PHIT..LER t1. YAltDLEY.
645
favor of plaintiffs, sustaining their objections to said two reports, and that the .report of February 20, 1886, which purportw to show the amount of funds of said estate on hand at the date ot the same to be $15,340, and asking an allowance of 5 per cent. for receiving said moneys, was allowed and approved only as to allowance of said commission of $767. As there is no doubt about the jurisdiction of the district court of Bowie county, Tex., in the matters shown to have been appealed thereto from the county court, the plea, so far as it attempts to establish that the complainants are barred of their action beeause there had been a full and dnal accounting in the county court of Bowie county, is not supported by the evidence. Whether the district court of Bowie county had original jurisdiction to accept the bond of complainants, and thus end the judicial administration of Strong's estate, we do not feel called on to decide, because it is a question not properly presented for consideration at this time, and because it seems whether the administration be closed or still pending in the state court, the complainants' suit may be prosecuted. Payne v. Hook, 7 Wall. 431; Byers v. McAuley, 149 U. S. 608, 13 Sup. Ot. 906. The conclusion which we reach in the matter of the plea is that, so far as it is intended to meet any of the claims of complainants' bill, it is not sustained by the evidence, and ought to have been overruled. The decree of the circuit court appealed from is reversed, and the cause is remanded, with instructions to enter a decree overruling the defendants' plea, lind with costs, and assigning the defendants to answer by the following rule day. PHILLER et al. v. YARDLEY. (Oircuit Court ot Appeals, Third Circuit. July 12, 1894.) No. 12, March Term, 1894. NATIONAL BANKS-!NSOLVENOY-PREFERENCES-CLEARING HOUSE BALANCES.
By special agreement, a national bank, instead ot the usual deposit of securities as collateral tor payment ot Its dally balance at the clearIng house, each day left with the clearing house manager all cbecks drawn on It, and other evidences ot Its indebtedness received trom other banks, to be held until the balance due from it for the day was paid. While certain checks and other evidences ot. its indebtedness were 80 held, the bank was closed by the comptroller ot the currE:'ncy. Thereupon the clearing house collected the amount of the checks, etc., from the banks trom which they had been received. and therefrom paid, besides the bank's balance tor the day, duebllls given by it for its balance for the preceding day, by their terms payable only through the clearing house the day after Issue, and actually in the exchanges held when the bank G:losed. and applied the remainder towards cancellation ot clearing house loan certificates issued to the bank under an agreement between the banks Whereby any loss from fallure ot one to pay such certificates was chargeable upon the others. Held that, as the transaction on the part of the bank was not in contemplation ot insolvency. nor with a purpose to give a preterence, or to prevent application ot Its assets as prescribed by law, the exchange between the banks was valid, and that it was not a.voilled, nor were the rights ot the clearing house or of the creditor banks 1mpa.ired, by what subsequently occurred; and theretore the receiver of
i
1
,
a.pd., .rights. aglLinst.. it, committee of the clearing alone,' to . question 'the approPr,adon of the money paid by the other banks.· 58 Fed. 7 I reversed, :' , ,. JY<t . .,; , , ., : :'!:. ' '. ' , "
..a Pok l . taJt..,lDin ,itssUit,against the :.to . . .· ... g. a.88 . 8.U.p.Jec.t .... II ID,anaging
(;1ourt o(tp,e United States for the East· ern ..' . . .' r.r4!, was asuitQJ M. receiver the Keystone N'atiqnalBanlt,',lilg/linst :GepI.'ge P4illElr and others, being the clearing committee. o,f . the. I;Iouse. of the of ;rb.iladelphia, chec¥,s,or the money col,n circuit a <iecree for plaintiff. 58 Fed. 746. · · . and John G. appellants. SilasW. . '. .' Ila(ore 'ACHnSON, Judge, and BUTLER and GREEN, District Judge&.
