COMMUTATION OF PUNISHMENT FOR CRIME VALID WITHOUT ACCEPTANCE BY

CONVICT.

SUPREME COURT OF OHIO, DECEMBER, 1877.*

IN THE MATTER OF SARAH M. VICTOR.

A commutation, by the governor, of the punishment of a lunatic convict, who was sentenced to be hung, to imprisonment for life, held to be valid and to take effect without the acceptance or assent of the convict, and it could not be defeated or invalidated by the convict's rejection or refusal of it when restored to reason. Commutation is not a conditional pardon, but the substitution of a lower for a higher grade of punishment, and is presumed to be for the culprit's benefit.

ERR

RROR to the Court of Common Pleas of Franklin county.

At the May term, 1868, of the Court of Common Pleas of Cuyahoga county, Sarah M. Victor was convicted of murder in the first degree, and sentenced to be executed on the 20th of August of the same year. On the 15th of July, 1868, the convict having become insane, the governor suspended the execution of her sentence until the 20th of November, 1868, and, by his order, she was confined in the Northern Lunatic Asylum. On the 12th of November, 1868, the prisoner still being insane, the governor commuted her punishment to imprisonment in the penitentiary in solitary confinement for life. The governor's warrant of commutation was directed and delivered to the sheriff of Cuyahoga county. In pursuance of the command of the warrant, the prisoner was taken from the asylum and committed to the penitentiary. She has never accepted or given her consent to the commutation. She remained in the penitentiary until the 8th day of January, 1876, when, her reason having been restored, she refused to assent to the commutation of her punishment, and procured from the Court of Common Pleas of Franklin county a writ of habeas corpus against the warden of the penitentiary, claiming that she was entitled to be set at liberty. Upon the hearing of the matter, the facts above recited having been shown, the court held that the prisoner never having accepted the commutation, she was retained in the penitentiary without warrant of law; but that she was not entitled to be set at liberty, because she was, "in law, an escaped prisoner, after conviction." And thereupon, the court ordered that she be discharged from confinement in the penitentiary, and that "she be delivered to the sheriff of Cuyahoga county, to be further dealt with by the Court of Common Pleas of that county, according to law."

To reverse this judgment and order of the Court of Common Pleas of Franklin county, and have the prisoner remanded to the penitentiary, the present warden of the penitentiary, who is the successor of the officer from whose custody she was taken, has filed his petition in error here.

A. H. Fritchey and Converse, Woodbury & Booth, for Mrs. Victor.

John Little, Attorney-General, for the State. WELCH, C. J. The only question involved in the case is whether the prisoner's acceptance of the commutation is essential to its validity. Or, to state the question more generally, has the governor of Ohio, under our present Constitution and laws, power to

* To appear in 31 Ohio St. Rep.

commute the sentence of a lunatic, without her consent? We have no hesitation in answering this question in the affirmative.

A commutation is not a conditional pardon; nor is it simply the substitution of one punishment for another. In its legal acceptation, it is a change of punishment from a higher to a lower degree, in the scale of crimes and penalties fixed by the law, and is presumed, therefore, to be beneficial to the convict. It is an act of executive clemency, equally as a pardon, only in a less degree.

In England, the pardoning power could be exercised by Parliament; and a pardon granted by Parliament needed not to be accepted by the culprit in order to render it effective. In the absence of constitutional provision, it seems, therefore, to be a power belonging to the legislative department. By our Constitution, this power is vested exclusively in the governor of the State. Whether, under this constitutional provision, and in the absence of any legislation on the subject, a pardon or commutation of punishment, by the governor, would be operative without the assent or acceptance of the convict, is a question not involved in the present case. This constitutional provision vests the whole pardoning power in the governor, and I see now no good reason why the power should not be held to be as effective and plenary in his hands, as it would have been if left to the legislative department. But we need not, and do not, now undertake to decide this question.

The case is amply provided for by statute. The fifty-eighth section of the act of April 7, 1856 (S. & C. 850), which was in force at the date of the commutation, provides: "That if any person, after being convicted of any crime or misdemeanor, and before the execution, in whole or in part, of the sentence of the court, becomes insane, it shall be the duty of the governor of the State to inquire into the facts, and he may pardon such lunatic, or commute, or suspend, for the time being, the execution, in such manner and for such period as he may think proper."

