Case Name: The Home and Southern Insurance Companies, appellees, v. The United States, appellants
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1874-12
Citations: 10 Ct. Cl. 145
Docket Number: 
Parties: The Home and Southern Insurance Companies, appellees, v. The United States, appellants.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 10
Pages: 145–156

Head Matter:
THE HOME INSURANCE COMPANY’S CASE.
(8 Court of Claims R., 449;
— Wallace R., —.)
The Home and Southern Insurance Companies, appellees, v. The United States, appellants.
On the defendants’ Appeal.
During the rebellion the legislature of Georgia passes an act to incorporate an insxirance compamy, with power to insure against losses by fire and the hazards of ocean or inlandnavigation and upon Uves. The act doesnot contain provisions of such, a nature as might operate in aid of the rebellion. At the time of the capture of Savannah the company owns cotton which is seized by the military. The company brings its suit for the proceeds. The only question raised on the trial is as to the right of a corporation created while the State was in rebellion to maintain a suit for the captured property. The court below decides that an act of the legislature of a State while in rebellion is the valid act of a de facto government, which will be sustained by the courts of the United States if it relates to the domestic affairs of the community.' Judgment for the claimant. The defendants appeal.
I. Notwithstanding the old rule that a corporation suing must prove its corporate existence, it has been many times decided that a plea of the general issue admits its capacity to sue, as does going to trial upon the merits. Such is the established rule in the Court of Claims, and the Government, wishing to contest the corporate existence of a claimant, must raise the objection by plea.
II. All the enactments of the de facto legislatures in the insurrectionary States which were not hostile to the Union or to the authority of the general Government, and which were not in conflict with the Constitution of the United States or of the States, have the same validity as if they had been enactments of legitimate legislatures. Therefore, an act passed by the legislature of Georgia during the rebellion to incorporate an insurance company, being ordinary legislation, having no relation to anything else than the domestic concerns of the State, must be deemed to have lawfully incorporated the company and given it a legal capacity to sue in courts of the United States.
III. Corporations in the Southern States created before or during the rebellion may maintain suits under the Abandoned or captured property Act and make proof that they have never given aid or comfort to the rebellion; for the act makes no distinction between natural and artificial persons.
The Reporters’ statement of tbe case:
The only question in tbe case rested on tbe act of incorporation, and is fully stated in the opinion of tho court.
Mr. Attorney-General Williams and Mr. Assistant Attorney-General Goforth for the United States, appellants:
The court below erred in holding that the claimants had a legal existence; and in holding that the rebel legislature of Georgia could create a corporation capable of suing the United States after the suppression of the rebellion.
The court below grounds its decision entirely on the decision of this court in the case of Texas v. "White, (7 Wall., 700.) We do not think that decision goes to tbe extent claimed. The language of this court is:
“Acts necessary to peace and good order among citizens, such, for example, as acts sanctioning and protecting marriage and the domestic relations, governing the course of descents, regulating the conveyance and transfer of property, real and personal, and providing remedies for injuries to person and estate, and other similar acts, which would be valid if emanating from a lawful government, must be regarded in general as valid when proceeding from an actual though unlawful government.”
The creation of insurance and banking companies is not an act “necessary to peace and good order among citizens.” It is simply a privilege — a franchise granted by the government to individuals. It has nothing to do with “peace and good order among citizens.” Such corporations are not necessary to the social or even business relations of a community.
In the case of Sprott v. The United States, (decided at the present term of this court,) the court goes no further than to affirm the decision in the case of Texas v. White. “Laws necessary in their recognition and administration to the existence of organized society” are“ the fundamental principles for which civil society is organized into government in all countries, and must be respected in their administration under whatever temporary dominant authority they maybe exercised.” This is all that the court held in the Sprott Case ; and this manifestly is the farthest extent to which the sovereign power of the Union should go in recognizing the acts done by an insurgent government. The regular and ordinary course of social and business affairs, that which belongs to the practice of civilized communities, and the modes, processes, and contracts relating thereto, it would be inconvenient, impolitic, and in many instances cruel to disregard or interfere with; but, at the same time, in observing this policy no sanction of the authority or obligation of the acts of the insurgent government is intended or implied.
