United States v. One Thousand Seven Hundred and Fifty-six Shares

This is another confiscation case that is actually multiple cases.

27 Fed. Cas. 334, Case No. 15,960a, was in the District Court of the Southern District of New York on November 12, 1863, presided over by District Judge Samuel Rossiter Betts. Leroy M. Wiley, a resident of Alabama, owned 1,756 shares of the Great Western Railroad Company of Illinois. The United States sought to condemn these shares. According to Judge Betts, “The court must take judicial notice that Alabama is an insurrectionary state, having been, at the commencement of this suit, and yet continuing, in a condition of rebellion and actual hostility against the United States. That condition constitutes all the Inhabitants of that state alien enemies of this country. This is indisputably so on the principles of international law, in regard to residents in countries foreign to each other. 3 Phillim. Int. Law, c. 6, § 82; Halleck, Int. Law, c. 29, § 6; 1 Kent, Comm. 76. In Jecker v. Montgomery, 18 How. [59 U. S.] 112, the supreme court say: ‘In a state of war between two nations, declared by the authority in whom the municipal constitution vests the power of making war, the two nations, and all their citizens or subjects, are enemies to each other.’ Still more emphatically and pertinently, in respect to the existing Rebellion in this country, the same court declares that the residents of the several states in war with the United States are enemies to this country, to the same effect as if citizens or subjects of a foreign nation. Cranshaw v. U. S. [unreported], decided March, 1863.” [27 Fed. Cas. 334, 335] So in a civil war, the citizens of the areas in rebellion hold the same status of enemies as the citizens of a foreign country would hold if the United States were at war with that foreign country. Judge Betts ruled, “It is unimportant to determine on this motion whether the right of Wiley in the subject-matter of the suit before the court is determined definitely by the subsisting state of hostilities between the place of his residence and the United States, or only suspended during such war; this decision goes no further than to rule that he is disqualified and inhibited from becoming a party to the pending action. I do not in this decision discuss the regularity of practice pursued in making appearance and answer for Wiley. I consider him effectively barred by law of all powers to intervene in court. The application of the libellants is therefore granted, and it is ordered that the answer and claim interposed in this suit on behalf of Leroy M. Wiley has been irregularly and improperly admitted on file in the cause, and that the same be stricken therefrom.” [27 Fed. Cas. 334, 335]

27 Fed. Cas. 335, Case No. 15,960b, was in the same court, presided over by the same District Judge. The Great Western Railroad Company moved to have the shares in the case turned over to the company. This case was heard “on motion by the United States to strike out the answer and claim interposed in behalf of the Great Western Railroad Company.” [27 Fed. Cas. 335] Judge Betts tells us, “The information demanding the forfeiture of the effects prosecuted in rem in this suit was filed August 25, 1863. Process of attachment and monition in due form of law was issued to the marshal, under the seal of the court, the same day, against the property named in the information, returnable in court the 15th of September thereafter. On that day it was returned by the marshal, with a certificate endorsed thereon, officially, that he had, on the 25th day of August, 1863, attached the above described 1,756 shares of stock, and given due notice to all persons claiming the same, &c.” [27 Fed. Cas. 335, 335-336] In laying out what needed to be decided, Judge Betts wrote, “The points for determination on the merits accordingly now are, whether the railroad company has perfected a lawful appearance in the cause upon any rights of their own, in relation to the subject in litigation, or whether there is on the evidence any lawful right of representation in the suit, with Leroy M. Wiley individually, or independent of his personal appearance, through the instrumentality of the railroad company or its agents.” [27 Fed. Cas. 335, 336] As part of his decision, Judge Betts reiterated that regarding Leroy Wiley, “As an enemy in rebellion or insurrection in open hostility against his own country, he is stamped with all the disabilities of an alien. Jecker v. Montgomery, 18 How. [59 U. S.] 112; The Prize Cases, 2 Black [67 U. S.] 635.” [27 Fed. Cas. 335, 336] In his judgment of the case, Judge Betts said, “If technically there might be ordinarily impediments to carrying on suits for private debts or claims against property held out of the regular scope and action of the machinery of the law, that consideration cannot avail against confiscation statutes, which remove all limitations and restrictions of the government in that respect, and authorize the arrest of the inculpated property and its forfeiture wherever it may be found, or however it may be represented. Act July 17, 1862 (12 Stat. 591, § 7). The statute places the captured property, subject to all the liabilities if arrested here, in the actual keeping of a remote corporation, as if it was within the authority and vaults of a bank or railroad corporation of the city of New York. Independently of these general principles which subject the effects of traitors to confiscation by means of summary actions appointed pointed by statutory provisions free of the common law formalities, the parties attempting to intervene in this suit and litigate the rights of the government in prosecution, do not qualify themselves to intermeddle in the matter. The 26th rule in admiralty of the supreme court requires every person, in order to be received as a defendant, entitled to controvert the right to property of any kind seized in rem by another, ‘to verify his own claim on oath, stating that the claimant, by whom or on whose behalf the claim is made, is the true and bona fide owner, and that no other person is the owner thereof.’ No such proof is affixed to the claim in this instance; nothing beyond a hypothetical and equivocal intervention is furnished at all, and that is by a person having no personal interest in the matter, and not being a legal representative of the corporation attempting to appear, and who is supposed to apprehend it may incur a contingent liability in respect to the effects seized. No adequate evidence is therefore before the court, authorizing the railroad to appear in this cause to resist its progress, or question the full right of the informants to press the same to a legal decision.” [27 Fed. Cas. 335, 336-337] He ruled, “The motion on the part of the United States attorney to strike the claim and answer from the files of the court in this suit is granted.” [27 Fed. Cas. 335, 337] Note that he confirmed in this ruling that he regarded the enemy populace in the confederate states to be traitors to the United States.