Here is absolute power given the governor to commute the punishment of a lunatic, uncoupled with any condition requiring assent. A lunatic is incapable of giving assent, and the power to pardon or commute his punishment is necessarily a power to do so without the consent of the lunatic. The Legislature has plenary power to prescribe the punishment of crimes and offenses, and can exercise that power without consulting the offender. Where the punishment of a lunatic is commuted under this statute, the substituted punishment is a punishment prescribed by law, equally as if it had been the only punishment provided for the offense, or the punishment inflicted by the sentence of the court. In substance and effect, the law declares that any person convicted of murder in the first degree, and afterward becoming a lunatic, shall be imprisoned in the penitentiary for life, if the governor, by his warrant, shall substitute that punishment for the death penalty. As soon as the commutation is made, the new penalty becomes the one fixed by law, and the original penalty cannot be restored. The words "for the time being," in the section of the statute referred to, do not relate to commutations or pardons, but merely to cases where the execution is suspended.

The judgment must be reversed, and the prisoner remanded to the warden of the penitentiary.

The evidence to which the defendant below objected, and to the admission of which he took exception, was quite unimportant. Its object was to prove the existence of the corporation and the increase of the corporate stock. But the existence of the corporation was admitted by the defendant's plea of non-assumpsit, and whether the corporate stock had been properly increased was a question the State only could raise. It is well settled that in a suit by a corporation a plea of the general issue admits the competency of the plaintiff to sue as such. Society for the Propagation of the Gospel v. The Town of Paulet, 4 Pet. 480. The first three assignments of error may, therefore, be dismissed without further consideration.

tween himself and his debtor, a holder for security of the debt, or even that he has no beneficial interest therein. This was ruled in The Newry, etc., Railway Company v. Moss & Co., 14 Beav. 64. In that case it was said that only those persous who appear to be shareholders on the register of the company are liable to pay calls. In re Phoenix Life Ins. Co., Hoare's Case, 2 Johns. & Heming, 229, it appeared that certain shares had been settled upon Hoare and others as trustees in a marriage settlement. The trustees had no beneficial interest, but they were registered as shareholders, with the word "trustees" added in the margin of the register, and they receipted for dividends as trustees. It was held by Vice-Chancellor Wood that they were liable as contributories to the full extent, and not merely to the extent of the trust estate. It was said "a person who is a shareholder is absolutely liable, although he may be bound to apply the proceeds of the shares upon a trust." In the case of The Empire City Bank, 8 Abb. Pr. (N. Y.) 192, reported also in 18 N. Y. 200, the Court of Appeals held persons responsible as stockholders in respect to the stock standing in their names on the books of the bank, though they held the stock only by way of hypothecation as collateral security for money loaned, and they were held liable for an amount equal to their stock for the unsatisfied debts of the bank. In Adderly v. Storm et al., 6 Hill, 624, it appeared that one Bush, in 1837, being indebted to the defendants, transferred to them on the books of a company certain shares of stock and delivered to them the usual certificates. On receiving the certificates the defendants gave Bush a receipt, stating they had received the stock, which they were to dispose of at any time for $200 per share, applying the proceeds to the payment of the notes which Bush owed them, or if not sold when the notes should be paid, to return the scrip to Bush or account for it. The last of the notes was paid in September, 1838, and the defendants returned the scrip to Bush, giving also a power of attorney for the transfer of the stock. The retransfer was not

ton, 91 U. S. 56, where a similar order and notice to the stockholders was held, not merely sufficient, but conclusive as to the right of the assignee to bring suit to enforce the payment of unpaid balances due for the corporate stock.

The only question remaining is whether an assignee of corporate stock, who has caused it to be transferred to himself on the books of the company, and holds it as collateral security for a debt due from his assignor, is liable for unpaid balances thereon to the company, or to the creditors of the company, after it has become bankrupt.

