# Morgan v. United States (113 U.S. 476)

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United States Supreme Court
113 U.S. 476
Morgan v. United States
[Syllabus from pages 476-477 intentionally omitted]
These four cases involve claims against the United States for the payment of certain bonds of the United States, known as 'five-twenty bonds,' consols of 1865, issued in pursuance of the authority conferred upon the secretary of the treasury by the act of congress approved March 3, 1865, entitled 'An act to provide ways and means for the support of the government.' Twenty bonds of the denomination of $1,000 each and 16 of $500 each were embraced in the suits. The controversy relates to the title only, all of them being claimed by the Manhattan Savings Institution, and 10 of each denomination by J. S. Morgan & Co., and the others, being 10 of $1,000 each and 6 of $500 each, by L. Von Hoffman & Co. The bonds having been called in for redemption, were presented at the treasury for that purpose by the holders, respectively, J. S. Morgan & Co. and L. Von Hoffman & Co., but payment was refused by the United States on account of the adverse claim of the Manhattan Savings Institution, and the claims of the several parties to the proceeds were treasury, March 12, 1880, pursuant to section 1063, Rev. St. Judgments were rendered by that court in favor of the Manhattan Savings Institution, and against the other claimants respectively. 18 Ct. Cl. 386. The several appeals bring up all the cases as they stood in the court of claims; the United States appealing from the judgment in favor of the Manhattan Savings Institution, the other parties from the judgments dismissing their respective petitions. The controversy is wholly between the claimants, the United States being merely in the position of a stakeholder, not denying its liability to pay to the true owners of the bonds.
The act of congress, in pursuance of which the bonds in question were issued. being 'An act to provide ways and means for the support of the government,' approved March 3, 1865, (13 St. 468, c. 77,) provided: 'That the secretary of the treasury be, and he is hereby, authorized to borrow from time to time, on the credit of the United States, in addition to the amounts heretofore authorized, any sums not exceeding in the aggregate six hundred millions of dollars, and to issue therefor bonds or treasury notes of the United States in such form as he may prescribe; and so much thereof as may be issued in bonds shall be of denominations not less than fifty dollars, and may be made payable at any period not more than 40 years from date of issue, or may be made redeemable, at the pleasure of the government, at or after any period not less than five years nor more than forty years from date, or may be made redeemable and payable as aforesaid, as may be expressed upon their face,' etc. The bonds issued under this act were called the consolidated debt or consols of 1865, because, in addition to the loan of six hundred millions of dollars authorized by it, the secretary of the treasury was empowered to permit the conversion, into any description of bonds authorized by it, of any treasury notes or other obligations, bearing interest, issued under any act of congress. The bonds themselves, differing only in numbers and denomination, were in the following form:
'165,120.
'[Consolidated debt. Issued under act of congress approved March 3, 1865. Redeemable after five and payable twenty years from date.]
'1,000.
'It is hereby certified that the United States of America are indebted unto the bearer in the sum of one thousand dollars, redeemable at the pleasure of the United States after the first day of July, 1870, and payable on the first day of July, 1885, with interest from the first day of July, 1865, inclusive, at six per cent. per annum, payable on the first day of January and July in each year, on the presentation of the proper coupon hereunto annexed. This debt is authorized by act of congress approved March 3, 1865.
'Washington, July 1, 1865.
J. LOWERY,
'For Register of the Treasury.
'Six months' interest due July 1, 1885, payable with this bond.
'(Thirteen oupons attached from and including coupon for interest due January 1, 1879, to and including coupon for interest due January 1, 1885.)'
They were accordingly known as 'five-twenty bonds,' being redeemable after five years, but not payable until twenty years after July 1, 1865.
The act of July 14, 1870, 'to authorize the refunding of the national debt,' (16 St. 272,) authorized the issue of three classes of bonds, according as they bore interest at the rates of 5 per cent., 4 1/2 per cent., and 4 per cent. per annum, amounting in the aggregate to $1,500,000,000, which the secretary of the treasury was, by the second section of the act, authorized to sell and dispose of, at not less than their par value in coin, and 'to apply the proceeds thereof to the redemption of any of the bonds of the United States outstanding, and known as five-twenty bonds, at their par value;' or, the act continuues, 'he may exchange the same for such five-twenty bonds, par for par.' By the fourth section of this act it was provided: 'That the secretary of the treasury is hereby authorized, with any coin of the treasury of the United States which he may lawfully apply to such purpose, or which may be derived from the sale of any of the bonds, the issue of which is provided for in this act, to pay at par and cancel any six per cent. bonds of the United States of the kind known as five-twenty bonds which have become, or shall hereafter become, redeemable by the terms of their issue. But the particular bonds so to be paid and canceled shall in all cases be indicated and specified by class, date, and number, in the order of their numbers and issue, beginning with the first numbered and issued, in public notice to be given by the secretary of the treasury, and in three months after the date of such public notice the interest on the bonds so selected and advertised to be paid shall cases.'
