Central Railroad & Banking Co. v. Ward

37 Ga. 515

• Court: Supreme Court of Georgia
• Decided: June 15, 1868
• Status: Published

Opinion

Warner, C. J.

There are two questions presented by the record in this case for our consideration and judgment. First, whether the complainants, and those under whom they claim, acquired a valid title to the fifty shares of the Central Railroad stock under the judgment, and proceedings had, in the District Court of the Confederate States? Second, if they did not, is the Central Railroad Company liable as a warrantor of the title of the stock transferred on the books of the Company to the purchasers thereof, under the proceedings had in said Confederate Court ? The Court below decided that the complainants acquired a valid title to the fifty shares of stock; but also decided that the Company would not be liable as a warrantor of the title to the stock, in the event of the failure of title in the parties from whom the complainants purchased the same. Both decisions of the Court were excepted to, and are now assigned for error here.

It appears from the record, that the fifty shares of stock now in controversy constituted a part and parcel of eight hundred and seventy-eight shares of the capital stock of the Central Railroad and Banking Company, which appeared on the books of the Company to have been held and owned in the names of sundry persons on the record mentioned, who were citizens of the United States of America, and have continued to be so all the time. These eight hundred and seventy-eight shares of stock were sequestrated as the property of alien enemies by the judgment of the Confederate Court, and the Company directed to transfer the stock upon their books to the Confederate States Receiver, Wm, C. Daniel, which was done on .the 3d day of May, 1862. Afterwards, Daniel, as Confederate States Receiver, under the order arid decree of said Court, sold the said shares of stock so sequestrated, and transferred the same on the books of the Company. On the 3d September, 1862, Daniel, the Receiver as aforesaid, transferred one hundred shares of said stock on the books of the Company to Octavus Cohen, and the said Octavus Cohen transferred fifty of said one hundred shares to Solomon Cohen, and Solomon Cohen, on the 17th April, 1863, transferred said fifty shares to one of the complainants, John E. Ward.

1. .Did the complainants, or those under whom they claim, acquire a legal and valid title to the fifty shares of stock, as against the original owners thereof, under the judgment and proceedings had in the Confederate Court, as set forth in the record ? The answer to this question will depenjl upon the fact whether the original owners of this railroad stock, being citizens of the United States, were alien enemies to the citizens of the State of Georgia, another of the United States, constituting the United States of America, as recognized by the Constitution thereof, and whether the Confederate Court had the lawful authority to adjudge them to be so, as stated in,the record. The judgment of the Court below, is based upon the idea of the legal right of separate State secession 'from the Eederal Union; that by the act of secession, Georgia became an independent State or nation, and that the late war was a contest between separate, independent States or nations ; or, at least; it was a civil war between the States, and that the citizens thereof were alien enemies to each other, and their property liable to confiscation under the proceedings had in-this case.