of
, OircuitJudge. Upon, a bill brought by Robert }L the Keystone National Bank, against seven inYard],ey, divi<lllals,constituting tlle:managing committee of the Philadelphia Cleacipg Bank Association, the court below rendered. a decree for $70,005.46, with interest from March 20,1891, against the defendants, who are the appellants, upon the ground that, after the knowninsoh"encyof the named bank, they applied (as was <lharged) ita funds.· in their hands 01' under their control to the payment of' its debts to the clearing )louse association, and to members thereof, with a view of giving them an unlawful preference over other creditors. The clearing house 'association of·· the .city of Philadelphia is a voluntary, uniucorporated association, composed of the national banks of that city';' its main object being to' effect at one common meeting place, called the "clearing house," the daily exchanges be. the associated banks. Its· affairs are under the general supeiWision of '3. committee of seven bank presidents, selected by a majority of the associated banks, and serving without compensatioIl,. '., a manager, who has immediate charge'of the conduct ·of the business at the clearing house. All exchanges, .however, are made directly between the banks themselves, through elerlts, representing them respectively. All'. the checks,drafts, and other evidences of indebtedness to be exchanged are brought to, the clearing house . . in sealed packages, there.. The gross amount of the alleged which are never of each package is indorsed upon the envelope, but not . The <;lerk Of each sending ,bank delivers diredly to the clerk ,of the receiving banJ,t the sealed package of checks and other obligations held by the former against the latter bank. Receipts pass oirectly betweell the (llerks of the sending' and receiving banks. After the exchanges are thus made, the gross' totals only are reported to the clearing house manager, who, upon this information, "makes up a sheet 'of differences to be adjusted and settled between
PHII,LER
v.
YARDLEY.
647
the various banks. Upon this sheet each debtor bank settles· the amount due by it to the creditor banks by paying the same to the clearing house manager, who immediately distributes it to and among the creditor banks. The Keystone National Bank of Philadelphia was a member of the clearing house association. On March 20, 1891, at 8:30 o'clock a. m., the hour fixed for the morning exchange, the messenger of that bank appeared at the clearing house with sealed packages purporting to contain exchanges against other banks, members of the association, amounting to $70,005.46. These packages he delivered from them directly to the clerks of the other banks, and receipts therefor. At the same time the messengers of other banks, members of the association, delivered to the clerk of the Keystone Xational Bank sealed packages of exchanges against it, purporting to amount to the sum of $117,035.21, and took from him receipt8 therefor. Thus there was a balance of $47,029.75 against the Keystone National Bank on that morning's exchange. After re-ceiving the sealed packages of checks and other exchanges purporting to amount to $117,035.21, the clerk of the Keystone National Bank left those packages in the custody of the manager of the clearing house until the bank should pay the $47,029.75 difference, which it was bound to do by 12 o'clock of that day. The reason for the deposit was this: Article 17 of the constitution of the clearing house association required each bank to deposit with the clearing house committee collateral security for the payment of its daily balances. In December, 1890, however, at the instance and for the benefit of the Keystone National Rank, a special arrangement was entered into between it and the clearing house committee whereby all the security held under article 17 to secure its daily balances was transferred to its loan-certificate account with the clearing house, so as to enable it to receive upon that security further advances of loan certificates, and it was agreed that thereafter, at morning exchange, the clerk of the Keystone National BanI" after receiving the packages of checks and other exchanges from the creditor banks, should leave the packages with the clearing house manager as security that any debtor balance due by it on that settlement should be paid by the bank before 12 o'clock of the same day. The Keystone National Bank did not pay its debtor balance of $47,029.75 due on the morning exchange of :March 20, 1891, by 12 o'clock that day, and that balance has been paid or tendered. Shortly after 10 o'clock on the same day, by virtue of an order made by the comptroller of the currency, the Keystone National Bank was closed by William P. Drew, bank eXaIiliner, and thereafter Robert M. Yardley was appointed receiver thereof. After 12 o'clock on the same day (March 20, 1891), the clearing house manager, acting under the instructions of the clearing house cOlllmittee, notified the banks which had presented the packages containing the checks, drafts, and other evidences of indebtedness against the Keystone National Bank for $117.035.21, that they must make those packages good by paying into the dearing house that
648
FED:E;l,\AL REPORTER,
vol. 62.
