684
FEDERAL REPORTER.
Clanton's partnership; but after Merritt became a partner I never ac'. verted to that stock as a security." And to the question, "Why?" he answers, "Because Merritt was a very responsible man." The testimony of respondent Morris is not consistent with these conclusions, nor with the testimony ofF. M. Gilmer and J. N. Gilmer, whosetestimonyis in substantial accord, and does not seem to be strained or improbable. As to the interviews und negotiatiolJ,s which F. M. Gilmer testifies he had and made with Morris & Co. for advances and credit to bis son and the firms with which he was connected, the testimony is very much that of Gilmer against Morris; but J. N. Gilmer's testimony is in support of that of his father, and the testimony of Morris is not sufficient to disprove it. Not only so, but the testimony of Josiah Morris is not in all points entirely clear; as, for example, where he says: "No, sir; there was no special arrangements. I frequently told Mr. Gilmer he should not have the stock unless he paid me what he owed me; but there was not a time tip to 1881.that 1 would not have readily give11 him the stock if he and all of them had paid me what they owed me. The stock was not worth as much as the amount they owed me, and was not, up to 1881, worth near the amount they owed me." And in answer to question, "You mean F. M. Gilmer and the accounts of the several firms in which J. N. Gilmer was engaged after the original transaction?" he say'l, "In which J. N. Gilmer was concerned. I was considering the whole of them." But without quoting further from the testimony, it seems pretty clear that we have here the pledge ofthe stock as collateral security for debts and to be created, and to become due after the 30th day of March, 1875. We have here, then, not merely the exifltence of a pledge, but we have the nature and character of the pledge, for it was not simply the pledge of the stock to secure the payment of a debt of a specified amount maturing at a definite time in the future, but it was in the nature of a continuing pledge or security; andso long as such relation and understanding existed between the parties in re;erence to the pledge, it must be admitted that the pledgee (Morris, in this case) was holding in virtue oithe title and right of the pledgeor, Gilmer. and could not be considered as holding adversely to such title and right, for there is perhaps no principle of law settled than that posseSSIOn, to give title, lIllist be adversary. Whatever difficulty there may be from the evidence to fix the time or times after the 30th of March, 1875, when F. M. Gilmer negotiated with Mords for advances of money and credit to.J.N. Gilmer, or to the firms with which he became connected, upon the faith of as collateral security, it is certainly clear that Morris & Co., this on and after the 30th day of March, 1875, did hold the stock in quest,onas collateral security, and did have accounts and do business with t4fl difi'l;lrent firms with which J. N. Gilmer became connected, and did adv:ance .molley to some of them by paying their checks when they ,had ()u.deposit with Morris & Co. at the time the che.<:ks were dra\yn and paid. ;The de'rc:lllse here is staleness of the demand, and laches on the part· complainant, and the statute of liu}itations .of six years Qfthe
GILMER t7. MORRIS... ,
state of Alabama. The bill was filed September 20, 1886, more than eleven years after the pledge of March, 1875, but about two years after the firm of Gilmer & Merritt ceased to do business with Josiah Morris & Co., and how 'long after the other firms with which J. N. Gilmer was connected ceased to do business with Morris & Co. is not clear, but certainly it was some years after the pledge of 1875. But, as matter of law, is it important to ascertain with more particularity as to the last date when arrangements were made for credit on the faith of this security, or when the last check was drawn and paid by Morris & Co. on the faith of this security? If it be true that on and after the 30th day of March, 1875, Morris & Co. held the stock as collateral, not only for debts then due, but also for debts to be created and become due, then we not only have the pledge, but also the character of the pledge, and the relatiotls of the parties to it. And now, when was it after that time that these relations changed? When was it that Morris repudiated the trust in which he held the stock, and gave notice to Gilmer that in default of payment and redemption of the pledge he would sell the property, or seek the aid of a court to enforce his rights in regard to it? There seems to be :no:fact or facts in the evidence that would fix such a time unless it be in. the year 1884, when the check for $100 which was drawn by Gilmer & Mer-' rltt was refused payment by Morris & Co., and when Gilmer; in con.., versation with Morris, referred to his Ely ton land stock, and Morris replied, "Why, Jimmy, that was DAver yours; it was your father's;" arid in the same conversation told him he had sold that property to pay an in. debtedness his father owed him. It is claimed, however, that the law is settled in Alabama that in the case of the pledge of stocks as collateral security, that the contract partakes of the nature of a mortgage of per. sonal property, and that the rules applicable to mortgages are to be ap'" plied, and not those applicable to a strict pledge; and the case of Gilmer v. Morris, 80 Ala. 78, and authorities there cited, are relied on in support of this 'proposition. In the case cited, at page 83, the court says: "It is not questioned, as far as we know, by any authority, that the pledgeor may always claim at least the period of six years, or the full pel'iod of time during which the pledgee is permitted to sue upon his secured debt or engagement. In Humphres v. Ten'ell, 1 Ala. 650, it was beldthat the right both of a pledgeor and of a mortgagor to redeem personal. property would be, in six years; and the plea of the statute of limitations of six year!l.In that case was held good as a bar to the pledgee's right to redeem withOlitany positive evidence of an adverse p o s s e s s i o n . " , '
The court, however, in the same page, recognizes a distinction petween a pledge and a mortgage, when itsays: , , , " "The case of a mere pledgee, it is apprehended, isdiffel'ent in some material from tbatof a mortgagee in possession, in whose favor tpe stat,ut<e of lImitations to run from the law-day of the mortgage; because of his presumedadVerfle holding from that time." ' ", . ,
It would seem doubtful at least if the courtjntended to settJlethelawi in AllOlbam,a thatin the case ,of a pledge ofstocks as collatemlsecurity thepresum,ption :ofaIl adverse holding on ti,le ,part, oCa
FJilDERAL REPORTER.
