EVANS-SNIDER-BUEL CO. et al. v. McFADDEN et al., 105 F. 293

THAYER, Circuit Judge, after stating the case as above, delivered the opinion of the court. Among the numerous chapters of Mansfield’s Digest of the Laws of Arkansas which were extended over and put in force in the Indian Territory by the act of congress of May 2, 1890 (26 Stat. 81, 95, c. 182), was

chapter 110, entitled “Mortgages,” which

chapter contains, among others, the following sections: “See. 4712. All mortgages, whether for real or personal estate, shall be proved or acknowledged in the same manner that deeds for the conveyance of real estate are now required bylaw to be proved or acknowledged; and When so proved or acknowledged shall be recorded — if for lands, in the county or counties in which the lands lie, and, if for personal property, in the county in which the mortgagor resides. “Sec. 4743.

Every mortgage, whether for real or personal property, shall he a lien on the mortgaged property from the time the same is filed in the recorder’s office Cor record, and not before; which filing shall be notice to all persons of the existence of such mortgage.” Prior to the adoption of tho

chapter concerning mortgages as the law of the Indian Territory, it had been decided by the supreme court of Arkansas in Main v. Alexander, 9 Ark. 112, that by force of the aforesaid sections a mortgage on personal property executed in that state was good as between the parties thereto, though not acknowledged and recorded; but that it constitutes no lien upon the mortgaged property as against strangers until it is acknowledged and recorded in the mode prescribed by the statute, although they have actual notice of its existence.

The doctrine last stated had been recognized and enforced in the state of Arkansas in several other cases prior to May 2, 1890, but in some cases — notably in Mitchell v. Wade, 39 Ark. 377, 386, Martin v. Ogden, 41 Ark. 186, 192, and in Ford v. Burks, 37 Ark. 91, 94 — it had been criticised as harsh ánd unjust, and not in harmony with equitable principles as they prevail elsewhere. It had also been decided as early as 1886 in Watson v. Lumber Co., 19 Ark. 83, 4 S.

W. 62, that a foreign corporation, not being a resident of that state, could not execute a mortgage on personal property located in that state which it owned, and, by placing it of record, create a lien which would be good as against strangers. In Main v. Alexander the controversy arose between a mortgagee whose mortgage was recorded, but'not properly acknowledged, and a creditor of the mortgagor, who had attached the mortgaged property. subsequent to the execution and record of the mortgage; and it was decided that the lien of the attaching creditor was paramount. In the case of Watson v.

Lumber Co. the controversy arose between a mortgagee who held á mortgage executed by a foreign corporation that was recorded in' the county, where the property was situated and certain judgment creditors of the mortgagor company who had caused executions to be levied on the mortgaged property subsequent to the execution and recording of the mortgage, and it was held that the lien of the judgment creditors was paramount to that of the mortgagee. Oh February 3, 1897 (29 Stat. 510, c. 136), congress passed

an act to the following effect: “That .section forty-seven hundred and forty-two of Mansfield’s Digest' of the Laws of Arkansas, heretofore put In force in the Indian Territory, is hereby amended by adding to said

section the following: ‘Provided, that if the moijgagor is a non-resident of the Indian Territory the mortgage shall be recorded in the judicial district in which the property is situated at the time the mortgage is executed.

All mortgages of personal property in the Indian Territory heretofore' executed and recorded in the judicial district thereof in .which the property was situated at the time they were executed are hereby validated.’ ” As this statute "in express terms validated all mortgages theretofore made by nonresidents of the Indian Territory on personal property there located which had been recorded in the judicial district where the property was situated, and therefore embraced and validated the two mortgages that had been executed by J. R.

Blocker in favor of the Evans-Snider-Buel Company, one of the principal questions discussed before this court concerns the power of congress to enact the statute aforesaid, and give to it such retrospective operation. It will be observed that William McFadden & Son, hereafter referred to as the attaching creditors, caused the writ of attachment in the action brought by them against J. R.

