, Clark v. Barnard :: 108 U.S. 436 (1883) :: US LAW US Supreme Court Center

Clark v. Barnard :: 108 U.S. 436 (1883) :: US LAW US Supreme Court Center

    U.S. Supreme Court

    Clark v. Barnard, 108 U.S. 436 (1883)

    Clark v. Barnard

    Decided May 7, 1883

    108 U.S. 436

    Syllabus

    1. The B. H. & E. Railroad, a company created by using the State of Connecticut, purchased the franchises and railroad of the H. P. & F. Railroad, a agency created beneath the laws of Rhode Island and Connecticut. The Legislature of Rhode Island ratified the sale, and authorized the B. H. & E. Company to exercise the rights, privileges, and powers of the H. P. & F. Company. Held that the B. H. & E. Company thereby became the felony successor of the H. P. & F. Company in Rhode Island, and, in appreciate to its railroad in Rhode Island, a corporation of that kingdom.

    2. The State of Rhode Island legal via an act of its legislature the B. H. & E. Company to increase inside the limits of the country the road therefore acquired. The act further contained the following proviso:

    "This act shall not pass into impact except the stated B. H. & E. Company shall, within ninety days from the growing of this General Assembly, deposit inside the office of the General Treasurer their bond, with sureties first-class to the governor of this nation within the sum of $a hundred,000, that they may whole their said street before the primary day of January, A.D. 1872."

    Within the time named, the needful bond was filed inside the sum of $one hundred,000 conditioned as follows:

    "Now, therefore, if said B. H. & E. Company shall entire their stated railroad before the first day of January, A. n. 1872, then the afore-written duty will be void; otherwise be and remain in full force and effect,"

    and as the needful security for the payment of the bond, a mortgage certificate of the City of Boston for $100,000 changed into deposited with the state treasurer. The B. H. & E. Company became bankrupt.

    Page 108 U. S. 437

    The assignees in financial disaster filed a bill in equity to restrain the treasurer of the nation from collecting the certificate. The treasurer demurred at the floor that the real birthday celebration in interest changed into the state. In the direction of the proceedings, the cash turned into paid into courtroom on an interlocutory decree. The state then came in and claimed it.

    Held:

    (1) That the voluntary appearance via the kingdom disposed of the demurrer and conferred jurisdiction to adjudicate upon the rights of the kingdom. The case outstanding from Georgia v. Jesup, 106 U. S. 458.

    (2) That the sum named within the bond in query was now not a penalty to secure the performance of a circumstance which can be discharged on payment of such damages as is probably proved to have arisen from nonperformance, but that it turned into within the nature of a statutory penalty for the nonperformance of a statutory duty, and that it became now not vital for the state to expose any actual harm or injury from the breach so as to be entitled to get better when the breach become proved.

    The regulation and cases in this challenge taken into consideration and reviewed.

    Bill in fairness by the assignees in financial disaster of the Boston, Hartford & Erie Railroad to restrain the Treasurer of the State of Rhode Island from receiving $100,000 within the possession of the court docket, the proceeds of a mortgage certificate of the City of Boston, which turned into lodged with the state through the bankrupt as safety for the overall performance of its bond for that quantity given to the state in pursuance of regulation to secure the construction of an extension of its road in Rhode Island, the extension never having been made. The facts seem in detail inside the opinion of the Court. The main questions discussed in argument had been the energy of the business enterprise to make the agreement with the kingdom; the rights of the events within the absence of the nation; the effect of an appearance by way of the country for the motive of saying the fund after it were paid into court, and the measure of damages at the breach of the situation of the bond.

    Page 108 U. S. 442

    U.S. Supreme Court

    Clark v. Barnard, 108 U.S. 436 (1883)

    Clark v. Barnard

    Decided May 7, 1883

    108 U.S. 436

    APPEAL FROM THE CIRCUIT COURT OF THE UNITED

    STATES FOR THE DISTRICT OF MASSACHUSETTS

    Syllabus

    1. The B. H. & E. Railroad, a employer created by means of the State of Connecticut, purchased the franchises and railroad of the H. P. & F. Railroad, a agency created below the laws of Rhode Island and Connecticut. The Legislature of Rhode Island ratified the sale, and authorized the B. H. & E. Company to exercising the rights, privileges, and powers of the H. P. & F. Company. Held that the B. H. & E. Company thereby became the prison successor of the H. P. & F. Company in Rhode Island, and, in appreciate to its railroad in Rhode Island, a agency of that kingdom.

    2. The State of Rhode Island legal by an act of its legislature the B. H. & E. Company to extend within the limits of the nation the road consequently received. The act similarly contained the following proviso:

    "This act shall not move into impact until the said B. H. & E. Company shall, within 90 days from the growing of this General Assembly, deposit inside the office of the General Treasurer their bond, with sureties excellent to the governor of this kingdom in the sum of $one hundred,000, that they'll complete their stated street before the first day of January, A.D. 1872."

    Within the time named, the requisite bond changed into filed within the sum of $one hundred,000 conditioned as follows:

    "Now, consequently, if said B. H. & E. Company shall whole their stated railroad earlier than the first day of January, A. n. 1872, then the afore-written duty shall be void; in any other case be and continue to be in complete force and impact,"

    and because the requisite protection for the fee of the bond, a loan certificates of the City of Boston for $one hundred,000 became deposited with the country treasurer. The B. H. & E. Company have become bankrupt.

