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was null and void, alleged that the East in a manner contrary to the interests of the Tennessee, Virginia &*Georgia Railroad Com creditors generally of the said road for a pany was a purchaser with notice of the ille very small part of its real value, the price gality, and then proceeded as follows:

nominally bid therefor being one million dol"And your orator charges that the said lars, and the real value thereof being four state of Georgia held the said property, aft million dollars, and did sell the road to it. er the seizure thereof, as a trust for the pay self for said price, in its own interest, and ment of the obligations of the said the Macon without regard to the interests of the benefi. and Brunswick Railroad Company to the ex ciaries of the trust, including your orator, tent of the avails of a sale of the said prop and thereupon, in equity, held the said property to be made for the interest of all creditors erty as a trust for you orator, and subject to of said company, with the privilege unto the his lien for the payment of his said bonds. said state of protection, first, out of said “And your orator avers that the said the avails, of its own indorsement of the bonds East Tennessee, Virginia and Georgia Rail. of said company; that the said state, in and road Company and the East Tennessee, Vir. by the resolution aforesa id, declared its in ginia and Georgia Railway Company had dorsement of the bonds held by your orator full notice in the purchase of said property to be not binding on it, and in advance of made by each of the said breach of trust demand upon it by your orator refused there by said trustee, and took the said property by to pay the said indorsement, or to en subject to the duties and liabilities of said force its said privilege of protection of said trusteo towards your orator,--that is to say, indorsement from the avails of said prop with the lien of your orator unaffected and erty so in its hands; that your orator there undischarged by the sale of said property by became at least entitled to the advantage made by said trustee in breach of his fiduof the said mortgage lien of the said state ciary duty,-and that the said last-mentionfor his protection, to have the said property ed company now holds said property as sold with proper regard to his interests and trustee for your orator, and subject to your the interests of bis fellow bondholders, to orator's lien for the payment of the said inbe allowed to participate freely with all other debtedness to him.” lienors of the said railroad at the sale of the The East Tennessee Company answered said railroad property by his said trustee in the supplemental bill, stating the various bidding upon said property, and paying conveyances through which the title bad therefor in the bonds held by him, herein finally come to be vested in itself, and assertbefore mentioned, with due regard to the ing the validity thereof. All the facts above protection of any and all prior liens and the stated appear on the face of the pleadings costs and expenses of sale.

and exhibits. Before the sale was made by “And your brator shows that in and by the state, John P. Branch, a holder of bonds the said resolutions under wbich said sale was of the same series as those heiu by these. made, and under color of which the said complainants, had filed a bill in the circuit trustee for your orator became possessed of court of the Southern district of Georgia, the said rgilroad property, the said state of asking for an injunction to prevent the sale, Georgia gave notice of its intention to com but the application was denied. Branch v. mit a breach of trust by excluding your ora

Railroad Co., 2 Woods, 385, Fed. Cas. No. tor from participation in said sale on equi 1,808. Branch had also taken a decree pro table terms with the holders of the first confesso against the Macon & Brunswick mortgage bonds, by excluding your orator, Railroad Company, and he was allowed to by the provisions thereof, from participation intervene below, and become a party to the in the avails of said sale or any benefit there present suit, in which he claims the same from by announcing openly to the world its rights as those asserted in the original and intention to sell the said road in its own supplemental bill. The cause was submit interest rather than in the interest of the ted to the court on bill, answer, and es.

creditors of said company, and by divers hibits, and resulted in a decree of dismissal. other acts and announcements, all concur. The case was then brought here by appeal.

ring to demonstrate positively to the world that the said trustee had determined to exclude your orator from any benefit under the

H. Chamberlain, and John Howard, for apsaid trust, and that it would not regard or

pellants. George Hoadly, for appellees. protect in any respect the interests of your orator and his fellow bondholders in the •Mr. Justice WHITE, after stating the case, said sale or distribution of avails.

delivered the opinion of the court. “And your orator shows that in point of The case of the appellants rests upon two fact the said state of Georgia, at the said distinct legal propositions. The first one assale, did commit the said breach of trust serts their right to be subrogated to a mortaccording to its previously announced inten gage security taken by the state of Georgia, tion, did exclude your orator and his fellow and, by virtue of such subrogation, to enbondholders from their rights of equitable force the mortgage against the property of protection at sale by bidding and paying the the railway company. The other proposi. bonds held by them, did sell the said road tiou is that they are direct mortgage cred.

el Chas. N. West, w. w. Montgomery

, D.