That the original holders and the transferees of the stock are thus liable we held in Upton v. Tribilcock, Sawyer v. Upton, and Master v. Upton, 91 U. S. 45, 56, and 65, and the reasons that controlled our judgment in those cases are of equal force in the present. The creditors of the bankrupt company are entitled to the whole capital of the bankrupt, as a fund for the payment of the debts due them. This they cannot have if the transferee of the shares is not responsible for whatever remains unpaid upon his shares, for by the transfer on the books of the corporation the former owner is discharged. It makes no difference that the legal owner, that is, the one in whose name the stock stands on the books of the corporation, is in fact only, as be

ants were held liable as stockholders for a debt of the company contracted in January, 1840, and this, it was said, would be the law though the plaintiff may not have known at the time he trusted the company that the defendants could be reached. So in Holyoke Bank v. Burnham, 11 Cush. 183, it was decided that a transfer of stock on the books of the bank, intended merely to be held as collateral security, makes the holder liable for the bank debts. It was said the creditor is to be considered the absolute owner, and that his arrangement with his debtor cannot change the character of the ownership. And in Wheelock v. Kort et al., 77 Ill. 296, the doctrine was asserted that when shares of stock in a banking corporation have been hypothecated and placed in the hands of the transferee, he will be subjected to all the liabilities of ordinary owners, for the reason that the property is in his name, and the legal ownership appears to be in him.

These decisions are sufficient to vindicate the judgment of the court below. The case of the plaintiff in error is a hard one, but he cannot be relieved consistently with due observance of well-established

law.

The judgment of the Circuit Court is affirmed.

LOANS MADE BY CORPORATION IN VIOLATION OF CHARTER.

UNITED STATES CIRCUIT COURT, NORTHERN DISTRICT OF ILLINOIS, APRIL 27, 1878.

MUTUAL LIFE INSURANCE COMPANY V. WILCOX.

A New York life insurance company was required by its charter to invest its capital and income in mortgages on real estate in New York State, or in United States or New York State stocks. It loaned money on an individual note. Held, that the maker of the note could not set up that the note was invalid, by reason of the company having no authority under its charter to make the loan.

hite continued to collect these premiums and receive them; did not remit to the company, but retained in his own hands all the premiums to which he was entitled as the agent of the company, from that time on until January, when his defalcation was discovered. It is claimed first, that this note is ultra vires; that this company had no right to loan this money to Cronkhite on the security of this note; and

Secondly, That the company has been reimbursed by the collection of the premiums upon policies which Cronkhite had placed, and upon which he was entitled to commissions.

the opinion.

BLODGETT, J. This is a suit upon a promissory note executed by Mr. Cronkhite, payable to Merrill and Ferguson, and guaranteed by Wilcox. The note bears date June 29, 1875, for the sum of $10,000. The facts surrounding the transaction are these: The Mutual Life Insurance Company is a corporation created in the State of New York, and deriving its powers from the charter granted by the State of New York, and certain of the general laws of that State.

The provisions of its charter applicable to this case are sections 9, 10 and 11.

§ 9. It shall be lawful for the said corporation to invest the said premiums in the securities designated in the two following sections * * *

manner, all other methods of investing its funds are excluded; and even securities given for such investments are void. But there is no case that is just parallel with this that is cited by counsel, and none which I have found. The later New York cases, and the later cases all through the United States, do not go to the extent of the New York cases, which were cited by the defendant, and I think the settled rule now is, that the question of how this company shall invest its funds is a question between itself and the Sovereignty that created it, and not a question between the borrowers and the company. That it does not lie-in other words in the mouth of this defendant, to charge that this security is void.

The money was advanced upon the faith of this se

take this security or not, is a question the defendant has no right to raise.

§ 11. The trustees shall have power to invest a certain portion of the premiums received, not to exceed one-half thereof, in public stocks of the United States, or of this State, or of any incorporated city in this State.