The company and Wiley appealed the case in 1865. 27 Fed. Cas. 337, Case No. 15,961, was held in the Circuit Court of the Southern District of New York on May 29, 1865, with United States Supreme Court Justice Samuel Nelson as the Circuit Justice presiding. In this case, “The district court decreed in favor of the libellants. The decree ordered the stock to be sold, and the proceeds, after the payment of a private debt of Wiley’s, and of the costs of the suit, to be paid, one-half to the United States and the other half to the informer mentioned in the libel. Wiley and the company, who appeared and put in claims and answers, appealed to this court.” [27 Fed. Cas. 337] In discussing the applicable law, Justice Nelson wrote, “The libel in this case is founded upon two acts of congress, one passed on the 6th of August, 1861 (12 Stat. 319), and the other passed on the 17th of July, 1862 (Id. 589). The 1st section of the act of August 6, 1861, declares, that if any person or persons, &c., shall purchase or acquire, sell or give, any property of whatsoever kind or description, with the intent to use or employ the same, or suffer the same to be used or employed, in aiding or abetting such insurrection or resistance to the laws, or any person or persons engaged therein, or if any person or persons, being the owner or owners of any such property, shall knowingly use or employ, or consent to the u se or employment of the same, as aforesaid, all such property is declared to be lawful subject of prize and capture, wherever found. &c. The 2d section declares, that such prizes and capture shall be condemned in the district or circuit court of the United States, &c., or, in admiralty, in any district in which the same may be seized, or into which they may be taken and proceedings first instituted. The 3d section provides, that the attorney-general, or any district attorney of the United States, may institute the proceedings of condemnation, and, in such case, wholly for the benefit of the United States, or, any person may file an information with such attorney, in which case the proceedings shall be for the use of such informer and the United States in equal parts. The 6th section of the act of July 17, 1862, declares, that if any person, &c., being engaged in armed rebellion against the government of the United States, or aiding or abetting such rebellion, &c., all the estate and property, moneys, stocks, and credits of such person shall be liable to seizure as aforesaid, and it shall be the duty of the president to seize and use them as aforesaid, or the proceeds thereof. The 7th section declares, that proceedings in rem shall be instituted in the name of the United States, in any district court thereof, &c., within which the property or any part thereof may be found, or into which the same, if movable, may first be brought, which proceedings shall conform as nearly as may be to proceedings in admiralty or revenue cases; and, if said property, whether real or personal, shall be found to have belonged to a person engaged in rebellion, or who has given aid or comfort thereto, the same shall be condemned as enemies’ property, and become the property of the United States, and may be disposed of as the court shall decree, and the proceeds thereof paid into the treasury of the United States.” [27 Fed. Cas. 337, 337-338]