ariae inhis favot from the maturity of the secured debt without demand or notice to: the pledgeor. In the case of Nabring v. Bank, 58 Ala. 204, it is said: "We think the bank was pledgee, and not mortgagee, of these shares. They were put in pledge to it for the payment of the money
Nabring borrowed, and there remained in Nabring a legal right to demand and. have them on the payment of the debt;" citing authorities, and going Oll to say: "As pledgee, the bank had no right to sell the shares without first. demanding payment of the debt from Nabring, or giving him notice of the intention to sell. * * *"But if the law was settled in Alahama, as claimed, Rtill the question remains, how far, on a question of this kind, so intimately connected with the general commerce of the country, this court would be bound by it? But, not to dwell upon this point, it is olear that none of the cases cited by the supreme court of Alabama in the opinion in Gilmer v. Morris, supra, were cases of pledge of stocks as security Of the character of that under consideration here. The court in that case had under consideration the pledge of 1871; and whatever the character of that pledge, and the. rights of the· parties der it, this court has held that the pledge of 1875 was a new and different pledge, involving a new and different trust from that of the pledge of 1871. If to the pledge now under consideration we undertake to ply the rule contended for, then we must inquire, when did the deot the payment of which was secured by this pledge mature and hecome· of this pledge at which the presumpdue? And when was the tion of adverse holding on the part of the pledgee would arise? It is manifest that to a pledge of the kind now under consideration, contemplating as it did future debts, such a rule, even if well founded, could necessary to discuss the law on this subnot apply. It is not ject further, for if the conclusions reached in reference to the nature and character of the pledge in question be correct, then there is no time prior to the year 1884 .when the statute of limitations of six years could begin to run in favor of Morris, and no room for the imputation of laches to the conlplainant in this suit. Hthe commencement of the litigation was lltimulated by the rapid advance of the value of the stock in question, still.it is not clear how that could give Morris the right, without notice and without demand, to treat the stock as his own, or sell and appropriunless a much greater length of time had elapsed than is shown here to justify a conclusion of the abandonment of the stock for the debt. 'l'his case does not faU within the rule of Hayward v. Bank. 96 U. S. 611. It is insisted, however, that the evidence showslhat the complainant never had any right to or interest in the stock which is the subject-matter ofthis suit; that the only interest he ever had in it was the mere opgiven price, which option was neyer closed by tion ·to plirchase it the payment of tlie purchase money. If it was a mere o:{>tion in the first place, and based upon no consideration, yet the fact remarns that the stock was paid for, except as to the interest fbr the time Mortis carried it, and his conduct in regard to it afterwards shows that, whatever may have· been his strict legalrightsin regard to the'stock, hecdidnot
GILMER 'V. MORRIS.
