155 case. If the former decree settled the independence of this contract, it settled it only with reference to whether its terms or provisions were distinct from the terms or provisions of those contracts which were crystallized into the territorial judgments1and not whether the contract was distinct from the others as to its consideration, or as to the motives which induced it, to such an extent that, if either party was deprived of the right to enforce it, he should not have indemnification for his loss arising from such dl>privation as a matter connected with the right of the parties arising from the other contracts. It must be borne in mind that the question presented is not whether the cross complainant is entitled to the redress sought by his cross bill, but whether he is prevented from urging his claim for such redress by the force of the previ. ous judgment between these same parties. My conclusion is that the plea must be adjudged to he insufficient. The respondents to the cross-bill may have until the next rule day in which to answer the bill.
MVERStl. HAZZARD
et ale
COircuit Oourt. D. Nebraska. 8eptember, 188Ll 1. CHATTEL MORTGAGES-NEGOTIABLE INSTRUMENTS-BoNA !i'rnE PORCHA.II..
A bona fide purchaser before maturity of negotiable notes secured by a chattel mortgage given by one having the legal title to the chattels takes both notes and mortgage freed from the claims of the assignee in bankruptcy of a third person, who has an undisclosed interest in the chattels and notes. The chattels being still in the hands of the mortgagor at the time the notes were purchased, the fact that the assignment walJ made prior thereto does not al!ect the purchaser's rights under the mortgage, as the property was not in CU8todia l$, so as to al!ect him with constructive notice.
B. SAM_BANItRUPTCY.
.
8.
NEGOTIABLE INSTRUMENTS-LIS PENDENS.
The doctrine of H, penden8 does not apply to negotiable paper, and a bmm ftiJ,e purohaser thereof before maturity takes a perfect title, although a suit to enjoin negotiating the same is pending at the time.
Bill in equity, brought by complainant, as assignee in bankruptcy of George Hazzard, to set aside as fraudulent certain promissory notes, and a mortgage given to secure them, upon a herd of cattle, and to subject the interest of the bankrupt in said cattle to the payment of the debts of the bankrupt estate. The bankrupt was at the time of his bankruptcy undoubtedly the owner of'a large interest in the herd of cattle, and comall the plainant was clearly entitled to recover that interest as Pllrties concerned except respondent Coates, who claimed to be an inno. cent purchaser without notice of the negotiable promissory notes above mentioned, secured by mortgage upon the cattle, under which mortgage he had taken possession. The cattle being beld in the name of the firm in fact in part owned by George Hazof Foster & Struthers, but zard, were mortgaged to John W. Hazzard to secure a number of negoti. able promissory notes, with the understanding that said John W. Haz-
156
FEDER"-L REPORTER.
vol; 50.
lArd, should negotiate the notes, and out of their proceeds pay It. certain prior incumbrance. These notes and the mortgage secnringthem were executed January 31, 1879, all the parties to the transaction being at that time aware of the interest of George Hazzard. Notice of application for order. of injunotion against disposing of the notes and mortgage in this suit then pending was served upon John W. Hilzzardat North Platte, in Lincoln county, Neb., ort the day of March, A. D. 1879, was served on George Hazzard at Indianapdlis, in the state of Indiana,.the day of ,1879. Thereupon George Hazzard returned to the state of Nebraska, and procured John W. Hazzard to go to the city of Chicago, in the state of Illinois, and employed one H. W. Babb, of North Platte, Neb., to go with him, and answer such questions as should be put to him in regard to the laws of Nebraska. The purpose ,of such journey was to make It disposal of said securities, and John.W. Hazzard and H. W. Babh left North Platte about the 30th of March, 1879, and arrived at Chicago on the evening of April 1, 1879. Injunction was allowed in this cause, restraining, etc., on the 31st day of March, 1879, bnt not served on JohoW. Hazzard. John W. Hazzard sold said notes and mortgage at Chicago on the 3d day ofApril, 1879, for $22,000, to Isaac P. Coates, the defendant. A large volume of proof was taken upon the question whether Coates was a bonafide purchaRer of the notes before maturity and without notice, and the question was elaborately discussed by counsel. A further question was also presented, to wit, whether, if Coates be a bonafide purchaser of the notes before maturity and without notice, he is to be protected in his right to the mortgaged property