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Argument for Manhattan Savings Institution.

of the Manhattan Savings Institution, as owners, to await the decision of which the bonds were retained by the Secretary in the custody of the Treasury Department.

In addition to the foregoing facts, found by the Court of Claims, it also found, that "during the period of the refunding transactions under the act of July 14, 1870, many five-twenty bonds of every call were not sent in promptly for redemption, but were held, in this country and Europe, through want of information, or otherwise, until long after the maturity of the call," and that."during the period of the refunding transactions of the government under the act of July 14, 1870, large numbers of the European holders of the five-twenty bonds of the act of March 3, 1865, called for redemption, from want of facility for sending their bonds to the United States, or to avoid the risk and expense of transmission, or various other reasons, were obliged to and did sell and dispose of their bonds, in the market, in London, to money-changers, bankers, and merchants, as the only means of obtaining the money for them. Many millions of the said called bonds were thus sold and disposed of in the London market, and dealt in by money dealers during that period, long after the maturity of the various calls;" and also that, "according to the custom and practice in London, the said called bonds of the United States were commonly dealt in by buying and selling after the time fixed for their redemption, in the same way and just as freely as the bonds not called for redemption."

Mr. Assistant Attorney-General Maury, on behalf of the United States, stated that they had no interest in the result of the suit; that their attitude was like that of the complainant in a bill of interpleader.

Mr. J. Hubley Ashton for Morgan and another, and Von Hoffman and another.

Mr. Howard C. Cady (Mr. Waldo Hutchins was with him) for Manhattan Savings Institution. These bonds are a contract, and are to be taken with reference to the intent of the

Argument for Manhattan Savings Institution.

parties, under the law. The government wanted to borrow a large sum, and they devised these bonds as the basis of the required loans. There could be no misunderstanding on the part of any holder that each of the bonds would become payable when the government, in the mode and at the time to be indicated, as prescribed by law, should express its will. It was not necessary to specify more on the face of the instrument than just what is there, to the end purposed. An instrument is to be taken with reference to the law governing it. This was the understanding of the public at large, for in those days bonds of this character were presented almost universally, and of this the court will take judicial notice. Again, this was the understanding of the parties, else why invariably make no claim for interest after those days? And look at the expressions of J. S. Morgan & Co. in the letter dated September 1, 1879: “Much to our surprise, payment has been withheld by the Treasury Department" of these bonds. " of these bonds. Again, these bonds became due on the days fixed in the call, or these claimants would not all have been at the doors of the Treasury asking for principal and interest on or about the respective days when they presented these bonds. Still, again, why the notice in the call and in the law that on those days the interest on those bonds so selected and advertised for payment should cease? But we are not left to reasoning alone. Upon the cases decided heretofore by this court the questions presented in these cases are settled. Texas v. White, 7 Wall. 700, was a case where United States coupon bonds issued to Texas in 1851 were transferred to White while the government of that State was in rebellion, after the 31st of December, 1864. The bonds were dated January 1, 1851, payable by their terms to bearer, and redeemable after the 31st day of December, 1864; and each of them stated that it was "transferable on delivery.” The court held: "Purchasers of notes or bonds past due take nothing but the actual right and title of the vendors. The bonds in question were dated January 1, 1851, and were redeemable after the 31st of December, 1864. In strictness, they were not payable on the day when they became redeemable; but the known usage of the United States to pay all

Argument for Manhattan Savings Institution.

bonds as soon as the right of payment accrues, except where a distinction between redeemability and payability is made by law, and shown on the face of the bonds, requires the application of the rule respecting overdue obligations to bonds of the United States which have become redeemable and in respect to which no such distinction has now been made. Now, all the bonds in controversy had become redeemable be fore the date of the contract with White." An attempt has been made to ward off the decisive effect of this authority by reason of what was said in connection with the phrase, "except where a distinction between redeemability and payability is made by law and shown on the face of the bonds." By analyzing this we shall see what it does not mean. Certainly it does not mean that in the absence of a distinction made by law and shown, the rule laid down does not apply. What led to the phraseology will better appear, perhaps, by referring to a paragraph on page 703 of the reports, where it is stated: "In pursuance of an act of the legislature of Texas, the comptroller of public accounts of the State was authorized to go to Washington and to receive there the bonds; the statute making it his duty to deposit them, when received, in the Treasury of the State of Texas, to be disposed of 'as may be provided by law,' and enacting further, that no bond issued as aforesaid, and payable to bearer, should be 'available in the hands of any holder until the same shall have been indorsed, in the city of Austin, by the Governor of the State of Texas." The italics are in the original. Applying this to the phrase in question, if such parts of this act as were intended to control the payment of these Texas bonds had been inserted on their face, it would have made such a distinction as to control the terms "redeemable after the 31st of December, 1864;" and the rule referred to in connection with the known usage of the United States to pay, &c., would not, by consequence, apply.

