Messrs. John W. Cary and J. M. Carlisle, for the appellants:

The complainants insist that the Barnes mortgage was executed in fraud of the rights of creditors, with the design to hinder, delay and oppress them, and to have said property speedily sold, so as to cut off and destroy all their rights as well as the interest of the stockholders of the La Crosse and Milwaukee Railroad Company. The disposition of the bonds under this mortgage by the directors of the La Crosse Company, was a gross fraud upon the creditors of said Company and all other parties having an interest in the property, and for that reason the bonds and the mortgage and all proceedings in connection therewith should be set aside and canceled.

Keohler v. The Black River Iron Co., 2 Black, 715 (67 U. S., XVII., 339).

The pretended foreclosure of this mortgage by Barnes, under the power of sale, by advertisement without the intervention of a court was, void, and conferred no new rights upon Barnes or the bondholders which they did not have before such foreclosure.

1 Hilliard, Mort., 131.

A mortgage that would not be sustained in a court of equity cannot be the foundation of a foreclosure by a sale under the power, so as to give title to the mortgaged property. Where a court of equity would only make a decree for $200,000 and order a sale for that amount, the mortgagee cannot resort to the power of sale and fix the amount at $2,000,000, and make a valid sale for that sum; and where the mortgagee pursues such a course, the sale will not stand even as a forclosure for the amount actually due.

Jackson v. Henry, 10 Johns., 185; Jackson v. Dominick, 14 Johns, 435; Cameron v. Irwin, 5 Hill, 272; Jencks v. Alexander, 11 Paige, 619.

In the case at bar, the notice set forth that the mortgage was for $2,000,000, and that $70,000 of interest had accrued and was due thereon. But $653,000 of the bonds had never been issued at all, and nearly $1,200,000 of the balance had not been legally issued, but only

who became in fact the purchasers at this pretended sale. Such fraud and misrepresentation rendered the sale void.

Longwith v. Butler, 3 Gilm., 32; Burnet v. Denniston, 5 Johns. Ch., 35; Klock v. Cronkhite, 1 Hill, 107; Bunce v. Reed, 16 Barb., 347; Rathbone v. Clarke, 9 Abb. Pr., 66; Jackson v. Clark, 7 Johns., 217; Miller v. Hull, 4 Den., 104; Hyland v. Stafford, 10 Barb., 558.

Mr. M. H. Carpenter) and Mr. Stark, for the Mr. C. Cushing (who also filed a brief by appellee:

Barnes is a necessary party, without whose presence the court cannot render the decree sought in this case.

Shields v. Barrow, 17 How., 130 (58 U. S., XV., 158); Field v. Holland, 6 Cranch, 24; Coiron v. Millaudon, 19 How., 114 (60 U. S., XV., 575.

The power of sale in the mortgage was valid. Bronson v. Kinzie, 1 How., 320; Richards v. Holmes, 18 How., 143 (59 U. S., XV., 304); Bradley v. Chester Valley R. R. Co., 36 Pa.,

141; Byron v. May, 2 Chard., 103; Walton v. Cody, 1 Wis., 433; Bloom v. Van Rensselaer, 15 Ill., 503.

Whatever were the merits of the complainant's case, too great delay occurred before the filing of the bill.

The Milwaukee and Minnesota Railroad Company was organized in 1859, and the bill in this case was not filed until April, 1863. Peabody v. Flint, 6 Allen, 52.

The State of Wisconsin, by express Act of its Legislature, authorized the foreclosure, sale and purchase by Barnes.

Act of Feb. 8, 1859, ch. 10, Sess. Laws of 1859.

And has further, by another Act of its Legislature subsequent to the formation of the present Milwaukee and Minnesota Railroad Company, recognized it as a valid organization under the laws of the State.

Act of March 6, 1862, ch. 2 of Local Laws. The foreclosure of this mortgage by advertisement has, as against all the complainants (they not being creditors by lien prior in date to that of the mortgage foreciosed), the same effect as a sale under foreclosure decree, ex cept they might have redeemed within one year from the sale, as provided by law.

