#### L. VON HOFFMAN & CO. v. THE UNITED STATES. THE MANHATTAN SAVINGS INSTITUTION v. THE UNITED STATES.

No. 12272

April 16, 1883.

United States 5-20 coupon bonds, payable to bearer, were stolen from the Manhattan Savings Institution, after they had been called in for redemption, but before maturity of the call. After such maturity they were purchashed by Von Hoifman & Co. of the bearer .in the usual course of business and without knowledge of how the bearer came into possession of them. ,

Von Hoffman & Co presented same their own account, and the Manhattan Savings Institution, claiming to he itself the lawful owner of the bonds, also demand payment.

The Secretary of the Treasury transmitted the case to this court under Kev.. Stat., § 1063, as shown in finding *X.*

Held :

I.Bonds of the United States made redeemable at the pleasure of the-United States after five years and payable twenty years after date, which, after five and before twenty years, are called infoT payment in three months after the date of the call under authority of the *Aei of July*14, 1870, ch. 77 (16 Stat. L., 272), become matured bonds at-the expiration of the throe months.

II.Whoever-buys such bonds after they are thus matured takes them subject to all defenses which may be set up against overdue commercial paper.

III.The *loria, fide*purchaser of called bonds after maturity of the calls acquires no title thereto against the owner from whom they had been previously stolen.

A controversy arose in the Treasury Department between two adverse claimants for the payment of certain bonds called *387in for redemption, claimed by one party, a savings institution, to have been stolen from it, and by the other, a firm in London, to have been purchased by them in the open market for a valuable consideration and in good faith, though after the maturity of the call.

The Secretary of the Treasury transmitted the cases to this court under Revised Statutes, § 1063, by a letter of transmis.sion set out in full in the tenth finding of facts.

The following are the facts found by the court:

I.. During the whole of the year 1879, and thereafter until the-bringing of this suit, the claimants Louis A. Yon Hoffman and William Mertens were copartners under the firm name of L. Yon Hoffman & Oo., engaged, in the city of New York, in the business of banking, and buying and selling exchange, bonds, and stocks.

II. At the same time the Manhattan Savings Institution, a corporation created by law of the State of New York, existed and was doing business, and it still exists and does business, as a savings bank, in the city of New York.

III. On the 27th of October, 1878, the said institution owned, and had in its possession in said banking-house, sixteen-coupon bonds of the United States, known as five-twenty bonds, con-sols of 1865, issued by' the United States in pursuance of and in conformity with the provisions of the *“*Act to provide ways and means for the support of the v ernment,” approved March 3,1865. Six of said bonds were for $500 each, and ten for $1,000 each. The following is a copy of one of the $ 1,000 bonds without the number of it:

Consolidated debt, issued under act of Congress approved March 3d, 1865. Redeemable after five and payable twenty years from date.

1000. Register’s office.] [Treasury Department. 1000.

[Engraving of United States Treasury.]

[seal.]

It is hereby certified that the United States of America are indebted unto thb 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 *388each year on the presentation of the proper Coupon hereunto annexed. '.This debt is authorized by act of Congress approved March 3d, 1865.

(Across the face:) 1000.

'Washington, July 1st, 1865.

J. B. Colby, •

*for Register of the Treasury.*

Each of the $1,000 bonds was in the words and figures of this. copy; and each of the $500 bonds was in the same words and figures, except that the words *five*hundred, instead of *one thousand,*appear in the statement of the sum in the body of the bond, and the figures indicating- the sum are 500 instead of 1000.- At each of the upper corners of each of said sixteen bonds, and upon each of the coupons attached to each of said bonds, was printed by types the serial number of the bond, as the same were printed thereon by authority of the Secretary of the Treasury, when the bond was issued by the United States. The serial numbers of the bonds were as follows:

$500 bonds: 82006, 82114, 86080, 97928, 101110, 103421.

$1000 bonds: 153986,157844,166794,166821,178050, 187141, 194597, 208069, 208746, 209419.

IY. Early in the morning of Sunday, October 27,1878, burglars entered the buildin g in which was the banking-house of said institution, and, overpowering the janitor of the institution, opened the iron vault, inside of which was an iron safe, which they broke open, and from which they stole and carried away securities of various kinds representing the value of about two and a half million dollars, among which were the sixteen bonds aforesaid.

It does not appear that the officers or servants of said institution were guilty of any negligence or want of proper care in the safe-keeping of the bonds and securities which were so stolen.

Y. On the 30th of July, 1878, the Secretary of the Treasury made the following call for five-twenty bonds, consols of 1865, for redemption, and gave public notice thereof:

SIXTY-FOURTH CALL.