But if these corporations had a legal existence during the time the rebel legislature assumed to regulate the affairs of the community composing the State of Georgia, such existence ceased with that legislature. The creature was not greater than its creator. That legislature could not set up a monument of its power that the Federal Government would be compelled to respect.
In this view, which is submitted to be a fair one, it is idle to claim any consideration for tbe character in which this claimant undertakes here to sue the United States. It was an artificial person, created without lawful authority, not necessary to the ordinary business and affairs of life. It could have thriven only by sympathy and co-operation with the unlawful insurgent body which gave it existence, and must necessarily have been, in intention and in fact, a part and parcel of the rebellion. Such an organization, it is submitted, can have no standing in this court j but its charter, the contract between itself and its rebel creator, should be repudiated, and, as by virtue of this it has assumed to come here to sue, its petition should be dismissed.
Messrs. Denver & Peclc for the claimants, appellees :
A reversal of the judgments is asked for upon the ground that the plaintiffs below did not sufficiently prove their corporate existence; the only proof on that subject being that the two companies were chartered by the legislature of the State of Georgia while that State was in insurrection against the United States. To this objection we reply:
The appellant is not in a condition to raise that question in this court. The declaration or petition in each case alleges that the plaintiff is “ a corporation created by the State of Georgia, and located and doing business at Savannah, in said State.” The defendant below filed several pleas. First, the general issue ,• second, non-indebtedness; third, traverse of loyalty; fourth, statute of limitations. None of these pleas required the plaintiffs (appellees) to prove their corporate existence, while the first plea was a legal admission of the fact.
In the case of Conrad v. The Atlantia Insurance Company this court said: “ The first exception is that the corporate capacity of the plaintiffs was not regularly proved before the introduction of the respondentia bond. It is to'be considered that this was a trial upon the merits, and by pleading to the merits the defendant necessarily admitted the capacity of the plaintiffs to sue. If he intended to take the exception, it should have been done by plea in abatement; and his omission so to do was a barrier of this objection.” (1 Pet., 450.) “In considering this point, it is material to observe that no plea in abatement has been filed denying the capacity of the plaintiffs to sue, and no special plea in abatement or bar that there is no such corporation as stated in the writ. The general issue is pleaded, which admits the competency of the plaintiffs to sue in the corporate capacity in which they have sued.
“ If the defendants meant to have insisted upon the want of a corporate capacity in the plaintiffs to sue, it should have been insisted upon by a special plea, in abatement or bar. Pleading to the merits has been held by this court to be an admission of the capacity of the plaintiff to sue.” (The Society for the Propagation of the Gospel v. The Town of Pawlet, 4 Pet., 501.)
The court there refers to a large number of authorities which sustain the proposition. “ The defense that the plaintiffs are not a corporation cau only be pleaded in abatement.” (Dented Vulcanite Company v. Wetherbee, 2 Cliff., 555.) It may be urged that this rule does not apply to cases of this character in the Court of Claims, where the common-law rules of pleading do not prevail. It is true that special pleading, with all its technicalities, has not been adopted in that court. ■But there are certain rules which are necessary to insure justice and secure a correct administration of the law that no court has a right to disregard. Due of these is that a plaintiff going to trial shall know with reasonable certainty what he must prove and what objections he has to meet. It would be a. tyrannous rule to hold that upon a mere general denial of his claim he must negative every possible objection to a recovery$ as, for instance, that he was not insane, that he was not a minor, that he had not made an assignment in bankruptcy, or, as in this case, that an act of incorporation had been derived from a valid legislative body. In all courts of which we have any experience, a general denial puts in issue only the substantial merits of the case; and if there are defenses of a technical character, relating to the person of the plaintiff, having no relation to the merits, he is entitled to receive notice by a plea in abatement, or at least by a special notice or plea in bar. (Christian Society in Plymouth v. Macomber et al., 3 Met., 236.)
