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Opinion of the Court.

bonds to its vendor. The bank, in this case, insisting that it obtained the bonds of the plaintiff in violation of the act of Congress, is bound, upon being made whole, to return them to him. No exemption or immunity from this principle of right and duty is given by the national banking act.

“The obligation to do justice,” this court said in Marsh v. Fulton County, 10 Wall. 676, 684,"rests upon all persons, natural and artificial, and if a county obtains the money or property of others without authority, the law, independently of any statute, will compel restitution or compensation.” “ This,” it was further said, “is a very different thing from enforcing an obligation attempted to be created in one way, when the statute declares that it shall only be created in another and different way." Upon this obligation to do justice rests the decision in Louisiana v. Wood, 102 U. S. 294, 298, 299, where this court held a municipal corporation liable to an action for money received on bonds issued by it, and which, being issued without authority of law, were invalid. The money it got was paid to it in the belief that the bonds were valid obligations of the corporation, and, therefore, was paid by mistake.

After citing Moses v. Macferlan, 2 Burrow, 1005, in which it was said that an action lies for money paid by mistake, or upon a consideration which happens to fail, or for money got through imposition, and also, Marsh v. Fulton County, the court, speaking by Chief Justice Waite, said that the law implied from what was done, a contract “ that the city would, on demand, return the money paid to it by mistake, and, as the money was got under a form of obligation which was apparently good, that interest should be paid at the legal rate from the time the obligation was denied.”

So, in Parkersburg v. Brown, 106 U. S. 487, 503, involving the liability of a municipal corporation upon bonds issued in its name and secured by deed of trust given by the person to whom they were loaned, and which bonds were held to be void for want of authority to execute them - the court said: “But, notwithstanding the invalidity of the bonds and of the trust, the O'Briens had a right to reclaim the property and to call on the city to account for it. The enforcement of such

Opinion of the Court.

right is not in affirmance of the illegal contract, but is in disaffirmance of it, and seeks to prevent the city from retaining the benefit which it has derived from the unlawful act. 2 Com. Cont. 109. There was no illegality in the mere putting of the property by the O'Briens in the hands of the city. To deny a remedy to reclaim it is to give effect to the illegal contract. The illegality of the contract does not arise from any moral turpitude. The property was transferred under a contract which was merely malum prohibitum, and where the city was the principal offender. In such a case the party receiving may be made to refund to the person from whom it has received the property for the unauthorized purpose, the value of that which it has actually received," citing White v. Franklin Bank, 22 Pick. 181; Morville v. American Tract Society, 123 Mass. 129, and Davis v. Old Colony Railroad, 131 Mass. 258, 275. See also Hitchcock v. Galveston, 96 U. S. 341, 351; Chapman v. County of Douglas, 107 U. S. 348, 356, 357; Salt Lake City v. Hollister, 118 U. S. 256, 263; Clark v. Saline County, 9 Nebraska, 516; Pimental v. San Francisco, 21 California, 351, 362.

We have said that the bank could hold the bonds, even if obtained by it without authority of law, as security for the money advanced to the plaintiff for them. This is only an application of the principle announced by this court in several cases involving the validity of transactions by national banks. Ir. National Bank v. Matthews, 98 U. S. 621, it appeared that a national bank loaned money upon the security of a note and a deed of trust of lands, both of which were assigned to it. The statute declared that a national banking association could

“on personal security,” and could purchase, hold and convey real estate for certain named purposes, “and for no others,” among which was not included the securing of a present loan of money by a deed of trust or mortgage on real property. The court, while assuming that the statute, by clear implication, forbade the bank from making a loan on real estate, refused to restrain the bank from enforcing the deed of trust. The decision went upon these grounds: That the bank parted with its money in good faith; that the ques

loan money

Opinion of the Court.

tion as to the violation of its charter, by taking title to real estate for purposes unauthorized by law, could be raised only by the government in a direct proceeding for that purpose; and that it was not open to the plaintiff in that suit, who had contracted with the bank, to raise any such question in order to defeat the collection of the amount loaned. If any doubt existed as to the scope of the decision in that case, it was removed by National Bank v. Whitney, 103 U. S. 99, where it was held that the right of a national bank to enforce a mortgage of real estate taken by it to secure indebtedness then existing, as well as future advances, could not be questioned by the debtor, and that a disregard by the bank of the provisions of the act of Congress upon that subject only laid the association open to proceedings by the government for exercising powers not conferred by law.