By an act passed January 20, 1871, (16 St. 399,) the foregoing act was amended so as to authorize the issue of 500,000,000 of 5 per cent. bonds instead of 200,000,000, as limited by the act of July 14, 1870, but not so as to permit an increase of the aggregate of bonds of all classes thereby authorized. During the period from July, 1874, to January, 1879, the secretary of the treasury made various contracts, in writing, for the negotiation of 5, 4 1/2, and 4 per cent. bonds issued under the refunding act of 1870, in Europe and this country, with associations of bankers and banking institutions in London and New York, which became known as syndicates. The claimants, J. S. Morgan & Co., were members of such a syndicate, between which and the secretary of the treasury a contract was entered into on the twenty-first of January, 1879. The members of that syndicate were Messrs. August Belmont & Co., of New York, on behalf of Messrs. N. M. Rothschild & Sons, of London, England, and associates, and themselves; Messrs. Drexel, Morgan & Co., of New York, on behalf of Messrs. J. S. Morgan & Co., of London, and themselves; Messrs. J. & W. Seligman & Co., of New York, on behalf of Messrs. Seligman Brothers, of London, and themselves; and Messrs. Morton, Bliss & Co., of New York, on behalf of Messrs. Morton, Rose & Co., of London, and themselves. The subscription was for ten millions of dollars of 4 per cent. bonds of that date, and five millions additional each month until June 30, 1879, when the contract terminated, the proceeds to be applied to the refunding of the public debt, the secretary of the treasury agreeing, on receiving each subscription under the contract for not less than five millions of dollars, to issue a call for the redemption of United States 6 per centum five-twenty bonds equal to or exceeding said sum. The syndicate agreed to pay to the treasury at Washington, within the running of such call, the amount of 4 per cent. bonds subscribed for, at par and accrued interest to the date of subscription, in United States gold coin, United States matured coin coupons, coin certificates of de osit issued under the act of March 3, 1863, or United States 6 per centum five-twenty bonds called for redemption not later than the date of the subscription to which the payment was to apply. It was also agreed that the United States should maintain an agency at London for the purpose of making deliveries of the bonds subscribed for to the parties as they should desire; and the agent appointed for that purpose was authorized by the secretary of the treasury to receive the stipulated payment therefor, including the five-twenty bonds offered in exchange.
On October 27, 1878, the Manhattan Savings Institution, a savings bank in New York, was the owner in possession of the 36 United States five-twenty coupon bonds which are the subject of these suits,-16 for $500 each, and 20 for $1,000 each; and on that day, the building in which was its banking-house was entered by burglars, and these bonds, among others, amounting in all to about two and a half million dollars, were stolen from the safe, without any negligence or want of proper care in their safe-keeping on the part of the officers and servants of the institution. On July 30, 1878, the secretary of the treasury issued a call for the redemption of $5,000,000 of five-twenty bonds, designated by numbers, in which it was stated as follows: 'By virtue of the authority given by the act of congress approved July 14, 1870, entitled 'An act to authorize the refuding of the national debt,' I hereby give notice that the principal and accrued interest of the bonds herein below designated, known as 'five-twenty bonds,' of the act of March 3, 1865, will be paid at the treasury of the United States, in the city of Washington, on and after the thirtieth day of October, 1878, and that the interest on said bonds will cease on that day.' Successive notices of other like calls were issued thereafter from time to time, according to which the dates on which the interest would cease on the bonds designated were from October 30, 1878, to and including March 18, 1879, which calls embraced all the bonds involved in these suits.
The 20 bonds claimed by J. S. Morgan & Co., and the 16 claimed by L. Von Hoffman & Co., were bought by them, respectively, at different times, during the year 1879, in London, from well-known and responsible parties, the latter purchasing from R. Raphael & Sons, bankers of high respectability in London, dealing largely in United States government securities; but all the bonds when bought, as well by R. Raphael & Sons as by the claimants, had been called for redemption by the secretary of the treasury, and designated in one of the notices to that effect, and the call in each case had matured, and the bonds were bought by them, respectively, with knowledge in each case of that fact; but they bought them, in the due course of their business as bankers, and paid the full market price for them, to-wit, par and accrued interest, in good faith, without suspecting, or having any reason whatever to suspect, that the bonds, or any of them, had been stolen by or from any person, or that there was any defect in the titles of the persons from whom the purchases were made, or that the numbers of any of the bonds had been changed, or that the numbers of any of the bonds were not the original and genuine numbers as issued by the treasury department of the United States. In point of fact great publicity was given through the newspapers to the fact of the robbery, and some kind of a circular was issued by the Manhattan Savings Institution in regard to it, but it did not appear what its terms were, nor where nor to whom it was sent. It was also shown that the serial numbers of four of the bonds purchased by J. S. Morgan & Co., and five of those purchased by L. Von Hoffman & Co., had been, in fact, subsequently to the robbery, wrongfully altered, but when, where, or by whom could not be ascertained, and there was nothing in the appearance of the altered bonds or the numbers, when purchased, calculated to excite the suspicion or notice of a prudent and careful man; the alterations having been so skillfully effected that they were only discoverable with the aid of a magnifying glass.
The 20 bonds claimed by J. S. Morgan & Co. were purchased by them for the purpose of making payment to the United States for 4 per cent. bonds subscribed for under the contract entered into with them and their associates by the secretary of the treasury on January 21, 1879, for the negotiation of 4 per cent. bonds, and to avoid the transmission of gold to settle their accounts with the treasury department. They were delivered by the claimants at different times soon after their purchase to the officer in charge of the agency of the United States for the refunding of the national debt in London, who received them in payment for 4 per cent. bonds of the United States then delivered by him to the claimants, and were by him transmitted to the treasury department at Washington for redemption. The secretary of the treasury, in consequence of notice of the adverse claim of the Manhattan Savings Institution, having withheld payment of these bonds, the claimants, J. S. Morgan & Co., in a letter to the secretary of September 1, 1879, stated the grounds of their claim as follows:

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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