Treasuhy Department, -

*July*30, *1878.*

By virtue of the authority given by the act of Congress approved July 14, 1870, entitled “'An act to authorize the refunding of the national debt,” I hereby give notice that the principal and accrued interest of the bonds *389bereinbelo w designated, known as ‘ ‘ five-twenty bonds ” of tbe act of March 3, 1665, consols of 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.

Coupon bonds, dated July 1, 1865, namely :

§50 — No. 69001 to No. 69500, both inclusive.

§100 — No. 117001 to No. 120000, both inclusive.

§500 — No. 82001 to No. 84000, both inclusive.

§1,000 — No. 151001 to No. 157000, both inclusive.

Total coupon..• $2,500,000

Registered bonds, “redeemable at the• pleasure of the United States after the 1st day of July, 1870, as follows:

§50 — No. 2351 to No. 2400, both inclusive.

§100 — -No. 18351 to No. 18450, both inclusive.

§500 — No. 10601 to No. 10700, both inclusive.

§1,000 — No. 35451 to No. 35850, both inclusive.

§5,000 — No. 9901 to No. 10250, both inclusive.

§10,000 — No. 19051 to No. 19800, both inclusive.

Total registered. §2,500,000

Aggregate. §5, 000,000

The amount *outstanding,*included in the numbers above, is five million dollars.

All United States bonds, forwarded for redemption, should be addressed to the “Loan Division, Secretary’s Office,” and all registered bonds should be assigned to “ the Secretary of the Treasury for redemption.”

Where parties desire checks in payment for registered bonds, drawn to the order of any one but the payee, they should assign them to the Secretary of the Treasury for redemption *account of the owner or owners, giving name or names thereof.*

[seal.] , ,JoiiN ShermaN, *Secretary.*

Afterwards the Secretary of the Treasury made and gave public notice of eight other like calls for five-twenty bonds, consols of 1865, for redemption, which embraced others of the sixteen bonds involved in this suit; and the following is a tabulated statement showing the number and date of each of the calls, which embraced any of the said sixteen bonds, and the time when each call matured, together .with the number and amount of each of the said sixteen bonds called for redemption, and the amount of interest due on each bond at the maturity of the call embracing it.

*390

YI. Great publicity was given through, the newspapers to the fact of the robbery aforesaid, and some kind of a circular was issued by the institution iu regard to the robbery, but it does not appear what its terms were, or where or to whom it was sent.

YII. Between the time when said robbery .took place and that at which the said sixteen bonds reappeared as hereinafter set forth, the serial numbers of five of them were wrongfhlly altered from what they were when stolen from the Manhattan Savings Institution, as above found. The alterations were as follows:

97928 altered to 97828.

178050 “ “ 178650.'

194597 “ “ 194697.

208746 “ “ 208748.

209419 “ “ 208419.

When, where, or by whom said alterations were made does not appear, there being not the least evidence tending to throw any light on those points.

There was nothing in the appearance of said five bonds, or the numbers thereof, when the bonds were purchased by B. Raphael *&*Sons, as hereinafter set forth, or when they came into the possession of L. Yon Hoffman *&*Co., calculated to excite the suspicion or notice of a prudent and careful man; and the alterations of the numbers were so skillfully effected that they were only discoverable with the aid of a magnifying glass.

*391YIII. In tbe year 1879, there existed in the city of London, England, a firm of bankers styled R, Raphael & Sons, having their place of business at 25 Throgmorton street in said city. Said firm had high respectability and standing in London and •elsewhere, and did a very large Business in United States Government securities.

At different times in the year 1879 the said R. Raphael & Sons bought in London the sixteen bonds which are the subject-matter of this suit; each and all of which, when so bought, had been called by the Secretary of the Treasury for redemption, as hereinbefore set forth, and the call in each case had matured; and R. Raphael & Sons bought the said bonds with knowledge that they had been scr'called. They bought them of well known and responsible parties in London, and paid the full market value of them, to wit, par and accrued interest, without having any reason whatever to suspect that the bonds, or any of them, had been stolen or wrongfully obtained by 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 on the bonds were not their original and genuine numbers as issued by the Treasury Department of the United States.

IX. All of said sixteen bonds were sold by R. Raphael *&*Sons to the claimants L. Yon Hoffman & Co., and sent to the latter in the same condition as when R. Raphael & Sons bought them as aforesaid; and the same were received byL. Yon Hoffman & Co. in the same condition as when they were sent by R. Raphael & Sons; and L. Yon Hoffman *&*Co. paid R. Raphael *■&*Sons the full market price for them, to wit, par and ac•crued interest, in good faith, without having any reason whatever to suspect that the bonds, or any of them, had been stolen or wrongfully obtained by any person, or that there was any defect ii; the title to the bonds, or that the numbers of any of the bonds had been changed, or that the numbers on the bonds weie not the original and genuine numbers as issued by the Treasury Department of the United States. All of said bonds were received by L. Yon Hoffman *&*Co. from R. Raphael & Sons with knowledge that they had been called for redemption, and that the call in each case had matured. The following is a statement of the dates on which the claimants received from *392B. Eapbael & Sons the.several bonds aforesaid; the genuine numbers in each case being here given:

May 10, 1879. Nos. 153986, 82006, 157844, 166794, 187141, 208069.

