On the facts, held
that the bonds in controversy should
be surrendered to the Trustees of the Internal Improvement Fund of
the Florida, and should be applied by them in accordance with the
prayer of their answer.
The case is stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
These appeals relate to the ownership of $103,000 in amount of
certain bonds of the Pensacola and Georgia Railroad Company
Page 117 U. S. 420
and the Tallahassee Railroad Company. For convenience, they will
be hereinafter referred to as "one hundred and three bonds." Many
of the matters involved were under consideration by this Court in
Florida v. Anderson, 91 U. S. 667
Railroad Companies v. Schutte, 103 U.
, to which reference is made for a general history
of the transactions out of which the present controversy arose.
The facts on which the rights of these parties depend we find to
be as follows:
The railroads of the two companies above named were sold by the
trustees of the Internal Improvement Fund of the State of Florida,
on the 20th of March, 1869, under the provisions of the internal
improvement act of Florida, passed January 6, 1855, to pay certain
bonds, of which those now in dispute are a part. A statement of the
provisions of this act will be found in the report of the case of
Florida v. Anderson,
beginning at 92 U. S. 670
conveyance of the railroads to the purchasers at the sales was
obtained, to use the language of the counsel for the appellant in
Littlefield's case, "through a well planned and cleverly executed
fraud," without the payment of about $472,000 of the purchase
money. This sum represented an equal amount of bonds outstanding,
which included the one hundred and three now in question. A history
of the facts connected with this transaction will be found in the
report of Railroad Companies v. Schutte,
103 U. S. 121
George W. Swepson was under obligations to pay what remained due on
the purchase money, or, which is the same thing, to get up and
surrender to the trustees of the Internal Improvement Fund the
outstanding bonds for cancellation.
On the 24th day of June, 1869, an act was passed by the General
Assembly of Florida, by which George W. Swepson, Milton S.
Littlefield, and their associates, were incorporated under the name
of the Jacksonville, Pensacola, and Mobile Railroad Company. The
important provisions of the charter of this company will be found
in the report of the Schutte
case at 103 U. S. 123
and following. Afterwards the title to the two railroads which had
been purchased was transferred to the corporation thus created. On
or before the 10th of November, 1869, Milton
Page 117 U. S. 421
S. Littlefield succeeded to all the rights of George W. Swepson
in the premises, and became bound to take up and surrender the
outstanding bonds, or pay the balance due on the purchase money in
On the 2d of August, 1869, drafts were drawn by George W.
Swepson on and accepted by Milton S. Littlefield, in favor of
Edward Houston, for $109,140. These drafts grew out of transactions
between the parties relative to the Jacksonville, Pensacola, and
Mobile Railroad Company and the Florida Central Railroad Company,
and in some way Houston held one hundred and ten of the bonds of
the Pensacola and Georgia Railroad Company and Tallahassee Railroad
Company as collateral security. These bonds were part of those
outstanding which Swepson was bound to take up and surrender, and
they included the one hundred and three now involved. The drafts
were likewise among the obligations which Littlefield assumed to
pay when, in November following, he took Swepson's place in these
On the 13th of May, 1870, Littlefield entered into a contract
with Houston, by which he bought the drafts above mentioned, and
certain shares of the stock of the Florida Central Railroad
Company, and gave his draft for $163,020.70 on S. W. Hopkins and
Co., the financial agents of the Jacksonville, Pensacola, and
Mobile Company, therefor. Under this contract, Houston was to hold
the one hundred and ten bonds as collateral for the draft then
given, and to deliver them to Littlefield when this draft was paid.
Various other contracts were afterwards made between Littlefield
and Houston which looked to a payment of the draft through the
securities of the Florida Central Railroad Company, but no payment
was in fact made before June 8, 1870, when Littlefield, as
President of the Jacksonville, Pensacola, and Mobile Company, was
in negotiation with Harrison Reed, Governor of Florida, for an
exchange of the bonds of the company for those of the state, under
the provisions of the charter. In the progress of these
negotiations, it was found that the unpaid purchase money stood in
the way of the exchange, and thereupon Littlefield, still acting as
president of the company, addressed a letter to the governor,
Page 117 U. S. 422
who was also ex officio
one of the trustees of the
Internal Improvement Fund, a copy of which is as follows:
"TALLAHASSEE, FLA., June 8, 1870
"Hon. Harrison Reed, Gov. Florida."
