relation to the consideration or origin of that note must be imputed to the bank for which he acted. The testimony of Hannan in relation to his knowledge, as it appears in the record, omitting the questions, to which his answers were given, is as follows:

"I did take from George J. Crane a note signed by Mr. Moore. It was while I was cashier of the Citizens' State Bank. I had learned from Mr. Crane of the transaction he had with Mr. Moore, and he had advised me of the details of the deal, and that he had Mr. Moore's note. Mr. Crane at that time was owing us quite a sum of money, the collateral to which I did not consider of much value, and, being anxious to obtain as much collateral as possible for the note, prevailed on him to turn the note over to us, which he eventually did. Mr. Crane had fully explained to me just what he was doing-explained what they tried to do in Denver, San Francisco, and other places before they went to Seattle-and I was fully advised at all times as to what he was doing. I knew full well what the note was given for; it having been given for the recipe and privilege of using the recipe for an opium and whisky cure. * * * I state that I knew all about the consideration for the original note. * Mr. Crane advised me upon his return to Council Bluffs from Seattle and the West how he had obtained Mr. Moore's note. This was prior to our taking the note."

This is the entire evidence bearing upon the question under consideration, and we think it must be conceded that it falls far short of showing that Hannan knew or had notice of anything tending to show that the note was without consideration, or had been obtained by the fraudulent representations set forth in the answer. It does show that Hannan was advised as to the consideration of the note, and that it was given in consideration of stock in a corporation represented to be the owner of a secret formula or prescription for the cure of the morphine, cocaine, and other drug habits; but there is nothing which tends to show that he knew that such alleged formula or remedy was worthless, or that the payees of the original note had failed to transfer or deliver to said corporation any such formula or prescription, or that the stock of said corporation was worthless, or that Crane or his partner, Bellinger, had made false representations as to the character of such formula or prescription, or made any of the fraudulent representations set out in the answer. Knowledge of the consideration will not prejudice the rights of the purchaser of a negotiable note, unless the consideration was illegal, or the purchaser knew that the same was without value. This witness further testified:

"I wrote Mr. Moore many letters, or caused them to be written, in behalf of the Citizens' State Bank of Council Bluffs, always claiming that the bank had acquired the entire note in good faith, for value, and without notice, as the letters written by me while in the bank will show."

And there is nothing in his testimony to warrant the inference that, when he wrote such letters, he did not believe them to be true. In the absence of evidence tending to show that the witness Hannan knew or had notice of the facts relied upon by defendant in error to show want of consideration for the original note, or that such note was obtained from him by the fraudulent representations claimed, the jury should have been instructed to find for the plaintiff in error. Judgment reversed, and cause remanded for a new trial.

MASON CITY & FT. D. R. CO. v. WOLF.

(Circuit Court of Appeals. Eighth Circuit. November 5, 1906.)

No. 2,327.

1. EMINENT DOMAIN-COMPENSATION FOR DAMAGE TO PROPERTY NOT TAKENNEBRASKA CONSTITUTION.

Const. Neb. 1875, art. 1, § 21, which provides that "the property of no person shall be taken or damaged for public use without just compensation," as construed by the Supreme Court of the state, entitles a property owner to recover for special injury caused to his property by the construction and operation of a railroad in the vicinity, in excess of that sustained by the public at large, although no part of his own property is actually invaded or appropriated. Such right of recovery includes damage to the property from noise, smoke, cinders, and vibrations of the ground, and the obstruction or impairment of the right of the owner to make use of public highways in the vicinity, which permanently depreciates its value, the measure of recovery being the difference between the market value of the property before the construction and operation of the railroad and its market value afterward; and it is immaterial whether the road is constructed on property condemned or purchased by the railroad company for the purpose, or upon or over public streets or highways under permission granted by the duly constituted public authorities. Damages are not recoverable, however, because of the mere presence upon adjoining property owned by the railroad company of its structures or excavations which do not affect the lateral support of plaintiff's ground.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 18, Eminent Domain, §§ 233-238.]

2. COURTS-RULES OF DECISION-CONSTRUCTION OF PREVIOUS DECISIONS.

General expressions in the opinion of an appellate court as to recoverable damage are to be taken in connection with the facts of the case in which they occur, and not extended to those cases which are fairly subject to the operation of a different principle.

In Error to the Circuit Court of the United States for the District of Nebraska.

This writ of error challenges a judgment obtained by Tressa Wolf against the railroad company for damages to her property caused by the construction and operation of railroad tracks in the vicinity thereof. William D. McHugh (Asa G. Briggs, on the brief), for plaintiff in error.