The sj>ecial pleas filed by the defendant, (appellant,) before referred to, show that this theory prevails in the Court of Claims.
Several years ago this precise question arose in the Court of Claims, was fully argued and maturely considered and decided, and no attempt has eyer been made to disturb or reverse the decision. Two questions had arisen in the case, which were pre viously presented to tbe court on motion and elaborately argued. It was objected on tbe part of tbe defendants: First. That the incorporation of the society'must be proved by tbe production of its charter, and that parole evidence, is not admissible to show tbe exercise of its franchise until the fact of its incorporation be first established. Second. That tbe trustees of a body corporate are not competent witnesses for tbe corporation,- and cannot be allowed to testify within tbe true intent and meaning of tbe Act June 25, 1868, (15 Stat. L., p. 75, § 4.) The court, after due deliberation, ■ decided: “ First. That tbe rule which ordinarily prevails should also govern actions under tbe Abandoned or captured property Act, and that tbe claimant should not be required to prove its incorporation unless tbe allegation of its incorporation be specially traversed. Second. That the trustees of a religious incorporation are neither 'claimants’ nor ‘persons interested,’ within the true intent and meaning of the statute which prohibits claimants and persons interested from testifying in this court against tbe United States.
“ To these decisions we still adhere. If here the plea of nul tiel corporation is not pleaded in these abandoned or captured property cases, and the property has been taken from the possession of the corporation, or- has been duly reported as owned by it, the defendants will be deemed to have dealt with it in its corporate capacity sufficiently to bring themselves within the ordinary rule.” (The Hebrew Congregation y. The United States, 6 0. of Gis. R., 244.)
It is true that the Court of Claims in its opinion discusses and decides upon the validity of the incorporation. This was unnecessary; but as the conclusions reached were in our favor, we could take no exception to it. We insist, however, that the issues in the case are to be found in the pleadings and not in the opinion of the court. If we had been called upon to establish our corporate existence, non constat but we could have shown it beyond cavil. The evidence which appeared on that subject was before.the court accidentally, and only as a part of the history of the case. The fact that a company was once incorporated by one legislative body did not prevent its acquiring a better corporate capacity in some other way. A year aud a half before these cases were tried, the Court of Claims had decided that the plea of the.general issue admitted the fact of incorporation and that we need offer no proof on that point.
The objection made to the corporate existence of the claimants is that the acts of incorporation shown in the record were passed by the legislature of the State of Georgia while that State was in rebellion against the United States.
It will be observed that the acts of incorporation are in the usual form for the organization of insurance companies. There is no reference to the rebellion or to the Confederate States; in fact, there is nothing in these charters from which the existence of either could be imagined. ■
It is well known that the insurance business of the United States has been principally done by companies located in the great money centers of the Eastern States. The rebellion brought their transactions in the South to a sudden termination. Hence the necessity of providing new instruments for transacting this business; and these charters were granted to fill up the gap left by the retirement of the old-established companies.
The peaceable, loyal, well-disposed people of the South were left in this dilemma: They must either remain uninsured or they must establish home companies under such authority as was placed over them.
The character and influence of this class of business, its necessity in all the peaceable pursuits of life, need no illustration or enforcement. If it differs in any respect from other mercantile pursuits of an innocent character, it is in the generally recognized fact that it must be carried on by the agency of associated capital through incorporated companies. That charters granted for this purpose by the legislatures of the seceded States are valid seems to be placed beyond a doubt by the decisions of this court repeatedly given.
