In re Chiles

ON motion by the State of Texas for a rule on John Chiles to show cause why he should not be dealt with as guilty of a contempt of this court in disobeying one of its decrees, and why he should not by proper instrument convey to the said State all his right, title, and interest to seventy-six certain bonds of the United States now in the possession of Droege & Co., of London.

The case was thus:

On the 12th of January, 1863-the State of Texas being then in rebellion against the United States-certain persons calling themselves its Military Board, and who were possessed, under a statute of the then so-called State, of actual power within its confines-entered into a contract with a certain G. W. White and J. Chiles, by which, in consideration of military stores to be furnished to the State, the State was to sell and transfer to them certain bonds of the United States which, long before the rebellion, the United States had given to the State of Texas as an indemnity for the surrender of certain territory claimed by it; and which bonds were thus known as the Texas Indemnity Bonds.

Two lots of bonds were mentioned in this contract. One of them was thus:

'2d. Seventy-six bonds with coupons attached, principal and interest amounting to $87,400, said seventy-six bonds and coupons supposed to be upon deposit with Droege & Co., England.'

The rebellion being suppressed, and the government of the State of Texas having passed again into the hands of persons loyal to the United States, the State filed a bill in this court against White & Chiles, one J. A. Hardenberg and several other persons, to establish its title to and to get control and possession of these bonds, or of their proceeds. The case is reported in 7th Wallace, page 700.

The bill recited the circumstances under which the United States issued and the State of Texas received the bonds known as the Texas indemnity bonds, and then alleged that these bonds fell into the hands of a combination of conspirators, who, assuming to be the lawful government of the State of Texas, sold them to White & Chiles, delivering one hundred and thirty-five of them, and selling the seventy-six above mentioned, which were then deposited with Droege & Co., in England. It alleged that the contract of sale by the military board of Texas, and the statute under which that board acted were void, because the object and purpose of both were to aid the rebellion in its efforts to overthrow the government of the United States; and it alleged that the bonds were not legally transferred for want of the indorsement of the governor of Texas, which, by a statute of that State, was made necessary to any legal transfer of them.

There was thus an assertion of title and ownership of these bonds both in law and in equity in the plaintiff, the State of Texas, with a recital of the origin and state of that title.

There was then an allegation of three distinct grounds on which the claim of the defendants was charged to be invalid: 1. That their possession was obtained through an unlawful band of conspirators who, taking possession of these bonds and of the political power of the State, had delivered the bonds to White & Chiles, without any authority to do so. 2. That such bonds could not be lawfully delivered or transferred so as to carry the title of the State to them to any person without the indorsement of the governor, which none of these bonds had. 3. That the contract under which White & Chiles received the bonds delivered to them, and claimed title to those not delivered, was void, because made with the intent to aid the rebellion.

A copy of this contract was set out as Exhibit 'A' of the bill, and mentioned, as already stated, specifically the seventy-six bonds.

White & Chiles filed separate answers to this bill, and took issue either as matter of law or of fact on all these grounds of complaint. They asserted the justice and legality of their title to the bonds and to all of them; and of course denied the right of the State to recover of them or of their vendees either these bonds or their proceeds in the treasury or their value.

On the 12th of April, 1869, a decree was entered in the case. It ordered—

'That the contract bearing date the 12th January, 1865, purporting to have been executed between the military board of the State of Texas and White & Chiles-which said contract is set forth as Exhibit A to the complainant's bill of complaint-is null and void and of no effect, and that the said White & Chiles, their agents and attorneys, and all others claiming to act in their behalf, be perpetually enjoined from asserting any right or claim under the same, and that the complainant is entitled to recover and receive the bonds and coupons mentioned in said contract as having been transferred or sold to the said White & Chiles, which at the several times of service of process in this suit were in possession or under the control of the defendants, respectively, and any proceeds thereof which have come into such possession or control with notice of the equity of the complainant.

'That the said G. W. White, John Chiles, J. A. Hardenberg, &c., and each of them, be hereby perpetually enjoined from setting up any claim or title to any of the bonds and coupons attached which are described in the first article of said contract filed as Exhibit A to the bill of complaint, and that the above complainant is entitled to restitution of such of the bonds and coupons and proceeds as have come into the possession or control of the said defendants, respectively, and as aforesaid.'

By the terms of the decree each party had leave to move for further orders.

In this state of things, Chiles, on or about the date of it, addressed and served on Droege & Co. this notice:

'July 17th, 1874.

'MESSRS. DROEGE & Co.,

'Manchester, England.

'You are again hereby notified that I am the owner, by contract with the State of Texas, of seventy-six Texan indemnity bonds of one thousand dollars each, and coupons attached, amounting in all to $87,400; and also of the balance of one hundred and fifty-one of said bonds, with coupons attached, placed in your custody by John Milton Swisher, of Texas. And you are hereby notified not to part with the possession of said bonds and coupons or any portion of them without due authority from me.

'My solicitors will wait upon you with the necessary process to bring the matter before a judicial tribunal as soon as the proper preparations can be perfected.

'JOHN CHILES.'

The State of Texas now, accordingly, made the motion on which the present rule to show cause was granted.

The petition on which it was granted charged that Chiles had continually and repeatedly asserted a claim to seventy-six of the bonds mentioned in the said decree, thereby seriously impeding a settlement and compromise by the State of Texas with persons who have possession of such bonds in England, and especially charging him with writing and serving the preceding notice to Droege & Co., as also a certain other notice to other persons in England, having some sort of relation to the proceeds of some of these Texas indemnity bonds; this last notice, however, not being much pressed by the counsel of Texas as a feature in the case, and the reliance being on the notice to Droege & Co. as to the seventy-six bonds, which were distinctly referred to in the bill in the original suit.

