Opinion of the court. Supreme Court to "all cases in law and equity arising under this Constitution;" and no construction of the Judiciary Act can be made to deprive the citizens of the United States of the protection guaranteed to them by that article. The leading case on this subject is Cohens v. Virginia;* a case elaborately argued and by numerous counsel. Responding to positions which had been maintained at the bar, and which would have narrowed the meaning of the expression, Marshall, C. J., announced it as the opinion of the court, that "a case in law or equity may be truly said to arise under the Constitution, or a law of the United States, whenever its correct decision depends on the construction of either;" and that great expositor of our Constitution and early statutes declared that he "who would withdraw any case of this description from that jurisdiction must sustain the exemption they claim on the spirit and true meaning of the Constitution; which spirit and meaning must be so apparent as to overrule the words which its framers have employed." At a subsequent day, Mr. Justice WAYNE delivered the opinion of the court. He stated it to be the conclusion of their honors, upon an examination of the record, that as the validity of the act of February 25th, 1862, was drawn in question, and the judgInent of the Court of Errors and Appeals of the State of New York was in favor of it, and of the right set up by the defendant, this court had no jurisdiction to reverse that judgment; that the dismissal of the case was accordingly to be directed. In support of the decision which he announced the learned Justice referred to various cases in this court which are mentioned in the note below.t NELSON, J., dissenting. MOTION GRANTED. * 6 Wheaton, 379. † Gordon v. Caldcleugh, 3 Cranch, 268; Fulton v. McAffee, 16 Peters, 149; Strader v. Baldwin, 9 Howard, 261; Linton v. Stanton, 12 Id., 423. Statement of the case. WHEELER V. SAGE. Where a firm, whose business was "a general produce business," owned a mortgage or real estate, which real estate itself the firm was desirous to purchase ander the mortgage, and intrusted the subject generally to one of the firm,-held, that the legal obligation of the partner intrusted being only to get payment of the mortgage, he might make an arrangement for his own benefit with a third person, without the knowledge of his partners, by which such third person should buy the mortgaged estate, giving him, the intrusted partner, an interest in it; and if the mortgage debt was fully paid by such partner into the firm account, that there was no breach of partnership or other fiduciary relation in the transaction; or, at least, that no other partner could recover from him a share of profits made by a sale of the real estate; all parties alike having been originally engaged in a scheme to get the real estate by depreciating its value through a process of entering a judgment for a large nominal amount, and by deceiving or "bluffing off" other creditors. THIS was an appeal from the District Court of the United States for the District of Wisconsin; the case in that court having been one of a bill in equity, by which the appellant Wheeler sought to charge Sage as his trustee. The material facts, as set forth in the bill, were these: On the 12th day of September, 1851, Wheeler, Sage, and Slocum entered into an equal copartnership, to carry on “a general produce business" in Troy, New York. The firm became the owner of a large debt against Alanson Sweet, of Milwaukee, which was secured by mortgage on valuable real estate. Proceedings to foreclose were commenced in October, 1854, and a decree passed in November, 1855. Sweet was insolvent, with heavy judgments against him. The parties were desirous of getting a perfect title to the mortgaged premises, their value being, when the mortgage was given, $50,000. In order to do this, it was thought necessary that certain judgments should be purchased and other arrangements perfected, which Sage informed Wheeler and Slocum could be done through a certain Alexander Mitchell, for $10,000. Sage was authorized to perfect the agreement, and to charge Wheeler and Slocum their proportionate amount on the books of the firm. This agreement, or a Statement of the case. similar one, was made by Sage with Mitchell, and judgments purchased under it. Without the knowledge of Wheeler, Sage, however, abandoned this agreement, and made one with Mitchell for his own benefit. The mortgaged property was sold, and Mitchell became the purchaser, letting Sage have one-third interest on certain conditions; this being done, as alleged, in violation of the rights and without the knowledge of Wheeler and Slocum. The mortgage debt. was fixed at $24,000, two-thirds of which amount was paid over by Sage to Wheeler and Slocum, being, as he said, the best that could be done, and which was accepted by Wheeler and Slocum on that hypothesis. Enough of the mortgaged property, the bill alleged, had been sold to produce $105,009, leaving unsold what was worth $27,000. The prayer of the bill was, that Sage might be declared to be trustee for Wheeler for one-third of the mortgaged property still held and unsold by Mitchell, and for one-third of the proceeds of what had been sold; and be decreed to account. Sage, in his answer, admitted that the firm