R. S. Wis., ch. 154, sec. 18; General Laws, Wis., 1859, ch. 10; Benedict v. Gilman, 4 Paige, 58; Klock v. Cronkhite, 1 Hill, 107; Demarest v. Wynkoop, 3 Johns. Ch., 129; Jackson v. Colden, 4 Cow., 266.

It is submitted that whatever might be the merits of the complainants, the advertisement of the premises for sale gave legal notice to all concerned; and any defense the complainants had to the foreclosure might have been interposed by application to a court of equity to enjoin the sale. The neglect to do so was consent; and having now for four years acquiesced until innumerable third persons have become interested in the property, they cannot ask a court of equity to set aside the sale upon grounds which existed, if at all, before the foreclosure was had.

By the 34th section of the laws of the United States, ch. 20, 1 Stat. at L., 73, it is provided that "the laws of the several States, except where the Constitution, treaties or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States, in cases where they apply." This is understood to apply to positive statutes of a State, and to rights and titles to things having a permanent locality, such as real estate and other matters immovable and intraterritorial in their nature and character.

Swift v. Tyson, 16 Pet., 1.

The words of the 34th section of the Judiciary Act, it is true, provide for its application to "trials at common law," and this is the case in equity. But this court, acting in a case of equity, will consider itself equally bound by

this rule of decision.

The Legislature of Wisconsin, having, by special Act, authorized Barnes to sell and buy in the road, and having since, by further Act, specially recognized the validity of the sale, purchase by him, and the organization of the present Company, seems absolutely to dispose of this case against the complainants.

Mr. Justice Nelson delivered the opinion of the court:

This is an appeal from the Circuit Court of the United States for the District of Wisconsin. The bill before us is a creditor's bill, filed by four different judgment creditors against the defendants, to set aside as fraudulent and void against creditors the sale under a mortgage made to Barnes, 21st of June, 1858, for $2,000,000, by the La Crosse and Milwaukee Rai road Company, which sale took place on the 21st of May, 1859, and under which the defendants' Company was organized; and that the Company be perpetually enjoined and restrained from exercising any control over the property or franchises mentioned in said mortgage, or from interfering in any manner with the road or its franchises; and, further, that the said Company be decreed to take nothing under the sale, and that the property or franchises of the La Crosse and Milwaukee Railroad Company may be sold and applied, after discharging all prior liens, to the satisfaction of the judgments of the complainants.

The complainants consist of the firm of F. P. James & Co., who are the owners of a judgment against the La Crosse and Milwaukee Company for $26,353.51, recovered in the District Court of the United States for the District of Wisconsin, on the 5th of October, 1858, in favor of Edwin C. Litchfield, and which came to the complainants by assignment.

Nathaniel S. Bouton, who recovered in the same court a judgment against the same Company for $7,937.37, on the 5th of April. 1859, and which judgment came to the firm of F. P. James & Co., by assignment: Philip S. Justice and others, who recovered a judgment in the Circuit Court of Milwaukee County against the same Company for $235.33, and E. Bradford Greenleaf a judgment in the same court against the same Company for $840.06. These judgments were liens on the La Crosse and Milwau kee Railroad, subsequent to the mortgage to Barnes, already referred to, which, with the sale under it, is sought to be set aside as fraudulent and void against creditors.

The mortgage was given to secure the payment of an issue of bonds for $2,000,000, on the 21st of June, 1858, and which were issued accordingly by the president and secretary, and were made payable in thirty years. One thousand bonds of $1,000 each, fourteen hundred of $500 each, and three thousand of $100 each, interest at seven per cent., payable semi-annually, on the first day of January and July in each year, with coupons attached. The sale under the mortgage took place on default of the payment of the first installment of interest, six months after it was executed. Barnes, the mortgagee, acted as mortgagee, acted as auctioneer, and bid off the property himself, as trustee for the bondholders, who soon after organized the Milwaukee and Minnesota Railroad Company, one of the defendants

in this suit.

As appears from the proofs at the time of the sale, there had not been $200,000 advanced on the entire issue of the two millions of bonds; indeed, the actual amount is but little over $150,000. $550,000 of the bonds do not ap pear to have been negotiated at all, which were held in trust and never used, and $103,000 had

been returned and canceled, making in the aggregate $653,000. $400,000 were given to Chamberlain to secure a note of the Company for $20,000, which he sold at auction, and which were bid in principally by the directors at five cents on the dollar. $310,000 of the bonds were given to secure a loan of $15,500, and which came into the hands of the same persons, or their friends, for about five cents on the dollar.