May 31,1879. Nos. 101110, 103421.

June 20, 1879. Nos. 82144, 166821, 86080.

July 23, 1879. Nos. 178050, 209419.

July 28, 1879. Nos. 97928, 194597, 280746.

The last five numbers here given are those which were altered, as stated in finding YII, to 178650,2084Í9,97828,194697, 208748.

On each of those days the bonds received by L. Yon Hoffman *&*Co. on that day were transmitted by them to the Treasury Department at Washington for redemption.

In answer to the transmission of bonds made by L. Yon Hoffman *&*Co. on the 10th of May, they received from the Assistant Secretary of the Treasury the following letter:

Washington, D. C., *May*13, 1879.

Messrs. *L. Von*Hoffmann & Co.,

*New Torla:*

Gentlemen : Coupon, bonds No. 82006, for $500, and Nos. 153986, 157844, 166794, 187141, and 208069, for $1,000 each, act Mar. 3,1865, consols of 1865, received for redemption with, your letter of the 10th last., are claimed to have been stolen from the Manhattan Savings Institution of New York.

Please cause to be prepared and transmitted to this Department an affidavit setting forth the time of purchase of the bonds referred to, the consideration paid, and whether, at the time the same were received, you were aware that they were claimed by the institution alluded to; together with any other evidence on which you rely to establish your claim of ownership of the bonds in question.

Very respectfully,

John B. Hawley,

*Ass’t Sec’t’y.*

This letter appears to have been the first intimation received by L. Yon Hoffman & Co. that any of said sixteen bonds had been stolen.

In answer to the transmission of bonds made by L. Yon Hoffman & Co. on the 31st of May, they received from the Assistant Secretary the following letter:

Washington, D. C., *June*3,1879.

Messrs. L. Von Hoffmann & Co.,

*New YorJc:*

Gentlemen : Coupon bonds Nos. 101110 and 103421, for $500 each, act Mar. 3, 1865, consols of 1865, received for redemption with your letters of *393the 31st ultimo, are claimed, to have been stolen from the Manhattan Savings Institution of New York.

The bonds referred to will be held as in previous, until the right of ownership shall have been established.

Very respectfully,

John B. Hawley,

*Ass’t Sec’t’y.*

In answer to 'the transmission of bonds made by L. Von Hoffmann & Co. on the 20th of June, no answer from the Treasury Department appears.

In answer to the transmission of bonds made by L. Yon Hoffman *&*Co. on the 23d of July, they received from the-Assistant Secretary the following letter:

Washington, *July*28, 1879.

Messrs. L. Von Hoffmann & Co.,

*Neto YorTc City:*

Gentlemen : Coupon bond-, originally numbered 178050, but altered to-178650, for $1,000, and coupon bond, originally numbered 209419, but altered to 208419, for $1,000, act March 3, 1865, consols 1865, received with your-letter of the 23d instant for redemption, are said to have been stolen from the Manhattan Savings Institution, of New York, & will be held by the-Department until the right of ownership of the same shall have been established.

Very respectfully,

John B. Hawley,

*Acting Secretary.*

This letter appears to have been the first intimation received by L. Yon Hoffman & Co. that -any numbers of said sixteen-bonds had been altered. *'*

In answer to the transmission of bonds made by L. Yon Hoffman & Co. on the 28th of July, they received from the Assistant Secretary the following letter:

Washington, D. C., *July*31, 1879.

Messrs. L. Von Hoefmann & Co.,

*JSTew York City:*

Gentlemen : Coupon bonds Nos. 97928r altered to 97828. for $500, & 194597 & 208746, altered respectively to 194697 & 208748, for $1,000 each, act Mar. 3, 1865, consols 1865, received with your letter of the 28th inst., for redemption, are said to have been stolen from the Manhattan Savings Institution of New York, and will be held by the Department until the right of ownership of the bonds in question shall have been established. The said bonds are marked on the back with blue pencil in the order of their numbers, as follows: (1) I. 25, 500, 16 Dec., '78; (2) I. 25,1,000,16 Feb.,'79;; and (3) I. 25, 1,000, 18 Mch., '79.