Blocker, the mortgagor, to be levied on the cattle that were conveyed by the mortgage, about seven months before the act of congress validating the mort gage was approved;’ also that the judgment by default was entered in that case against the attached debtor five days before the law was enacted.

But when the act was approved the interplea of the Evans-Snider-Buel Company in the attachment suit was still pending and undetermined, as well as when the judgment by default was taken, and no trial of the issue existing between the interpleader and the attaching creditors was had until several months thereafter, to wit, on April 20, 1897.

We deem it wholly unnecessary to indulge in any extended discussion of the question which has been mooted whether the act of congress aforesaid impairs the obligation of a contract, and is for that reason void First, because the inhibition against the exercise of such a power which is contained in

section 10. art. 1, of the federal constitution, is not addressed to the national legislature, but to the legislatures of the several states (Mitchell v. Clark, 110 U. S. 633, 643, 4 Sup. Ct. 170, 28 L. Ed. 279; Legal Tender Cases, 12 Wall. 457, 20 L. Ed. 287; Beach, Mod. Cont. § 1633); and, second, because no contract is disclosed by the record which the act of congress in question operates to impair. It is true that the attaching creditors have a judgment against J. It.

Blocker, and that judgments are sometimes termed “contracts of record”; but such general statements mean only that the law will imply a promise on the . part of a judgment debtor to pay a judgment that has been recovered against him, and that he may be sued in form ex contractu on such implied promise. A contract of that nature, however, which does not rest on the mutual assent of the parties thereto, but is forced upon the judgment debtor as the result of a legal implication, is not such a contract as the federal constitution was intended to protect against legislation tending to impair its obligation.

This proposition is well established by controlling authority. Louisiana v. Mayor, etc., of City of New Orleans, 109 U. S. 285, 288, 3. Sup. Ct. 211, 27 L. Ed. 936; Garrison v. City of New York, 21 Wall. 196, 203, 22 L. Ed. 612.

If the act of congress of February 3, 1897, above quoted, is invalid, it is made so by virtue of the fifth amendment to the federal constitution, which, in so far as it is pertinent here, declares that, “no person * * * shall be deprived of life, liberty or property without due process of law.” This is a limitation on the power of congress, and the question is whether the attaching creditors will be deprived of a property right in the cattle which they have caused to be seized under the writ of attachment in their favor if the act is given effect according to the manifest purpose of the lawmaker.

It is urged in behalf of -the attaching creditors that the lien obtained by virtue of the writ of attachment was of such a nature that it could not be impaired by

an act of congress, even if it had been passed prior to the entry of the judgment by default against J. R. Blocker, the mortgagor; and certain authorities are cited in support of that contention, notably Day v. Madden, 9 Colo. App. 464, 48 Pac. 1053; Mulnix v. Spratlin, 10 Colo. App. 390, 50 Pac. 1078; Hall v. Stephens, 65 Mo. 670, 681; and Hannahs v.

Felt, 15 Iowa, 141; but three of these cases — the same being those that are first cited — were decided in states whose constitutions at the time declared that “no * * * law retrospective in its operation * * * shall be passed,” and in two of the cases the ruling to the effect that the lien of an attachment cannot be devested by a legislative enactment at any time after the writ is lévied appear to have been based mainly on the theory that to give

an act of the legislature the effect of impairing an existing attachment lien would conflict with the local constitutional provision last quoted. The Iowa decision in Hannahs v. Felt, supra, does not appear to have been made under the influence of such a constitutional provision as has been adopted in Colorado and Missouri.

In that case, however, the decision denying the efficacy of a legislative act to discharge the lien of an attachment was based principally on the ground that the act under consideration did not in terms attempt to devest such liens, but that its real purpose was to postpone for the time being sales of property belonging to persons in the military service, either under a mortgage, or deed of trust, or by virtue of an execution under a judgment or decree.