    Page 108 U. S. 437

    The assignees in financial disaster filed a bill in fairness to restrain the treasurer of the nation from gathering the certificates. The treasurer demurred on the floor that the real birthday celebration in interest turned into the kingdom. In the path of the lawsuits, the cash was paid into court on an interlocutory decree. The kingdom then got here in and claimed it.

    Held:

    (1) That the voluntary look via the kingdom disposed of the demurrer and conferred jurisdiction to adjudicate upon the rights of the kingdom. The case distinguished from Georgia v. Jesup, 106 U. S. 458.

    (2) That the sum named inside the bond in question become not a penalty to stable the performance of a situation which may be discharged on price of such damages as might be proved to have arisen from nonperformance, but that it become inside the nature of a statutory penalty for the nonperformance of a statutory responsibility, and that it changed into no longer essential for the nation to show any actual harm or damage from the breach which will be entitled to recover whilst the breach become proved.

    The regulation and instances in this challenge considered and reviewed.

    Bill in equity with the aid of the assignees in financial disaster of the Boston, Hartford & Erie Railroad to restrain the Treasurer of the State of Rhode Island from receiving $a hundred,000 within the possession of the courtroom, the proceeds of a mortgage certificates of the City of Boston, which changed into lodged with the kingdom by way of the bankrupt as safety for the overall performance of its bond for that amount given to the nation in pursuance of regulation to secure the construction of an extension of its road in Rhode Island, the extension never having been made. The facts appear in detail inside the opinion of the Court. The fundamental questions discussed in argument had been the energy of the corporation to make the settlement with the kingdom; the rights of the parties inside the absence of the nation; the impact of an appearance by way of the kingdom for the reason of claiming the fund after it had been paid into courtroom, and the measure of damages at the breach of the condition of the bond.

    Page 108 U. S. 442

    MR. JUSTICE MATTHEWS delivered the opinion of the Court.

    The appellees, who have been complainants below, filed their invoice in equity as assignees in financial ruin of the Boston, Hartford & Erie Railroad Company, against Samuel Clark, General Treasurer of the State of Rhode Island, and the City of Boston and Frederick U. Tracey, its Treasurer. The bill alleged that the Boston, Hartford & Erie Railroad Company turned into a corporation created through the States of Connecticut and Massachusetts for the motive of constructing, acquiring, and running a railroad from Boston, in Massachusetts, to Willimantic, in Connecticut, and from Providence, in Rhode Island, to Willimantic, and from Willimantic through Waterbury to the kingdom line of Connecticut, and thence to Fishkill, in New York; that the directors of the company, without authority from the organisation or with the aid of regulation, carried out to the Legislature of Rhode Island in 1869, and obtained the passage of an act entitled "An act similarly to an act to ratify and verify the sale of the Hartford, Providence & Fishkill Railroad to the Boston, Hartford & Erie Railroad Company," via which the corporation changed into authorized to locate and construct a railroad in extension in their line of railroad purchased of the Hartford, Providence & Fishkill Railroad Company, taking off at their depot in Providence, thence going for walks to the easterly line of the kingdom in or close to the Village

    Page 108 U. S. 443

    of Valley Falls, to fulfill and connect with a Massachusetts railroad extending thru North Attleborough from Boston, so that you can make a non-stop line of railroad in a northerly and southerly direction among Providence and Boston; that this act contained a provision inside the following phrases:

    "This act shall not go into impact until the said Boston, Hartford & Erie Railroad Company shall, inside ninety days from the rising of this General Assembly, deposit within the workplace of the General Treasurer their bond, with sureties excellent to the governor of this nation, in the sum of $100,000, that they'll entire their stated road earlier than the primary day of January, A.D. 1872."

    That this condition was no longer complied with, and that the stated act therefore in no way took impact and is totally null and void; that after the passage of the act, the administrators and officials of the company, with out authority and in abuse of their accept as true with and responsibility, filed with one Samuel Parker, then the General Treasurer of Rhode Island, a paper, purporting to be the bond of the business enterprise, however without sureties, and fraudulently took of the price range of the organization the sum of $100,000, and deposited the same with the City Treasurer of Boston in change for the duty of that metropolis, a duplicate of that's as follows:

    "Temporary Loan, City of Boston"

    "$a hundred,000 No. 6"

    "This certifies that, for price acquired, there will be due from the City of Boston, payable on the workplace of the City Treasurer, on call for, after the primary day of December subsequent, to the General Treasurer of the State of Rhode Island, or order, the sum of $100,000, with interest on the fee of seven percentage consistent with annum, in modern funds."

    "This loan being authorized through an order of the town council handed the 9th day of June, 1869, to count on the profits of the prevailing economic 12 months."

    "Interest will no longer be allowed after this notice is due."

    "June 28, 1869"

    "ALFRED T. TURNER, Auditor"

    "FRED. U. TRACEY, Treasurer"

    "NATH L B. SHURTLEFF, Mayor"

    Page 108 U. S. 444

    That the directors and officials of the employer, without attention and with out authority, deposited this certificates and duty with the said Parker, who acquired the same with out warrant of law, and thereupon held the equal to the usage of the railroad organisation; that the organization never typical the act of the legislature recited; that the railroad legal thereby has in no way been constructed, nor any paintings carried out thereon, nor has the State of Rhode Island, nor any citizen thereof, suffered any damage or loss by reason thereof; that the General Assembly of Rhode Island taken into consideration that the filing of the certificate and responsibility of the City of Boston become not a compliance with the act, and did not ratify the taking of the same until after the bankruptcy of the railroad organization; that stated financial ruin become adjudicated on October 21, 1870, and the complainants became assignees in financial ruin of stated employer from that date, and entitled to the money represented by using the said certificates; that Samuel Parker having died, the respondent Clark succeeded him as General Treasurer of Rhode Island, and got here into ownership of the said certificates, which, it is alleged, but, he holds wrongfully, and in his man or woman and now not his reputable capability, and to the use of the complainants, however which, although, he threatens to accumulate and withhold from them the proceeds thereof.