Mr. Cronkhite was the agent of the plaintiff in this city. In the month of June, 1875, he applied to the plaintiff for a loan of money, stating to them that his interests required that he should raise the sum of $10,000; that it was very difficult for him to attend to other business here, as their agent, and at the same time make necessary changes in his own affairs. Considerable discussion and correspondence took place between the parties in regard to this matter; and finally the company concluded to let him have the money. But they directed Merrill and Ferguson, who were the general agents in the north-west, of the plaintiff, to advance the money, and the note was taken by Merrill and Ferguson, and assigned by them to the company. This note was guaranteed by Mr. Wilcox, in due form; and at the same time, and simultaneously with giving the notes, Cronkhite gave to the company an assignment of all his interests in the renewals, as they are called. It was claimed on the part of the defendant, that Cronkhite, as the agent of the company, had a vested right in the commissions upon the premiums, which should be paid upon certain policies which he had placed as the agent of the company.

Shortly after this note was given, or perhaps simultaneously with giving it, the money was remitted to Mr. Cronkhite by Merrill and Ferguson; but Cronk

There is a large number of cases that have arisen lately, under the United States National Bank Act, that are very analogous to this; where the bank is positively prohibited by the act from loaning more than ten per cent of its capital to any one person, and yet the courts have held that securities given on such loans, in excess of ten per cent, were valid, and that it does not lie in the mouth of the party who borrowed the money of the company to object to a violation of this rule. Any other rule than this would make the policy-holders and parties interested in the funds of this company entirely remediless. Suppose that the directors of this corporation, induced by the larger rate of interest which is usually proffered in the western States, or outside of New York, had, instead of loaning their money upon New York State security, seen fit to invest largely in securities in the State of Illinois, would the stockholders have to lose it all simply because their directors had violated the charter? It would seem to me a very harsh rule to say that the parties interested in this fund should be the losers simply from this violation of the company's charter; a question simply between the sovereignty and the corporation itself.

Some force may also be given to the suggestion that this was an isolated transaction made between the company and its agent, and not a general change in the policy or business of the company.

But the same section which I have just read, for instance, requires that the funds of the company shall be invested on unincumbered real estate. Suppose that the directors had made loans to a man in the State of New York, upon incumbered real estate, would it lie in his mouth to say that that loan was

void because there was a mortgage on the property prior to the mortgage of the company for the debt?

The same section also provides that the real estate shall be at least double the value of the amount loaned.

Now, the same rule that is invoked here on the part of the defense would entitle a man in the State of New York, who has borrowed this fund, to say that the security for the loan was void because the property was not of double the value; that the directors had exceeded their power, and the note or obligation was ultra vires. I, therefore, conclude that the defense of want of power to make this loan here, and consequent invalidity of the note, is not well taken.

The next objection is, that the company has been paid by the collections of commissions which ought to have gone to Cronkhite, and which should be applied in liquidation of this note.

As I have already said in stating the facts, Cronkhite, during the time he remained the company's agent, after the giving of this note, retained all the commissions in his hands, and the company received no commissions from him while he remained the company's agent. It may be a very important question whether Mr. Cronkhite is entitled to draw any commissions after his agency ceased.

On general principles I would be inclined to hold that the insurance company would certainly have made a very improvident and unbusiness-like contract to agree to pay an agent commissions on collections after he had ceased to be worthy of their confidence as an agent to make collections.

But whether that is so or not, I am satisfied that this defense, if available at all, can only be made in a court of equity where an account can be stated, and it can be ascertained how much this company has collected that ought to be applied upon this claim.

I do not intend to commit myself by saying that the defense could be made applicable even in equity; but, if at all available it must be maintained in equity.

I shall, therefore, find the issues in this case for the plaintiff, and assess the damages at the amount of the note.

JURISDICTION OF UNITED STATES CIRCUIT COURTS.

UNITED STATES SUPREME COURT, OCTOBER TERM,

1878.

EX PARTE SCHOLLENBERGER.