The important question to be decided is, what was the political status of the State of Georgia and the people thereof during the war, and at the termination of the war, according to the fundamental principles of international law and the fundamental principles of the .Constitution of the United States ? If the State of Georgia had the legal right to secede from the Federal Union, and thereby became an independent State or nation, outside of the Federal Union, and, as such, was conquered by the government of the United Statejs, as an independent State or nation, then her citizens were not entitled to claim any protection under the provisions of the Federal Constitution. They might have been lawfully placed under military government by the conqueror, and dealt with as the recognized principles of international law prescribe, until again admitted into the Federal Union, as provided by the Constitution thereof. But a majority of this Court, during the present term, in the case of Chancely vs. Baily & Cleveland (post) have held and decided that the State of Georgia could not lawfully secede from the Federal Union, that by her own voluntary, executed compact, she constituted an integral part of the political sovereignty of the government of the United States of America; that, having in her sovereign capacity, voluntarily granted certain powers enumerated in the Federal Constitution, for the expressed purpose of forming and creating that government, in order to form a perpetual Union of the States, of which she was one, she could not, afterwards, resume or reassert the powers so granted, and thereby destroy the unity of that government of which she constituted an integral part, except by successful revolution, which has not been accomplished. The reasons for that decision will not be again repeated here. From this conclusion, as to the legal right of separate State secession from the Federal Union, it necessarily follows that the orignal owners of the railroad stock, being citizens of any one of the United States of America, were not alien enemies to the citizens of the State of Georgia, another of the United States, in any legal sense of that term. By an act of Congress, passed in 1798, it is provided that in case war shall be declared between the United States and any foreign nation or government, the citizens of such foreign nation or government, within the United States, shall be recognized as alien enemies. United States Statutes at Large, 577. The original owners of this railroad stock were nót citizens of any foreign State or nation. This Confederate Court mentioned in the record,' derived its authority solely from an organization of several of the States of the Federal Union, which attempted to secede therefrom, but failed to do so. That organization of assumed seceded States, for the purpose of resisting the government pf the United States, was in violation of the supreme law of the land, as declared by the Constitution of the United States — as was held by a majority of this Court in Chancely vs. Baily (post,) consequently that Court, deriving its sole authority from that organization did not have the lawful jurisdiction to adjudge and determine, that the original owners of this railroad stock were alien enemies, or to confiscate and order a sale of their property as such, as set forth in the record. Therefore, the purchasers of said railroad stock under the pretended authority of such judgment and sale, acquired no legal or valid title thereto. When the rights to property are sought to be changed by the sentence of a judicial tribunal, the power and authority under which it acts must be considered and looked into. It is for governments to decide whether they will consider a colony which has separated herself from the mother country an independent nation. Until such decision shall be made, or the mother country shall relinquish her claim, courts of justice must consider the ancient state of things as remaining. Rose vs. Himely, 4 Cranch’s R., 241. “ It belongs exclusely to governments to recognize new States in the revolutions which may occur in the world, and until such recognition, either by our own government, or the government to which the new State belonged, Courts of justice are bound to consider the ancient state of things as remaining unaltered.” Gelston vs. Hoyt, 3 Wheaton’s R., 246. The Confederate government was never recognized by the government of the United States as a legal, existing government.

But it is contended that, although the State of Georgia may not have had the legal right to secede from the Federal Union, still she was in fact out of the Union for all political purposes, and was recognized by the government of the United States as a belligerent enemy, and therefore, according to' the laws of war, she must be considered and treated as a State out of the Union; that all acts done under her authority whilst in that condition, including the confiscation of this railroad stock, were lawful and valid acts, and that the. title of the original owners to the same was thereby legally divested. Before proceeding to discuss this branch of the case) it is proper to remark that the Common Law of nations, (which is a part of the Common Law of the land,) when in conflict with the principles and provisions of our American Federal Constitution and the form of government established thereby, or the laws enacted in pursuance thereof, must yield to the latter. The Common Law of nations, when repugnant to the positive provisions of the Constitution of the United States or the laws enacted' in pursuance thereof, must be considered as abrogated or repealed by the latter.