"SIR: I have the honor to state that in addition to the bonds of
the Pen. & Geo. and Tallahassee Railroad Companies already
deposited with the Board of Trustees Int. Imp. Fund, I have at the
railroad office $41,350."
Bro't over . . . . . . . . . . . . . . . . $ 41,350
And have secured . . . . . . . . $110,000
" " " . . . . . . . . 70,000
" " " . . . . . . . . 15,000
Total outstanding. . . . . . . . . . . . . $227,250
Respectfully, M. S. LITTLEFIELD
Pres't., J., P. & M., R. Co.
The $110,000 bonds here referred to were those held under the
contracts between Littlefield and Houston. After this letter
Littlefield delivered to the governor a draft, of which the
following is a copy:
"$227,250 TALLAHASSEE, June 8, 1870"
"On demand, when in funds, pay to the order of his Excellency,
Harrison Reed, Gov., two hundred and twenty-seven thousand two
hundred and fifty dollars, value received, and charge the same to
account of --"
"M. S. LITTLEFIELD"
"Pres't J., P. & M. R. Co.
"To Messrs. S. W. Hopkins and Co., 71 Broadway, N.Y."
This draft was never paid, but on its delivery the exchange of
bonds of the state for those of the company was made by the
governor, acting for the state, and by Littlefield, acting
Page 117 U. S. 423
for the railroad company. Out of this exchange, the suits of
State of Florida v. Anderson
and Railroad Companies v.
arose, as well as much other litigation in the courts
of the state and of the United States.
After the delivery of the state bonds to Littlefield, the draft
of $163,020.70 held by Houston was paid by Hopkins and Co. out of
the proceeds of the sale of these bonds, or upon their security,
and on the 12th of April, 1871, an agreement was made between
Houston and S. W. Hopkins and Co., the drawees, by which the one
hundred three bonds in question were deposited with Mariano D.
Papy, to be held by him, and not delivered to any person unless
directed to do so by M. S. Littlefield and S.W. Hopkins and Co.
jointly, or unless directed to be delivered to Littlefield by
Hopkins and Co., or to Hopkins and Co. by Littlefield. It was also
further agreed that there should be no delivery to Littlefield
until certain suits which had been begun against Houston, and which
were particularly described, had been dismissed. On the 14th of
June, 1872, Papy was directed by Hopkins to deliver the bonds to
Littlefield on the dismissal of the suits. It was stipulated at the
hearing of the present case below that these suits had then been
dismissed, but at what precise time does not appear.
On the 17th of July, 1872, Edward C. Anderson, Jr., and others,
holders of some of the $472,000 of unpaid bonds, began a suit in
the Circuit Court of the United States for the Northern District of
Florida, for themselves and all other holders of like bonds who
might choose to become parties plaintiff, on the usual terms,
against the Jacksonville, Pensacola, and Mobile Railroad Company
and others, including Milton S. Littlefield and the trustees of the
Internal Improvement Fund, to subject the railroad of the railroad
company, defendant, to the payment of their bonds. On the same day,
the one hundred and three bonds in the hands of Papy were by him
delivered, under an order of the Superior Court of Chatham County,
"T. Mayhew Cunningham, Cashier of the Central Railroad and
Banking Company of Georgia, to be by him deposited in the vault of
the said bank, and there to be safely kept subject to the further
order of the court."
Page 117 U. S. 424
in April, 1873, they were deposited by Cunningham with the
Circuit Court of the United States for the Northern District of
Florida, subject to the orders of that court in the Anderson suit,
where they have ever since remained.
On the 18th of June, 1875, the following order in reference to
these bonds was entered in the Anderson suit:
"It is further ordered that the said master shall give immediate
notice through the public gazettes heretofore used by him for such
purpose to all parties who may claim an interest, direct or
indirect, in the bonds which have been deposited with him by T.