Itors, and have a specific mortgage lien up secured by the statutory mortgage created on the property of the company.

by the act of 1866, and that the mortgage *A right of subrogation, such as is here rights thus existing were not affected by the claimed by the appellants, does not involve sale made by the state in 1875, but are yet any direct lien in favor of the creditor, re subsisting, and may be enforced against the sulting from his position as such. It only mortgaged property in the hands of the presexists in consequence of his being, as a cred ent defendant. It is obvious that, if the statitor, entitled to enjoy certain rights which utory mortgage created by the act of 1866 was are vested in the surety at the time tbe sub solely for the indemnification of the state, and rogation is claimed. This principle is funda not for the security of the bondholders, the mental. and its application is fatal to the latter, whatever may be their indirect rights complainants. As the creditor's right to by subrogation, cannot directly avail them. subrogation depends on the existence, in the selves of the statutory mortgage. Chambersurety, of the rights to which subrogation lain v. Railroad Co., 92 U, S. 299; Tennessee is sought, it follows that, after the surety Bond Cases, 114 U. S. 663, 5 Sup. Ct. 974, 1098. bas parted with the thing given him for his In order, therefore, to give them the relief protection, the creditor can bave no subroga. which they seek, the statutory mortgage must tion to such thing. In the present case, be treated as having been given to secure when the subrogation was claimed, the state the holders of the bonds. But, if this view be bad divested herself of all her rights, under taken, the claim here asserted is untenable. the mortgage of indemnity, by selling the If there be a mortgage in favor of complainmortgaged premises, and had applied the ant's bonds, it must result from the terms of proceeds of the sale to the payment of the the act of 1866; but these bonds were not debt wuch the mortgage was given to se issued under that act, and owe their existence cure. She had no longer any rights of her to the authority conferred by the act of 1870. own, therefore no subrogation could be de This act reserved no mortgage, and the bonds rived througb her. Aside from this consid of relator, having been issued under it, do eration, in order to enforce equitable subro not purport to be secured by mortgage. The gation against a surety, he must be made a claim that they are so secured is deduceu from party to the cause. The state of Georgia is this contention: The act of 1870, it is assert. not, and cannot be, without her consent, im ed, purported to be an amendment to the pleaded. All the foregoing doctrine was ap act of 1866; therefore the provisions as to plied and carefully stated in Chamberlain v. mortgage found in the act of 1866 were in. Railroad Co., 92 U. S. 299, where, speaking corporated into and became a part of the act through Mr. Justice Field, the court said: of 1870. Between 1866 and 1870, however, “Whatever rigbt the plaintiff had to compel the following amendment to the constitution the application of the lands received by of Georgia was adopted, and it was in force the state to the payment of the bonds beld when the act of 1870 was passed: by him. it was one resting in equity only. "The general assembly shall pass no law It was not a legal right arising out of any making the state*a stockholder in any cor. positive law, or any agreement of the par porate company; nor shall the credit of we ties. It did not create any lien which at state be granted or loaned to aid any comtached to and followed the property. It was pany without a provision that the whole a right to be enforced, if at all, only by a property of the company shall be bound for court of chancery against the surety. But, the security of the state, prior to any other the state being the surety here, it could not debt or lien, except to laborers; nor any combe enforced at all, and, not being a specific pany in which there is not already an equal lien upon the property, cannot be enrorced amount invested by private persons, nor for against the state's grantees. Where proper any other object than a work of puviic imty passes to the state, subject to a specific provement." lien or trust created by law or contract, such Under these provisions, if we were to conlien or trust may be enforced by the courts strue the act of 1870 as desired, the result whenever the property comes under their would be to make that act clearly violate the jurisdiction and control. Thus, if property amendment to the constitution just cited; for, held by the government, covered by a mort if the statutory mortgage secured the bondgage of the original owner, should be trans holders, then the bonds issued under the act ferred to an individual, the jurisdiction of of 1866 were necessarily secured by a first the court to enforce the mortgage would at mortgage, and those issued under the act of tach, as it existed previous to the acquisition 1870 by a second. This conclusion can be of the government. The Siren, 7 Wall. 158. avoided only in one or the other of two ways: 1.39. But where the property is not affected First. By contending that the incorporation by any specitic lien or trust in the hands of of the provisions of the act of 1806 into the the state, her transfer will pass an unincum act of 1970 made the bonds issued under the bered estate."