It is charged in the bill, and the proofs are very strong in support of it, that this note to Chamberlain for $20,000, and the loan of $15,500 to secure the payments of which these bonds were given-$400,000 in amount for the first sum, and $310,000 for the second-were made by the Company for the purpose, and with the intention of obtaining a division of them among the directors, at merely nominal prices. It is very fully established that this was, in point, the result of the two transactions.

We have looked with some care into the proofs, and into the brief of the learned counsel for the defendants, to ascertain the portion or amount of these bonds, or of the stock of the Milwaukee and Minnesota Company, into which some of them were converted, that are now in the hands of bona fide holders, and we find no evidence in the record tending to show any amount beyond the sum already mentioned less than $200,000. These were the only outstanding bonds existing at the time of the foreclosure and sale for which value had been paid; the remainder of the $2,000,000 were either in the hands of the directors or under their control, and not negotiated, or, they were in their hands under the fraudulent arrangements we have already stated, at nominal prices. Nor do we find that the present holders of the bonds or stock of the Company are in any better or more favorable condition than those who organized the defendants.

The notice of sale set forth that the mortgage debt was $2,000,000, and that $70,000 of interest were due.

It needs no authorities to show that such a sale cannot be upheld without sanctioning the grossest fraud and injustice to the La Crosse and Milwaukee Company, the mortgagee, and its creditors. This deceptive notice was calculated to destroy all competition among the bidders, and, indeed, to exclude from the purchase everyone, except those engaged in the perpetration of the fraud. The sale, therefore, must be set aside, and the Milwaukee and Minnesota Company be perpetually enjoined from setting up any right or title under it-the mortgage to remain as security for the bonds in the hands of bona fide holders for value, and that the judgment creditors, the complainants, be at liberty to enforce their judgments against the defendants therein, subject to all prior liens or incumbrances.

Cited 101 U. S., 848; 8 Biss., 517.

Ex parte THE MILWAUKEE AND MINNE

SOTA RAILROAD COMPANY. Mandamus denied where case decided adversely.

Petition for a mandamus to the circuit court commanding it to deliver certain property, denied,

where, since the presentation of the petition, it had been decided in this court that the possession of the property did not belong to the petitioner. [No. 8.]

Submitted Mar. 20, 1868. Decided Mar. 30, 1868. PETITION for mandamus.

The opinion of the court can best be understood by reference to the case of The Milwaukee and Minnesota Railroad Company v. The Milwaukee and St. Paul Railroad Company, and Soutter v. The Milwaukee and Minnesota Railroad Company, ante, 859, docket Nos. 218,219, and the cases there referred to; also to the last preceding case.

Mr. C. Cushing, for petitioner.

Mr. Justice Nelson delivered the opinion of the court:

This is an amended petition by the Milwaukee and Minnesota Company for a mandamus to the Judges of the Circuit Court of the United States for the District of Wisconsin, commanding that court to order certain rolling stock, particularly described, to be taken out of the hands of a receiver and delivered to the petitioners pursuant to a decree entered in said court on the 18th July, 1866, in the case of Soutter et al. v. La Crosse and Milwaukee Company et al. Since this petion was presented, a case on appeal between the parties has been heard and decided, in which it was determined that the possession of this rolling stock did not belong to the petitioner. The motion for the mandamus must, therefore, be denied.

Ex parte WILLIAM H. DE GROOT, Petr. (See S. C., 6 Wall., 497.)

Mandamus not issued to compel court below to issue mandamus-remedy is writ of error.

A mandamus will not be issued by this court to the court below, for the purpose of reversing its decision, and commanding it to issue a mandamus. The remedy, if any, is by writ of error to the court

below to reverse the judgment there rendered. [No. 10.]

Argued Mar. 20, 1868. Decided Mar. 30, 1868. PETITION for mandamus.

The case is sufficiently stated by the court. Mr. R. J. Brent, for petitioner.

Mr. Justice Nelson delivered the opinion of the court:

This is an application for a mandamus to the Judges of the Supreme Court of the District of Columbia.