Mayhew Cunningham, trustee; that he hold said bonds in his custody
subject to the final order of this court; that the said bonds are
claimed by the trustees of the Internal Improvement Fund as having
been purchased from Edward Houston by the Jacksonville, Pensacola,
and Mobile Railroad Company, under agreement with said trustees,
for the purpose of cancellation; that upon petition filed with him
the said master, and ten days' notice to the said trustees, and at
any time before the first day of the next term of the court, he
will take testimony touching the claim or interest or title of any
such petitioner upon or to the said bonds, or any part thereof, and
that unless petition be filed in accordance with this order, all
right, title, and interest of any such person to or in the said
bonds would be forever adjudged to be barred."
The notice required by this order was duly given, and on the
13th of July, 1876, the trustees of the Internal Improvement Fund
filed their petition in the master's office, asking that the bonds
be delivered to them, claiming title under the transaction between
Littlefield and the governor on the 8th of June, 1870, at the time
of the exchange of bonds, and also under a decree of the Circuit
Court of Duval County, Florida, on the 20th of August, 1875, in a
suit brought by them on the 20th of March, 1872, against the
Jacksonville, Pensacola, and Mobile Railroad Company, Milton S.
Littlefield, and others, in which their right to the bonds under
their claim was fully established as against all the parties to
that suit. Calvin Littlefield was, however, not a party.
On the 18th of March, 1872, John H. Miller began a suit
Page 117 U. S. 425
against Milton S. Littlefield in the Circuit Court of Duval
County, Florida, to recover a debt of $50,000. In this suit a
judgment was rendered April 18, 1872, for $50,708, and on the 15th
of November, 1872, Miller filed a creditors' bill in the Circuit
Court of the United States for the Northern District of Florida to
subject the one hundred and three bonds to the payment of the
judgment as the property of Milton S. Littlefield. Under this bill,
a decree was rendered December 2, 1873, directing a sale of the
bonds for that purpose. Afterwards, on the 5th of August, 1875, the
bonds were sold to Robert J. Washington, whereupon he appeared in
the Anderson suit, and asked leave to defend his interest and
title. Washington afterwards, on the 22d of December, 1881,
assigned his interest in the bonds to Edward J. Reed.
On the 23d of May, 1877, J. Fred. Schutte and others, holders of
state bonds given in exchange for the bonds of the Jacksonville,
Pensacola, and Mobile Railroad Company, brought a suit in the
Circuit Court of the United States for the Northern District of
Florida for the foreclosure of the statutory lien of the state as
security for the bonds of the railroad company given in exchange
for those of the state. In the bill, it was claimed, among other
things, that this lien of the state was superior to that of the
trustees of the Internal Improvement Fund for the balance of the
original purchase money, and as to the 103 bonds the following
averment was made:
"Complainants are informed and believe that said defendant,
Milton S. Littlefield, made some agreement with said George W.
Swepson to perform the obligations which the latter undertook with
said trustees to do, viz.,
to purchase said unpaid
Pensacola and Georgia and Tallahassee Railroad Companies' bonds;
that said Littlefield did in fact purchase of said Edward Houston
one hundred and three of said bonds in performance of such
contract, which bonds are now deposited in the registry of this
court to the credit of a cause therein pending, in which Edward C.
Anderson et al.
are plaintiffs, and the Jacksonville,
Pensacola, and Mobile Company et al.
are defendants; that
said bonds are claimed by divers persons under some
Page 117 U. S. 426
contract with said Littlefield, which persons had full knowledge
that said bonds were paid for out of the money for which the bonds
issued by Governor Reed to the said Jacksonville, Pensacola, and
Mobile Company were sold as before set forth. Said one hundred and
three bonds have never been in the actual possession of said
Littlefield. Complainants are advised that they should be delivered
to said trustees of the Internal Improvement Fund, and they should
take such proceedings as may be necessary to procure the same to be
On the 31st of May, 1879, a decree was entered in the cause
declaring that the trustees of the Internal Improvement Fund had a
first lien on the property of the Jacksonville, Pensacola, and
Mobile Company, "to secure the payment to said trustees of the sum
of $463,175.27, and interest thereon since March 20, 1869 at the
rate of eight percent per annum," and directing a sale for the
benefit of the Schutte bondholders, subject to this prior lien.
