Anthony Seeberger v. McCormick/Opinion of the Court

In the suit brought by McCormick against the Market National Bank of Chicago it was held by the supreme court of Illinois that the contract of lease sued on was not incidental and necessarily preliminary to the organization of the corporation, and therefore, by virtue of § 5136 of the Revised Statutes, having been executed by the defendant before being authorized by the Comptroller of the Currency to commence the business of banking, did not bind the defendant. That decision being arrived at upon a consideration of the legal import of a statute of the United States, was plainly one involving a Federal question. But it was contended that this court had no jurisdiction to review the action of the state court, because its decision was in favor, in respect to the Federal statute, of the party who had set up and claimed an immunity under it. It was, however, clearly shown by this court that, as the defendant had relied on the statutory prohibition to transact any business until it had been authorized by the Comptroller of the Currency to commence the business of banking, and as the plaintiff had relied on the exception out of that prohibition, that is, had claimed that the lease was 'incidental and necessarily preliminary to the organization,' and as the decision was against the plaintiff on the latter contention, it was therefore a decision against a right claimed by him under a statute of the United States, and reviewable by this court on writ of error. McCormick v. ''Market Nat. Bank'', 165 U.S. 538, 546, 41 L. ed. 817, 820, 17 Sup. Ct. Rep. 433.

McCormick's recovery in that action having been restricted to rent for the time of the bank's actual occupancy of the premises, he brought the present suit against the persons who had taken part in the proposed organization of the bank, charging them as partners doing business in the firm name and style of the Market National Bank of Chicago. He recovered a judgment in the appellate court of Illinois. That judgment has been affirmed by the supreme court of Illinois, and the case is now before us on a writ of error to the judgment of the state supreme court.

The theory upon which this action was maintained in the state courts can be best made to appear by a quotation from the opinion of the supreme court:

'The principle is one of agency, and that plaintiffs in error, as the agents of the corporation in making the contract of the lease, by necessary implication asserted to the lessor that they were in fact authorized to cause the lease to be executed by the corporation. Where the contract is made in good faith and both parties are fully cognizant of the facts, and the mistake is one of law only, the result of which is to exonerate the principal from liability, because the agent had no lawful authority to make the contract, it is clear that the agent cannot be held liable, either ex contractu or ex delicto.

'The appellate court was authorized to find, and doubtless did find, that this was not such a case. These directors were charged with knowledge that they had not taken the necessary steps to obtain, and had not obtained, the certificate of the Comptroller necessary to confer power to make the lease, and it was a fair inference for the appellate court to draw from the agreed facts that McCormick did not know of this omission until August 15, 1893, several months after the lease was executed and after possession of the premises had been taken by the lessee under it. The stipulation also showed that the plaintiffs in error canceled their articles of association in July, but remained in possession of the premises until the 15th day of August. They had by resolution authorized and directed the execution of the lease, and there can be no doubt of the legal sufficiency of the evidence to establish an implied warranty on their part of their authority to enter into the lease on behalf of the corporation, if such implied warranty is in law a sufficient ground on which to make them liable to respond in damages to McCormick for a breach of such warranty. . ..

'We are of opinion that upon both principle and authority such an action can be maintained. Indeed, the fraud, if any, arises out of the contractual relations which the parties have assumed. The express contract purporting to bind the principal may be void, but if the agent has given his warranty, express or implied, that he is authorized by his principal to execute that contract when he has no such authority, we know of no principle in law or logic which would prevent the other party from recovering for the breach of such warranty where injury has been sustained by such breach.'

Did such a state of facts and law present a Federal question? Certainly there was no formal allegation in the assignments of error to the judgment of the appellate court that the plaintiffs in error were claiming any immunity under the laws or Constitution of the United States; nor is there any allusion, however distant, in the opinion of the supreme court to any such question. And surely the fact that the defendants had proposed, but had failed, to effect an organization as a banking association under the laws of the United States, did not bestow a Federal character upon their transactions. By withdrawing from their futile attempt to create a corporation under the statutes of the United States, these individual defendants must be deemed to have renounced any right, title, or immunity they might have possessed under such organization had it been perfected.

It has been frequently held that the contention, even if formally made, that plaintiffs in error were seeking to avail themselves of some right or immunity under the Constitution or laws of the United States, does not give us jurisdiction to review the judgment of the supreme court of a state where that judgment was based upon a doctrine of general law sufficient of itself to determine the case. Beaupre v. Noyes, 138 U.S. 397, 34 L. ed. 991, 11 Sup. Ct. Rep. 296; Eustis v. Bolles, 150 U.S. 361, 37 L. ed. 1111, 14 Sup. Ct. Rep. 131; Pierce v. Somerset R. Co. 171 U.S. 641, 43 L. ed. 316, 19 Sup. Ct. Rep. 64; Remington Paper Co. v. Watson, 173 U.S. 443, 43 L. ed. 762, 19 Sup. Ct. Rep. 456.

We think that the question whether the plaintiffs in error rendered themselves liable to McCormick by reason of their false assumption of corporate authority was one of general law, and not one to be solved by reference to any law, statutory or constitutional, of the United States.

As well, then, because no Federal question was in form presented to or passed upon by the supreme court of Illinois, as because the judgment of that court was based upon matter of general, and not Federal, law, we are unable to see that we have jurisdiction to review that judgment; and the writ of error is accordingly dismissed.