of money, and accordingly, in compliance with this demand, these banlFs forthwith. paid to the clearing house manager $117,035.21 in .cash, and tooka;way the packages. After the morning exchange on that day, the state of accounts between the Keystone National Bank and the clearing house association was this: The debtor balance of the bank on that morning's settlement, as we have seen, was $47,029.75. Its debtor balances on the exchanges of the day amounted to $41,197.36, for which it had issued its clearinghouse duebills,-two thereof, amounting to $23,390.52, to the clearing house association, and several others, amounting to $17,806.84, directly to certain banks of the association. These duebills were in thefor.m prescribed by the rules of the association, bore date March 19, 1891, aJ1,d by their terms were "payable only in the. exchanges through the clearing house the day after issue." Then, in addition to its. debtQr balances on these exchanges, the Keystone National Bank owed $335,000 on clearing house loan certificates which had been issued to it previously by the clearing house committee, agreeably to the provisions of a written agreement between all the associ.ated banks. To secure the payment of this last'lllentioned indebtedness for $335,000, the bank had deposited with the clearinghouse committee collateral securities; but the other banks were '. ultimately pesponsible for that debt in case of a deficiency in the collaterals, for by the terms of the written agreement referred to any loss caused by the nonpayment of clearing hous.e loan certificates issued by the committee to any member of the association was assessable upon all the other banks in the ratio of capital. The money, pamely, the $117,035.21, which the other banks, upon the call of the, clearing house committee, paid on March 20,1891, to the clearing hous.e manager, he immediately appropriated, by the direction of the committee, in manner following: To make good the balance due by the Keystone National Bank on tbat morning's exchang· es, $47,029.75; to the payment of the duebiIls given by the bank for its debtor balances. on the exchanges of the preceding day, $41,197.36; and the residue, $28,808.10, he applied towards the cancellation of the clearing house loon certificates which had been issued to that bank. Has the receiver of the bank any just reason to complain of that appropriation, or of the transaction in ;any respect? The receiver of an insolvent national bank takes its assets subject to all just claims and defenses that might have been inter· posed against the corporation itself; and all liens, equities, and rights arising by express agreement, or implied from the nature of the dealings between the parties, or by operation of law, prior to insolvency, and not in contemplation thereof, remain unimpaired. Scott v. Armstrong, 146 U. S. 499, 510, 13 Sup. Ct. 148. The morning exchange on March 20th between the Keystone Na· tional Bank and its clearing house associates, in itself, was unimpeachable. It took place before the bank examiner acted. The clearing house association· had no reason to suspect the impending failure. On the part of the bank itself the transaction was in the regular course of its business, all:d with a view to continued opera-
PHILLER
649
tions. It did not act in contemplation of insolvency, nor with a purpose to give one creditor a preference over another, or to prevent the application of its assets in the manner prescribed by law in case of insolvency. The rights of the parties were fixed when the bank was closed. As between the Keystone National Bank and the other banks, the morning exchange had been already consummated. The packages of exchanges on the one side and the other had been delivered and receipted for. The exchange itself was an accomplished fact. What remained to be done was the payment by the Keystone National Bank of its debtor difference of $47,029.75 to the clearing house manager. To insure this payment by 12 o'clock, the bank, under its arrangement with the clearing house committee, left its sealed packages in the hands of the clearing house manager. The bank, however, defaulted, and what afterwards occurred in the clearing house was in consequence. The situation was unprecedented. The bank had been closed by the government officer. The pledge was not an ordinary one. The sealed packages on temporary deposit with the clearing house manager did not contain assets of the bank, but checks and drafts drawn upon it, and other evidences of its indebtedness. As the packages contained commercial paper, prompt action might be necessary to hold indorsers and drawers. In the emergency, occasioned Wholly by the default of the Keystone National Bank, whose supposed equity is the foundation of this bill, the clearing house committee made the call upon the other banks already mentioned. Whether those banks were bound to comply with that demand to its full extent we need not inquire. Under the stress of the situation they saw fit to do so, and paid into the clearing house, of their own moneys, $117,035.21, and relieved the manager of his custody of the packages. Did this work an annulment of the morning exchange ? We cannot so conclude. That deduction would be highly unreasonable. That the banks which paid in this money intended such a result is incredible. The whole transaction negatives the idea of intended rescission. Indeed, the other banks had no right to undo the morning exchange without the concurrence of the Keystone National Bank. Nor was it to their interest to disturb what had taken place. Why should they pay this· large sum of money into the clearing house in relief of the debtor bank? Assuredly, this money was not paid for the benefit or use of the Keystone National Bank. The other banks made the payment in promotion of their own interests as members of the association, primarily in order that they might make settlements inter se. This they were at liberty to do without relinquishing any of their rights or equities as against their defaulting associate. The obligation of the Keystone National Bank to pay its debtor balance remained in full force. Without the payment of the $47,029.75, the bank was not entitled to the return of the deposited packages. Hence those packages were rightfully withheld from the bank. Nothing is better settled than the right of a transferee of a pledge to hold it until the debt for which it was given is paid. Story, Bailm. § 327; Donald v. Suckling, L. R. 1 Q. B. 585; Talty v. Trust Co., 93 U. S. 321. This principle is peculiarly
650
62.