But look at this phrase, "distinction between redeemability and payability made by law," and see if by possibility it can apply to the bonds stolen from the Manhattan Savings Institution. Those bonds are, in terms, as will be recollected, redeemable at the pleasure of the United States after July 1, 1870,

Argument for Manhattan Savings Institution.

and payable on the 1st day of July, 1885. Now, is there any law making a distinction between redeemable and payable, as used in these bonds? None. The act of '65 and the provision of section 3697 of the Revised Statutes as to the mode of working out the pleasure of the United States by calls, numbers, &c., and fixing the day and place of presentation for payment, voice the instrument; but the use of the word "redeemable" invariably contemplates payment in connection therewith. So that in the case of the bonds in these suits, there being no such distinction as that referred to, the Supreme Court of the United States says: "the known usage of the United States to pay all bonds as soon as the right of payment accrues requires the application of the rule that purchasers of bonds past due take nothing but the actual right and title of the vendors to bonds of the United States which have become redeemable." And this point was affirmed in Texas v. Hardenberg, 10 Wall. 91, where it is said: "We have reconsidered the grounds of that decision [Texas v. White], and are still satisfied with it." And reaffirmed in Vermilye v. Adams Express, 21 Wall. 138, 145, where it is said: "This point being, as the court considered, settled." Mr. Justice Miller, in delivering the opinion in the Vermilye case, says: "We have not quoted the language from the opinion in that case [Texas v. White] with any view of affirming it. It may admit of grave doubt whether such bonds [the Texas bonds], redeemable but not payable at a certain day, except at the option of the government, do become overdue, in the sense of being dishonored, if not paid or redeemed on that day." But, so far from repudiating the rule itself, as laid down in Texas v. White, the court unanimously held it applicable to redeemable United States bonds In proceeding with the consideration of the second proposition of our adversaries, the cases cited seem to be sufficient. They have dwelt much on the lex mercatoria; but these instruments are themselves only of recent introduction, and there can be no custom in regard to them which is a part of the law merchant. That is a graft upon the common law, which by its age and universality, has become such a branch of the unwritten law that courts have knowledge

Argument for Manhattan Savings Institution.

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thereof. In the present cases, assuming any practice of trade in these bonds (truly or not), it is claimed to be only of recent growth; and if the wording of an instrument is such as to exclude any such practice, no such usage can affect the established rules settled by adjudication. Crouch v. Credit Foncier, 8 L. R. Q. B. 374, 386. In Barnard v. Kellogg, 10 Wall. 383, 391, Mr. Justice Davis says: "It is well settled that usage cannot be allowed to subvert settled rules of law." In Goodman v. Roberts, 10 L. R. Ex. 357, the Chief Justice of England says: "We must by no means be understood as saying that mercantile usage, however extensive, should be allowed to prevail, if contrary to positive law. To give effect to a usage which involves a defiance or disregard of the law would be obviously contrary to a fundamental principle." In the case of Vermilye v. Adams Express Co., above cited, Mr. Justice Miller said: "We cannot agree with counsel for the appellants that the simple fact that they were the obligations of the government takes them out of the rule which subjects the purchaser of over-due paper to an inquiry into the circumstances under which it was made, as regards the rights of antecedent holders." And further on he says: "Bankers, brokers, and others cannot, as was attempted in this case, establish by proof a usage or custom in dealing in such paper which, in their own interest, contravenes the established commercial law. If they have been in the habit of disregarding that law, this does not relieve them from the consequences nor establish a different law." In England, a decade or more ago, a disposition seemingly manifested itself to extend the rule laid down in the leading case of Miller v. Race by Lord Mansfield, 1 Burr, .452, and as stated in Swift v. Tyson, 16 Pet. 1, by Mr. Justice Story, in his quaint, incisive way, viz.: "There is no doubt a bona fide holder for value, without notice before due, may recover." "This is a doctrine laid up among the fundamentals of the law, and requires no authority," &c. See, also, Goodman v. Simonds, 20 How. 343. In many of the English cases, both old and modern, certain negotiable instruments are spoken of as passing like money, but in no one of these cases is that phraseology used with reference to the transfer of paper

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