In so far, however, as that decision lends support to the claim that an attachment lien cannot be impaired at any time by legislative action, even where the legislature is not deprived of the power to pass laws that are retrospective in their operation, it is not only opposed to the decision of this court in Bank v. Reithmann, 49 U. S. App. 144, 25 C. C. A. 101, 79 Fed. 582, but. to the decisions of other courts in cases where the question has been expressly raised and decided. Freiberg v. Singer, 90 Wis. 608, 63 N. W. 754; Stephenson v. Doe, 8 Blackf. 508, 513.

Considered as an original proposition, the weight of reason, as well as the authorities on kindred questions, sustain the view that an attachment lien, at least until a final judgment is rendered in the case, may be impaired, displaced, or destroyed by legislative enactments which are designed to have that effect, and that attaching creditors have no just ground to complain of such legislation. A writ of attachment is nothing more than a remedy afforded by law for the collection of a debt.

It is like a capias qd respondendum, and a remedy of that nature may be abolished at any time by the legislature which created it. The same proposition holds good with respect to all laws which merely provide remedies for the enforcement of rights or the redress of grievances. They may be modified or repealed without reference to the effect of such legislation on pending actions, the only limitation on the power of the legislature in this respect being that an adequate remedy must remain or be provided for the enforcement of such existing rights as have their origin in private contracts.

In actions ex contractu litigants are not entitled to insist that they shall be afforded the same remedies or be privileged to plead all of the defenses that were available when the contract 'was made, or that have accrued subsequently under existing laws; the rule being that remedies, and those rights pertaining to the remedy which are purely of statutory creation, may be altered or abolished, even after an action is instituted, provided an adequate remedy remains for rights founded oh contract, and that some defenses, such as those existing under usury laws and those that have accrued under statutes of limitation, may be withdrawn, and rendered of no avail.

These principles are so familiar that a few cases only need be cited in their support. Terry v. Anderson, 95 U. S. 628, 633, 24 L. Ed. 365; Campbell v. Mining Co., 83 Fed. 643, 645, 27 C. C. A. 646, 55 U. S. App. 150; Wilson v. Simon (Md.) 45 Atl. 1022; Campbell v. Holt, 115 U. S. 620, 628, 6 Sup. Ct. 209, 29 L. Ed. 483; Ewell v. Daggs, 108 U. S. 143, 151, 2 Sup. Ct. 408, 27 L. Ed. 682; Morley v. Railway Co., 146 U. S. 162, 168, 13 Sup. Ct. 54, 36 L. Ed. 925; Von Hoffman v. City of Quincy, 4 Wall. 535, 553, 18 L. Ed. 403; Butler v. Palmer, 1 Hill, 324, 329', 330; Curtis v. Leavitt, 15 A!. Y. 1, 152, 153; Suth.

St. Const. § 482. We are of opinion, therefore, that a legislative body like the congress of the United States, which is not prohibited from passing retrospective or retroactive laws, has an undoubted power to devest or impair an attachment lien, at least until there has been an adjudication that adequate grounds for the attachment exist, and that the lien of the attachment be enforced.

The power of congress to deal with a remedy which it has provided for the collection of a debt does not cease as respects a suitor who has simply taken the initial steps to avail himself of the remedy, but whose rights have not been finally adjudicated. The power in question continues, in any event, until such time as, by making use of the remedy, the suitor has acquired a title to or an interest in specific property which the parties to the action are no longer privileged to deny. It is only at such period that his rights can be s’aid to have become vested. Prior thereto they are merely conditional or inchoate.

It is insisted, however, in behalf of the attaching creditors that, they acquired a vested right or a vested interest in the cattle by the rendition of the judgment by default on January 29, 1897, which, could not be impaired by a subsequent legislative enactment, and that this proposition is tenable, even if it be true, as last above held, that prior to that time the lien of the attachment might have been displaced by

an act of congress. With reference to this contention it may be said that it is undoubtedly true that by the rendition of the judgment by default Blocker, the defendant in the attachment suit, lost his right to challenge the existence of the grounds of attachment on account of which the writ had been obtained, as well as the right to deny the fad: of his indebtedness to the attaching creditors, or the amount thereof. These were issues which the defendant in the attachment suit, and he alone, was entitled to raise.