,:apPlieable:here, the ':clearing house' manager held' the deposited paekages for the- benefit of the creditor banks. It is our judgment that the morning exehange between the associated banks was valid, and was not avoided, or, the rights thereunder of the clearing house association or of the:ereditor banks impaired, by what subsequently occurred; It is 'quite plain that the court below proceeded upon views radically' different :fl'Om those we have expressed. 'l'he decree, it will be, perceived, ent'irelyoverlooks' the default of the Keystone NatiOnal Bank, and puts the receiver in a far better position than the bank would have been in had it fulfilled the terms of its pledge. Had it done that, it would have paid into the clearing house $47,· 029.75"whe!reas, without paying anything, the receiver has a decree.requidngthe defendants' to account to him for the whole $70,005.46.,.:Weare unable to accept that result as just. ,The principleof· the' decision of: the supreme, court in the case of Scott v. Attnstrong, requires that the equities and rights arising from the express agreements or implied from the nature of the dealings on the' ,one side and the between the 'Keystone; National' house association or the other members, thereof on the other side, priorto the ,closing of,the bank, shall be preserved and enforced. Wl1lJ1·anythingdoneprejudicial to the rights of the Keystone NationaL BankO'l::its receiver? As already stated, the clearing to $41,197.36, which the bank had given for its balaricesOn the exchanges of the .preceding day, were paid out of the fund claimed by the receiver. Oan the rightfulness of thalappropriation be' gainsaid? On the face of each duebill it was stipulated that it was "payable only in the exchanges through the dearing honse the ,day after issue." Those duebills were actually hi the morning exchange on March 20, 1891. They were in the packages amounting to $117,035.21, delivered to the clerk of the Keystone National Bank. They were entitled ,to payment out of the bank's credit of $70,005.46 in that morning's exchanges. The application of the $41,197,36 to those duebills was therefore right, .even npon the as to the origin of the fund which the clearing hOnsemanager disbursed. The duebills were xtinguished. By no possibility can they come against the funds in the hands of the receiver; Is the receiver in any position to question the application of the, $28,808.10 to the indebtedness of the Keystone National Bank as a member of,thecleai.'ing house association ()nits loan-certificate account? That liability arose from the course of dealings between the bank and the clearing house, and under an express agreement between all the members thereof, wheteby the other associated banks were· chargeable· with any loss occasioned by the failure of the Keystone National Bank to pay. The other banks, therefore, liad a prevailing equity to have applied to that debt money of their own which they paid into the cleating house under the circum:I±I:ow can 'the receiver object that, as the stances as between the other banks; a balance from outcome of the
651
funds which they provided was applied to the reduction of the debt" due by his bank? Then, again, the receiver, who has no higher rights than his bank, is in a court of equity. Here he is met by the default of the bank in not paying into the clearing house the $47,029.75 it was bound to pay. He has not deemed it to be for the interest of his trust to pay that money. He does not propose to do so. How, then, can he ask a decree against the defendants for the $28,808.10? Obviously, to the extent of his bank's default, he is without equity. For the reasons stated, we hold that the receiver has no good ground upon which to challenge the transactions in the clearing house. We add a single observation: As the right of set-off existed between the banks (Scott v. Armstrong, supra; Yardley v. Clothier, 51 Fed. 506, 2 C. C. A. 349), it is by no means clear tM-t the other creditors of the Keystone National Bank would havefared better if the exchange had not taken place. With claims aggregating $117,035.21 as against claims for $70,005.46, it would seem improbable that anything would have been recoverable by the: receiver. Finally, the receiver does not show himself to be entitled here to equitable relief of any nature. The duebills for $41,197.36 are entirely out of the way. It does not appear that any items in the packages for $117,035.21 have been proved against the funds in the hands of the receiver, or have been presented to him for payment, or that any suit thereon has been brought or is threatened. If the receiver has the right to insist upon the formal cancellation of $28,808.10 of those items (which is the utmost he can claim), the present bill is not available to him to secure such decree. No such relief is here sought. The bill is not framed for that purpose. It is not apparent that the receiver needs the aid of a court of equity; but, if he is entitled to equitable relief, it is as against the other banks. Those banks are not parties to this suit. The decree of the circuit court is reversed, and the case is remanded to that court with directions to dismiss the bill of complaint. GREEN, District Judge, dissents. BUTLER, District Judge (concurring). While I believe the foregoing opinion sufficiently vindicates the conclusion reached, I desire, in view of the dissent expressed, to add a few lines. It' must be kept in mind that the suit is against certain individuals as the clearing house committee, and not against the banks involved in the exchange. If the latter did anything by which the plain. tiff is aggrieved we cannot consider it here. The defendants are only liable for their own acts. These acts are those connected with the exchange of !Iarch 20, 1891. What were they? On the morning of that day the Keystone Bank delivered to their manager a package of its. own obligations (received from other banks for cancel· lation) to be held as security for the payment of $47,000, which it had undertaken to pay by 12 o'clock that day. It did n'ot pay; and as the value of the security depended utl0n holding the indorsers,.