But let us examine this question in accordance with the rules prescribed' by the Common Law of nations. Was the war in which the people of Georgia was engaged a civil war or a rebellion ? According to some writers upon international law, the distinction between a civil war and a rebellion, is where the malcontents have any just cause for taking up arms against the sovereign authority. If they have, it is termed a civil war; if they have not, then it is termed a rebellion. Without pretending to decide whether the people of Georgia were engaged in a’ civil war, or a rebellion, it is quite certain that the war was prosecuted by the government of the United States upon the theory that it was a rebellion, and it was so declared by that government, in the most solemn form. In view of important questions that may hereafter be presented to this Court for its consideration and judgment, the State of Georgia will be considered as occupying.the position that the government of the United States has asssgned to her in regard to the war. If, however, we consider the contest- in which the people of Georgia were engaged with the government of the United States as a civil war, instead of a rebellion, the result must be the same, so far as the political status of the State is concerned, as well as the rights of the parties now before the court. “ A civil war,” (says Mattel,) “ breaks the bonds of society and government, or at least suspends their force and effect: it produces in the nation two independent parties, who consider each other as enemies, and acknowledge no common-judge. These two parties, therefore, must necessarily' be considered as thenceforward constituting, at least for a time, two separate bodies, two distinct societies. Though one of the parties may have been to blame in breaking the unity of the State, and resisting the lawful authority, they are not the less divided in fact. Besides, who shall judge them ? Who shall pronounce on which side the right or the wrong lies? On earth they have no common superior; they stand, therefore, in precisely the same predicament as two nations who engage in a contest, and being unable to come to an arrangement, have recourse to arms. This being the case, it is vei’y evident that the common laws of war, those maxims of humanity, moderation and honor, which we have already detailed in the course of this work, ought to be observed by both parties in every civil war.” Vattel, 425, section 293. Thus it is very clear that the common laws of war, were applicable to the belligerent parties during the ' time the contest continued, — during the time the sovereign authority .of the government of the United States'was suspended by the force of arms in the State, — they were during that time belligerent enemies, so far only as to observe those maxims of humanity, moderation and honor- prescribed by the common laws of war, but they were domestic belligerent enemies, and not alien belligerent enemies, and that fact negatives the right of confiscation in this case, on the part of those who were resisting the sovereign authority of the government, of the United States. Although the common laws of war are applicable to, and are to be observed during the continuance of a civil, war, what is to be done when the sovereign authority of the government is asserted by force of arms over the State attempting to secede therefrom, and-peace and order is restored in a civil war f “ When the sovereign,” (says Vat-tel,) “ has subdued the opposite party and reduced them to. submit and sue for peace, he may except from the amnesty-the authors of the disturbances — the leaders of the party,.’ He may bring them to a legal trial, and punish them if they be found guilty.” Vattel, 426. This' could not be done, until the sovereign authority of the government had beem restored over the State, the civil war suppressed, the enemies of that sovereign authority subdued, and peace maintained. It was undoubtedly the duty of the government of the United States to have protected the people of Georgia against both foreign and domestic enemies, to have maintained the sovereign authority of the United States over them ; but if,, for a-time, that authority wa's. suspended by the force of arms- ihi the hands of the domestic enemies of that government, what was the duty of the government, when its authority was restored by force of arms, towards the people of the State, •and what was the political status of the State according to the well-established principles of international law? We have already shown that the government might bring to trial the authors of the disturbance, and punish them, if found guilty, in case of a civil war, but what is the condition of the State, and the people thereof, at the termination of a civil Avar? “The sovereign,” (says Vettel,) “ is bound to protect the persons and property of his subjects, and to defend them against the enemy. When, therefore, a subject, or any part of his property, has fallen into the enemies possession, should any fortunate event bring them again into the sovereign’s poAver, it is undoubtedly his duty to restore them to their former condition, to re-establish the persons in all their rights and obligations, to give back the effects to the OAvners; in a Avord, to replace everything on the same footing on which it stood previous to the enemy’s capture. The justice or injustice of the war, makes no difference in this case.” Vattel, 3y2, section 205. The proposition to be established is, that although by civil Avar the State of Georgia, for a time, may have been in the hands of and under the control of domestic belligerent enemies and the sovereign authority of the Government of the United States may have been for a time suspended; yet Ayhen that authority Avas restored by force of arms, the position of the State was in the Union, not only de jure but de facto, Vattel states, the principle which is applicable to the case: “ If the sovereign retakes those towns, countries or prisoners, who had surrendered to the enemy, he recovers all his former rights over them, and is bound to re-establish them in their pristine condition.” Vattel 394, section 210. The pristine condition of the State of Georgia, prior to the AArar, was one of the original thirteen sovereign States that formed the government of the United States,-and then and, noAv, constitutes an integral part of the sovereign authority of that government, the unity of which she could not destroy by her own act, unless the absolute legal right of separate State secession be admitted. If the State was in the Union upon the suppression of a civil war both de jure and de facto, surely she was in the Union upon the suppression of a' rebellion against the government of the United States.