This prior lien was on account of the unpaid purchase money at the
original sale, and the amount found due included the one hundred
and three bonds, but there was no express adjudication as to the
ownership of these bonds, or as to the right of the railroad
company or of the Schutte bondholders to have them applied toward
the satisfaction of the debt to the trustees. From this decree the
Schutte bondholders did not appeal, but on appeals by some of the
other parties to the suit, the decree was affirmed by this Court
January 17, 1881, Railroad Companies v. Schutte,
its authority the road was afterwards sold.
On the 14th of February, 1882, Calvin Littlefield filed in the
Anderson suit a petition to have the one hundred and three bonds
delivered to him, and in his petition he stated that the trustees
of the Internal Improvement Fund and Edward J. Reed also claimed an
interest. As to his own title, he stated that on the 13th of July,
1871, Milton S. Littlefield assigned the bonds "in possession and
control of M. D. Papy" to him as security for the payment of a debt
of $50,000, and that on the 11th of January, 1872, this assignment
was made absolute, "that the expenses of a foreclosure may be
Page 117 U. S. 427
The evidence shows that while the suit of Miller v.
above referred to, was pending, and under which
the bonds were sold to Washington, these title papers of Calvin
Littlefield were sent by him to J. J. Finlay, an attorney at law at
Jacksonville, Florida, for some purpose, and that under date of
December 24, 1873, Finlay wrote a letter to Littlefield which
contained the following:
"As General Littlefield had not yet been examined before the
master in chancery in the matter of the creditors' bill, about
which I wrote you in my last, the agreement above mentioned reached
me in time to enable him to answer more fully and satisfactorily as
to the ownership of the stocks and bonds mentioned in said
agreement. He will answer that these securities belong to you and
not to him. I am of the opinion that you are the bona fide
owner of these securities under and by virtue of said agreement,
and that any decree made in the case of Miller v. M. S.
is not binding on you for the reason that you were
not, and are not, a party to said suit. For the present, therefore,
I do not see that it is necessary to take any step or incur the
expense of any independent proceeding in the matter. As things
progress, however, if it should become important for the protection
of your interests to institute proceedings, it can be done."
It does not appear that Calvin Littlefield gave any notice of
this assignment to Papy while the bonds were in his hands, or to
anyone else claiming an adverse interest prior to the filing of his
petition. Edward J. Reed answered the petition, setting up his
title as the assignee of Washington, and asking that the bonds be
delivered to him. The trustees of the Internal Improvement Fund
also answered, setting up their title, and asking that the bonds be
surrendered to them and credited on the decree in the Schutte case
"as of and for the amount due on said bonds, principal and
interest, on the 12th of April, 1871."
The circuit court, on the 23d, of June, 1882, decreed that the
bonds be surrendered to the trustees of the Internal Improvement
Fund, and applied in accordance with the prayer of their answer.
From this decree, Calvin Littlefield and Edward
Page 117 U. S. 428
J. Reed took appeals, which have been docketed here as separate
Upon the facts found, and about which there is substantially no
dispute, we have no hesitation in affirming the action of the
circuit court. Although the contracts under which the bonds passed
from the hands of Houston to Papy, and from Papy to the circuit
court, in the Anderson
suit, were in the name of Milton S.
Littlefield, all payments for the bonds after June 8, 1870, were
made from the funds of the Jacksonville, Pensacola, and Mobile
Company. What was done by Littlefield at the time of the exchange
of bonds with the governor had the effect of transferring the one
hundred and three bonds to the trustees of the Internal Improvement
Fund, subject to the lien of Houston as security for his draft of
$163,020.70. When that draft was paid and the lien satisfied, the
equitable title of the trustees was perfected, and thereafter the
bonds were held by Papy, and his successors in possession, for
them. It follows that at the time Littlefield undertook to transfer
the bonds to Calvin Littlefield he had nothing to transfer. All his
interest had long before been passed to the trustees. Neither does
Calvin Littlefield occupy the position of a purchaser without
notice of the prior claim of the trustees, because when he took his
title the bonds were in the possession of Papy, who was in legal
effect trustee for whom it might concern.