latter act equal in rank of mortgage with The appellants must therefore rely for the the bonds issued under the former. But to maintenance of any rights they may possess admit this contention would make the act of upon their second proposition, which is to the 1870 void, because it would, if thus construed, effect that the bonds which they hold were impair the obligations of the contract made

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with the holders of the bonds first issued. Is there any statement of such mortgage ic
Or, second, by contending that, inasmuch as the act of 1870, under whicu they were issued.
the mortgage created by the act of 1866 was The claim here is merely that a mortgage re-
in favor of the state, and not in favor of sulted from the statute passed in 1866, which
the bondholders, the issuance of the bonds statute in express terms reserves a mortgage
of the second series simply increased the ag only for such bonds as are indorsed by the
gregate amount of the state's liability, and state. The case relied on involved no ques-
that there was no difference between the two tion of the existence of a mortgage, but the
in rank of lien and mortgage, since the state point at issue was whether an admittedly ex-
held both the first and the second series, and isting mortgage could be enforced against
the two were practically issued under one the corporations. Here, on the contrary, the
act. But this would be an assertion that the question is whether the mortgage under the
statutory mortgage created by the act of 1866 act of 1866 ever existed quoad the bonds is.
was solely for the benefit and indemnitica sued under the act of 1870.
tion of the state, and that the holders of the These conclusions are decisive of the
bonds were not directly interested therein. cause, but other considerations, which affect
If this position be assumed, it defeats the the merits of the controversy, are equally
complainants, as we have already seen. fatal to the appellants. It cannot be doubt-

However, it is claimed that, even if the ed that, even if the bonds issued under the state's indorsement of the bonds issued un act of 1870 were secured by the statutory der the act of 1870 was in violation of the mortgage reserved by the act of 1866, they coustitutional amerdment, the only result is were second in rank, and therefore their to render the indorsement void, and thus the holders were junior mortgage creditors. Nor

bonds are left outstanding as* valid contracts can it be gainsaid that the statutory mortof the railroad company, secured by the stat gage conferred upon the state a power to utory mortgage reserved in the act of 1866. sell the mortgaged property. This power This contradicts the plain text of that act, was exercised in 1875. The grounds upon since it only purported to reserve a mortgage which it is asserted that the sale was void in favor of bonds indorsed by the state. And, are: First, that before the sale it was anbesides, if this argument were adopted, it nounced that only bonds of the issue of 1866 would render efficacious a legislative violation would be received in payment, and that at of the constitutional amendment, since it pre the sale it was declared that such bonds supposes that there was power in the general would only be received at their market val. assembly to allow the mortgage security, ue. There is no averment in the bill that which had been taken by the state solely in or the first mortgage creditors complained of der to secure the bonds she bad guarantied, to these requirements, nor does it contain any te transferred to others as a means of secur allegation that the holders of the second ing bonds to which her guaranty could not be series of bonds, who are now championing constitutionally atiixed. In other words, twat the rights of the first mortgage creditors, the state, having a first mortgage security, bid at the sale, or in any way manifested wbich she had taken to secure bonds, of their willingness to free the property from which she was an indorser, could vitiate such the first mortgage debt. The rights of the security by allowing others to participate in second mortgage creditors were necessarily the benefits thereof, and thus do by indirec subordinate to the paramount rights of the tion what the constitution forbade her to do creditors first in rank. The property of the directly.