The bank having then the right to hold the bonds until reimbursed for its advances, but being bound, upon implied contract, to return them, on demand, when repudiating as illegal the agreement under which it got them, the next inquiry is as to the amount for which it may be held liable upon its refusing to surrender them to the plaintiff. In considering this question we assume that the bank had the bonds in its possession as well when this action was brought as when it declined to comply with the plaintiff's demand for the contract. It is neither alleged nor proved that it had disposed of the bonds prior to such demand. The jury found that it purchased the bonds, and, the contrary not appearing, the presumption was that it held them even at the commencement of the action. The amount found in plaintiff's favor was the difference between the price paid by the bank and the value of the bonds at the time the plaintiff demanded compliance upon its part with the alleged contract. The result is substantially the same as if the plaintiff had tendered back the amount received from the bank and demanded a return of the bonds or their value; in which case it would have been liable for the value of the bonds, at least, at the time of the demand. It is unnecessary to discuss the conflicting decisions as to the general rule defining the proper measure of damages

Opinion of the Court.

where personal property is wrongfully detained. If the proof showed that the bonds were of greater value at or before the time of trial than at the time of the demand for their return, a different question would be presented. Galigher v. Jones, 129 U. S. 193, 201. In this case it appears that there was no difference in their value at those respective dates. The bank, if liable at all, is certainly liable, in this case, for the value of the bonds at the time it refused, upon demand, to restore them. It was not in default, under the alleged contract, until the plaintiff's demand for its performance; for until then its possession of the bonds was with his consent. Until demand, the plaintiff had not manifested his will to have them restored to him. The conversion occurred when the defendant repudiated all obligation to perform the contract or denied that any such contract was ever made, and yet held on to the bonds as its property. We say held on to them, because the jury has found, and we must take it to be true, that the bank, and not Barclay on his individual account, purchased them.

Our conclusion upon the whole case, so far as the questions arising in it may be reviewed by this court, is, that if the bank had no authority to purchase the bonds in question, it is yet not exempt, by reason of anything in the national banking act, from liability to the plaintiff for the difference between the price it paid for them and their value at the time it refused, upon plaintiff's demand, to comply with the contract made by it for their purchase and held on to the bonds.

Judgment affirmed. Syllabus.





No. 118. Argued December 16, 1890. – Decided March 2, 1891.

The Pullman Southern Car Company, operating drawing-room and sleeping

cars, hired ten of such cars to a railroad company at the compensation of three cents per mile per car for every mile run by its cars upon the lines of the railroad company. The railroad company agreed, when requested, to repair the cars furnished under the contract as it might become necessary, and, without request, to make such repairs as were required to insure their safety, rendering bills monthly to the Pullman Company and charging for such repairs only the actual cost of the material and labor expended. The railroad company assumed responsibility for damages to the cars occasioned by "accident or casualty” while the sleeping car company assumed responsibility for loss or damage arising from defective heating apparatus or lights furnished by it. The latter company was to have the exclusive right for fifteen years to furnish drawing-room and sleeping cars on all passenger trains of the railroad company, the latter binding itself not to contract with any other party to run said class of cars on and over its lines during that period. If either party failed to keep and perform its covenants the one not in default could, upon written notice, declare the contract at an end. The railroad company had the option to terminate the contract at the end of five, eight or eleven years, upon written notice served six months before the date fixed for such termination. Two of the sleeping cars, the Louisiana and Great Northern, were entirely destroyed by fire originating “ from a cause unknown;” the former at the time of the fire being on the railroad track under a depot shed used by the railroad company to store cars when not in actual transit, and the latter being in a shop belonging to the railroad company, known as the Pullman repair shop, which had been assigned to the exclusive use of the sleeping car company as a place where it could repair its own cars. This shop at the time of the fire was in the possession of the Pullman Company, the railroad employés having no access thereto. The Great Northern had been in that shop for repairs by its owner for six months before the fire, and but for the fire would have been in condition to have been again put in actual use by the railroad company on the day succeeding the fire. Both the Louisiana and the Great Northern were insured by the Pullman Company.

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