Very respectfully,

John B. Hawley,

*Acting Se&t’y.*

*394X. The Secretary of the Treasury retained and still retains in the custody of the Treasury Department the said sixteen bonds, but was ready and willing tó pay the amount thereof, with the interest which had accrued on each of them, to the legal owners thereof respectively whenever it should appear who were such legal owners j but he referred the question of the conflicting rights of the several persons claiming to be owners of the bonds to the Court of Claims, by the following letter:

Treasury Department, *March*12, 1880.

*To the Honorable Chief Justice and the Justices of the Court of Claims:*

Whereas Messrs. L. Von Hoffman & Co. and others have filed in this Department and claimed therefrom the present payment to them, respectively, of certain bonds which were issued by the United States in the year 1865, under the provisions of the act of Congress approved March 3,1865, which bonds are commonly called “coupon bonds” and “consols of 1865,” and which bonds, so demanded, are described in a certain list or schedule attached hereto, marked A, wherein are stated the number and denomination of each bond the payipent of which is so claimed, the number of the call made by this Department upon the owner thereof to present the same for payment, the date of the call, and the- date of the maturity thereof, the namo of each person, or firm, or bank which presented said bonds to this Department and claimed payment thereof, together with the dates of the several letters transmitting said bonds to this Department;

And whereas the bonds set forth in said Schedule A are claimed as the lawful property of the Manhattan Savings Institution of New York, from the banking-house of which said institution it alleges that they were stolen on the 27th day of October, 1878;

And ■whereas said institution also claimed from this Department the present payment of said bonds as promised in its calls therefor;

And whereas the claims presented by the persons, firms, and corporations named in said Schedule A and said Savings Institution, and the proper and lawful payment of the bonds therein described, involve disputed facts and controverted questions of law, when the amount in controversy exceeds $3,000, and when the decision therein will affect a class of cases and furnish a precedent for the future action of this Department in the adjustment of a class of cases: I do herewith transmit to your honorable court, in com-plines with section 1003 Revised Statutes, the said several claims of the persons, firms, and corporations named in said Schedule A, and also the claims of said Savings Institution, with the vouchers, papers, proofs, aud documents pertaining to each of said claims, that the same may be proceeded in in your honorable court as if originally commenced therein by the voluntary action of each of said claimants.

Very respectfully,

John Sherman,

*Secretary.*

*395*Mr. J. Kubley Ashton*for Von Hoffman & Go.:

1. There is no foundation in the'principles of the law merchant for the contention ,that “ called.” 5-20 bonds, of the Act of March 3,1865, outstanding in the hands of holders, became *-overdue*in the sense of being dishonored, so that honest acquisition could not confer title, after the so-called maturity of the ■calls, and before the time expressed upon the face of the bonds for their payment by the United States. (2 Parsons, Bills and Notes, 201; *Andrews*v. *Pond,*13 Pet.', 77; *Vermilye*v. *Express Go.,*21 Wall., 145; *Wheeler*v. *Guild,*20 Pick., 545; *Jordan*v. *'Tate,*19 Ohio S. R., 586; *Maltison*v. *Marks,*31 Mich., 422; *Helmer*v. *Krolick,*36'Mich., 371; *Bates*v. *Leelair,*49 Vt., 234; *Buxbridge*v. *Manners,*3 Gamp., 193.)

2. The theory that these called bonds received, by the proceedings under the Refunding Act of July 14,1870, anew period of maturity, or became overdue three months after the date of the calls, or that the calls ,had any fixed' period of maturity ■other than that expressed on the *face*of the bonds, is warranted by nothing in that act, or in the calls as formulated under it. The calls were simply notices that the bonds would be paid at the Treasury “on and after” a day named, and that interest would cease on that day. The bonds, therefore, cannot be ■deemed overdue until after presentation at the Treasury for redemption. *(Brooks*v. *Mitchell,*9 M. *& W.,*15; *Bank of Fort Edward*v. *Washington Bank,*5 Hun., 605.) The cessation of interest, under the statute, before their legal maturity, did not work dishonor of the bonds. *(Bank.v. Kirby,*108 Mass., 497; *■Cromwell*v. *Sac Go.,*96 IT. S. R., 58; *Railway Go. v. Sprague,*103 U. S. R., 762.) v

3. All the Act of July 14, 1870, contemplated was the saving •of interest. Congress never intended to deprive these securities, held, as they were, in large numbers, during the refunding operations, in almost every civilized country, of any of the immunities which the general commercial law threw around them when issued by the Government, or to impair their value, •after the calls, in the hands of those who held them, as the representatives of money in the'markets of the world.

4. The Act of 1870, on the contrary, authorized the Secretary ■of the Treasury to treat the called bonds as money, and they were by him so treated, in the refunding operations of the Gov-*396eminent under that act. (“ Specie Resumption and Refunding of tbe National Debt,” Ex. Doc. No. 9, H. of Rep., 46th Goug., 2d sess., page 516.)