    The prayer of the bill is

    "That the said respondent Clark may be decreed to haven't any proper, name, or hobby in or to the stated paper writing A, or in or to the stated money so deposited with the stated respondent Tracey, or to any component thereof, and that he may be decreed to assign and supply over the said paper A on your orators, and may be enjoined and limited from imparting the same to the said respondent Tracey, or to the said City of Boston, or from receiving any money or payment in any respect thereon or therefor, or any element thereof, or from receiving or maintaining the said sum of $one hundred,000, or any component thereof, from the stated respondent Tracey, or the stated City of Boston, and that the stated respondent Tracey and the stated City of Boston can be decreed to pay over on your orators, as assignees as aforesaid, the said sum of $one hundred,000, with interest thereon, and may be enjoined and restricted from paying the same, or any component thereof,

    Page 108 U. S. 445

    or any cash on account thereof, to the said respondent Samuel Clark, the General Treasurer of the State of Rhode Island, and that your orators may additionally have such different and further comfort as on your honors shall appear meet, and as the nature and occasions of the case shall require."

    To this bill a demurrer was filed by way of Clark for need of jurisdiction, at the floor that it was, in substance, a fit through residents of one state in opposition to the State of Rhode Island. This demurrer changed into overruled. Clark then filed his answer, denying the fabric allegations of the invoice, asserting that the transaction was with the State of Rhode Island, thru the treasurer in his legit capability, and insisting upon the immunity of the kingdom from suit with the aid of residents of other states as a protection. The reason got here on for listening to upon the pleadings and proofs, when an interlocutory decree was passed, April 15, 1878, ordering the payment of the cash due from the City of Boston upon the mortgage certificates into the registry of the court, with liberty to the defendant Clark to take and file evidence in assist of any declare for damages by cause of the breach of the bond of the Boston, Hartford & Erie Railroad Company to the State of Rhode Island, and similarly ordering that on final listening to, and upon filing in court docket the certificates of indebtedness, the General Treasurer of the State of Rhode Island must have and get better of the stated sum inside the registry such portion, or the entire thereof, as ought to quantity to the sum, if any, for which any surety would possibly or for which the most important obligor in stated bond might be accountable, upon the proof, either for any penalty or damages by way of purpose of the nonperformance and breach of the conditions of stated bond.

    On May 3, 1878, the City of Boston paid into courtroom the sum of $100,000, and, further, the interest collected to December 1, 1869, and eventually, on February 25, 1880, a further amount for interest in complete. On March 17, 1880, the subsequent claim of the State of Rhode Island was filed through the allowance of the court as of April 15, 1878, after the entry of the interlocutory decree of that date:

    Page 108 U. S. 446

    "And now comes the State of Rhode Island, by using the undersigned, the equal recommend who've regarded for the defendant Clark, General Treasurer of stated kingdom, and, with out prejudice to the demurrer of said General Treasurer, claims the fund within the registry of the courtroom."

    This was signed via counsel.

    On very last hearing, the fund became awarded to the appellees, and from that decree Clark, General Treasurer of the State of Rhode Island, and the State of Rhode Island appealed. The state itself is a celebration to the enchantment bond, which recites that the State of Rhode Island became an intervenor and claimant of the fund in court docket and that a decree was rendered in opposition to it as such.

    The bond finished and introduced by the Boston, Hartford & Erie Railroad Company to the State of Rhode Island is as follows:

    "Know all guys with the aid of those gives that the Boston, Hartford & Erie Railroad Company, a organization created through the General Assembly of the State of Connecticut, is held and firmly bound to the State of Rhode Island and Providence Plantations within the sum of a hundred thousand bucks, to be paid to stated State of Rhode Island and Providence Plantations, to which payment, well and clearly to be made, the said organization doth bind itself and its successors firmly via those provides."

    "The situation of the aforewritten duty is such that whereas, by using an act of the General Assembly of said State of Rhode Island entitled An act similarly to an act entitled an act to ratify and affirm the sale of the Hartford, Providence & Fishkill Railroad to the Boston, Hartford & Erie Railroad Company, handed on the January session, 1869, stated Boston, Hartford & Erie Railroad Company are authorized and empowered to locate, lay out, and assemble a railroad in extension in their line of railroad purchased of the Hartford, Providence & Fishkill Railroad Company, setting out at a point of their said purchased railroad at or close to their freight depot in the City of Providence; thence jogging westerly and northern by using a line westerly of the kingdom s jail, a little easterly of the Rhode Island Locomotive Works, and thence by nearly a instantly line and crossing or strolling near to Leonard s Pond, and thence passing between the

    Page 108 U. S. 447

    Villages of Pawtucket and Lonsdale, and over and above the Providence & Worcester Railroad; thence continuing to the easterly line of the country, in or near the Village of Valley Falls:"

    "Now therefore if said Boston, Hartford & Erie Railroad Company shall complete their said railroad before the first day of January, A.D. 1872, then the aforewritten obligation will be void; otherwise be and remain in full force and impact."

    "In testimony whereof, said Boston, Hartford & Erie Railroad Company have brought about this instrument to be signed via John S. Eldredge, its president, and its corporate seal to be thereto affixed, this twenty-third day of June, 1869."