“ It is not necessary to attempt any exact definitions within which the acts of such a State government must be treated as valid or invalid. It may be said, perhaps with sufficient accuracy, that acts necessary to peace and good order , among citizens, such, for example, as acts sanctiouing and protecting marriage and the domestic relations, governing the course of descents, regulating the conveyance and transfer of property, real and personal, and providing remedies for injuries to person and estate, and other similar acts, which would be valid if emanating from a lawful government, must be re garded in general as valid when proceeding from an actual though unlawful government, and that acts in furtherance of or support of rebellion against the United States, or intended to defeat the just rights of citizens, and other acts of like nature, must, in general, be regarded as invalid and void.” (Texas v. White, 7 Wall., 733.)

Opinion:
Mr. Justice Strong-
delivered the opinion of the court:
These were suits, under the Abandoned or captured property Act, to recover the proceeds of the sale of cotton captured at Savannah in 1864, and now in the Treasury of the United States. From the findings of fact in the Court of Claims it appears that the plaintiffs are corporations created by the legislature of G-eorgia in 1861 and 1863, while the State was in armed rebellion against the Government of the United States; and the question now presented is whether such corporations can be recognized as having a legal existence, with capacity to own cotton and to sue in the Court of Claims. It is insisted on behalf of the appellants that the courts of the United States will not recognize the competency of those bodies known as the legislatures of the insurgent States to create corporations such as insurance, banking, and trust companies; and as the plaintiffs in the court below were incorporated under acts passed after the attempted secession of Georgia from the Union, and before the close of the war, it is argued that they can have now no legal existence.
It may well be doubted whether, under the pleadings in the court below, the appellants have any right to raise such an objection here. There was no plea that traversed directly the corporate existence of the plaintiffs. A general denial of the averments of the petition was hardly sufficient. Notwithstanding the old rule that a corporation suing must prove its corporate existence, it has been many times decided that a plea of the general issue admits its capacity to sue, as does going to trial upon the merits. (Lehigh Bridge Company v. The Lehigh Coal and Navigation Company, 4 Rawle, 9; Sutton v. Cole, 3 Pick., 245; Conard v. The Atlantic Insurance Company, 1 Pet.,. 450; The Society for the Propagation of the Gospel v. The Town of Pawlet, 4 Pet., 501.) And such is the established prac tice in the Court of Claims. (Hebrew Congregation v. The United States, 6 C. Cls. R., 244.)
We do not, however, rest our decision upon this ground. We prefer answering the question which the appellants attempt to raise. No doubt the legislature of Georgia, in 1861 and 1863, when the enactments were made for the incorporation of these plaintiffs, was not the legitimate legislature of the State. The State had thrown off its connection with the United States, and the members of the legislature had repudiated or had not taken the oath by which the third section of the sixth article of the Constitution required the members of the several State legislatures to be bound. But it does not follow from this that it was not a legislature the acts of which were of force when they were made, and are in force now. If not a legislature of the State de pire, it was at least a legislature de facto. It was the only law-making body which had any existence. Its members acted under color of office, by an election, though not qualified according to the requirements of the Constitution of the United States. Now, while it must be held that all their acts in hostility to that Constitution or to the Union of which the State was an inseparable member have no validity, no good reason can be assigned why all their other enactments, not forbidden by the Constitution, should not have the force which the law generally accords to the action of defacto public officers. What that is was well stated by Kent in the 2d volume of his Commentaries, page 295. " In the case of public officers," he says, " who are such defacto acting under the color of office by an election or appointment not strictly legal, or without having qualified themselves by the requisite tests, or by holding over after the time prescribed for a new appointment, as in the case of sheriffs, constables, &c., their acts are held valid as it respects the right of third persons who have an interest in them, and as concerns the public, in order to prevent the failure of justice." And thus this court has ruled, in regard to the legislatures of the insurgent States, in several cases which have come up for our decision. In Texas v. White and Chiles (7 Wall., 700) Chief-Justice Chase, in delivering the opinion of the court, (while declining to attempt any exact definition within which the acts of an insurgent State government must be treated as valid or invalid,) remarked: "It maybe said, perhaps with sufficient