A statute of Pennsylvania requires every insurance company from without the State, as a condition for doing business therein, to stipulate that any legal process affecting it may be served on a designated agent within the State or on the insurance commissioner, and that such service shall have the same effect as if served personally within the State. Held, that original process from the United States Circuit Court served in Pennsylvania upon the designated agent of a non-resident insurance company, giving the stipulation mentioned, would give jurisdiction to the court under the act of 1875 (18 Stat. 470), the company being "found " within the dis

trict.

of the relators against a number of insurance companies incorporated by the laws of other States, but doing business in that State under a license granted pursuant to a statute regulating that subject. The Circuit Court declines to entertain jurisdiction of the causes for the reason, as is alleged, that the defendant companies were not, "at the commencement of the respective suits, or at any time, inhabitants of or found in the said district." This presents the only question in the case, as it is conceded that the citizenship of the parties is such as to give the court jurisdiction if the several defendants can be sued in the district without their consent.

A statute of Pennsylvania provides that "no insurance company not of this State, nor its agents, shall do business in this State until he has filed with the insurance commissioner of this State a written stipulation, duly authenticated by the company, agreeing that any legal process affecting the company served on the insurance commissioner, or the party designated by him, or the agent specified by said company to receive service of process for the said company, shall have the same effect as if served personally on the company within this State, and if such company should cease to maintain such agent in this State so designated, such process may thereafter be served on the insurance commissioner; but so long as any liability of the stipulating company to any resident of this State continues, such stipulation cannot be revoked or modified, except that a new one may be substituted, so as to require or dispense with the service at the office of said company within this State, and that such service of process according to this stipulation shall be sufficient personal service on the company. The term 'process' includes any writ of summons, subpoena, or order whereby any action, suit, or proceedings shall be commenced, or which shall be issued in or upon any action, suit, or proceedings brought in any court of this Commonwealth having jurisdiction of the subjectmatter."-(Laws of Penn., 1873, p. 27, § 13.)

The return to the rule to show cause admits that all the defendant companies were doing business in the State under this statute, and that their designated agents were duly served with process in each of the suits. For the purposes of this hearing the fact of due service upon the agents must be considered as established. If in reality it is not so, the court below will not be precluded by any thing in this proceeding from inquiring into the truth and acting upon the facts as they are found to exist.

The act of 1875, determining the jurisdiction of the Circuit Courts (18 Stat. 470), and which in this particular is substantially a re-enactment of the act of 1789 (1 Stat. 79, § 11), provides that "no civil suit shall be brought before either of said courts against any person by any original process or proceeding in any other district than that whereof he is an inhabitant, or in which he shall be found at the time of serving such process or commencing such proceedings, except," etc.

It is unnecessary to inquire whether these several companies were inhabitants of the district. The requirements of the law, for all the purposes of this case, are satisfied if they were found there at the time of the commencement of the suits, and that question we think was settled in R. R. v. Harris, 12 Wall. 81. In that case it appears that when the suit was commenced the statutes defining the jurisdiction of the courts of the District of Columbia provided that “no

action or suit shall be brought * *by any original process against any person who shall not be an inhabitant of or found within the district at the time of serving the writ."-(2 Stat. 106, § 6.) Afterward, in 1867, the law was changed in respect to foreign corporations doing business in the district, and service allowed upon the agent (14 Stat. 404, § 11), but when the suit was begun and the process served the old law was in force. The Baltimore and Ohio Railroad Company, a Maryland corporation, was authorized by Congress to construct and extend its railroad into the District of Columbia. Harris having been injured while traveling as a passenger upon the railroad outside of the district, sued the company in the Supreme Court of the district, and caused the writ to be served upon the president of the company within the district. The company objected to the jurisdiction of the court, and insisted that it was neither an inhabitant of nor found within the district. In ruling upon this objection we held that although the company was a foreign corporation, it was suable in the district, because it had in effect consented to be sued there in consideration of its being permitted by Congress to exercise therein its corporate powers and privileges. The language of the court, speaking through Mr. Justice Swayne, is: "It (a corporation) cannot migrate, but may exercise its authority in a foreign territory upon such conditions as may be prescribed by the law of the place. One of these conditions may be that it shall consent to be sued there. If it do business there it will be presumed to have assented, and will be bound accordingly." Then, after an examination of the statute granting the right to extend the road, it was said (p. 84): "We entertain no doubt that it made the company liable to suit where this suit was brought in all respects as if it had been an independent corporation of the same locality." This language was cited with approbation and adopted as a correct exposition of the law by Mr. Justice Field, speaking for the court, in R. R. v. Whitton, 13 Wall. 285.