    "[L. S.]"

    "BOSTON, HARTFORD AND ERIE R. CO.,"

    "By JOHN S. ELDREDGE, President"

    "Executed in presence of --"

    "SAMUEL CURREY"

    "H. S. BARRY"

    The testimony taken in the reason pursuant to the interlocutory decree, it's miles admitted, failed to show any harm or loss occasioned to the State of Rhode Island or to any of its citizens or population by means of purpose of the failure of the railroad organization to conform with the conditions of this bond.

    The first query for willpower on this appeal is that of jurisdiction, raised first by using the demurrer and afterwards through the solution of Clark, General Treasurer of the State of Rhode Island, at the ground that the suit become in effect delivered in opposition to a state by residents of some other state, contrary to the Eleventh Amendment to the Constitution of the USA.

    We are relieved, but, from its consideration through the voluntary appearance of the state in intervening as a claimant of the fund in court. The immunity from in shape belonging to a state, that is respected and protected via the Constitution within the limits of the judicial strength of the United States, is a personal privilege which it may waive at pride, so that in a match, in any other case properly brought, wherein a kingdom had sufficient hobby to entitle it to end up a party defendant, its look in a courtroom of the US might be a voluntary submission to its jurisdiction, at the same time as of route those courts are always open to it as a suitor in controversies among it and

    Page 108 U. S. 448

    citizens of different states. In the present case, the State of Rhode Island regarded inside the motive and provided and prosecuted a declare to the fund in controversy, and thereby made itself a party to the litigation to the whole quantity required for its entire determination. It have become an actor in addition to defendant, as by way of its intervention the proceeding have become one in the nature of an interpleader, in which it have become important to adjudicate the damaging rights of the country and the appellees to the fund, to which both claimed title. The case differs from that of Georgia v. Jesup, 106 U. S. 458, in which the kingdom expressly declined to become a party to the fit, and regarded only to protest against the workout of jurisdiction via the court docket. The situation that the arrival of the country become entered with out prejudice to the demurrer of Clark, the General Treasurer does now not have an effect on the end result. For that demurrer couldn't attain past the question of the proper to sue Clark by purpose of his professional man or woman, which have become insignificant while the kingdom made itself a celebration, and in point of reality the bill was framed to keep away from the objection, via charging Clark as a perpetrator in his individual capability. For the foundation of the invoice, whether it be appeared as directed against the officer or the state, is that the transaction throughout became void as ultra vires the corporation. And this offers the next question to be considered. That query arises and is to be decided upon the subsequent announcement of records.

    The Boston, Hartford & Erie Railroad Company turned into originally created a organisation by using the laws of Connecticut. Its constitution conferred authority upon it in these phrases:

    "Said Boston, Hartford & Erie Railroad Company might also buy . . . the franchise, the complete or any a part of the railway or railway assets of any railroad company located in complete or on this country, whose line or a part of whose line of railway, built or chartered, now forms part of a railway line from the harbor of Boston, passing thru Thompson to Willimantic, and from Providence through Willimantic to Hartford, Waterbury, and thence in the direction of the North River, with

    Page 108 U. S. 449

    the reason of reaching a point at or near Fishkill in the State of New York, . . . and said Boston, Hartford & Erie Railroad Company may also make any lawful contract with some other railway company with which the track of stated railroad might also join in relation to the commercial enterprise or property of the equal, and can take rent of any railroad, or may also hire their railway to, or may additionally make joint stock with, any connecting railway enterprise in the line of, and forming a necessary a part of, and walking within the equal general direction as, their stated direction, and between its terminal points."

    In pursuance of this authority, the Boston, Hartford & Erie Railroad Company purchased the franchises and railroad of the Hartford, Providence & Fishkill Railroad Company. This latter business enterprise became a consolidated enterprise, deriving its lifestyles and powers from the legal guidelines both of Connecticut and Rhode Island, whose avenue, as defined within the acts of incorporation, constituted a line within the widespread description contained in the segment from the constitution of the Boston, Hartford & Erie Railroad Company, already quoted. By a subsequent act of the Legislature of Rhode Island the sale and transfer of the Hartford, Providence & Fishkill Railroad, its property and franchises, to the Boston, Hartford & Erie Railroad Company become ratified and confirmed to date as said railroad changed into located in that state, and it was thereupon in addition enacted that the

    "Said Boston, Hartford & Erie Railroad Company, via that call, shall and might have, use, exercise, and enjoy all of the rights, privileges, and powers heretofore granted and belonging to said Hartford, Providence & Fishkill Railroad Company and be situation to all the duties and liabilities imposed upon the equal through its constitution and the overall laws of this country."

    The Hartford, Providence & Fishkill Railroad Company became without question, thus far as it owned and operated a railroad in the State of Rhode Island, a business enterprise in and of that nation, and the Boston, Hartford & Erie Railroad Company have become its prison successor in that nation as owner of its assets, and exercising its franchises therein, and became consequently in recognize to its railroad in Rhode Island, a company in and of that kingdom.