company had been for nearly two years unNor does the case of Railroad Cos. v. Schut der seizure, the default having occurred in te, 103 U. S. 118, sustain this argument of the 1873. It was the plain duty of the second appellants. There the state of Florida issued mortgage creditors, if they were interested her bonds to aid the railroads, securing her in preventing the sale, and wished to tender self by a first mortgage on the roads, and their bonds in payment, to bid a suficient taking in exchange bonds of the companies. amount to lift the prior incumbrance. Not It was certified on the state bonds that they only is there no averment that they did this, were protected by a first mortgage "as secur but the bill contains an assertion that, in ity for the holders thereof." The bonds, thus the event the mortgage indemnified only the drawn, were indorsed by the railroad com state, then equality of rank existed between panies, and issued by them. The obogation the holders of the second and the holders of of the state was found unconstitutional, but the first series of bonds; and upon this alit was held that, inasmuch as the railroad leged equality the complainants, as holders companies had indorsed the bonds thus of the second series, base their claim to a drawn, they had guarantied the existence of participate*ratably in the distribution of the the mortgage, and the holders of the bonds purchase money, and thus infringe upon the were therefore entitled, as against them, to unquestioned rights of the bondholders un. insist upon the validity of the mortgage, and der the act of 1866. to assert legal rights by virtue thereof. In The other ground of attack upon the sale the present case there is no mention of the was the incapacity of the state to purchase existence of a mortgage on the face of we at her own sale, which, it is claimed, re bonds declared on by the complainants; nor

sulted from the fact that the statutory mort.

extinguished the prior mortgage by which they were secured, and that, the sale being voidable at the instance of complainants,an option which their bill asserts,—the second mortgage, which was held by them, has thus become first. No offer to pay the amount of the first mortgage was made prior to the purchase of the property by the de fendants, and their title annot now be divested, even if such an offer were made. We think the complainants are not entitled to the relief which they claim, and that the property passed to the defendants free from any lien under the statutory mortgage arising from the act of 1866 or 1870, even if from the latter any such mortgage ever re sulted.

Affirmed

gage reserved by the act of 1866 made the state a trustee for the bondholders. Conceding this, the state was both a trustee and a mortgagee, and she had a direct individual interest in the property, by reason of her indorsement on the bonds. The general assembly of the state of Georgia had expressly authorized the governor to bid in the property, on behalf of the state, in case there was no bid sufficient to protect the outstanding obligation which bore the state's indorsement. Even if this provision be considered inapplicable upon the ground that the state could not lawfully bid at the sale under a power conferred upon herself by herself, the complainants' position would be untenable. It is conceded that the settled doctrine in Georgia is that the purchase by a trustee is not absolutely void, but merely voidable, at the option of the cestui que trust. Worthy V. Johnson, 8 Ga. 236. Let us suppose, for the sake of argument, that the cestuis que trustent in this case were the holders of the bonds which were issued under the act of 1866 and of those which were issued under the act of 1870. The bill contains an averment that the holders of the first class surrendered their bonds to the state after her purchase of the property, and that she has discharged her liability under her indorse ment upon their bonds. In retiring these bonds the state paid off the first mortgage debt, not only to the extent of her bid, but to nearly twice its amount. The action of the first mortgage creditors in accepting the extinguishment by the state of their securities and the mortgage by which they were secured was, in effect, a ratification of the sale, and established its legal validity, so far as they were concerned.