was desirous of becoming the owner in fee of the premises mortgaged, and that it was thought by an expenditure of $10,000 that the object could be attained; and that an arrangement to this effect was contemplated with Mitchell, but became impracticable, and was abandoned: that Mitchell controlled the defence, which was serious and complicated, and it was feared by Wheeler that it might so far prevail as to lessen the amount of the mortgage debt. After considerable negotiation, a basis of settlement was agreed to by the partners and Mitchell, which fixed the amount due on the mortgage at $24,000. The defence was withdrawn, and a decree entered (at the instance of Mitchell) for $33,000, which was to be discharged on the payment of $24,000 by Mitchell, or at his election the decree was to be assigned to him. Mitchell preferred a sale to cut off an intervening claim. Sage admitted that, after the sale, he became interested in one-third of the property, but denied that Wheeler and Slocum have ever had, or were ever entitled to any interest whatever therein, and averred that when the sale was made there was Statement of the case. no subsisting agreement or understanding other than that said Mitchell should pay the amount agreed upon at the time of sale. The answer also denied that the mortgaged premises were of the value stated in the bill, and insisted that enough had not been realized from their sale to pay Sage the sum of $24,000. A general replication was filed, and proofs were taken. In regard to the plan of getting a "perfect title" to the premises, it appeared by these that Sweet had about thirty different judgment creditors (Mitchell holding a judgment for $18,556.04, and the remaining creditors, exclusive of the Troy firm, for $59,597.73); that the principal item of the mortgaged premises was a warehouse, valued, when the mortgage was given, at $50,000, but of which the rise in value had been so great, that when the bill was filed it had come to be valued by some persons at twice that sum. The firm, accordingly, did not want to receive their money and interest under the proceeding to foreclose, but wanted to get the warehouse itself; of which, indeed, they had been for some time in possession, and which they were now actually occupying, with apparent exercise of ownership. But there were difficulties in the case. Sweet thought that with the rise of this property, which would occur by a railroad about to be made near it, the Lake Shore Railroad,—he would be able to reinstate his affairs, and his judgment creditors looked to the same possibility as the means of at least getting the amount of their debts. Sweet accordingly threatened to redeem; and the creditors were watching the course of events. The object of Wheeler, Sage, and Slocum was, therefore, to get the warehouse itself under their mortgage, and for no more, or for little more, than its principal and interest. The operation was to be performed, in part, by buying in certain judgments at a discount, and in part by securing Sweet's acquiescence, in virtue of a consideration, to their getting a decree as speedily as possible, and an arranged sort of sale on foreclosure. The following extracts, or parts or copies of letters, selected from a large number in the record, give an idea of the process. The firm, it ap Statement of the case. peared, was represented in Troy by Messrs. Sage (M. C.) & Slocum, as R. Sage & Co.; and in Milwaukee by Mr. Wheeler, as Wheeler & Co. MESSRS. R. SAGE & Co. [WHEELER TO SAGE.] MILWAUKEE, October 11, 1858. GENTLEMEN: Had conversation this morning with Mr. Sweet; says he shall try and have some one redeem, and knows where he can get the money; that the property was worth $90,000, as other property was selling, and wanted $10,000 for his aid in perfecting title, which he says he can do. I remarked to him that it would be no object to him to redeem, as his judgmentcreditors would take it all from him again. He said he knew it, but in all human probability he should defend. I remarked that bis services might be worth something to you in perfecting title, but no such sum as he named. . . . I think if you can secure his quietness, that you would be safe from any creditors. I am of the opinion that if terms could be made with him for $3000, payable when title is perfected, it would be a good thing to do. Let us hear from you what you think. Yours, truly, WHEELER & Co. On the 26th November, 1853, Wheeler writes to Sage: "Mr. Sweet is defending the suit of foreclosure of warehouse property; can't imagine what he does it for, unless it is to make you pay him for keeping still, or to stave it off until the property should rise more in value. Sweet is willfull.” Wheeler says subsequently, at different dates: "I think there is a game, an intrigue in the defence, against the warehouse property. There may be a collision of parties that we little expect... Sweet is ugly, and is determined to make you all the trouble he can;" "is trying to make some defence in your chancery suit of warehouse property; is around amongst the warehouse men making inquiries what it is worth." "These chancery suits are long-winded." "There is no earthly doubt but that the warehouse property is worth $50,000; nor but that it would sell for that now." "The property is variously estimated from $50,000 to $100,000.” |