5. The usage of the money markets of Europe and this, country has solved the question whether the called bonds should be considered securities for and the representatives of money, by treating them as such. *(Goodwin*v. Bobarts, L. R., 10 Exchequer, 337; affirmed, 1 App. Gas., 476.)

6. The neglect of the previous holders to give notice of the loss of the securities to these purchasers will inure to the protection of an honestly acquired title. *(Vermilye*v. *Express Go.,*21 Wall., 145; *Orleans*v. Platt, 99 U. S. R., 682; *Merchants’ Panic*v. *State Bank,*10 Wall., 604; *Grant*v. Vaughan, 3 Burr,. 1516; Byles on Bills, 361.)

7. The alterations of the numbers on the bonds have no effect to avoid them in the hands of the purchasers. Even if the alteration be deemed material, having been effected by strangers, it is regarded by our law as mere spoliation. The English doctrine that the material alteration by a stranger avoids an instrument is repudiated in this country. (2 Parsons, Bills and and Notes, 574; 2 Dan. Neg. Insts., 349; *United States*v. *Linn,*1 How., 110; *United States*v. *Spauldipg,*2 Mason, 482; *Huntv. Gray,*35 N. J., 233; *Eullerton*v. *Sturges,*4 Ohio S. R., 536;. *Bigelow*v. *Stilphen,*35 Vt., 521.)

8. A subsequent innocent holder can no more be affected by the act of a spoliator, in altering such a security, than any person acquiring a title antecedent to the alteration. *(Gomm.*v. *Emigrant Industrial Savings Bank,*98 Mass., 18; *Oity of. Elizabeth*v. *Force,*29 N. J. Eq., 591; *Birdsall*v. *Bussell,*29 N.. Y., 220; 11 Opin. Att. Gen., 260.)

*Mr. Howard O. Cady*for the Manhattan Savings Institution:

1. These bonds were redeemable and payable three months, after “ call.” The words in the bond *“*payable July 1, 1885,”' are to be construed with the whole instrument and the statutes, which every man is presumed to know. (Rev. Stat., 3697.) A note payable in terms thirty days after date is by law payable thirty-three days after date, and when reference is made to the terms “ on its face,” what is signified is the terms in their legal effect. What was signified here was this : The United States will *397pay these bonds after the 1st of July, 1870, as the Secretary shall give public notice. Interest ceased as the calls matured, and there could be no other .consoionable understanding than that thereafter the bonds would be overdue and only unpaid from failure of presentation. *(Texas*v. *White,*7 Wall., 735; *Ver-milye*v. *Adams Express Co.,*21 ibid., 144; *Mayor of Griffin*v. *City Banlc,*58 Ga), 584.)

2. Purchasers took after the bonds were payable, subject to «equities, and acquired no better title than the transferers had. *{.Executor*v. *Com., of Va.,*18 Gratt., 277; *EincMey*v. V. *P. B. B.,*129 Mass., 52; *Brown*v. *Davis,*3 Term R., 80, note *a.)*

3. Whether the bonds be regarded as maturing at the time named in the call or not, each call was such a notice to every one as to ‘‘fairly put a party upon inquiry,” and he is therefore “chargeable with all the facts.” *(Angle*v. W. TV. *Mut. Life Ins. Co.,*92 U. S. R., 342; *Goodman*v. *Simonds,*20 How., 365.)

4. Th,e numbers of some of the bonds were changed to avoid detection and gain an unlawful advantage, which evidences fraud and vitiates them in the hands of the holder, unless explained. *(Meyer*v. *Henelce,*55 N. Y.,-412; *Woody. Steele,*6 Wall., -80; Abbot’s Negotiable Instruments, § 1410), even though they could not be detected by the most careful scrutiny. *Wade*v. *Withington, 1*Allen, 561; Abbott, *ibid.,*1375.) Being fraudulent, it is not important whether the-changes are material or not. (1. Greenleaf on Ev., § 568.) But these are material the numbers are parts of the inscriptions under the act; by them the bonds are called, and they enable the Government to regulate its payments. The changes varied the legal effect and operation of the bonds — destroyed identity and affected the time of payment. *(Davis*v. *Jenney,*1 Metcalf, 221.)

5. As to the Manhattan Institution — the lawful owner without. complicity — the changes are only spoliation. (2 Parsons on Bills, 574; *Piersol*v. *Grimes,*30 Ind., 130.)

*Mr. Thomas Simons,*Assistant Attorney-General, for the United States, submitted the case without argument, as the Government had no interest in the controversy between the • contending claimants.