Under these circumstances, conceding that the second series of bonds were secured by a second mortgage, their holders cannot equitably be allowed to avoid the sale without*tendering reiinbursement of the amount of the first mortgage. Their claims were subordinate to those of the holders of the first series, and they have no recourse until the latter are paid, and it would be grossly inequitable to allow them to avoid a sale which has been ratified by those who were primarily interested in the price resulting therefrom, without compelling them, as a prerequisite, to do equity by protecting the first incumbrancers. Collins v. Riggs, 14 Wall. 492; Jones, Mortg. 8 1669; Pom. Eq. Jur. § 1220 et seq. Instead of doing this, although nearly two years had elapsed between the sale and the filing of the bill, the complainants assert that their bonds are, in the contingency last stated, equal in rank of mortgage lien with those of the holders of the first series, and hence that they are entitled to an equal participation in the proceeds of the mortgaged property. Indeed, in the discussion at bar, the contention was advanced that the retirement of the first mortgage bonds by the state, after her purchase,

(156 U. S. 296) EMERT v. STATE OF MISSOURI.

(March 4, 1895.)

No. 120.
CONSTITUTIONAL LAW-INTERSTATE COMMERCE

PEDDLER'S LICENSE. Rev. St. Mo. § 6471, declaring any person who deals in selling goods, by going from place to place to sell the same, to be a peddler, and section 6472, prohibiting peddling without a license, which section 6473 provides shall state how the dealing is to be carried on, and which, by section 6479, must be exhibited on demand of a sheriff, collector, constable, or citizen householder of the county, is not an invasion of the power of congress to regulate interstate commerce, as applied to one who, as agent of a manufacturer in another state, thus sells and delivers sewing machines which he has with him at the time of soliciting purchases. 15 S. W. 81, 103 Mo. 241, affirmed.

In Error to the Supreme Court of the State of Missouri.

This was an information, filed July 27, 1889, before a justice of the peace in the county of Montgomery and state of Missouri, for a misdemeanor, by peddling goods without a license, in violation of a statute of the state, contained in chapter 137, entitled “Peddlers and Their Licenses," of the Revised Statutes of Missouri of 1879, the material provisions of which are copied in the margin,i and which is re-enacted as chapter 125 of the Revised Statutes of 1889.

or

i Sec. 6171. Whoever shall deal in the selling of patents, patent rights, patent or other medicines, lightning rods, goods, wares merchandise, except books, charts, maps and stationery, by going from place to place to sell the same, is declared to be a peddler.

Sec. 6172. No person shall deal as a peddler without a license; and no two or more persons shall deal under the same license, either as partners, agents or otherwise; and no peddler shall sell wines or spirituous liquors.

Sec, 6473. Erery license shall state the manner in which the dealing is to be carried on, whether on foot, or with one or more beasts of burden, the kind of cart or carriage, or, if on the water, the kind of boat or vessel, to be employed.

Sec. 6476. Any person may obtain a peddler's license by application to the collector of the county in which he intends to carry on his

207

867.

• The information alleged that the defendant that said machine was of the value of afty on June 26, 1889, in that county, "did then dollars; that the defendant had no peddler's and there unlawfully deal in the selling of license at said time." goods, wares, and merchandise, not being The court adjudged that the defendant was books, charts, maps, or stationery, by going guilty as charged in the information, and from place to place, in a cart or spring wag that he pay a fine of $50 and costs. The de on, with one horse, to sell the same, and did feudant moved for a new trial, because the then and there, while going from place to facts in the agreed statement constituted no place to sell said goods, wares, and merchan. offense, and because the statute on which he dise aforesaid, unlawfully sell one sewing had been charged and convicted, being chapmachine to David Portucheck, without then ter 137 of the Revised Statutes of 1879, was and there having a license as a peddler, or in contravention of section 8 of article 1 of any other legal authority to sell the same; the constitution of the United States, and against the peace and dignity of the state." void in so far as it affected bim. The motion