    Page 108 U. S. 450

    Thereafter, in January, 1869, the Legislature of Rhode Island passed the act out of which the existing litigation has grown, entitled

    "An act in addition to an act entitled An act to ratify and verify the sale of the Hartford, Providence & Fishkill Railroad to the Boston, Hartford & Erie Railroad Company. "

    In its first section, it's miles enacted as follows:

    "The Boston, Hartford & Erie Railroad Company, a organization created by the General Assembly of the State of Connecticut, are hereby legal and empowered to discover, lay out, and construct a railroad in extension of their line of railroad by way of them bought of the Hartford, Providence & Fishkill Railroad Company, starting off at a point of their said bought railroad at or close to their freight depot inside the City of Providence; thence running westerly and northern through a line westerly of the country prison, a little easterly of the Rhode Island Locomotive Works, and thence via nearly a instantly line, and crossing or jogging near to Leonard s Pond (so referred to as), and thence passing between the Villages of Pawtucket and Lonsdale, and over and above the Providence & Worcester Railroad; thence persevering with to the easterly line of the country in or close to the Village of Valley Falls, there to fulfill and connect to a railroad extending westerly thru North Attleborough from the path of Boston, authorized via the Commonwealth of Massachusetts."

    The eighth phase of the act is as follows:

    "Said railroad, while the same shall had been built, will be controlled and protected in all respects in line with the provisions of, and be challenge to, an act entitled An act to contain the Providence & Plainfield Railroad Company, and the several acts in addition to and amendment thereof, and the general legal guidelines of the state."

    The act consequently called the "Act to comprise the Providence & Plainfield Railroad Company" changed into the charter of the business enterprise via that name in the State of Rhode Island, that, by way of consolidation with a Connecticut employer, fashioned the Hartford, Providence & Fishkill Railroad Company.

    Page 108 U. S. 451

    The twelfth phase of the act, recited within the complainant s bill, is as follows:

    "This act shall not cross into impact until the stated Boston, Hartford & Erie Railroad Company shall, inside 90 days from the rising of this General Assembly, deposit inside the workplace of the General Treasurer their bond, with sureties great to the governor of this country, within the sum of $100,000, that they will complete their said avenue before the first day of January, A.D. 1872."

    This act of the Legislature of Rhode Island turned into duly everyday via the stockholders of the Boston, Hartford & Erie Railroad Company; the bond required by way of the 12th phase, as already set out, become performed and brought, and the certificate of indebtedness, in lieu of sureties, became given via the enterprise and everyday by means of the nation.

    It is now argued by means of counsel for the appellees that the celebration which, in most of these transactions, changed into managing the State of Rhode Island, became the Boston, Hartford & Erie Railroad Company, in its person as a business enterprise of the State of Connecticut; that, as such, it had no electricity, underneath the constitution granted by way of that kingdom, to build or very own a railroad immediately connecting Boston and Providence, nor had it, as such, any capacity to acquire a grant of one of these franchise; that therefore everything done or attempted in that behalf became extremely vires and void.

    But the Boston, Hartford & Erie Railroad Company became also a employer of Rhode Island. As such, it owned and operated a railroad inside that kingdom, and had obtained and exercised franchises below its laws, to which it become in all respects challenge. It became the assignee of the street and rights linked therewith, previously belonging to the Hartford, Providence & Fishkill Railroad Company, and it became this business enterprise, residing and appearing in Rhode Island, that the legislature, by the act in question, authorized to exercising the additional powers it conferred.

    If it had had no previous lifestyles as a employer underneath the legal guidelines of Rhode Island, it'd have come to be such by using virtue of the act in question. For although, as a Connecticut organisation,

    Page 108 U. S. 452

    it is able to have had no ability to behave or exist in Rhode Island for those functions, and no capacity by using distinctive feature of its Connecticut constitution to simply accept and exercise any franchises not pondered by using it, but the herbal persons, who were corporators, may as properly be a corporation in Rhode Island as in Connecticut, and, by way of accepting charters from both states, could properly emerge as a company frame, through the same call and appearing through the same corporation, officials, and companies, in every, with such schools within the two jurisdictions as they could severally confer. The same association of natural humans would as a consequence be constituted into two distinct company entities in the two states, acting in every consistent with the powers regionally bestowed, as noticeably as although they had not anything in not unusual either as to name, capital, or club. Such became in truth the case in regard to this organization, so that in Rhode Island it become completely a employer of that state, difficulty to its legal guidelines and capable to do within its territory some thing its regulation may authorize.

    "Nor will we see any reason [as become said by this Court, Mr. Justice Swayne, delivering its opinion in Railroad Company v. Harris, 12 Wall. sixty five, 79 U. S. eighty two], why one nation won't make a organization of any other state, as there prepared and performed, a company of its own, quo ad hoc any assets within its territorial jurisdiction. That this will be executed changed into fairly held in Ohio & Mississippi Railroad Company v. Wheeler, 1 Black 297."

    The identical view became taken in Railway Company v. Whitton, thirteen Wall. 270; in Railroad Company v. Vance, ninety six U. S. 459, and in Memphis & Charleston Railroad Company v. Alabama, 107 U. S. 581, decided at the existing term. The query of the powers of the Boston, Hartford & Erie Railroad Company as a agency in Rhode Island and of the felony effect of its acts and transactions accomplished in that nation is to be decided exclusively by the legal guidelines of that kingdom, and not by the ones of Connecticut, which haven't any force beyond its personal territory. It effects, therefore, that the doctrine of extremely vires, as right here advised with the aid of the appellees, has no vicinity on this controversy.

    Page 108 U. S. 453

    It is, however, advised on behalf of the appellees -- and this become the ground on which the decree below proceeded -- that the obligation required via the statute and given with the aid of the business enterprise turned into a bond, in the penal sum of $a hundred,000, conditioned that the organization could completely build its avenue in the duration confined, upon which no restoration may be had, except for such damages as may be proven to have resulted to the State of Rhode Island from the breach of its situation; that no harm on that account is tested, it being in truth admitted that none sincerely resulted; that the certificate of indebtedness and the fund which has arisen from its fee had been pledged simply, in lieu of sureties, as collateral security for the pride of the bond, and that consequently the declare of the State of Rhode Island against it having consequently failed, that fund reverts to the appellees.