as against the claim of the assignee in bankruptcy of George Hazzard. The master found that Coates was an innocent purchaser, and that he. was entitled to the benefits of the mortgage· security. The case was .heard on exceptions to the master's report. Chapman &- Hammond and Lamb, Billingsley &- Lambertson, for complainant. E. Wakeley, for respondent Coates. MCCRARY, Circuit Judge. It will be observed that this case presents an important question of law respecting the rights of the bona fide purchaser of commercial paper secured by mortgage. Assuming that Coates wassneh a purchaser, and that he had no notice of the fraud, (and such the court finds to be the fact,) the case turns mainly upon the question, which has been elaborately argued by counsel, whether he is to be regarded in the light also of an innocent bona fide purchaser of the mortgage, so as to have the right to enforce it as against the assignee in bankruptcy of George Hazzard. The question to what extent, and under what circumstances, the bona fide purchaser of negotiable commercial paper secured by mortgage is entitled to the ·benefits of the mortgage security, unaffected by equities existing as between the original parties, is one of great and growing importance. It is now well settled that the mortgage is only an incident
llYERS t7. HAZZARD.
157
to the debt, .ll.nd passes with it to the assignee. No formal assignment The debt is the principal thing, and the of the mortgage is mortgage an accessory, so .that the assignment of the debt passes all the mortgagee's interest in the mortgaged property, whether the assignment be before or after the forfeiture. Langdon v. Buel, 9 Wend. 80; Gould v. Marsh. 1 Hun, 566; Johnson v. Hart, 3 Johns. Cas. 322; Ellett v. Butt, 1 Woods, 214; Gaff v. Harliing, 48 Ill. 148; 1 Jones, Mortg. §§ 813-822, and cases cited·. Where there is no question as to the validity or construction of the mortgage, or as to the title of the mortgagor as between the original parties to the instrument, there can be none, of course, as between the mortgagor and the assignee of the secured debt. The cases of doubt and difficulty arise where, as between the original parties to the mortgage, there isa question as to its validity, or as to its force and effect, independent of any question affecting the note, or where a third party claims the mortgaged property and denies the authority of the mprtgagor to fasten a lien upon it. In such cases, to what extent can the innocent, bona jide purchaser of the note before due be regarded as an innocent purchaser oftha mortgage also, and entitled to protection accordingly against equities existing as between the original parties? We are confronted in the outset by a conflict of authority upon the principal question. In several of the states it is held that the assignee of a negotiable note, secured by mortgage, takes the latter, as he would any other chose in action, subject to all the equities which subsisted against it while in the hands of the original holder. The argument in support of this doctrine is that a mortgage is in its nature a nonnegotiable in.strument, and that the rights of the parties to it cannot be fixed and determined by the law merchant. Mortgages. it is insisted, are not commercial paper, and it is not convenient to pass,them from hand to hand, so that they may perform the office of money in commercial transactions, as may be done with notes, bills, and the like. It is accordingly held, in t1:;le cases now under consideration, that while the purchaser of a note secured by mortgage may be entitled to all the rights of an innocent purchaser of commercial paper, so far as the note is concerned, yet. if he seeks to foreclose the mortgage, he may be met by any defense which would have been good as against the original mortgagee. Johnson v. Carpenter. 7 Minn. 176, (Gil. 120;) Hostetter v. Alexander. 22 Minn. 559; Olds v. Cummings,31 Ill. 188; White v. Sutherland, 64 Ill. 181; Fortier v. Darst, 31 Ill. 212; Sumner v. Waugh, 56 Ill. 531; Baily v. Smith, 14 Ohio St. 396. On the other hand, it is held by the supreme court of the United States, and by the courts of last resort in a large majority of the states, that an assignee for mIne of a negotiable note secured by a mortgage, before due and without notice, takes the mortgage, as he does the note, free from equities existing between the original parties. It is said, in support of this doctrine, that the note, being the principal thing, imparts its character to the mortgage. The mortgage is regarded as following the note, and as taking to itself the same qualities, so that the assignee takes the former, as he takes the latter, free from any existing equities between the original parties. A leading case upon this subject,
158
J'ZDERALREPORTEB,
vol 50.