The defendant pleaded not guilty, and was for a new trial, as well as a motion in arrest adjudged to be guilty, and sentenced to pay of judgment, was overruled; and the defend. a fine of $50 and costs. He appealed to the ant, upon the ground that a constitutional circuit court of the county; and in that court question was involved, and assigning as erthe parties, for the purpose of dispensing rors the same causes as in his motion for a with evidence, agreed in writing, signed by new trial, appealed to the supreme court of their attorneys, that the case might be decid the state, which affirmed the judgment. 103 ed by the court on the following agreed state Mo. 241, 15 S. W. 81. ment:

The defendant sued out this writ of error, (1) That for more than five years last past which was allowed by the presiding judge of the Singer Manufacturing Company has been, that court upon the ground that there "was and still is, a corporation duly organized un drawn in question the validity of a statute der the laws of the state of New Jersey, and of, or an authority exercised under, said a citizen of that state.

state, on the ground of their being repug. “(2) That on and prior to June 26, 1889,

E.

nant to the constitution of the United States, S. Emert, defendant, was in the employ of and the decision was in favor of such their said Singer Manufacturing Company, on a validity." salary for his services, and at said time, in

S. N. Taylor and Lawrence Maxwell, Jr., pursuance of said employment, was engaged

for plaintitf in error. R. F. Walker, Atty. in going from place to place in said Mont

Gen. Mo. gomery county, Missouri, with a horse and wagon, soliciting orders for the sale of Singer sewing machines, having with him in * Mr. Justice GRAY, after stating the case, said wagon a certain New Singer sewing ma delivered the opinion of the court. chine, which on said day he offered for sale From early times in England and America, to various persons at different places in said there have been statutes regulating the occu. county, and that on said day the defendant pation of itinerant peddlers, and requiring did find a purchaser for said machine, and them to obtain licenses to practice their did sell and deliver the same to David Portu

trade. check, in said county.

In Tomlin's Law Dictionary are these defi. "(3) That said Singer machine in question nitions: "Hawkers. Those deceitful fellows was manufactured by said Singer Manufac who went from place to place, buying and turing Company at its works in the state of selling brass, pewter, and other goods and New Jersey, and that said sewing machine merchandise, which ought to be uttered in belonged to, and was the property of, said open market, were of old so called; and the company, and that it was forwarded to this appellation seems to grow from their uncer. state by said company, and by it delivered tain wandering, like persons that, with to the defendant, as its agent, for sale on its hawks, seek their game where they can find account, and said machine was sold on ac it. They are mentioned in St. 33 Hen. VIII. count of the said manufacturing company;

C. 4." "Hawkers, pedlars, and petty chaptrade, by paying the amount levied on such li cense. Any county court may, by an order of

record, require all peddlers doing business in Sec. 6477. There shall be levied and paid, on their county to pay a liceuse tax, not greater all peddlers' licenses, a state tax of the follow than that levied for state purposes. ing rates: First, if the peddler travel and car Sec. 6478. Every person who shall be found ry his goods on foot, three dollars for every dealing as a peddler. contrary to law or the period of six months; second, if one or more

terms of bis license, shall forfeit, if a foot pedhorses or other beasts of burden, ten dollars for dler, the sum of ten dollars; on one or more every period of six months; third, if a cart or beasts of burden, twenty-five dollars; in a cart other land carriage, twenty dollars for every or other land carriage, fifty dollars; in a boat or period of six months; fourth, if in a boat or oth other vessel, one hundred dollars. er river vessel, at the rate of one dollar per day Sec. 6479. Every peddler sball, upon the defor any period uot less than five days; and such mand of any sheriff, collector, constable, or citilicense may be renewed, at the expiration of zen householder of the county, produce his lithe first license, for any period not greater than cense, and allow the same to be read by the six months, on payment of fifty cents a day, person making the demand; and, in default the number of days to be specified in such li Thereuf, shall forfeit the sum of ten dollars

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cense.

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