*398OPINION.

Drake, Ch. J.,

delivered the opinion of the court:

On the 27th of October, 1878, the vault of the Manhattan Savings Institution in the city of hi ew York was burglariously entered, and an iron safe therein was broken open, and from it were stolen and carried away a large number of bonds and other securities, representing a value of about two and a half million dollars, among which were sixteen United States five-twenty coupon bonds, consols of 1865, issued under the authority of the Act of March 3,1865, *u to provide toays and means for the support of the*Government” (13 Stat. L., 468, ch. 77). It does not appear that the officers or servants of the institution were guilty of any negligence in the care and custody of said bonds and securities.

The Secretary of the Treasury issued nine calls for five-twenty bonds for redemption, under the authority of the Act of July 14,1870, *11 to authorize the refunding of the national debt”*(16 Stat. *L.,*272, ch. 256); in which calls Were embraced all of said sixteen bonds. The first of the calls was dated July 30, 1878, and the last December 18, 1878, and each call matured three-months after its date. The day of the maturity of the last call was therefore March 18, 1879.

Some weeks after this last date R. Raphael *&*Sons, bankers in London, purchased there six of these sixteen bonds; and thereafter, in May, June, and July, 1879, purchased ten more ;. all of which they sold to the claimants L. Yon Hoffman & Co.,, then doing business as bankers in New York. The former firm bought the bonds in London, in good faith, at their full market value, without any reason to suspect any infirmity in the title to them; and the latter firm took them in equal good faith, and paid R. Raphael *&*Sons the full market value of them, namely, par and accrued interest, without any reason to suspect any such infirmity. The first intimation to either of those firms of the bonds having been stolen was given by the Treasury Department to L. Yon Hoffman *&*Go., when they sent to the Department the first lot of six of the bonds, and received therefrom information to that effect; and the same information was repeated as to the several succeeding lots, aggregating ten bonds, transmitted by them for redemption; and it was not until after *399the information was thus given’to them that it was imparted to B. Baphael *&*Sons. There is, therefore, not the least ground for imputing any wrong whatever .in the transaction to either of those firms. The only question is as to the legal ownership of the bonds.

There can be no doubt that if B. Baphael *&*Sons or L. Yon Hoffman & Co. had purchased the bonds in good faith, for value, *before*the maturity of any call of the Secretary of the Treasury embracing them, they would be entitled to hold them against all the world. *(Murray*v. *Lardner,*2 Wall., 110; *Texas*v. White, 7 ibid., 700; *Vermilye*v. *Adams Express Co.,*21 ibid., 138; *Stinkley*v. *U. P. Railroad Co.,*129 Mass., 52.)

The only point in the-case is as to whether their purchase *after*the maturity of calls by that officer changes L. Yon Hoffman *&*Co.’s legal rights. If those’ calls did not, in law, have the effect of making the bonds then due and payable, the Government cannot impeach or question the title of that firm, and must pay the amount of the bonds to them. If, on the other hand, the calls did have, in law, the effect of making the bonds due and payable at the maturity of the calls, then L. Yon Hoffman *& Go.*took overdue paper, subject to any and every defense which might be urged against their title.

The counsel for L. Yon Hoffman & Co. claim that to hold that the bonds became due and payable at the maturity of the calls is to hold that thereafter they ceased to be negotiable. We do not concur in this view, *negotiable*is a term applied to any contract, the right of action on which is capable of being transferred by indorsement and delivery, ór by delivery alone, and the transfer of which vests in the holder a right to sue thereon in his own name. These bonds were payable to bearer, and were therefore transferable by delivery, and therefore were, without dispute, negotiable in the legal acceptation of the word at any time before they became due and payable. Were they not equally negotiable after that time *%*In our opinion, it cannot be questioned that they were. We know of no rule of law which terminates the transferability of negotiable paper on the day it becomes due and payable. Beast of all is there any such rule in regard to Government bonds payable to bearer. They are just as negotiable after maturity as before; but"with different results in the two cases as *'to*the legal rights of the holder. He that takes them in good faith before their maturity takes *400them with an unimpeachable title; but the title of him who takes them after maturity may be impeached.

To avoid the necessary effect of this doctrine, the counsel of L. Yon Hoffman & Co. takes the position that the time of the maturity of these bonds is that *fixed on their face*for their payment by the United States, namely, the first day of July, 1885, and that until after that day they continued fully negotiable, with all the protection accorded by the law merchant to negotiable paper. And as a necessary corollary from this position he goes further, and contends that the calls of the Secretary of the Treasury for these bonds for redemption, and the non-redemption of the bonds at or after the time when they might have been presented for redemption, did not make them then overdue in the sense of being dishonored; and that unless they were overdue in that sense, L. Yon Hoffman & Co.’s title to them, acquired after the maturity of the several calls, cannot be impeached. Upon the soundness of these positions depends the right of L. Yon Hoffman & Co. to these bonds. We have considered the positions with all the respect due to the able counsel, and are not able to sustain them, for reasons now to be stated.