tlnd r «:ijo'tltrdl1ing' sofar:asthe·fedemloOurts are cOncemed, is that '01 Lcmgctn, ,16 Wall. 271.: In that caSIJ the rule ju'st stated witslaid'do"'J.l by Mr. Justiee,SWAYN1US follows: of a note underdueraises the presumption of the want of notice, and this presumption stands until it is overcome by sufficient proof. . The calle is a different one from what it woul(f be if the mortgage stood a)one,or the note was or' hadbe,el1 assigned after ma. The question presented fOl' whether an assignee, under, the circurn,stances of this case, takes the as he takeR the note, free from the objections to which it was lia.ble in the hands of the mortgagee. We hold the atIiriliative. The contract as regardS' 'the note was that the makt>r should pay it at maturity to any buna fide indorsee, without reference to any defenses, to which it .might have been liable in the hands of the payee. The mortgage was conditioned to secure the fulfillment of that contract. To Jet in sucha.l,lefense against such a holder would be a clear departure from the agreement of the mortgagor aodmortKagee, to which the assignee subsequently in good faIth became a party. If the mortgagor desired to reserve such an an advantage, he should have given a nonnegotiable' instrument. If one of two innocent persons must suffer by a deceit, it is more consonant to reason that he who ·puts trust and confidence in the deceiver should be a loser, rather than a stranger.' .. In order to understand the scope of this opinion, it is necessary to note that the defense in the case as against the mortgage was, in substance, that, as between the original parties, it had been satisfied. The mortgagor alleged that at the time of the execution of the mortgage she delivered to' the mortgagee certain property, which he agreed to sell, and apply the proceeds to the satisfaction of the note, and that, instead of so doing, he converted the property so delivered to his own use. The sole question was whether the equitable satisfaction of tha mortgage in this way could be set up as against the assignee. This case is not,therefore, as some lawyers have assumed, authority for the doctrine that the bona fide purchaser, without notice, of a negotiable uuderdue note, secured by mortgage, holds the mortgage precisely as he holds the note, subject to no delElDses whatever that would not be good against the latter. In that case there was no question 8S to the title of the mortgagor at the time that the mortgage was given,nor as to the rights of any third party with respect to the mortgaged property, nor as to the validity or construction of the mortgage itself. It seems manifest that it was not the intention of the court to assert broadly the rule that, because a mortgage is given to secure a negotiable note, which, before maturity, is assigned to a bona fide purchaser, therefore no objection can be raised to the mortgage, unless it would be an objection constituting a defense to the note in the handS of such a purchaser. The court decided the case before it, and was careful to qualify its opinion by the words, "under the circumstances of this case."The general rule announced in Carpenter v. Longan has been adopted in Massachusetts, Maine, Michigan,Wisconsin, Nebraska, Iowa, Missouri, and other states. See Jones, Mortg. § 834, and numerous cases cited. .But the doctrine has not yet been established as the law of New York or Pennsylvania. Union OoUeg8V. Wheeler, 61 N. Y. 88; Hvr8man v. Gel'ker, 49 Pa, St. 282.
one,
lfYERB 11. HAZZARD.