The Evans-Snider-Buel Company was not concerned therein; and it is doubtful, to say the least, if it was entitled to be heard with respect thereto, since its right to the cattle depended on other considerations. But, be this as it may, the judgment by default did not determine, as against the party last named, who had intervened in the attachment suit, as it had a right to do, and had denied the right of the attaching creditors to subject the attached property to the payment of their claims, that it could be so appropriated.

That was an issue which remained to be tried when the act of congress of February 3, 1897, was approved, and it was in no wise affected by the judgment by default. It is difficult to understand, therefore, why the entry of that judgment changed the status of the case eo instanti as respects the interpleader, and deprived congress thenceforth of the power to enact a law which prior thereto it possessed the power to enact.

The interpleader’s rights were not adjudicated,- since the judgment by default did not determine that the lien asserted by the attaching creditors upon the cattle in controversy was superior to the lien which was asserted by the inter-pleader. That question remained undecided, and was left open, after the judgment by default, for future consideration and decision. The phrase “a vested right” has no very precise signification.

It is an expression which is not used in the federal constitution, nor in any of its amendments; the language of the fifth amendment being that “no person * * * shall be deprived of * * * property without due process of law.” In the law of real property — where it is most frequently employed — the word “vested” is used to define an estate; either present or future, the title to which has become established in some person or persons, and is no longer subject to any contingency.

And when the phrase “a vested right” or a “vested interest” is used in other relations it may with reasonable precision be held to mean some right or interest in property that has become fixed or established, and is no longer open to doubt or controversy.

If the words in question are understood in that sense, it cannot be said that "the attaching creditors acquired a vested right to the cattle, as against'the .interpleader, by the judgment in their favor against Blocker: Instead, however, of seeking for an exact definition of the phrase in question, we think it will be more profitable for present purposes to refer to some of the cases, and particularly to those which are of controlling authority here, where it has been held that rights acquired in virtue of existing laws, and claimed to be vested, were not so far vested as to become property within the meaning of the federal constitution, and to be for that reason beyond the reach of legislative action.

Thus, in the case of Morley v. Railway C-o., 146 U. S. 162, 13 Sup. Ct. 54, 36 L. Ed. 925, a judgment had been obtained, which, under existing laws, bore interest at a given rate. After its rendition the legislature reduced the rate of interest on judgments, doing so in language which made the act applicable to judgments that had been recovered before the act was passed. It. was held that this law neither impaired the obligation of a contract nor deprived judgment creditors of their property without due process of law. In Campbell v. Holt, 115 U. S. 620, 628, 6 Sup. Ct. 209, 29 L.

Ed. 483, the right to plead the statute of limitations against a personal indebtedness had accrued in favor of the debtor when the bar of the statute was removed by the adoption of a new constitution. It was held that the debtor had no right to complain. The court said, “We certainly do not understand that a right to defeat a just debt by the statute of limitations is a vested right so as to be beyond legislative power in a proper case.” In Ewell v. Daggs, 108 U. S. 143, 2 Sup. Ct. 408, 27 L.

Ed. 682, a right which had accrued to a debtor to plead usury as a defense under a law that was in force When the contract was entered into was taken away by a subsequent enactment, and it was held that no valid objection could be urged against such legislation. In Butler v. Palmer, 1 Hill, 324, it appeared that at the time of the sale of a judgment debtor’s land finder an texecution the law allowed him a certain time to redeem, find’the master’s deed specified this period of redemption on its face.

A subsequent statute repealed the law granting such period for redemption, and prescribed a shorter period within which the right must he exercised. It was held that the right to redeem within the period named in the master’s deed was not so far vested that it could not he shortened by legislative action. See, also, People v. Livingston, 6 Wend. 526. In Green v. Abraham, 43 Ark. 420, a mortgage improperly acknowledged had been placed of record, which, .by reason of a defective acknowledgment, was not notice to subsequent purchasers or lienors.

