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determination of this case by the Circuit Court, bas given judgment in two cases adversely to the judgment in this, and to the views above expressed. The first case was that of Griswold v. Seligman, decided in November, 1880; the other, that of Fisher v. Seligman, decided in February, 1882, in which the former case was substantially followed and confirmed. The case of Griswold v. Seligman seems to have been very fully and carefully considered. We have read the opinion of the court and the dissenting opinion of one of the judges with much attention, but we are unable to come to the conclusion reached by the majority.

We do not consider ourselves bound to follow the decision of the State court in this case. When the transactions in controversy occurred, and when the case was under the consideration of the Circuit Court, no construction of the statute had been given by the State tribunals contrary to that given by the Circuit Court., The Federal courts bave an independent jurisdiction in the administration of State laws, co-ordinate with, and not subordinate to, that of the State courts, and are bound to exercise their own judgment as to the meaning and effect of those laws. The existence of two co-ordinate jurisdictions in the same territory is peculiar, and the results would be anomalous and inconvenient but for the exercise of mutual respect and deference. Since the ordinary administration of the law is carried on by the State courts, it necessarily happens that by the course of their decisions certain rules are established which become rules of property and action in the State, and bave all the effect of law, and which it would be wrong to disturb. This is especially true with regard to the law of real estate and the construction of State constitutions and statutes. Such established rules are always regarded by the Federal courts, no less than by the State courts themselves, as authoritative declarations of what the law is. But where the law has not been thus settled, it is the right and duty of the Federal courts to exercise their own judgment; as they also always do in reference to the doctrines of commercial law and general jurisprudence. So when contracts and transactions have been entered into, and rights have accrued thereon under a particular state of the decisions, or when there has been no decision, of the



State tribunals, the Federal courts properly claim the right to adopt their own interpretation of the law applicable to the case, although a different interpretation may be adopted by the State courts after such rights have accrued!! But even in such cases, for the sake of harmony and to avoid confusion, the Federal courts will lean towards an agreement of views with the State courts if the question seems to thein balanced with doubt. Acting on these principles, founded as they are on comity and good sense, the courts of the United States, without sacrificing their own dignity as independent tribunals, endeavor to avoid, and in most cases do avoid, any unseemly conflict with the well-considered decisions of the State courts. As, however, the very objeot of giving to the national courts jurisdiction to administer the laws of the States in controversies between citizens of different States was to institute independent tribunals which it might be supposed would be unaffected by local prejudices and sectional views, it would be a dereliction of their duty not to exercise an independent judgment in cases not foreclosed by previous adjudication. As this matter has received our special consideration, we have endeavored thus briefly to state our views with distinctness, in order to obviate any misapprehensions that may arise from language and expressions used in previous decisions. The principal cases bearing upon the subject are referred to in the note, but it is not deemed necessary to discuss them in detail.1

1 McKeen v. Delancy's Lessee, 5 Cranch, 22; Polk's Lessee v. Wendal, 9 id. 87; Thatcher v. Powell, 6 Wheat. 119; Preston's Heirs v. Bowmar, id. 580; Daly's Lessee v. James, 8 id. 495; Elmendorf v. Taylor, 10 id. 152; Shelby v. Guy, 11 id. 361; Jackson v. Chew, 12 id. 153–168; Fullerton v. Bank of United States, 1 Pet. 604 ; Gardner v. Collins, 2 id. 58; United States v. Morrison, 4 id. 124; Green v. Neal's Lessee, 6 id. 291; Groves v. Slaughter, 15 id. 449; Swift v. Tyson, 16 id. 1; Car. penter v. Providence Washington Insurance Co., id. 495 ; Carroll v. Safford, 3 How. 441; Lane v. Vick, id. 464; Rowan v. Runnels, 5 id. 134; Smith v. Kernochen, 7 id. 198; Nesmith v. Sheldon, id. 812; Williamson v. Berry, 8 id. 495; Van Rensseluer v. Kearney, 11 id. 297 ; Webster v. Cooper, 14 id. 488; Ohio Life Insurance & Trust Co. v. Debolt, 16 id. 416; Beauregard v. New Orleans, 18 id. 497; Watson v. Tarpley, id. 517; Pease v. Peck, id. 595; Morgan v. Curtenius, 20 id. 1; League v. Egery, 24 id 264; Suydam v. Williamson, id. 427 ; s. c. 6 Wall. 736; Leffingwell v. Wurren, 2 Black, 599; Mercer County v. Hacket, 1 Wall. 88; Gelpcke r. City of Dubuque, id. 175; Seybert v. Pittsburg, id. 272; Havemeyer v. Iowa County, 3 id. 294; Thomson v. Lee County, id. 327; Christy v: Pridgeon, 4 id. 196; Mitchell 7. Burlington, id. 270; Lee County v. Rogers, 7 id. 181; Butz v. City of Muscatine, 8 id. 576; The City v.