The petition was presented to that court, praying for the award of a mandamus to the defendant, the Secretary of the Treasury, commanding him to pay to the relator the sum of $114,000 which had been awarded to him by the Secretary of War, in pursuance of a Joint Resolution of Congress. The petition sets out at large the grounds of the indebtedness of the government to the relator, the Joint Resolution and the reward of the Secretary of War for the amount above stated. The court below denied the prayer for a mandamus, and the papers are now presented to this court for a mandamus to the court

below, for the purpose of reversing its decision and commanding it to issue the mandamus.

The party has mistaken his remedy, if he has any, which is by writ of error to the court below to reverse the judgment there rendered in the case. The authorities are uniform on the question. Decatur v. Paulding, 14 Pet., 497; Kendall v. U. S., 12 Pet., 527; Brashear v. Mason, 6 How., 92; U. S. v. Guthrie, 17 How., 284 [58 U. S., XV., 102].

THE ETNA INSURANCE COMPANY, Piff. in Err.,

V.

SAMUEL H. WEBSTER.

Messrs. George B. Hibbard and J. 8. Newberry, for the plaintiff in error:

This was a mere proposition for the contract, only to become complete upon the approval of the risk by Dorr, the General Agent. The case is distinguishable from that of Perkins v. Wash. Ins. Co., 4 Cow., 645.

See Milner v. Field, 5 Exch., 829; McCotter v. Mayor, etc., 35 Barb., 609.

The Company was under no obligation to give notice of its non-approval. The approval was the condition on which the contract became operative. Without that approval, there was no contract.

Messrs. William P. Wells and Alfred Russell, for the defendant in error,

Cited, Perkins v. Wash. Ins. Co., 4 Cow., 645; Lightbody v. N. A. Ins. Co., 23 Wend., 18; Palm v. Medina Ins. Co., 20 Ohio, 537.

Mr. Chief Justice Chase delivered the opinion of the court:

canceled the policy and gave no notice of disapproval until after the loss, the policy must be re

garded as valid and effectual.

[No. 84.]

Argued Feb. 13. 1868. Decided Mar. 30, 1868.

IN

ERROR to the Circuit Court of the United States for the Eastern District of Michigan. The history and the nature of the case fully appear in the opinion.

The principal questions here relate to the correctness of the charge of the court below. That charge was as follows:

I. The defendant had a right to limit the authority of its agent, and so far as the limitations imposed were known to the plaintiff, he was bound by them.

II. The application of the plaintiff and the policy of the defandant were one transaction, and the plaintiff cannot deny knowledge of what is spread upon the paper signed by him. III. That paper authorized the defendant, in good faith, but not arbitrarily, to reject the application and annul the policy issued to the plaintiff.

IV. Whether the application was rejected in good faith, is a question for the jury to deter mine. If the defendant did not act in good faith in this respect, the plaintiff is entitled to recover. V. If the defendant did reject the application in good faith, it was bound thereupon, under the circumstances of the case, to give notice of that rejection within a reasonable time to the plaintiff.

VI. If that notice was not given to the plaint iff and no knowledge of it came to him until after the loss of the vessel, October 25, he was notified within a reasonable time, and the plaintiff is, in that event, entitled to recover.

To each of the instructions marked respect ively III., IV., V., VI., the counsel for the Company excepted.

tion.

To facilitate the making of such insurances with promptitude, the agent was furnished with blank policies duly signed by the Presi dent and Secretary of the Company, and requiring nothing to make them obligatory contracts, except to be filled up and countersigned by him.

These things being so, Webster, the plaintiff below and now the defendant in error, applied, on the 25th of September, 1860, to Webber for insurance on the schooner Ottoca, for the resi due of the current season of navigation; and thereupon Webber filled up, countersigned and delivered to Webster a policy of insurance, duly executed by the President and Secretary of the Company, by which $1,733 were insured upon The Ottoca from that day (September 25th, 1860) to the 30th of November, 1860. Webster, on his part, paid the premium by an indorsed note in the usual mode.

The same schooner had previously, in 1858, been insured in like manner on the application of Webster, in the same Company, through the same agent.