Applying these principles to the present case there cannot be any doubt, as it seems to us, of the jurisdiction of the Circuit Court over these defendant companies. They have in express terms, in consideration of a grant of the privilege of doing business within the State, agreed that they may be sued there, that is to say, that they may be found there for the purposes of the service of process issued "by any court of the Commonwealth having jurisdiction of the subject-matter." This was a condition imposed by the State upon the privilege granted, and it was not unreasonable. La Fayette Ins. Co. v. French, 18 How. 407. It was insisted in argument that the statute confines the right of suit to the courts of the State, but we cannot so construe it. There is nothing to manifest such an intention, and as the object of the Legislature evidently was to relieve the citizens of Pennsylvania from the necessity of going outside of the State to seek judicial redress upon their contracts made with foreign insurance companies, it is but reasonable to suppose that they were entirely at liberty to select the court in the State having jurisdiction of the subject-matter, which, in their judgment, was the most convenient or desirable. As the company, if sued in a State court, could remove the cause to the Circuit Court, and thus compel a citizen of the State to submit to that jurisdiction, we see no reason why the citizen may not, if he desires it, bring the company into the same jurisdiction at the outset. While the

Circuit Court may not be technically a court of the Commonwealth, it is a court within it, and that, as we think, is all the Legislature intended to provide for.

States cannot by their legislation confer jurisdiction upon the courts of the United States, neither can consent of parties give jurisdiction, when the facts do not; but both State legislation and consent of parties may bring about & state of facts which will authorize the courts of the United States to take cognizance of a case. Ex parte McNeil, 13 Wall. 243. Thus, if the parties to a suit, both plaintiff and defendant, are in fact citizens of the same State, an agreement upon the record that they are citizens of different States will not give jurisdiction. But if the two agree that one shall move into and become a citizen of another State, in order that jurisdiction may be given, and he actually does so in good faith, the court cannot refuse to entertain the suit. So, as in this case, if the Legislature of a State requires a foreign corporation to consent to be "found" within its territory for the purpose of the service of process in a suit, as a condition to doing business in the State, and the corporation does so consent, the fact that it is found gives the jurisdiction, notwithstanding the finding was procured by consent. The essential fact is the finding beyond which the court will not ordinarily look.

A corporation cannot change its residence or its citizenship. It can have its legal home only at the place where it is located by or under the authority of its charter, but it may by its agents transact business anywhere, unless prohibited by its charter or excluded by local laws. Under such circumstances it seems clear that it may, for the purpose of securing business, consent to be "found" away from home for the purposes of suit as to matters growing out of its transactions. The act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts. It is rather in the nature of a personal exemption in favor of a defendant, and it is one which he may waive. If the citizenship of the parties is sufficient, a defendant may consent to be sued anywhere he pleases, and certainly jurisdiction will not be ousted because he has consented. Here the defendant companies have provided that they can be found in a district other than that in which they reside, if a particular mode of proceeding is adopted, and they have been so found. In our opinion, therefore, the Circuit Court has jurisdiction of the causes, and should proceed to hear and decide them.

We are aware that the practice in the Circuit Courts generally has been to decline jurisdiction in this class of suits. Upon an examination of the reported cases in which this question has been decided, we find that in almost every instance the ruling was made upon the authority of the late Mr. Justice Nelson, in Day v. Rubber Co., 1 Blatchf. 628, and Pomeroy v. R. R. Co., 4 id. 120. These cases were decided by that learned justice, the one in 1850, and the other in 1857, long before our decision in R. R. v. Harris, supra, which was not until 1870, and are, as we think, in conflict with the rule we there established. It may also be remarked that Mr. Justice Nelson, as a member of this court, concurred in that decision.

Judge Woods, of the fifth circuit, has already decided in favor of the jurisdiction (Knott v. Ins. Co., 2 Woods, 479), and Judge Dillon, of the eighth circuit, declined to take it only because he felt himself foreclosed by the rulings of other judges, and especially