Afterwards the mortgaged property was attached under a writ against the mortgagor, and thereafter rhe legislature validated the record of the mortgage. The mortgagee having brought replevin to recover the attached property from one who claimed it under the attachment, it was held, in substance, that the interest of the attaching ci'editor in. the attached property was not vested, but could be, and that it was in fact, displaced by the subsequent enactment validating the i-ecord of the mortgage. The following cases are similar to those already cited, and, as we think, uphold the same doctrine: Freeborn v.

Smith, 2 Wall. 160, 175, 17 L. Ed. 922; Baker’s Ex’rs v. Kilgore, 145 U. S. 487, 12 Sup. Ct. 943, 36 L. Ed. 786; Terry v. Anderson, 95 U. S. 628, 633, 24 L. Ed. 365; Garrison v. City of New York, 21 Wall. 196, 205, 22 L. Ed. 612; Louisiana v. Mayor, etc., of City of New Orleans, 109 U. S. 285, 289, 3 Sup. Ct. 211, 27 L. Ed. 936; Grinder v. Nelson, 9 Gill, 299, 309; Town of Danville v. Pace, 25 Grat. 1, 15; Satterlee v. Matthewson, 16 Serg. & R. 169; Wilson v. Simon (Md.) 45 Atl. 1022.

It may be difficult in some cases to fix the precise date at which a right can he said to he fully vested, and for that reason to have become property within the meaning of the federa] constitution, when the right in question is purely of statutory creation, or has been acquired by pursuing some remedy which the law affords to suitors, and is in no sense an obligation arising out of contract; but we are of opinion that the right invoked in the case at bar was not vested on February 3,1897, in any such sense as to be outside the sphere of legislative control.

When called upon to resolve questions like the one in hand, the courts have never deemed it necessary to close their eyes to the equities of the case, but have frequently permitted their judgments to be influenced by the consideration that that which the legislature has done in the way of disturbing rights acquired under existing laws was morally right, and in accordance with justice and fair dealing. In an early case (Foster v. Bank, 16 Mass. 245, 273), Parker, C.

J., remarked, “The truth is, there is no such thing as a vested right to do wrong;” and this remark has been quoted with approval'by the supreme court of the United States and other courts. Freeborn v. Smith, 2 Wall. 160, 175, 17 L. Ed. 922; Freeland v. Williams, 131 U. S. 405, 420, 9 Sup. Ct. 763, 33 L. Ed. 193; Goshorn v. Purcell, 11 Ohio St. 652; Town of Danville v. Pace, supra; Satterlee v. Matthewson, supra. And in Randall v. Kreiger, 23 Wall. 137, 149, 23 L.

Ed. 124, the supreme court said, speaking with reference to a legislative act which impaired an existing title: “Claims contrary to justice and equity cannot be regarded as of that character [that is to say, as vested rights]. Consent to remedy the wrong is to be presumed.” It is our privilege and duty, therefore, in determining whether a vested right has been violated and whether congress exceeded its just power in validating the interpleader’s mortgage, to consider-whether its action was dictated by á sense of justice, and was right when viewed from a purely moral standpoint.

If it was, a more-liberal view may well be taken of its power to displace the attaching creditor’s lien than would be permissible if its action was partial, or arbitrary, and without just cause or excuse. Viewing the case for the purpose last indicated, it is manifest at a glance that congress was influenced by the highest considerations of public policy to pass the act of February 3, 1897, and that, in so far as the interpleader and others in a like situation were concerned, it was justified in stretching its constitutional powers to their utmost limit to prevent the consummation of a grievous wrong.

The cattle in controversy had been bought and paid for with the money of the inter-pleader, with the understanding that they should be mortgaged to secure its repayment. Such a mortgage was executed. The transaction was fair and honest, and all the publicity was given thereto-which the circumstances permitted. We understand the local law to be that the mortgage so executed was, in any event, good as-between the mortgagor and mortgagee, for such was the decision in Main v. Alexander, supra.