accuracy, that acts necessary to peace and good order among citizens, such, for example, as acts sanctioning and protecting marriage and tbe domestic relations, governing tbe course of descents, regulating tbe conveyance and transfers of property, real and personal, providing remedies for injuries to person and estate, and other similar acts wbicb would be valid if emanating from a lawful government, must be regarded in general as valid when proceeding from an actual though unlawful government, and that acts in furtherance or' in support of the rebellion against the United States, or intended to defeat the just rights of citizens, and other acts of like nature, must in general be regarded as invalid and void." This language was intended only as an outline, but it sufficiently indicates where is the line .between valid and invalid acts of the legislatures of the insurgent States. Similar opinions were expressed in Sprott v. The United States, a case decided at this term, (ante, p. 1.) There, when speaking of the powers of the insurgent States, our language was: " It is only when, in the use of these, powers, substantial aid and comfort was given or intended to be given to the rebellion, when the functions necessarily reposed in' the State for the maintenance of civil society were perverted to the manifest and intentional aid of treason against the Government of the Union, that their acts are void." And with equal distinctness was it said in Horn v. Lockhart, (17 Wall., 580 :) " We admit that the acts of the several States" (in insurrection) "in their individual capacities, and of their different departments of government, executive, judicial, and legislative, during the war, so far as they did not impair or tend "to impair the supremacy of the national authority or the just rights of citizens under the Constitution, are in general to be treated as valid and binding. The existence of a state of insurrection and war did not loosen the bonds of society or do away with civil government or the regular administration of the laws. Ho one that we are aware of seriously questions the validity of judicial or legislative acts in the insurrectionary States touching these and kindred subjects, when they were not hostile in their purpose or mode of enforcement to the authority of the National Government, and did not impair the rights of citizens under the Constitution." After these emphatic utterances controversy upon this subject should cease.. All the enactments of the de facto legislatures in the insurrectionary States during the war, which were not hostile to the Union or to the authority of the General Government, and which were not in conflict with' the Constitution of the United States or of the States, have the same validity as if they had been enactments of legitimate legislatures. Any other doctrine than this would work great and unnecessary hardship upon the people of those States, without any corresponding benefit to the citizens of other States, and without any advantage to the National Government.
Tried by the rule thus stated, the enactments by which the plaintiffs in these cases were incorporated must be treated as valid. They had no relation to anything else than the domestic concerns of the State. Neither in their apparent purpose nor in their operation were they hostile to the Union or in conflict with the Constitution. They were mere ordinary legislation, such as might have been had there been no war or no attempted secession; • such as is of yearly occurrence in all the States of the Union. We hold, therefore, that the Court of Claims correctly decided that the plaintiffs were lawfully incorporated, and that they had a legal capacity to sue in that court.
It remains only to notice one other position taken by'the appellants during the argument. It is that even if the plaintiffs below are corporations which this court can recognize as such, they cannot sue in the Court of Claims for the proceeds of the sale of captured, and abandoned property, because, as it is argued, the Abandoned or captured property Act provides only for suits by persons who could have given aid and comfort to the rebellion. It is said corporations were incapable of giving such aid, and that they cannot make proof that they have never given it. Nothing in the assignments of error justifies the presentation of such an argument. But were it otherwise, the argument would be plainly unsound. The act of Congress confers the right to sue upon any person claiming to have been the owner of the captured or abandoned property. It makes no distinction between natural and artificial persons, and it has not been doubted that corporations created before the war commenced might sue. Many such actions have been sustained. It is no objection to them that plaintiffs in all suits are required to make proof that they have never given aid and comfort to the rebellion. Such proof may be made as well by artificial as natural persons. Corporations may have rendered very substantial aid to the armed resistance to the laws of the United States. They may have made loans or contributions to the confederate government. They may even have fitted out companies or regiments of soldiers. If they have rendered no aid, the fact is quite capable of proof.
The judgment of the Court of Claims in each case is affirmed.