On the 25th of October, 1860, the schooner Ottoca was wrecked and became a total loss from perils covered by the policy, and notice of the wreck and loss was duly given to the Insurance Company.

Such was the substance of the proof on the plaintiff below.

On the part of the defendant it was proved that immediately after the delivery of the pol icy to Webster, a paper, partly written and partly printed, and called an application, was signed by the latter at the request of the former. This paper contained a general statement of the substance of the transaction, and was also signed by Webber. Following the signatures appeared this printed memorandum: The insurance on this application is to take effect when approved by E. P. Dorr, General Agent

This paper was immediately transmitted by Webber to Dorr, was received on the 29th of September, but the application did not receive his approval, and was sent back to Webber with a letter directing him to return to Webster the premium note received, and to cancel the policy. This letter was received by Webber on the 2d of October.

It also appears from the evidence that Webber, apparently dissatisfied, wrote to Bennett, another General Agent at Cincinnati, on the subject, and seems to have expressed in his letter some apprehension that the course directed by Dorr would "earn for the Company the reputation of backing out of contracts regularly made." No attempt was made to cancel the policy, nor was the premium returned, nor was any notice given to Webster of the action of the general agent until after the loss, when Webster called to give notice of it to the Company. Then for the first time Webber informed him that his application for insurance had been rejected, and offered to return the premium note, which Webster declined to receive, and insisted on his contract.

Upon this case we are of the opinion that the liability of the Insurance Company attached, subject to revocation, on the making and delivery of the policy of insurance, and the receipt of the premium by its agent.

The facts in the case are much stronger against the Company than in that of Perkins v. Wash. Ins. Co., 4 Cow., 645.

In that case the agent had no power to make insurance, but only to receive proposals and determine rates, with an understanding, sanctioned by the Company, that if the rates and proposals should prove satisfactory, the Company would issue a policy accordingly, and that in the meantime the risk should be binding on it. The court held that the right of the Company to refuse a risk upon such proposals was not arbitrary; but that the conditional arrangement of the agent would bind it absolutely in the absence of fraud or misconduct on his part, known to the applicant for insurance.

What, then, is the true effect of the memorandum? In strictness, and taken apart from the transaction, its terms make the validity of the policy depend upon the approval of the of the general agent. "The insurance on this application to take effect when approved by E. P. Dorr, General Agent, at Buffalo." But it is clear that such was not the understanding of the parties, nor of the general agent himself. The policy issued was perfect in form and substanae; the premium note was in the usual form, and for the proper sum; the delivery of the policy and the receipt of the note were significant acts. If the general agent had never acted upon the application at all, and the term of insurance had expired without loss, it will hardly be maintained that the insured could set up his omission or neglect in this respect as a defense to an action upon the premium note. The transaction, then, was not a nullity until approved. It must be regarded, we think, as an insurance of the same character as that passed upon in the case from Cowen's Reports. The memorandum, considered in connection with other parts of the transaction must be treated as, at most, the reservation of a right; not, however, to be arbitrarily exercised by the general agent, to disapprove the insurance, and annul the contract on notice to the insured and on return of the premium note. The evidence shows that it was in this light substantially that both the agents regarded the transaction until after the loss. The general agent at Bufalo sent back the application, directing the agent at Saginaw to return to the party insured his premium note, and cancel the policy. The agent at Saginaw, not satisfied with this direction, as is shown by his correspondence with another general agent at Cincinnati, neither returned the note nor canceled the policy.

It is a necessary consequence of these views that, in the absence of all notice of disapproval until after the loss, the policy must be regarded as valid and effectual.

What has been said covers substantially the several instructions given to the jury by the circuit court, and disposes of the exceptions to them.

The judgment of the Circuit Court is, therefore, affirmed.

Cited-95 U. S., 388; 2 Sawy., 330; 42 Ind., 598; 68

UNITED STATES, Appt.,

V.

BALES OF COTTON, Marked J. H. B., DAVENPORT & BURNS, Claimants.

Union Ins. Co. v. United States, ante, 879, followed.

dered conformed, in respect to trial by jury and Decree reversed as irregular, and new trial orexceptions to evidence, to the course of the common law. [No. 146.]

Argued Mar. 26, 1868. Decided Mar. 30, 1868.