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District Court is still in full force and effect, and is wholly unpaid and unsatisfied, &c.
The defendants filed a demurrer, which was overruled. They then answered, admitting the execution of the bond and the first judgment of affirmance, and setting up that Burgess subsequently gave a new supersedeas bond, and removed the case to this court, where the judgment of the Circuit Court was affirmed; and that by such second bond “the judgment of said Circuit Court was superseded, rendered inoperative, and vacated, and defendants were for ever released and discharged from any and all liability upon said bond sued on.”
For a further defence, they averred that the plaintiff had not sued out an execution against Burgess, or pursued the sureties on the second bond, they being solvent.
To these affirmative defences the plaintiff demurred. His demurrer was overruled. The plaintiff then filed a replication, denying the new special matter set up. The court rendered judgment for the defendants. The plaintiff then removed the case here.
Mr. Nathaniel Myers for the plaintiff in error.
1. The admission in the answer of the execution and breach of the bond entitled the plaintiff to a judgment in his favor, on the pleadings, unless the special matter pleaded by the defendants constituted a valid defence.
2. The affirmance by the Circuit Court of the judgment of the District Court fixed the liability of the sureties, and was a breach of the condition to prosecute the writ of error with effect. Karthaus v. Owings, 6 Har. & J. (Md.) 134.
3. The second writ of error did not annul that affirmance, or discharge the sureties on the original supersedeas bond. Dolby v. Jones, 2 Dev. (N. C.) 109; Ashby v. Sharp, 1 Litt. (Ky.) 156; Jordan v. Agawam Woollen Co., 106 Mass. 571; Hinckley v. Kreitz, 58 N. Y.583; Smith v. Falconer, 11 Hun (N. Y.), 481; Gillette v. Bullard, 20 Wall. 571; Smith v. Crouse, 24 Barb. (N. Y.) 433; Richardson v. Krapf, 5 Daly (N. Y.), 385; Rev. Stat., sect. 1000; Gardner v. Barney, 24 How. (N. Y.) Pr. 467; Robinson v. Plimpton, 25 N. Y. 484; Kellar v. Williams, 10 Bush (Ky.), 216; Brandenburg v. Flynn's Administrator, 12 B. Mon. (Ky.) 399; Patterson v. Pope, 5 Dana (Ky.), 241. 4. It was not necessary to sue out an execution against the original judgment debtor. Smith v. Ramsay, 6 Serg. & R. (Pa.) 573; Wood v. Derrickson et al., 1 Hill (N. Y.), 410; Tissot v. Darling, 9 Cal. 278; Smith v. Gaines, 93 U. S. 341; Brandt, Sureties, sect. 404. Mr. Given Campbell, contra.
The only question for consideration is, Did the court err in rendering judgment in favor of the defendants ? and it is submitted on their behalf that it did not. The new bond when the writ of error was sued out of this court operated as a supersedeas, and discharged the sureties on the bond given in the District Court.
Such a bond is intended to secure the payment of the judg. ment, if the defendant fails in the Appellate Court. Rule 29, Sup. Court; Evans v. Hardwick, 1 J. J. Marsh. (Ky.) 435; Morris v. Barclay, fc., 3 id. 376; Moore v. Gorin, 2 Litt. (Ky.) 186; Sumrall et al. v. Reid, 2 Dana (Ky.), 65.
It is with this view that it is required to be in double the amount of that judgment. Shannon and Wife v. Spencer, 1 Blackf. (Ind.) 120; Norwood v. Martin, 3 Har. & John. (Md.) 199; Parker v. Hannibal f St. Jo Railroad Co., 44 Mo. 415.
This court must have had in view the fact that at common law, sureties were not liable beyond the court for which they stipulated, or the fourth and tenth rules in admiralty would not have been so carefully framed.
The judgment of the Circuit Court, so far as it affected the defendants as sureties on the first bond was vacated by the subsequent proceedings, Payne v. Cowan, 17 Pick. (Mass.) 142; and an action of debt could not be maintained upon it. Atkins v. Wyman, 45 Me. 399; Campbell v. Howard, 5 Mass. 376; Keen v. Turner, 13 id. 266; State of Ohio v. Commercial Bank of Cincinnati, 7 Ohio, 129; Clark Gale v. R. Butler, Jr., 35 Vt. 419.