159
For our.present purposewt' will assume, as we are ,hound to do, the soundness of the general rule announced in Chrpenter v. Longan, and similar cases, and address ourselves to the task of determining, if we Can, its true meaning and its proper limitations. the general language:employed in some of the cases might seem to justify the inference a mortgage transferred with a negotiable note before due is to be for all purposes as commercial paper, it is manifest that the rule thus l;lroadly stated cannot be mainmined upon principle. In many of the cases the rule is stated to be that the mortgage· is regarded as following the note, and as taking the same character; but it must, of course, be .understood that the mortgage takes the character of a negotiable note only in so far as in its natute it is capable of having that characterJmputed to it, and the ;rule must be subject to certain modifications or exceptions. In any suit brought by the assignee of the, note tQ foreclose the mortgage, the mortgagor may be beard to assert that the mortgage is invalid as to all or part of. the property, by ,reason of anything that appears upon the face of the mortgage, or by reason of anything that the assignee is bound by law to know, whether the same constitutes a defense to the note or not. A third party may be heard to Rssert, as against the validity of such a mQrtgage in the hands of the assignee, that the mortgagor, at the time of the execution of the mortgage, had no power to execute it. ,The ,mortgage in the hands of the assignee, like the note, is freed from equities existing as between the original parties. This being so, no defense to the mortgage, on, the ground of fraud, duress, or want of consideration, could be admitted as against the assignee; nor could the defense of payment or satislaction, nor of a release of the mortgage, as between the original parties, nor of any other similar matter, be set up. But there may, beyond question, be defenses to a mortgage in such a case that cannot be defensesto the note,-defenses the force and effect of which cannot be determineil by an appeal to the principles of the law merchant. Of this character are objections which relate to, and in the nature of the case <\an only relate to, the mol'tjl.age, its construction, validity, or force and effect. They may be objections which third parties only are interested in raising. ·W cannot give to, the mortgage all the properties of negotiable paper j nor apply to it all the principles of the law merchant, without '8. disregard 9f 'eleIXlentary principles. A few examples may serve to illustrate this, proposition. There. are in most, if not in all, of the states" statutes.. designed for the protection of the homestead rights of the family of the owner. These statutes generally provide that a mortgage executed by the husband alone, without the concurrence of the wife, be void. If, in a state where such a statute prevails, the husband executes his negotiable note, and a mortgage to secure the same, the wife's concurrence, upon the homestead occupied by himself and family, there can be no reasonable doubt that the mortgage would be void, even in the hands of a bona fide purchaser of the note before due. Tpe of the mortgage would be bound to inquire whether the property mortgaged was a homestead, and would have con-
FEDERAL REPOR:TER,
vol. 50.
sttuetivenotioe that it was occupied as such; while the purchaser of a. negotiable note is not bound to make any inquiries, but, 6nthe contrary, ag we shall presently see, is protected unless he acts in bad faith. A similar question may arise where the mortgagor has the legal title, but where a third party is in possession, claiming an interest. In such a. i}ase the possession of the third party would be notice of his claims, and a purchaser or mortgagee would take subject to Doubtless the assignee of the mortgage debt would take the mortgage with like notice; but, if so, he would not be protected to the same extent and in the same way. as a bona. fide purchaser of negotiable paper before due. It is probable that another modification of the general rule we are considering must be admitted in cases arising out of the entry of satisfaction by a mortgagee after he has assigned the debt secured by the mortgage. If we are to apply the rule strictly, it will follow that, in the absence of a statute requiring assignments of mortgages to be recorded, the purchaser of ' the mortgaged property is bound to inquire whether the mortgagee is still the holder olthe notes before relying upon a release of the mortgage by him. This upon the ground that in such a case the notes are the evidence of the authority of the mortgagee to enter satisfaction of the lien, and so it has been held. Catherwood v. Burrow8,'7 Reporter,492; Crosby v. Raub, 16 Wis. 616; Martineau v. Mc()ollurn,4 Chand. 152; Cornell v. HiChens, 11 Wis. 353; 1 Jones, Mortg. § 314. It' would seem that the rule laid down in these cases results very naturally from the doctrine that an innocent purchaser of a negotiable note, secured by mortgage, is an innocent purchaser of the mortgage also, and takes it unaffected by any equities between the mortgagor and mortgagee. And yet it has not been ad{)pted with unanimity. On the <lontrary, it has been held frequently that an assignment of the mortgage by transfer of the debt is effective only as between the parties and those having notice of the transfer of the notes. It is said with much force that a subsequent purchaser of the mortgaged property is not bound to take notice of the assignment by transfer of the notes alone. "The assignee of the notes ca.n easily protect himself by requiring an assignment of the mortgage,and recording it, and thus give notice of his right; and, if he omit to do this, he should be the party to suffer for the negligence." 1 Jones, Mortg. § 820; Bank v. Ander8on, 14 Iowa, 559; Ayer8 v. Hays, 60 Ind. 452. The dootrine of these cases may well be maintained upon the principles of equity that, where one of two innocent persons must suffer loss, and one of them has been negligent and the other diligent, the former shall suffer. But the application of this rule presupposes that the purchaser of the notes is chargeable with negligence in not obtaining an assignment of the mortgage, and placing the same upon the record, which can scarcely be true if, by the purchase of the notes, he becomes entitled to the mortgage without an assignment, and is to be protected in his rights under it against every defense that would not be good against the notes. The difficulty lies in the attempt to treat a mortgage for all purposes as commercial paper. Perhaps the
MYERS 'V.