H. C. Brome (A. H. Burnett, on the brief), for defendant in er

ror.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

HOOK, Circuit Judge. Upon the plaintiff's lot in Omaha, Neb., were a double dwelling house and a cottage. No part of her property was taken or physically encroached upon by the railroad company, nor was there any proof of negligent construction of its works or operation of its engines and cars. But evidence was received at the trial of injury resulting from a deep excavation made by the company in adjoining lots purchased and owned by it, from the extension of the excavation across the public street upon which plaintiff's lot fronts and

148 F.-61

also across the alley that runs in the rear, from the noises of the operation of the road, from smoke and cinders emitted by the engines, and from the vibration of plaintiff's ground caused by the movement of the engines and cars. The excavation was from 20 to 30 feet deep, and at its nearest point it was about 10 feet from plaintiff's property line. The street and alley directly in front and at the rear were not touched, and full and unobstructed use thereof towards the north was not impaired; but on the south, a short distance from the south line of plaintiff's lot, both thoroughfares were permanently destroyed by the excavation, and the company fenced them off to prevent accidents.

At the trial the company, by appropriate objections to the evidence, motions, and requested instructions, sought to have each element of damage claimed excluded from consideration by the jury; but the court admitted all of them, with the qualification, however, that in respect of smoke and the noises of railroad operation there must be an injurious effect upon the value of plaintiff's lot in the mind of a good-faith purchaser, and not a mere personal inconvenience to the occupants. With this explanation the court charged the jury that plaintiff was entitled to recover whatever the evidence showed her lot had depreciated in value by reason of the construction and operation of the railroad in proximity thereto, and that the amount was determinable by the difference between the market value before the road was built and the market value afterwards. It was conceded that the city council of Omaha had granted by ordinance the right of way to the company, and had vacated those portions of the street and alley within the exterior limits of the excavation, and also that the company had contracted to indemnify the city against all damages resulting from the action. of the latter. The controlling questions in the case are whether each of the elements of injury above mentioned were proper for the consideration of the jury in the assessment of damages, and whether the trial court in its instructions correctly announced the measure of recovery. The solution of these questions involves a consideration of the fundamental law of the state and the decisions of its highest judicial tribunal.

The Constitution of Nebraska (section 21, art. 1, Const. 1875) provides:

"The property of no person shall be taken or damaged for public use without just compensation."

Gottschalk v. Railroad, 14 Neb. 550, 16 N. W. 475, 17 N. W. 120: In this case the railroad company, acting under municipal authority, constructed its road in an alley in the rear of plaintiff's lot. The court held that the property owner had a cause of action. After referring to the Nebraska Constitution of 1866, which limited the recovery to cases in which property was "taken" for public use, and the enlargement of the right of recovery by the addition of the words "or damaged" in the Constitution of 1875, it said:

"The evident object of the amendment was to afford relief in certain cases where, under our former Constitution, none could be given. It was to grant relief in cases where there was no direct injury to the real estate itself, but some physical disturbance of a right which the owner possesses in connection

with his estate, by reason of which he sustains special injury in respect to such property in excess of that sustained by the public at large. To this extent the property owner is entitled to recover. It is not necessary, to entitle a party to recover, that there should be a direct physical injury to his property, if he has sustained damages in respect to the property itself, whereby its value has been permanently impaired and diminished. This is but justice. While public improvements are essential to progress and to the welfare of the race, yet, as the public are to receive the benefits, whether by the opening of streets and public grounds or by the construction of railways, the party receiving the benefit should bear the burden. This should not be cast upon others."

In support of the conclusions reached the court employed liberal quotations from the case of Rigney v. Chicago, 102 Ill. 64, where, in considering a constitutional provision like that of Nebraska, the Illinois court said:

"But under the present Constitution it is sufficient if there is a direct physical obstruction or injury to the right of user or enjoyment, by which the owner sustains some special pecuniary damage in excess of that sustained by the public generally, which by the common law would, in the absence of any constitutional or statutory provisions, give a right of action. ** * The question, then, recurs: What additional class of cases did the framers of the new Constitution intend to provide for which are not embraced in the old? While it is clear that the present Constitution was intended to afford redress in a certain class of cases for which there was no remedy under the old Constitution, yet we think it equally clear that it was not intended to reach every possible injury which is necessarily incident to the ownership of property in towns or cities, which directly impair the value of private property, for which the law does not and never has afforded any relief. For instance, the building of a jail, police station, or the like, will generally cause a direct depreciation in the value of the neighboring property, yet that is clearly a case of damnum absque injuria. So, as to an obstruction in a public street, if it does not practically affect the use or enjoyment of neighboring property, and thereby impair its value, no action will lie. In all cases, to warrant a recovery, it must appear there has been some direct physical disturbance of a right, either public or private, which the plaintiff enjoys in connection with his property, and which gives to it an additional value, and that by reason of such disturbance he has sustained a special damage with respect to his property in excess of that sustained by the public generally. In the absence of any statutory or constitutional provisions on the subject, the common law afforded redress in all such cases, and we have no doubt it was the intention of the framers of the present Constitution to require compensation to be made in all cases where, but for some legislative enactment, an action would lie by the common law."

Railroad v. Ingalls, 15 Neb..125, 16 N. W. 762: Here the railroad was laid upon the side of a country road adjacent to the plaintiff's land, and a recovery by him was sustained against a contention that the railroad merely afforded one of the modes of enjoyment of the public easement and the county commissioners had expressly authorized its construction. There was no especial discussion in the opinion of the constitutional provision or the limitations of its application.

Railroad v. Reinhackle, 15 Neb. 279, 18 N. W. 69, 48 Am. Rep. 342: A railroad company, with leave of the city authorities, laid two tracks upon the east side of a street, upon the opposite side of which the plaintiff's lot abutted. The track near the middle of the street was used as a team track, and was constantly kept nearly filled with cars to be loaded and unloaded. It was held that every lot owner whose lot abutted on the street had a special interest therein distinct from that of the pub

lic at large, and that the permission of the city authorities to a railroad company to use the street was no defense to an action by an abutting lot owner who suffered special damage from a permanent obstruction. The court also approved of an instruction that the measure of damage was the difference between the market value of the property before the permanent obstruction and the market value afterwards.

City of Omaha v. Kramer, 25 Neb. 489, 41 N. W. 295, 13 Am. St. Rep. 504: The damages claimed in this case were caused by the construction of a viaduct over railroad tracks upon a street upon which plaintiff's lots fronted. The court declined to follow the rule, announced in Penn. R. Co. v. Marchant, 119 Pa. 541, 13 Atl. 690, 4 Am. St. Rep. 659, that under a constitutional provision similar to that of Nebraska there can be no recovery in the absence of "such a legal wrong as would be the subject of an action for damages at common law." Referring to the Nebraska provision, the court added:

"The provision, therefore, is remedial in its nature, and the well-known rule, that in the construction of remedial statutes three points are to be considered, viz., the old law, the mischief, and the remedy, and so to construe the act as to suppress the mischief and advance the remedy, is to be applied. 1 Blackstone, Com. 87. Applying this rule to the provision in question, and it embraces all damages which affect the value of a person's property, and includes cases like that under consideration. In other words, the words 'or damaged,' in section 21, art. 1, of the Constitution, include all actual damages resulting from the exercise of the right of eminent domain which diminish the market value of private property."

It should be said, however, that in support of this conclusion the court cites the Gottschalk Case and Rigney v. Chicago. The court further said:

"The fact that damages are consequential will not preclude a recovery, if the construction and operation of the public improvement is the cause of the injury; and it is not necessary that the damages be caused by trespass or an actual physical invasion of the owner's real estate. The test is: Excluding general benefits, is the property in fact damaged? If so, the owner is entitled to compensation."

In all the cases thus far reviewed the damages were caused by the obstruction of public highways or the operation of railroads therein. In Railroad v. Rogers, 16 Neb. 117, 19 N. W. 603, a railroad company was held liable where it had built its road and occupied all of the lot adjoining the plaintiff's property and had extended its tracks into the street. In these respects the case of Railroad v. Fellers, 16 Neb. 169, 20 N. W. 217, is similar. But in neither of them does it appear that the mere existence of the structures of the railroad company upon its own property, as distinguished from the public thoroughfare, was regarded as affecting the amount of the recoverable damage.

Railroad Co. v. Hazels, 26 Neb. 364, 42 N. W. 93: Hazels was the owner of a half of a block of ground upon the south side of Third street in Pawnee City, Neb. The railroad company acquired by purchase, and not by condemnation, the south half of several blocks of ground upon the opposite side of the street, and constructed various railroad tracks thereon and across the intervening streets. Upon its own ground opposite the land of plaintiff it also constructed a depot, which, with the main and side tracks of the railroad, practically occu