The fundamental error in his position is in overlooking the very terms of the bonds themselves, which make a broad line of distinction between them and ordinary commercial paper. The latter has always a time of payment fixed by its own terms, and it is dishonored only when the promisor fails to pay at that time. But on the face of these bonds the Government, while fixing a day of payment, reserves to itself the right to pay *before*that day; and the question here is as to the effect of that reservation. To answer this question we must look not to the law merchant, but to the statute law authorizing the issue of the bonds. They could have hpd no existence except by statutory authority; the reserved right to pay before the fixed day of payment could be stipulated for only in pursuance of statute; and to the statutes we must resort to determine the effects, direct and remote, of that reservation.

By the Act of March 3,1865, under which these bonds were issued, it was enacted as follows:

> That the Secretary of the Treasury he, and he is hereby, authorized to borrow, from time to time, on the credit of the United States, * * * any sums not exceeding in the aggregate six hundred millions of dollars, *401and to issue tlierefor 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 f * * maybe made payable at any period, not more than forty years from date of issue, or may be made redeemable, at the pleasure of the government, at or after any period no.t less than five years nor more than forty years from date, or may be made Redeemable and payable as aforesaid, as may be expressed on their face.

This provision expresses what the contract of the United States should be with parties from, whom money should be borrowed; it formed, to every intent, a-part of every bond issued under its authority; and it was notice to all the world that the Government reserved the right, at its own pleasure, to redeem the bonds issued under its authority, at and after such time as the Secretary of the Treasury might fix for their redemption after the lapse of five years from their date.

The bonds in this case express on their face that they are payable on the first day of July, 1885; but they also express that they are *u redeemable at the pleasure of the United States after the first day of July,*1870.” These terms of the contract were in exact conformity with the statute.

What is the signification of the word *redeemable*there? It simply expresses the right of the United States to buy and receive back the bond, by paying the full amount of it before the fixed day of payment. He who took one of those bonds took it with full notice *on its face*that that right existed, and also with reference *on its face*to the act of Congress authorizing the bond to be so shaped. By so taking it he agreed that that right might be exercised by the United States at their own pleasure, at any time after the first day of July, 1870.

What is the meaning of the words *u at the pleasure of the United States*” *?*Did they refer merely to the time when that pleasure might be exercised? We think not. It seems to us quite clear that the pleasure might be exercised, not only as to the time when, but also as to the place where and the terms on which the bonds might be redeemed, and the legal effect which should attend their redemption. No other view appears to us consistent with the rights of the United States, whether considered as a. contracting party or as a sovereign.

Of Course, the United States could indicate its pleasure only by an act of Congress. Notwithstanding the language of the bonds, there could be no right in any Department or officer, after the expiration of the five years, to redeem one of them *402without express authority conferred by such an act. This conveyed notice to every holder of a bond that further legislation; must be had before the bond could be so redeemed. And it also conveyed notice to him that he took the bond subject to the pleasure of the TJnited States as to the character, scope, and effect of such legislation.

Such being the attitudes of the parties toward each other in relation to the bonds, the Congress declared the pleasure of the United States as to the exercise of the reserved right of redemption, by the following’ provision in the above-cited act of July 14,1870:

> The Secretary of the Treasury is hereby authorized * * “ 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 horeaftor become redeemable by the terms of their issue. But the particular bonds so to be paid and cancelled 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 cease.

In this'provision tlie following things appear: 1. That it refers to bonds which had become, or should thereafter become, redeemable by the terms of their issue; 2. That the redemption of them should be effected by their payment at par; 3. That the payment should be made by the Secretary of the Treasury; 4. That the Secretary should give public notice, indicating and specifying by class, date, and number the particular bonds tO' be at any time redeemed; and 5. That in three months after the date of such public notice the interest on the bonds selected and advertised by the Secretary to be redeemed should cease.. Such was the form in which the United States saw fit to signify their pleasure as to the redemption of the bonds of which these sixteen were a part. That law, instantly on its passage, became,, in legal effect, a part of every bond which expressed on its face that it. was redeemable at the pleasure of the United States. Every holder of such a bond, at and after the date of that enactment, held it subject absolutely thereto, and to all legal results flowing from the operation thereof.