    The proposition of counsel for the appellees, as said through them, is that

    "from a duration at least as early the 12 months 1650 all the way down to the present time, bonds have constituted a awesome elegance of devices, the impact of that's constantly the same, inside the identical experience that the impact of a conveyance to A. and his heirs is constantly the equal. Such is the rule of fairness. Such turned into the effect of the statutes. Consequently, if in a selected case parties have expressed their responsibility within the form of a bond, their legal responsibility is thereby determined to be an responsibility to carry out the circumstance or pay the damages truly sustained from nonperformance thereof,"

    and, as a announcement of the guideline, they cite the following passage, 2 Sedgwick Meas.Dam. (7th ed.) 259, notice:

    "Of course, in this magnificence of agreements as in all others, whilst the contract takes the everyday shape of a penal bond, the sum constant will always be appeared as a penalty, and this might properly be placed on the cutting-edge, at the floor of goal, as derived from the writing itself, for this form of tool is in such not unusual use that persons who inn to it need to be held to have in view its felony effects."

    While this can be familiar as a sufficiently accurate declaration of the overall rule as to bonds with situations designed

    Page 108 U. S. 454

    as an indemnity among personal folks for nonperformance of a collateral agreement, yet in admire to such instances, it cannot be considered as universally proper.

    "It is often a dubious question [stated the Supreme Judicial Court of Massachusetts in Hodges v. King, 7 Met. 583, 587], whether the sum stipulated to be paid at the nonperformance of a condition is inside the nature of a penalty, or is the quantity settled by means of the events for the purpose of making that certain which could be in any other case unsure. . . . The bond has indeed a situation, but that may be a count number of shape and can not turn that right into a penalty which, however for the shape, is an agreement to pay a specific sum below positive instances."

    So that it can not efficaciously be stated to be proper in all such instances that the purpose to treat the sum named in the bond as a penalty to secure the performance of the condition, and to be discharged on charge of damages bobbing up from nonperformance, can be inferred generally of regulation or a conclusive presumption from the mere shape of the obligation.

    Originally at law, in case of breach of the condition of a bond, the amount recoverable was that named in the responsibility. So that if the situation is not possible both in itself or in regulation, the responsibility remains absolute. As

    "if a man be certain in an responsibility, etc., with condition that if the obligor do cross from the Church of St. Peter in Westminster to the Church of St. Peter in Rome inside 3 hours, that then the responsibility will be void. The circumstance is void and impossible, and the duty standeth desirable."

    So, again, if the situation is against a maxim or rule in law, as

    "if a man be certain with a condition to enfeoff his wife, the condition is void and towards law because it is in opposition to the maxim in regulation, and yet the bond is ideal."

    Co.Lit. 206b. So wherein the condition is feasible on the date of the device and will become impossible sooner or later, the obligation does not turn out to be thereby discharged except the impossibility of performance changed into the act of God, or of the regulation, or of the obligee. Accordingly, it changed into held with the aid of this Court in Taylor v. Taintor, 16 Wall. 366, that once someone arrested in a single country on a crook price, and launched under

    Page 108 U. S. 455

    his personal and his bail s recognizance that he will appear on a day constant and abide the order and judgment of the court docket on manner from which he has been arrested, goes into some other nation, and, even as there, is, on the requisition of the governor of a third nation, for a criminal offense dedicated in it, brought up, and is convicted and imprisoned in such 1/3 kingdom, the condition of the recognizance has not become not possible with the aid of act of regulation so one can discharge the bail;

    "the regulation which renders the overall performance impossible, and therefore excuses failure, ought to be a regulation operative in the nation when the responsibility turned into assumed, and obligatory in its results upon her government."

    The ground, nature, and bounds of the jurisdiction of courts of fairness to alleviate against consequences in such instruments is properly stated by means of Mr. Justice Story in this language:

    "In brief, the overall precept now adopted is that, anywhere a penalty is inserted simply to stable the performance or entertainment of a collateral object, the latter is taken into consideration because the essential cause of the tool, and the penalty is deemed only as accent, and therefore as meant best to stable the due performance thereof or the harm certainly incurred by means of the nonperformance. In each such case, the proper test commonly, if now not universally, through which to ascertain whether or not relief can or cannot be had in fairness, is to remember whether repayment can be made or now not. If it can not be made, then courts of fairness will no longer interfere. If it could be made, then, if the penalty is to steady the mere fee of money, courts of fairness will relieve the birthday celebration upon paying the foremost and interest. If it's far to secure the overall performance of a few collateral act or task, then courts of fairness will preserve the bill, and could direct an issue of quantum damnificatus, and while the amount of the damages is ascertained via a jury, upon the trial of such an problem, they will grant alleviation upon fee of such damages."

    Eq.Jur. § 1314.

    And Mr. Adams, in his Treatise on Equity, sixth Am. ed. 107, says, at the same problem:

    "The equity for alleviation against enforcement of consequences originates in the rule of thumb which previously prevailed at law, that, on breach of a settlement secured via penalty, the total penalty might be enforced, with out regard to the damage sustained. The court docket of

    Page 108 U. S. 456

    chancery, in treating contracts as topics for precise overall performance, became certainly caused the realization that the annexation of a penalty did no longer adjust their person; and, in accordance with this view, could not, on the only hand, permit the contracting party to stay away from overall performance through paying the penalty, and, however, could restrain lawsuits to enforce the penalty on a next performance of the settlement itself, viz., within the case of a debt, on payment of main, interest, and charges, or in that of any other agreement, on reimbursement of the actual damage sustained."