The attaching creditors’ debt was contracted long prior to the purchase of the cattle and the execution of the mortgage, and they had actual knowledge of its execution, and of the record thereof, before they caused the writ of attachment to be-levied. The attaching creditors seem, therefore, to have made a deliberate attempt to appropriate the property of the interpleader to the-payment of another’s debt by taking advantage of a defect in the law, doing so in utter disregard of the doctrine which has been generally accepted, by courts of equity since the decision in Le Neve v. Le Neve, 3 Atk. 646, 2 White & T.

Lead. Cas. Eq. 35, that one who-purchases property with full knowledge of another’s interest therein, and with intent to deprive him of that interest, is a purchaser mala fide. Under these circumstances it was the duty of congress to afford all the relief against the threatened wrong which could be afforded by a liberal

interpretation of its legislative powers; and it is likewise the duty of the courts in such a case to construe those powers liberally, to the end that a wrong may not be perpetrated through the forms of law. It may be that there is a legal presumption that, when congress extended the

chapter of the Arkansas statute concerning mortgages over the Indian Territory, it was aware-o-f the

interpretation that had been placed upon the various provisions of that

chapter by the supreme court of that state; but a legislative body is not omniscient, and, whatever may be the presumption, we are unable to believe that congress possessed such knowledge in fact, and that it intended to deprive nonresidents of the territory of the power to- make a mortgage on personal property there located' which would be effectual to protect mortgagees against the claims of third parties.

We can conceive of no reason which. would lie liable to influence congress to enact a law of that character, and are, therefore, constrained to believe that the peculiar construction placed on sections 4742 and 4743 of the mortgage act by the supreme court of Arkansas was unknown to congress when they were made applicable to the Indian Territory, and that it made haste to cure what it deemed to be an obvious defect or omission in the law as soon as its attention was directed to the defect.

The act of February 3, 1897, stands on the same plane, therefore, as a curative act, and should be treated as a statute which was enacted for the purpose of remedying a mistake theretofore inadvertently made by the lawmaker. When the attention of congress was directed to the peculiar construction that had been placed on the aforesaid sections of the mortgage act in the state from which it was borrowed, it found the controversy between the attaching creditors and the interpleader still pending and undetermined. The rights of the former were in fieri.

No court had at that time decided that they were entitled, as against the interpleader, to subject the mortgaged property to the payment of their judgment against the mortgagor; and believing, doubtless, that such an adjudication, if made, would defeat, rather than promote, the ends of justice, it undertook to forestall a possible decision of that nature by validating the record of the interpleader’s mortgage. ■ We are of opinion that the concluding clause of the act of congress of February 3, 1897, which was designed to accomplish that end, was a lawful enactment, and not in coniliet with any provision of the federal constitution, because at the date of its enactment the attaching creditors had no such vested right or interest in the cattle in controversy as the constitution was intended to protect against legislative action.

Learned counsel for the interpleader have argued at some length that the United States courts in the Indian Territory were and are under no obligation to construe sections 4742 and 4743 of the

chapter concerning mortgages as they were construed in Main v. Alexander, supra, because that decision is in conflict with other decisions of the supreme court of Arkansas on kindred questions, and because it lias been discredited by judicial criticism in the state of Arkansas, and cannot be regarded as settling the true construction of the statute in controversy, even in the state where it originated.

They also claim that the attachment writ only operated upon such interest in the cattle as the mortgagor had at the time the writ was levied, and that this interest was a mere equity of redemption, the mortgage being, in any event, good as against the mortgagor. Some other propositions are also advanced, all of which have been noticed, but, without expressing an opinion thereon, we prefer to rest our decision on the ground heretofore stated, that the act of congress operated to validate the interpleader’s mortgage.

The judgment of the United States court of appeals in the Indian Territory is accordingly reversed and annulled, and the judgment of the United States court in the Indian Territory for the Northern district thereof, which was rendered at its March term, 1899, being for the right party, is in all things affirmed.