687
stand on such ground jand whether this arose froni the favor to the elder Gilmer, or a desire to secure and hold his influenoe in favor of an enterprise, the success of which was vital to the value of the stock of which he was a large owner, or whatever the motive may have been, certain it to hold the stock as collateral is he changed his position when he securitY', and cannot now be heard to say that because the last dollar of the purchase money was not paid the stock is still his property, as it originally was, and no right to.it ever passed to this complainant. , The respondent offers in evidence the briefs of counsel, and the record of the cause in the state conrt, to show that the question of the statute ,of limitations and staleness of the demand in suit were in point of fact heard and determined by the decree in the state court. To this evidence .the cOlDplainRllt objected, and contends that these questions were not tendered in issue by his bill in the suit in the state court, and therefore not pertinent 'here; that R decree of a court must be confined to the aUe,gati()ns i.ll the pleadings upon which it is founded,. Rnd that arguments and proofs and decrees C)fcourts outside of .the sc.opeof the pleadings cannot be held to be matter of estoppel, and will be restrained by construction to the matter in issue in the pleadings. This is not a case of vagueness and uncertainty as to what the issues were which were matter of decision in the state court, nor is it a case of contention as to what matters were decided as between defendants to. a bill, as in the case of Corcoran v. Canal Co., 94U. S. 744. And upon this hearing it does not seem that the question of res adjudicata is presented in other or stronger light in favor of the respondents than it was ill the hearing on the suffi. ciencyo.i,the pleain bar to this suit. 30 Fed. HeP'J\l:76. Since this case was heard, my attention has been called to the recent caseM Bissellv. :Spring Valley ToWnship, 124 U. S. 225,8 Sup.' 'Ct. Rep. 495. Whatever may be said of the case, it is quite different in its facts from the case at bar,and the point decided there seems to· be that the finding of facts in a former suit, upon demurrer, which were fatal.t<> the ,bonds from which the coupons in suit were cut, was equally fatal, to a suit between the same parties upon other coupons cut from same bonds as if the facts in the first suit had been found by the verdict ofa jury. It may be saidin that case that there was no new or different cause of action set up in the second suit,which was an attempt to recover on coupons, of the same bonds which bad been other 9()upons, it is true found to have been issued without authority of law, and therefore void. This case and the case of Cromwell v. Sac Co., 94 U. S. 351, are cases of suits at law upon coupons, issued by municipal corporations, and in ,that class of cases there is littlegrOl'ind fora distinction between the cause ;of action and· the subject-matter of the action. In the case at bar the suit is not upon bonds, which are at the same time the cause and subject-matter of the action, but it is a suit in equity, for the Sllme right as the former suit, but asserting a new and distinct cause of action. Even in this Spring Valley Case, the court, at page 232, says there are un,doubtedly many cases Where a final jUdg'mentupon a demurrer will not conclude as to .a.future actiol1;the demurrer may go. to the form of the
688
action, to a defect in the pleading, or the jurisdiction of the court; :l< and on the previous page the court say that the judgment in the: prior action operates as an estoppel only as to those matters in issue or points controverted upon the determination of which the finding or verdict was rendered. The supreme court of Alabama, in the case of Hanchey v. Coskrey, 81 Ala. 150, 1 South. Rep. 259, Judge CLOPTON, speaking for the court, says: "The doctrine of estoppel by judicial proceedings is qualified by the established limitation that the judgment must be a decision on the merits, a judgment founded upon non-joinder or misjoinder of parties, or merely defective pleading, or any technical ground or collateral or incidental questions whereby the merits of the case were not and could not have been' determined, will not preclude an inquiry into the merits in a subsequent suit so instituted as to avoid the objection by which the first was defeated;" citing authorities. This is certaInlyon a line with the doctrine of the case of Gould v. Railroad Co., 91 U. 8.534, which has neither been overruled nor modified. The decree ;is for complainant; and will be entered accordingly·.
t.l,
PVGSLEY
'I).
BROWN et ua:. July 23,1888.)
(Oircuit Court, D. Oolorado.
PUBLIC LANDs-IN])IAN TITLES- DECISION OF SECRETARY OF INTERIOR-RE' VIEW. .
Defendant claimed .title to a tract of land under adeed alIeged to have been executed in behalf of the original locator of Chippewa scrip, which was void, because issued' witbout authority by the commissioner of Indian affairs. Plaintiff claimed u.ndera deed subsequimtly executed by such locator, and alleged that defendant's deed was executed under a forged power of attorney, and was therefore void. In proceedings before the secretary of the interior, . of whiCh plaintiff's grantor had notice, the land was awarded to defendant. Held. that defendant was within the provisions of 17 U. S. St. 340, authorizing the secretll,ryto give title. to lands held under such scrip whenever it shall be shown to his satisfaction that said lands are held by innocent parties, in good faith, and that the locations under such scrip have been made in good faith, alld by innocent holders of the same; and that the decision of the secinvolved no question of law, but simply the question of fact as to the good faith of the claimants, and therefore was not subject to review by the "cour.t. .
lnEquity. Bill to declare a trust in certain realty. Bill inequity, filed by Leonora S. Pugsley against Henry C. Brown an,d wife, to have defEmdant Brown declared a trustee of certain lands held b.y him under a patent. ·SeldQn. Bacon. for plaintiff. J. H,., Brown: for defendants. HALLETT, J. Chippewa scrip issued to Mary Dauphinais by the missioner of Indian under the seventh 'claus6of the second article