Regarding the case at hand, Justice Nelson says, “The real issue under that act [the first of the two] is, whether or not the property seized has been so used or employed with the knowledge and consent of the owner. The owner may or may not be an alien enemy; and, even if he be an alien enemy, his property is not the subject of a proceeding under the act, unless it can be shown to have been used or employed for the purpose mentioned. This particular use or employment lies at the foundation of the forfeiture. Now, the property sought to be confiscated in the present proceedings, is stock in an incorporated company, in the state of Illinois. Its situs is in that state; and there is great difficulty in perceiving how such an interest or species of property is capable of being used or employed in contravention of the provisions of the statute. Bu, waiving this, although the court required proof of the fact of the use or employment of the stock in aiding or abetting the insurrection, within the meaning of the act of congress, before condemnation, we find no evidence whatever in the record on the subject; and yet the forfeiture is declared under the act of August 6, 1861, as one moiety of the proceeds is directed to be paid to the informer. Under the act of July 17, 1862, the whole of the proceeds must go to the government. This decree must have been an oversight, as all the proofs on the record apply exclusively to the offence charged in the latter act. There is some confusion of ideas in the libel of information, which, probably, misled the court in the decree; for, while the libel embraces both acts of congress, which, as we have seen, are different in principle and ground of proceeding, it concludes by praying that the proceeds, after condemnation and sale of the stock, be distributed to the government and the informer in equal parts; and the decree is in conformity with the prayer. The libel of information and the decree are under the act of August 6, 1861, while the proofs are all under the act of July 17, 1862.” [27 Fed. Cas. 337, 338] So according to Justice Nelson, Judge Betts misapplied the law.

Additionally, Justice Nelson says Judge Betts didn’t have jurisdiction in the case: “It is quite clear that the court below never acquired jurisdiction of the res, by any lawful seizure of the stock in question. The property consisted of an interest in the capital stock and dividends of an incorporated company in the state of Illinois, and which, as respects the legal proceedings in the Southern district of New York, is, in judgment of law, to be regarded as a foreign corporation, as much so as a corporation in London. The process of the court could not reach it. The situs of the property was beyond this district, and out of the jurisdiction of the court.” [27 Fed. Cas. 337, 338]

According to Justice Nelson, the most important question in the case was “whether or not the court below was right in striking from the files the claim and answer of Wiley, and in entering his default, on the ground that he was an alien enemy, and could have no standing in court.” [27 Fed. Cas. 337, 339] He tells us, “the principle that an alien enemy has no standing in court, and cannot appear and defend his property seized as prize of war on the high seas, does not appear to have ever been applied to a claimant in the admiralty. On the contrary, the books are full of cases in which the very question involved was the national character of the claimant–whether he was a neutral or an enemy. I need refer to only a few of them: The Indian Chief, 3 C. Rob. Adm. 12; La Virginie, 5 C. Rob. Adm. 98; The Fama. Id. 106; The Boedes Lust, Id. 234; The President, Id. 277; The Gerasimo, 11 Moore, P. C. 88; The Baltica, Id. 141. In many of the prize cases growing out of the recent Rebellion, the main point involved turned upon the fact whether or not the claimant was a neutral, or a loyal citizen, or an enemy. Indeed, at the very last term of the supreme court, these questions were before it and were fully discussed and decided. All of these cases are applicable to and control the question in the present case. The two proceedings–the one a capture on the high seas, and the other a capture on land–are analogous, not merely in their nature and purpose, but are made so by the acts of congress.” [27 Fed. Cas. 337, 339] In continuing his reasoning, Justice Nelson wrote, “I have not deemed it necessary to discuss the question raised, whether or not the claimant can be regarded as an alien enemy, he having been a citizen of the United States at the breaking out of the war, and being still a resident of one of the states, inasmuch as, according to the cases already referred to, even if he be an alien enemy, he is entitled to appear as a claimant, and contest the allegations in the libel.” [27 Fed. Cas. 337, 339]

Justice Nelson concluded the decision of the District Court was reversed and the libel of information had to be dismissed. So Wiley retained his stocks in the long run.

This group of cases is important to us for two reasons. First, because of the operation of the Confiscation Acts, and second, because of what they had to say about the status of people living in rebel territory. Notice that the question of whether or not Wiley was personally loyal to the United States never entered into the discussions. It didn’t matter because he lived in rebel territory.

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