The original bond was not given to secure the judgment of the Circuit Court when the cause was removed here. If that bond remained in force, another in double the amount of that judgment should not be required, as no additional security, except for costs, would be necessary to transfer the case here, ciation, shall pay a tax of ten per centum on the amount of notes of any town, city, or municipal corporation, paid out by them.”
There was a verdict in favor of the United States for $2,000; and judgment thereon having been rendered, the bank thereupon sued out this writ of error.
Mr. B. C. Brown for the plaintiff in error.
So far as it seeks to impose a tax by the United States upon the circulation or other use of the notes of a State municipal corporation, the statute in question is unconstitutional and invalid.
The principle to which the plaintiff in error appeals is well settled.
In our dual government, each — State and Federal — is supreme in its own sphere. Each, in all its departments, may devise and use its own means for the discharge of its duties and the exercise of its powers, without hindrance from the other. Neither may, directly or indirectly, by taxation or otherwise, impede the other in the use of such means. dce'uilough v. The State of Maryland, 4 Wheat. 316; Weston v. City Council of Charleston, 2 Pet. 419; Dobbins v. Commissioners of Erie County, 16 id. 435; Bank of Commerce v. New lors City, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Bradley v. The People, 4 id. 459; The Banks v. The Mayor, 7 id. 16 Bank v. Supervisors, id. 26; The Collector v. Day, 11 id. 113 ; United States v. Railroad Company, 17 id. 322; Freed nan v. Sigel, 10 Blatch. 327; State v. Garton, 32 Ind. 1; Jones v. Keep, 19 Wis. 369; Sayle: v. Davis, 22 id. 229; Fifield v. Close, 15 Mich. 505; In the Matter of Georgia, 12 Op. Att.Gen. 282.
A municipal corporation is a part of the State government, and is protected from Federal taxation to the same extent and in the same manner as the State itself. United States v. Railroad Company, supra.
This principle cannot be denied, but the United States will contend that it does not relieve the bank from payment of the tax.
That the tax is laid upon the municipality's notes and evidences of indebtedness, or rather upon it, cannot be denied.
In determining whether a tax falls within the prohibicion, its effect must be considered, and is decisive. In Railroad Com pany v. Peniston (18 Wall. 5), the exemption of Federal agencies from State taxation was said to be dependent “ upon the effect of the tax; that is, upon the question whether the tax does, in truth, deprive them of power to serve the government as they were intended to serve it, or does hinder the efficient exercise of their power.” p. 36.
The effect of the tax in this case is apparent. The tax is more burdensome than any which has ever come before the court for determination. In all former cases, the tax was a single specific one, ending on payment. This is a continuing one, following the city's note wherever it may go, and never ending or ceasing until the city abandons the attempt to exercise its legitimate powers. In ten transfers, the national government absorbs the whole value of all the notes issued by the city. Each taker from the city must consider not only the tax which he must pay, but also that which must be paid by the person who takes it from him ; for by each transfer, in exchange for the obligations of the government, or of private persons, or for articles purchased or in payment of debts, the note, whether it be taken at a discount or a premium, or at par, is “ paid out,” within the meaning of the act imposing this tax.
The case most nearly analogous to this is Weston v. City Council of Charleston, supra. The “stock” of the United States and these “notes” are similar in every respect. Each was the evidence of a governmental debt, contracted in the exercise of the borrowing power. It is a mistake to call this a tax upon the bank. The bank may be the paying agent, just as in United States v. Railroad Company, supra. There the railroad company was the paying agent, but the tax, when paid, fell upon Baltimore. In this it falls upon Little Rock. The only material difference between Weston v. City Coun cil of Charleston (supra) and the case at bar is, that there the tax was imposed directly upon the stock, while here the attempt is to arrest the city's notes in their circulation, and prevent their passing from hand to hand, by affixing a tax upon their transfer. The contention by the United States
Missouri, Kansas, & Texas Rail Payne o. Sheldon, 63 Burb. (N.Y.)
Cargo, 1 Cliff. 219
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Pierce v. Milwaukee Construction
Olcott v. Bynum, 17 Wall. 44 288 Postlewait & Creagan and Keeler
Osgood v. Allen, 1 Holmes, 185
Town of Keithsburg v. Frick, 34
Page v. Wisden, 20 L. T. N. 8. III. 410
Quarry v. Bliss, 27 N. Y. 277 194
Patterson v Kentucky, 97 U. S. Eq. 29