    It has accordingly been uniformly held, in cases too severa for quotation, that courts of fairness will no longer interfere in instances of forfeiture for the breach of covenants and conditions wherein there can not be any just reimbursement decreed for the breach, for, as became stated by using Lord Chancellor Macclesfield, in Peachy v. Duke of Somerset, 1 Strange 447; S.C. Prec.Ch. 568; 2 Eq.Cas.Abr. 227, "it is the recompense that offers this Court a handle to supply remedy."

    The software of this precept will become greater appear in instances in which a public hobby or coverage supervenes, as in which, for noncompliance with the aid of stockholders in corporations engaged in undertakings of a public nature, with the phrases of price of installments due as a consequence of their stocks, by using which a forfeiture of the inventory and of all preceding bills thereon has been incurred and declared, the courts refuse to provide remedy. Sparks v. Proprietors of Liverpool Waterworks, 13 Ves. 428; Prendergast v. Turton, 1 You. & Col.Ch. 98; Naylor v. South Devon Railway Company, 1 De G. & Sm. 32; Sudlow v. Dutch Rhenish Railway Company, 21 Beav. 43.

    In the case of Sparks v. Proprietors of Liverpool Waterworks, thirteen Ves. 433, Sir Wm. R. Grant, M.R., stated:

    "The parties might settlement upon any terms notion match, and may impose phrases as arbitrary as they thrilled. It is crucial to such transactions. This struck me as now not just like the case of people. If this species of equity is open to parties engaged in these undertakings, they couldn't be carried on. . . . Why isn't this equity open to contractors for authorities

    Page 108 U. S. 457

    loans? Why won't they arrive right here to be relieved after they have failed in making their deposit? And if they might have comfort, how ought to authorities pass on? It might be just as tough for those undertakings to move on. If reimbursement can't be successfully made, it ought not to be tried."

    Accordingly, where any penalty or forfeiture is imposed with the aid of statute upon the doing or omission of a certain act, there courts of equity will now not intervene to mitigate the penalty or forfeiture, if incurred, for it'd be in contravention of the direct expression of the legislative will. Story s Eq.Jur. § 1326. Lord Chancellor Macclesfield stated, in Peachy v. Duke of Somerset, 1 Strange 477:

    "Cases of agreements and conditions of the birthday party and of the regulation are virtually to be prominent. You can in no way say the law has decided rarely, however you can that the birthday party has made a tough bargain."

    In Powell v. Redfield, four Blatchford forty five, an software was made in equity to restrain suits upon a bond given in pursuance of the revenue legal guidelines of the US, which changed into denied on the floor that a courtroom of equity had no proper to interfere, and, by means of injunction or decree, to truely repeal the explicit provisions of a wonderful statute or defeat their operation within the precise case.

    In Benson v. Gibson, three Atk. 395, Lord Hardwick stated:

    "Nor is it like the case of bonds given as a protection now not to defraud the sales, due to the fact there, wherein a person is guilty of a breach, it's miles taken into consideration in law as a criminal offense, and this court docket will not relieve for this reason."

    The case of Treasurer v. Patten, 1 Root 260, turned into an action for the penalty of a bond given to oblige the defendant to observe the legal guidelines respecting excise, in which there has been a verdict for the plaintiff and the �two hundred penalty. Defendant moved the court, says the record, to chancer stated bond.

    "By the Court. There isn't any strength brief of the legislature can do it, for it's far the sum prescribed via an act of the legislature. "

    Page 108 U. S. 458

    So in Keating v. Sparrow, 1 Ball & Beatty 367, the Lord Chancellor Manners said:

    "It has been argued on the a part of the plaintiff that this Court leans against forfeiture, if the birthday party may be compensated, and that he can in this case, wherein hobby and septennial fines may be given to the owner. That precept is relevant to instances of contract among the events, but not to the provisions of an act of Parliament or conditions in regulation."

    The fact that the obligation is in the shape of a bond to the country does not make its penalty much less a statutory forfeiture, and so outside the jurisdiction of a courtroom of fairness. In the case of United States v. Montell, Taney forty seven, it become held that the sum secured by a bond with sureties, under the Act of Congress of December 31, 1792, c. 1, sec. 7, 1 Stat. 290, conditioned that the registry of a vessel should be used entirely for the vessel for which it's far granted, and need to now not be disposed of to any individual in anyway, and if the vessel be lost, or prevented with the aid of disaster from returning to the port, and the registry will be preserved, or if the vessel be offered, that the registry will be added up to the collector, is a penalty or forfeiture inflicted through the sovereign strength for a breach of its legal guidelines, no longer a liquidated quantity of damages due beneath a agreement, however a hard and fast and sure punishment for an offense, and no longer the less so due to the fact security is taken earlier than the offense is committed in an effort to stable the price of the satisfactory if the law ought to be violated. Chief Justice Taney, in his opinion, stated:

    "Penalties and forfeitures imposed by means of statute aren't typically furnished for by way of bond and protection given in advance. The sum recovered from Montell is recovered upon a settlement; the action became added upon a contract, and turned into no longer and could not were introduced in any of those paperwork which might be usually essential for the healing of fines or forfeitures imposed with the aid of regulation. Yet this sum changed into, in reality, forfeited through Montell, by reason of his violation of a obligation imposed by the act of Congress; it turned into a specific penalty upon the proprietor and master, for the fee of a particular offense towards the policy of that law. And despite the fact that the quantity became secured through bond given for the performance of the

    Page 108 U. S. 459

    duty, yet this obligation turned into a part of the same coverage with different obligations stated inside the act and for which other penalties are inflicted. . . ."