In answer to the rule to show cause, and in answer to interrogatories propounded to him by the complainant's counsel, Chiles admitted that he signed the abovementioned notices in the city of New York and caused them to be served on the parties, and that he had claimed, ever since the decree in the original case, and did now claim, as owner, the seventy-six abovementioned bonds. But he denied that he was guilty of any contempt or violation of the injunction of this court, on two grounds:

1st. That the decree of the court only enjoined him from asserting a claim under the contract between White & Chiles and the military board of Texas, which was the Exhibit 'A' mentioned in the decree, whereas the title which he now asserted to all the bonds, including the seventy-six, was, as he alleged, under a wholly different contract made by himself alone, on the 4th of March, 1865, with the said military board (which he deemed was the proper authority of the State of Texas), after the one which was declared void by the decree of this court, but before the suit was brought. And that in that last contract White had no interest whatever. He added that being in no wise forbidden, or not at full liberty to assert a claim as owner to the said bonds thereunder, he proposed to have the question of his right to the said bonds thereunder adjudicated by the proper court in England.

2d. That there could be no violation of the injunction until he asserted his claim by some kind of judicial proceeding, which he had not yet attempted to do.

The question therefore was whether, on this petition and answer, he could be properly punished for a contempt.

Mr. Albert Pike, against the rule:

I. The object of the original suit was to annul the contract made with White & Chiles. It had no other object. The injunction was but a mode of giving effect to the decree annulling it. And no other contract being mentioned in the suit or decree, the injunction cannot lawfully have the effect to forbid the assertion of right under any other. It can annul no contract that was not asked to be annulled, and properly impeached; certainly not by implication, one of the existence of which it was not even informed.

Although the second contract was made long before the decree, it had taken no effect at all as a transfer of the seventy-six bonds, until by the decree the first contract was annulled. Until then Chiles had no title under it, to these bonds, which he could set up. He could not plead a title before it existed.

Injunctions are granted to suppress vexatious suits; to remove improper impediments and defences at law; to restrain alienations of property; to prevent transfers; to prevent irreparable mischiefs and trespasses; to suppress publications; to compel delivery up of possession and to quiet possession; to restrain from carrying on a suit, or entering judgment in a foreign country, and for a number of other things; but we find none to prevent a man from saying, orally or in writing, by way of notice or otherwise, that he has a claim or right to property or to evidences of debt of any kind. A written notice to such effect is no more than an oral one. If one 'sets up' a claim, or 'asserts' a claim, so does the other. Chiles has had the right, ever since the decree was rendered, to stand at the street-corners and proclaim, if he saw fit, or to publish and advertise in the newspapers here and in London, and to tell, inform, advise, and notify to Droege & Co. that he believed and knew that he had a perfect right to and was the proprietor of the bonds in England or those which he and White had received under the first contract, notwithstanding the decree of this court. It is no contempt of the court to think and to say that its decision in any case is wrong. The court itself has declared that of its own decisions, and reversed them; and dissenting opinions are continual. In the very case of Texas v. White & Chiles-in which the decree which it is now said has been contemned, was given-there were dissenting opinions by Grier, Swayne, and Miller, JJ.; the opinion of each of them going to the foundation of the case,-the right, to wit, of the State of Texas to sue at all.

Besides, these bonds are in England, under a sovereignty distinct from any which this court has anything to do with. This court had no power to compel Droege & Co., or any other man in England, to come into these precincts, or to pass upon money held by them.

In the inquiry whether Chiles has violated the law, the decree is to be construed in his favor, and against the plaintiff: 1st, because it is penal in its nature; and 2d, because it is the decree of the plaintiff made in response to his prayer, and upon the case made by him in his bill.

The decree in this case, indeed, enjoined all the defendants from setting up any claim to any of the bonds described in the first article of the contract. But a court will always construe a decree with reference to the issues it was meant to decide. However broad and emphatic the enjoining words may be, the object of the bill in this case was to avoid and set aside the particular contract attacked by the bill; and the general words must be restricted within these limits.

II. Chiles has not, according to the legal meaning of the phrase, or according to its meaning as used in the decree, set up or asserted a claim to the seventy-six bonds in question, he not having instituted or commenced any suit, action, or proceeding whatever, for the enforcement of any right in himself to them, or of any interest in them.

Messrs. R. T. Merrick and T. J. Durant, contra:

The manifest conclusions to be drawn from a perusal of the letter of Chiles to Droege & Co. are, so far as John Chiles is concerned:

First. To ignore absolutely all the proceedings in the suit of Texas v. White & Chiles, reported in 7th Wallace, and to treat the elements of the thing adjudged therein, so far as the seventy-six bonds are concerned, as absolutely void.

Second. In violation of the decree and its accompanying injunction, to again claim the bonds as owner.

Third. To prevent, by the active interposition of Chiles, the State of Texas from reaping the fruits of the decree in the said case of Texas v. White & Chiles.

Any statement which can be made of the case now before the court shows that this is so, and that Mr. Chiles is in contempt. We do not insist upon the grounds for this assertion. The court will enforce them if it deems it necessary.

We now go further; and in view of what Chiles has done by his notices, in view of the embarrassments which by them he has caused and is causing, we ask that he be compelled to execute, under direction of a master to be appointed in the case, a proper instrument transferring to the State of Texas in form, the title to the seventy-six bonds in the hands of Droege & Co. And in view of his plain contempt of the court already committed, we ask that he be imprisoned until he execute such a transfer.

Mr. Justice MILLER delivered the opinion of the court.