161
question most frequently arises in cases involving the rights of third parties in and to the mortgaged property. 'These cases generally present, in some form, the question of the title of the mortgagor, or of his right to bind the property by the mortgage, or a question of priority as between the different lienholders. The general rule is that the mortgage binds only the interest of the mortgagor at the time ofits execution; but an important exception arises in those cases where the mortgagor, though not the owner in fact, is vested with the legal title and the ostensible ownership of the property mortgaged, so that the real owner is estopped to assert his right to it as against a mortgagee in good faith, for a v81uable consideration, and without notice. For the purposes of this dOlltrine, a mortgagee is a purchaser, and the question whether he is an innocent purchaser, without notice, will be determined by the familiar principles applicable to all other purchasers. It would seem, also, to fol· low, as a necessary consequence of the prevailing doctrine, that the assignee of the mortgage, whether by a formal assignment or by purchase for value before maturity and without notice, of the note which it secures, is to be regarded also as a purchaser of the property within the rule. Keeping these rules in view, we shall have constantly in mind the principles upon which to determine every case in which the title of the mortgagor is sought to be attacked by a third party. The application of this doctrine may be illustrated by the case of a trustee in possession, and having all the insignia of title, but who. in fact, holds in secret trust for a third party. If such a trustee executes a mortgage for a valuable consideration to an innocent mortgagee, who takes it, and advances money or gives credit upon the faith of it, the real owner will be estopped to question the validity of the mortgage in the hands of the mortgagee or his assignee, on the ground that the mort..; gagor was not the owner. ouch mortgagee, as we have already seen, is a purchaser; and it is well settled that where a trustee in possession of the trust estate makes a bona fide conveyance of it, for a valuable consideration,. to a purchaser who has no notice of the trust, the title of purchaser will be good both at law and in equity, for he has equal equity with the cest'ui que trust, and the legal conveyance gives him priority at law. Hill, Trustees, 282, 509, et seq. - Another numerous and important class of cases arises out of conveyances made without consideration, and with intent to defraud creditors. The grantee in all such conveyances takes the property in trust for the grantor or his creditors; but, inasmuch as he is clothed with the legal title, he may make a valid mortgage, for a valuable consideration, to a third party, who has no notice of the fraud or the trust; and in such a case neither the original owner nor his creditors, though the latter be entirely innocent, can set aside the mortgage on the ground that the mortgagor had no title to mortgage. The original owner is estopped because of his fraudulent act in vesting the title in the mortgagor; the creditors are estopped because their equity is not superior to that of the mortgagee, and' for the additional reason that the latter holds under one who had the legal title. If, however, a creditor has, before v.50F.no.2-11
v:01
50.