In the present case, as already observed, when the transactions in question took place, and when the decision of the Circuit Court was rendered, not only was there no settled construction of the statute on the point under consideration, but the Missouri cases referred to arose upon the identical transactions which the Circuit Court was called upon, and which we are now called upon, to consider. It can hardly be contended that the Federal court was to wait for the State courts to decide the merits of the controversy and then simply register their decision; or that the judgment of the Circuit Court should be reversed merely because the State court has since adopted a different view. If we could see fair and reasonable ground to acquiesce in that view, we should gladly do so ; but in the ex-, ercise of that independent judgment which it is our duty to apply to the case, we are forced to a different conclusion. Pease v. Peck, 18 How. 595, and Morgan v. Curtenius, 20 id. 1, in which the opinions of the court were delivered by Mr. Justice Grier, are precisely in point.

The cardinal position assumed by the State court is, that inasmuch as certificates of stock were in fact issued to, and accepted by, J. & W. Seligman, and they voted on the stock, chey are absolutely estopped from denying that they are the owners of the stock, subject to all the liabilities incident to that relation; and that they cannot have the benefit of the exception accorded by the law to those who hold stock as collateral security, because, as the court holds, that exemption only applies to those who have received stock in that way from some stockholder who can be made liable as a stockholder, and not to those who have received stock from the corporation itself by way of collateral security.

The first position, that the acceptance of the stock, and voting upon it, absolutely precluded the defendants from denying that they are owners of the stock, has been already considered.

Lamson, 9 id. 477; Olcott v. The Supervisors, 16 id. 678; Supervisors v. United States, 18 id. 71; Boyce r. Tabb, id. 546; Township of Pine Grove v. Talcott, 19 id. 666 ; Elmwood v. Marcy, 92 U. S. 289; State Railroad Tax Cases, id. 575; Ober v. Gallagher, 93 id. 199; Town of South Ottawa v. Perkins, 94 id. 260; Davie v. Briggs, 97 id. 628; Fairfield v. County of Gallatin, 100 id. 47 ; Oates v. National Bank, id. 239; Douglass v. County of Pike, 101 id. 677; Barrett v. Holmes, 102 id. 651; Thompson v. Perrine, 103 id. 806; s. c. 106 id. 589.

The great mass of authorities relied on by the Supreme Court of Missouri, on this part of the case, English as well as American, are cases in which parties have been held as corporators or associates as between themselves and the corporation, and upon that footing have been held responsible to creditors when the rights of creditors have been in question. We think that we have sufficiently shown that these authorities cannot govern the case in hand if any effect is to be given to the law of Missouri, exempting from personal liability those who hold stock in a fiduciary character or by way of collateral security. We will, therefore, briefly examine the other position, that this law does not apply to those who receive stock as collateral se curity from the corporation itself.

The argument that the exemption from liability in cases of stock held as collateral security, applies only to those who have received it from third persons who were stockholders and who can be proceeded against as such, seems to us unsound, and contrary both to the words and the reason of the law. It takes for granted that stock cannot be received as collateral security from the corporation itself and still belong to the corporation, and yet we know that such transactions are very common in the business of this country. The words of the statute are positive, and relate to all holders of stock for collateral security. They are as follows: "No person holding stock in any such company as executor, administrator, guardian, or trustee, and no person holding such stock as collateral security, shall be personally subject to any liability as stockholder of such company.” The reason of this law is derived from the gross injustice of making a person liable as the owner of stock when he only holds it in trust or by way of security, and from the inexpediency of putting a clog upon this species of property, which will have the effect of making it unavailable to the owner, or of deterring prudent and responsible men from accepting positions of trust where any such property is concerned. It seems to us that not only the law, but the reason upon which it is founded, applies to the holders of stock as collateral security, whether received from an individual or from the corporation itself. It is argued, however, that the remaining words of the law are repugnant to this view. These words are as follows: “ But

the person pledging such stock shall be considered as holding the same, and shall be liable as a stockholder accordingly, and the estates and funds in the hands of such executor, administrator, guardian, or trustee shall be liable, in like manner and to the same extent, as the testator or intestate, or the ward or person interested in such fund, would have been if he had been living and competent to act, and held the stock in his own name." The argument is, that these words imply that there must always be some person or estate to respond for the stock, or else the exemption cannot take effect. The obvious answer is, that this clause fixes the liability upon the pledgor as a stockholder, where there is a pledgor who can be made liable in that character. When the corporation pledges its own stock as collateral security, though it cannot be proceeded against as a stockholder eo nomine, the reason is because it is primarily liable, before all stockholders, for all its debts. In such a case the clause last quoted would not strictly apply to it; but the holder of its stock as collateral security would be within both the letter and the spirit of the first clause. It is supposed that some flagrant injustice would ensue if there was not some one who could be reached as a stockholder in every case of stock pledged as collateral security ; hence, stock pledged by the corporation itself must be regarded as belonging to the pledgee, though no other pledgee of stock is treated in

Where is the justice of this ? Why should the stock be necessarily considered as belonging to some one besides the corporation itself ? Is any one harmed by considering the corporation as its true owner? If the stock had not been issued as collateral security, it would not have been issued at all; it would not have been in existence. Would the creditors have been any better off in such case? They are better off by the issue of the stock as collateral, because the general assets of the company have received the benefit of the moneys obtained by means of the pledge. The more closely the matter is examined, the more unreasonable it seems to deny to a pledgee of the corporation the same exemption which is extended to the pledgee of third persons. We think that the one equally with the other is protected by the express words and true spirit of the law.

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