, well have been satisfied when the additional names were secured by acceptance, and when the drafts thereby became completed bills of exchange. We have already seen that whether the drafts and accompanying bills of lading evidenced sales on credit, or requests for advancements on the cotton consigned, or bailments to be sold on the consignor's account, the drawees were entitled to the possession of cotton before they could be required to accept, and that if they had declined to accept because possession was denied to them concurrently with their acceptance, the effect would have been to discharge the drawers and endorsers of the drafts. The demand of acceptance, coupled with a claim to retain the bills of lading, would have been an insufficient demand. Surely, the purpose of putting the bills of lading into the hands of the bank was to secure the completion of the drafts by obtaining additional names upon them, and not to discharge the drawers and endorsers, leaving the bank only a resort to the cotton pledged.

able forty-five days after date, together with a bill of lading, endorsed by A., for certain wheat sent from Milwaukee to Toronto, it was held that, in the absence of any instructions to the contrary, the defendants were not bound to retain the bill of lading until payment of the draft by B., but were right in giving it up to him on obtaining his acceptance. This case was reviewed, in 1863, in the court of error and appeals, and the judgment affirmed. 2 Upper | Canada Error and Appeals Reps. 282. See, also, Goodenough v. The City Bank, 10 Up. Canada Com. Pleas, 51; Clark v. The Bank of Montreal, 13 Grant's Cha. 211.