According to these fundamental principles of international law, independent of the provisions of the Federal Constitution, the war was prosecitted, on the part of the Government of the United States, for the purpose of maintaining its sovereign authority over all the States which constituted an integral part thereof, and to preserve the unity of the same, for the protection of th¿ citizens thereof, and their property. This being so, what were the rights of the original owners of this railroad stock, at the time of the attempted secession of the State, in 1861 ? They were citizens of one or more of the United States, which did not attempt to secede from the Federal Union. By the 2d section of the 4th article of the Constitution of the United States, it is declared, that “ the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.” The owners of this railroad stock, then, at the time of the attempted secession of the State of Georgia, although citizens of another State within the Federal Union, had the lawful right to own, have, hold, and enjoy the title to the same in this State, under the supreme law of the land, which the war was prosecuted to uphold and maintain.

But it is contended that inasmuch as the war, which was prosecuted by the Government of the United States, for the maintenance of its sovereign authority over the States which attempted to secede therefrom, assumed the'proportions of a civil war, therefore, an organization of these latter States, for the purpose of resisting the authority of the Government of the United States, could, under the claim of belligerent rights during such war, lawfully confiscate this railroad stock, as the property of alien enemies. In support of this position the decision of the Supreme Court of the United States, in the Prize cases, is relied on- — 2 Blade’s Rep., 666. In the case of Shortridge vs. Mason, in the Circuit Court of the United States, for North Carolina, reported in the American Law Beview, for October, 1867, p. 95, Chief Justice Chase says, in relation to the Prize cases, “ but there is nothing in that opinion which gives countenance to' the doctrine which counsel endeavors to deduce from it, that the insurgent States, by the act of rebellion, and by levying war against the nation, became foreign States, and their inhabitants alien enemies.” In the case of Shortridge vs. Mason, it was held to be no defence to an action for debt, that the defendant had been compelled to pay the amount of the debt, with interest, to a receiver under the sequestration acts of the Confederate States. In relation to the principles asserted by the Court in the Prize eases, it may be remarked, that whilst it may be lawful for the regular established Government, in order to maintain its sovereign authority over those who attempted to resist it by civil toar, to confiscate the property of the latter, found within the military lines of the former, during the existence of the war, as a belligerent right; yet, it does not follow, that those who are engaged in revolution for the purpose of resisting the lawful authority of that Government, can claim the lawful right to confiscate the property of citizens who adhere to the lawful Government, as alien enemies, under the claim of a belligerent right to do so, the more especially when they fail to malee good that claim by force of arms. In a legal point of view, the difference between the two cases will be at once apparent. The complainants, and those under whom they claim, derive their title to the railroad stock, under proceedings of an unauthorized, and unrecognized organization which has failed, and ceased to exist, and their title thereto being so derived, failed 'with it. It is the judgment of a majority of this Court, that the judgment of the Couit below, upon this branch of the case, be reversed.

2. In regard to the other question made in this case, whether the Central Railroad and Banking Company are to be held liable as guarantors, or warrantors of the title to this stock, simply because the Company allowed the transfer of the stock to be made upon their books, under the facts and circumstances presented by the record, it is the unanimous opinion of the Court that the Company are not so liable. By the 9th section of the charter of the Company, certificates of stock therein are transferred on the books of the Company only by personal entry of the stockholder, his or her legal representative. The stock is not purchased of the Company, but of the party who represents himself to be the owner of it, who, when the terms of sale are consummated, directs the transfer to be made by his personal entry, or that of his legal representative, on the books of the Company, to his vendee. In the absence of any "fraud or collusion, on the part of the Company, the mere transfer of the stock on the books thereof, by direction of the vendor to his vendee, does not make the Company liable as a guarantor, or warrantor, of the vendor’s title to the stock. If the vendor’s title to the stock is not good, the vendee must look to him from whom he purchased the stock, and to whom he paid the consideration therefor. There was an implied warranty on the part of.the vendor of the stock that he had a valid title theretb. See Eevised Code, section 2609. These cirtificates of stock are not such recognized currency as will protect the vendee thereof, as a bona fide purchaser. Eevised Code,‘section 2597. It is the judgment of this Court, that the judgment of the Court below be affirmed upon this assignment of error in the record. Let the respective judgments be entered in accordance with the judgment of this Court.

[See the dissenting opinion of Harris, J., after the next case.]