the Iborflgll.geis set aside: tbefra.udulent con., veyance: aluHo subject th.eproperty totbe pa3-tlllm,t olthe· debts of the fraudnlent\graJ;}tor, thena.1question of more difficulty may.,ame. It is,genera.lly; :howev:er, one, which,resoh'es itselfsimply intp a question of notice, and.it:will hlgeneral be determined by settling the qnestion whether the, mortgagee is a purchaser for value and without noticE\. If the:creditor has instituted· legal proceedings to. set aside the salE' before tbeexecutionof the mortgage,the question will be whether the mort· gagee'hadeitheractual'or constructive notice of such proceedings. It is!lheld that. where a fraudulent mortgage is given to secure a negoti. able promissory. note,void as between the parties, if a creditor or assignee iniIisolvency seizE's the property and: files a bill to set aside .the the assignment of the'note.,andmortgage, the assignee, though ,be:takes fora good consideration and without actual notice, cannot h6ldtbe property. If,. however, .the purphaser of the note and the morigag4f\ had1 1lcquired title.ingood faith lllnd·far· a valuable considera. tion:before any steps had .beentaken to avoid the mortgage,he· would ha....e' stood on a different'ground.,:,Jones, Chat, Mortg;. § 508j Bigelow v. 'Smith l 2 Allen, 264·. .In, making the application6f these rules, it will be found necessary to (j)'bserVe.the distinction' between mortgages of real estate and mortgages propel'ty·. The general principles above indicated apply alike to all mortgages, but the, particular rules by which the questions as to.1Il0tice and as to what eonstitutes,as to purchasers ormortgageea, suffieient·evidence of title in.the mortgagor; may not be the same. or mortgagees Qii. real estate inay, ordinarily, rely On the record title, while purchaserS! or mortgagees of, personal property must, as. a. rule, take the chanceeas to· the vendor's title. If a negotiable promissory. note, secured by,-mortgage upon .personal property, be as. signed for value, before maturity,. to a purchaser without notice, to what extent i1! such: purchaser bound to inquire as to the title of the mott;.. gagor; to1:he"mortgaged As, for example, suppose the case insolvent,who, ·in contemplation of bankruptcy, fraudulently transferS! hi5· t>ersonalpropetty to another to keep it from coming into the hands of his assignee .in .bankruptoy, and thereafter. goes into bankruptcy;, inaueha case itis, ofdourse,clear, that the assignee could re. cover the, property from tbefrandulent vendeej but if he has it to secure 'R:ilegotiablenote,which is transferred before due to an innocllnt purohaser for."alue,will the latter be protected as claims of the assignee? . Each case involving. questions of this character must be dete;rmined upon the rule above stated, viz., that the assignee of thenote.ie to be regatde<ilas a purchaser Of the mortgaged property fr6m the mortgago.r, be protected to the extent that any other purchaser;.\Vould be protected, nnd to that extent only. The purcbaser of personaLproperty from a fraudulent vendee, in good faith and without notice Qfthefraud, is una:f:liected by the equities of 'third parties of which he has no notice.·, :Ta/erell's ,A88ignee Harrell, 1 Woods. 476; PraU v.Ourtis, 6 N. B. R. 139. Applying this rule to the case of the
MYERS V.HAZZARD.