    "It really isn't to be seemed as a bond with a collateral condition, in which the jury are to assess the damages which america shall show that they have sustained, for, in line with that creation, the quantity of damages might now not depend upon the quantity of the penalty defined inside the segment, which is graduated in line with the size of the vessel, however could rely upon the discretion of different juries, and large damages is probably given in which the penalty became handiest 4 hundred greenbacks than in a case wherein the penalty become thousand bucks. This glaringly isn't the aim of the law, and the USA are entitled to recover the complete sum, for which the party is bound, if every body of the situations are broken. Besides, how may want to america prove any particular amount of damages to have been sustained via them in a suit on this bond? What do they lose? It would be tough, we suppose, by means of any course of evidence or any procedure of reasoning to show that the United States had sustained any particular quantity of damages in a case of this description, or to undertake any rule by using which the damages can be measured through a jury, or be liquidated through settlement between the parties."

    "The sum, for which the events are to turn out to be bound is obviously a penalty or forfeiture, inflicted by way of the sovereign power for a breach of its laws. It is not a liquidated quantity of damages due upon a settlement, but a hard and fast and positive punishment for an offense. And it isn't always the less a penalty and a punishment due to the fact security is taken earlier than the offense is dedicated, on the way to steady the charge of the nice if the regulation ought to be violated."

    Recurring now to the precise instances of the prevailing case, so as to the utility of these principles and selections, we are glad that the proper solution of the question now underneath examination is to be determined in two foremost issues.

    The first of these is that it changed into not intended by way of the events, the State of Rhode Island on the only hand, and the Boston, Hartford & Erie Railroad Company on the opposite, that the responsibility

    Page 108 U. S. 460

    given and everyday ought to be for an indemnity towards any loss or damage anticipated to be suffered with the aid of the kingdom, within the occasion that the railroad organization need to fail to construct the railroad as required. It is found as a fact that no such loss or damage has in reality ensued. It is equally simple that none may want to in all likelihood have arisen. The protection isn't always to be extended to any meant damage to personal hobbies legally suffering from the manner of building the paintings. All harm of this type to private men and women turned into cautiously supplied for in different elements of the act. As to the kingdom itself, the actual celebration to the arrangement and contract, it is able to gain not anything in its political and sovereign person with the aid of the development of the road; it is able to lose not anything with the aid of the default. If it may be meant as feasible that the state had in view the general public hobbies of trade and trade inside the production of the proposed railroad, and supposed to provide for loss and harm to them with the aid of purpose of its failure, the obvious solution is that no computation and assessment of real damages on that account might be possible, leaving as the alternative that the country, in fixing the penalty of the bond within the statute, had set up its very own degree of the general public loss. The question of damages and reimbursement became no longer, as it couldn't have been, in contemplation of the parties. There become no room for supposing that there may be any. To anticipate that the statute required this bond and safety in this feel, in complete view of the legal conclusion which it is said necessarily flows from its shape, and that within the occasion pondered, of the failure to construct the road, all that remained to be finished became that the kingdom have to hand again cancelled the duty and security it were at such pains to genuine, is to position upon the transaction an interpretation altogether inadmissible. It would have been, upon such an assumption, a useless and mindless factor, and but private folks may be once in a while presupposed to act improvidently, we aren't to put such constructions, while it's miles legally possible to avoid them, upon the planned and solemn acts and transactions of a sovereign electricity, performing through the varieties of legislation. The conclusion, in our opinion, can't be resisted that the purpose of the events within the transaction in question changed into that if the railroad have to

    Page 108 U. S. 461

    not be constructed in the time confined, the company should pay to the country, truely and for its own use, the sum named inside the bond and secured by using the deposited certificate of indebtedness. The supposition is not open that the penalty became prescribed merely in terrorem, to stable punctuality in overall performance, with the reserved goal of allowing subsequent performance to condone the default, for a distinct section of the statute (sec. nine) announces that in case of failure to complete the road within the time restrained, the act itself should be void and of no impact.

    In the second region, we suppose that the sum named within the statute is imposed by using it as a statutory penalty for the nonperformance of a statutory obligation. The duty required is that the railroad corporation shall give a bond, with high-quality security, that they may obey the regulation; that they'll entire their street as required by means of it. The language clearly means that in case they fail to achieve this, they shall forfeit and pay the sum named, and so one can insure its price, extra parties to the bond, as sureties, are required. It is admitted that if it does not imply this it does no longer imply anything, and we've got already stated that we aren't at liberty to adopt that opportunity. We should construe it ut res magis valeat quam pereat, and the guideline of strictness, in the construction of penal statutes, does now not require an interpretation which defeats the very item of the regulation. The State of Rhode Island was handling certainly one of its own businesses, and it had best right to behave upon its own coverage and prescribe its personal terms, as conditions of powers and privileges sought from its authority.

    For these reasons the decree of the circuit court docket is reversed, and the motive is remanded, with commands to go into a decree in favor of the State of Rhode Island for the sum of $one hundred,000, payable out of the fund in courtroom, with a lot hobby thereon, if any, as has accrued on that sum because the first day of January, 1872, which is the date whilst the amount became due.

    And it's miles consequently so ordered.

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