And now we come to the question whether a public notice— ordinarilytermed a *call*— given by the Secretary of the Treasury, that the principal and accrued interest of designated bdnds *403would be paid on and after a certain day, and that the interest on such bonds would cease on that day, had the legal effect of' bringing the bonds to maturity on the specified day of payment ? If it did have that effect, then L. Yon Hoffman *&*Co. bought— not dishonored, but — overdue bonds, which remained in the market, not because the Government had failed to pay them,, but because the holders had failed to present them for payment-at the time named by the Government for their presentation for that purpose. L. Yon Hoffman & Co. contend that these bonds were not brought to maturity by those calls, but could be considered as matured only on the first day of July, 1885 5 and that therefore they took a title not subject to be impeached.

In considering this position the first point to be settled is the meaning of the maturity of a negotiable instrument. There can be but one answer to this — that the time of maturity is the time when the instrument becomes due and payable; that is, when the holder of it is entitled to demand, and the maker of it is bound to pay, all that is due upon it.

Ordinarily, the time of maturity is fixed .by the terms of the instrument, and in such case neither party to it can, by his own separate act, change the time./ The holder cannot demand payment before the fixed day, nor can the maker compel the holder to receive payment before that day. This is so because the contract is to be enforced and fulfilled in strict accordance with its terms. Had these bonds been ’ simply payable on the first day of July, 1885, the Hnited States could not have required the holder of them, under penalty of the stoppage of interest, to receive payment before that day, and therefore they could never before then have been brought to maturity.

But that is not this case. The^bonds -in question, we repeat, bore on their face the declaration of the right of the United States to redeem them after the first day of July, 1870, and that right was reserved to the United States by the act under which the bonds were issued, and was, in every view, of the very essence of the contract. The subsequent act of July 14,1870, prescribed how that right should be exercised.

Now, when that right was exercised in conformity with that act, we are unable to perceive-why it did. not bring these bonds to maturity, each oue'at the end of three months after the date of the call embracing it, when the holder of it would be entitled to receive the principal of it and accrued interest. *404Tills is ho more nor less than just what he would be entitled to on any day of payment fixed in the bond. To contend, therefore, that the bond did not mature on the day specified in the Secretary’s notice for its full payment seems to us to be wholly without justification. We therefore hold that each ofthe bonds in question did, in law, become matured on the day when the holder of it had the right, in pursuance of the Secretary’s call,1 to receive payment of all then due on it; and that whoever bought them after’that day took them as overdue paper, with only such title as his vendor had, and liable to have his title to them disputed and impeached..

There is in this ruling no hardship on L. Yon which they did not knowingly bring upon themselves. They knew that these were “called bonds,” and they bought them as such. . If, when they bought them, they believed that they had not matured, and would not mature until the first day of July, 1885, why should they have transmitted them, as they did instantly, to the Treasury Department for redemption1? They bought them at par and accrued interest, at a time when it was a notorious public fact, of which we are entitled to take judicial notice, that in every money market in the world where United States bonds were bought and sold, these bonds, if payable only in 1885, would have commanded a considerable premium. Why did they not, by a sale of them, realize the profit of the premium ? The answer is very simple and inevitable. They knew that the bonds were due and payable; that they had, in eyes of all dealers in such securities, reached their maturity; that they had no market value, except as representing the right to receive the principal of them and accrued interest; and they lost no time in seeking to obtain from the Treasury just that amount, and asked no more.

From all this it follows, as it seems to us, that L. Yon man & Co. acquired, as against the Manhattan Savings Institution, no title to these stolen bonds, and that the' institution has still the title to them, wholly unimpaired by the fact of their having been stolen.

At the argument much was said on both sides the alterations of the numbers of five of the bonds. We have not noticed that subject because, as between these contending claimants, the alterations have no bearing on the question of title. If the bonds were annulled by the alterations, then *405neither claimanlis entitled to recover on them. Neither,"therefore, can attempt to overthrow the other’s right of recovery, because of the alterations, without thereby overthrowing his own right. It is only the Government that could set up the alterations as a defense, and it has not done so. On the contrary, it stands ready to pay the altered bonds whenever the rightful ownership of them is judicially determined; and it is to obtain such determination that the whole controversy was remitted to this court by the Secretary of the Treasury.

Note. — On the 4th of June, 1883, a similar case was decided in favor of the Manhattan Savings Institution, in which Messrs. J. S. Morgan *Sb*Co. were "also claimants as purchaser of the bonds sued on. Judgment was rendered for the bank in the sum of $15,284.53.

The decision of the court is, that the petition of L. Yon Hoffman & Co. be dismissed; and that judgment be entered in favor of the Manhattan Savings Institution for the principal of the sixteen bonds, $13,000, and for the aggregated interest, accrued on them up to the maturity of the several calls made by the Secretary of the Treasury, as shown in the tabulated statement in finding Y, amounting together to $13,229.28.