163
assignoo'ofanegotiable natE!;" secured by,1nortgage upon personal property, under such circumstances as to malte him the purchaser of the property; we reach the contllusion that iDsuch accase as that last stated he is entitled to protectioo. Our conclusions in this case are as follows: 1. The respondent Isaac P. Coates is a bona fidt purchaser of the notes described in the pleadings, before maturity and without notice, within the rule established by the decision of the supreme court olthe United States in Murray v. Lardner, 2 Wall. 110, and he is entitled to protection accordingly. 2. The said respondent Coates, as the bona fidt purchaser of said notes beforematurity and without took the mortgage.,as he did the notes, freed from equities arising' between the previous parties thereto. and also freed from any latent equity existing complainant at the time of the assignment of the notesbf which he, said Coates, had no notice. Oarpenter v. Longan, 16 Wall. 271; Murrayv. Ly7hurn, 2 Johns. Ch. 441. 8. The said Coates, lls,theassignee of said notes and mortgage, under the circumstances developed in proof, is, entitled to the same, pl,'oteetion that would be accorded to the purchaser of property from a fmud. uhmt vendee, in good faith and without notice of the fraud. Such a purchaser would be unaffected by latent equities of third partips of which he had no notice. JarreU's A8bignee v. HarreU, 1 Woods, 476; Pr;att ,v. Ourtis, 6 N. B. R. 139. 4'. The title of Coates to the notes, and his protection as a bona fide purchasElr, was not affected by the pendency of this suit. Negotiable instrument& are not subject to the rule of lis pendens. Wade, Notice, § 372; Day v. Zimmerman, 68 Pa. St. 72; KeUogg v. Fancher, 23 Wis. 21. 5. Since at the time of the assignment of the notes and mortgage to Coates the mortgaged was not in custodia legis, but was in the possession of the mortgagors, the same was not, in the hands of Coates, subject to the result of this suit, nor was he charged with notice of thig suit. 6. Property held in the name of John W. Hazzard atthe time George Hazzard was adjudicated bankrupt did not ipso facto vest in the assignee in bankruptcy. There existed in the latter only the right to recover it upon making proof that it was in equity the property of the bankrupt. This right the assignee was bound to exercise before the transfer of the property to a bona fide purchaser without notice of his claim. After such transfer he cannot recover it from such purchaser. The assignee of the notes and mortgage (Coates) was such a purchaser, or, if not technically such, he is entitled to the same protection. 7. The rights of Coates, as purchaser of the notes in question, are not affected by the fact that said notes were in equity the property of George Hazzard, or of his assignee in bankruptcy, nor by the fact that the notes in lieu of which they were executed may have been indorsed in blank and delivered to said George Hazzard. The purchaser, in goood faith and without notice, of negotiable notes before maturity from the payee, is entitled to protection.
FEDERAL
vol. 50·
CoPP. ". LoUISVILLE & N. Ry. Co. (CirCUit Oourt, E. D. LowLstana. April 21, 1899.) L LnnTATJO'l(!':"'.!.l'PLICATJON OP BTATII
8uTriTJls. Under .· 5t;. U. S. § 721, when congr"ss create. a new right of &Otlon, without providing any limitation thereto, the st.a.te statutes of limitations apply, and are binding upon the United States courts. .' ,
.. B.um-'1NTERST.lTIII OOMMERCE-SUIT'POR DISCRIMINATION.
Tll.e right of action created by the interstate commerce act, (24 St. p. 380, §§ 8, 9,) In favor of the party against whOm discrimination is made in the charges for the transportation of merchandise, comeBwithin Rev. Civil Code art. 3586, prOViding .limitation of ,one year to actions for resultmg from quasi o:t!enses.
At Action by Frank,!,. Copp against the Louisville & Nashville Railway Company to recover an amount paid for freight in excess of that pall! by others for similar service. New trial,granted· .B. R. Fornian, for plaintiff. . ' Bayne. & for defendant.
J Jldge. -The plaintiff has brought a suit under the act .of the Commero6;Act," (24 St. U. S. p. 380, §§ 3, 9,) to recover the amount of freight paid by him to the defendant iQ eX{;ess of that paidtolt \ly others for similar service. An exceptiop ,file4 by the . interposing the plea of the limitst.it;lp Qf prescription in force unde.rtlw; st;atuteof the. state of Louisiana. The upon is Rev. Civil,:Code, art. 3586, which provides that "the actions are alsl;) prescribed by one year: That for injurious words, ,whether verbal or written, and that for damages caused by animals, or resll}ting from offenses Qrquam. offenses." It is claimed by the .defendant that this is an actipn for aqu<Ui offense, alld it is controlled by the state statute. Code Prac. art. 28, declares that "personal actions are grounded on four causes: Contracts, quam. contracts, offenses, and quasi offensesi" and article. 32 further defines personal, actions arising from to be' when .the grouo.d of action is the injury dODe to an· other by, one of those faults which are not considered 8S real crimes or Qfl'enses. It has not been.questioned,and 1 think cannot be questioned, that the fault complained of by,.the plaintiff is included within the nition of "quasi offenses." , ,