The same is true of the claim under which Edward J. Reed holds.
When the bill was filed by Miller to subject the bonds to the
payment of his judgment against Littlefield, they belonged to the
trustees, and not to Littlefield, and consequently nothing passed
by the sale in that suit.
It is contended, however, that as the trustees
"insisted in the Schutte
case on a lien for the full
amount of the unpaid purchase money which was decreed to them, and
that the one hundred and three bonds were outstanding,"
they "are estopped now from claiming that these one hundred and
three bonds should be delivered to them and cancelled, and a credit
given therefor on such decree." This it is claimed amounted to an
abandonment by the trustees of their title to the bonds under the
arrangement between Littlefield and
Page 117 U. S. 429
the governor, which inured to the benefit of Milton S.
Littlefield or his assigns. To this we cannot agree. No issue was
made in that suit as to the actual ownership of the bonds. The
trustees of the improvement fund did not claim that they were not
entitled to the bonds, nor that the amount due on them should not
be credited on the account for unpaid purchase money if their title
should be established, but that until it was established no such
credit should be given. Neither did the Schutte bondholders claim
that the credit should be given at once, but that the necessary
proceedings be had to establish the title and thus secure the
application. When the decree was rendered the title had not been
settled, and so no credit was then allowed; but nothing was done to
prevent the trustees from making good their claim then pending in
the Anderson suit, and, if successful, from giving the proper
credit on the decree. That is what they are seeking to do here.
Having presented their petition for a delivery of the bonds, they
were met by the counter-petitions of Calvin Littlefield and Reed,
and thus the rights of all the parties have been presented for
final adjudication. The question involved is not one of security,
but of title. The bonds are held by the court for whom it may
concern, and the point to be settled is, to whom shall they be
delivered? Aside from the claim of abandonment put forth by Calvin
Littlefield, they belong, as we have seen, to the trustees of the
improvement fund, as Milton S. Littlefield, the common source of
title, first conveyed to them. It is conceded that the trustees
have never actually reconveyed to Milton S. Littlefield; neither
have they executed any formal conveyance or release to Calvin
Littlefield. All they have done is to take a decree in their favor
for what would be due them if their title should fail, and this,
while a suit was pending to establish that title. Other parties
were foreclosing a mortgage junior to theirs, and it became
necessary to fix the amount of their prior lien. This the other
parties were willing should be done before their disputed title was
settled, and so, to save themselves from loss in case of defeat,
they took a decree for what would be their due in that event. To
that the junior mortgagees did not object. Their effort had been
Page 117 U. S. 430
defeat the prior lien altogether. Having failed in that, they
were willing to submit to a decree for the larger amount, leaving
the disputed question as to the one hundred and three bonds to be
settled afterwards in the proceeding that had been begun for that
purpose, or any other that might be instituted. This was not an
abandonment by either party. The decree was silent as to these
bonds, and the petition for their delivery to the trustees on file
in the Anderson
suit, where the bonds were, was allowed to
remain. It is now being prosecuted by the trustees as a mode of
obtaining satisfaction of the decree in their favor. If they
succeed, it may inure to the benefit of the purchasers at the sale
under the Schutte
decree, but of this Calvin Littlefield
has no right to complain. If he did not own the bonds, it is a
matter of no importance to him what disposition the trustees may
make of them. All his rights depend alone on his ownership. If he
is not the owner, he is entirely out of all the litigation between
the rest of the parties. Neither the railroad company nor the
bondholders, who are alone interested in the
amount for which the sale was made, are here to complain. The
trustees alone can control the bonds. Having protected all who had
the right to look to the original unpaid purchase money for the
satisfaction of their bonds, they have performed their whole duty
as trustees, so far as the bondholders are concerned.
The decree of the circuit court is affirmed.