652
FEDlilRAL REPORTER,
the committee, on being indemnified by the receipt of an equal sum. of money from the other banks, handed the obligations over to them. On this state of facts what claim has the receiver on the committee? Until the $47,000 are paid by the Keystone or the receiver, neither has any right to the obligations; nor can either complain of the disposition made of· them.. When the money for which they are pledged is paid the receiver will be entitled to them, and t1:).e committee must then produce them, or account for their value. The bank did not pay the money, and the receiver will not, it greatly exceeds the value:of the obligations-which consistof promises of the broken bank, comparatively worthless. .Their value is just the amount Of the dividends they will draw if not redeemed. If the receiver redeems them he, or rather the creditors of bank, will be benefited to the extent of the dividends thus-saved-nothing more. The fundamental error of the plaintiff consists in the assumption that the exchange of obligations was. annulled by the subsequent transaction between tl;le committee and the other banks-respecting which nothing need be added to what is said in the foregoing opinion. But if we concede this assumption the plaintiff will not be helped. The annulment of. the exchange, if it bound the Keystone, might and doubtless would entitle the latter to a return of the $70,000 of obligations, which it had previously held. But it would not render the committee liable for their return. The committee never had nor saw them. But even COnceding the committee's responsibility for their return, the assumption that it became liable to pay $70,000 for failure to return them is clearly erroneous. In $uch case the measure of damages would be the amount the receiverJostby such failure. This would be the value of the obligations to him and the creditors. Let us see what this is. The banks owing the obligations, held $117,000 of the Keystone's liabilities, which were a valid set-off. The receiver could not therefore recover a cent. The obligations nevertheless had some value, as they would extinguish $70,000 of the Keystone's liabilities, thus diminishing the claims against its assets that mUCh; saving to the creditors the dividends which the $70,000 of obligations would draw if not canceled. This then is the loss from failure to' return them. If the assets will pay 30 per cent. (which is very improbable), the dividends on $70,000 would be $21,000. Thus we see, even assuming that the exchange was annulled, and that the committee became responsible for the obligations, the receiver is not entitled to $70,000, as claimed and awarded. As the dividend rate is not ascertained we cannot know what (in this view) the receiver's loss is. But the plaintiff further assumes that the clearing house received $70,QO() for the Keystone Bank, in its transaction with the other banks, after the Keystone's failure. This assumption is wholly unwarranted. Nothing I think can be plainer than that the other banks did not pay any money to the committee for the Keystone, or itf;l receiver. Why should they? What object could they have in SO? They owed that bank nothing. On the contrary it owed them. Whytherefor:e should ,they yolunteer to pay the ob-
PHILLER V. YARDLEY.
653
ligations it had held against them while they held its obligations (which were an available set-off), exceeding the amount in $47,000? In doing so they would simply throwaway $70,000, (saving the inconsiderable sum that might be recovered back in dividends). It is clear that none of the money paid to the committee was intended for the Keystone, or inured to its benefit. It gave up nothing. Its rights under the exchange remain intact. When it pays its debt the obligations must be returned or their value accounted for. The object of the other banks in paying money to the committee is not clear, and we are not called upon to ascertain it. Why it was paid and what was done with it is unimportant It was their own, to do with as they pleased. It was probably paid to settle balances among themselves. But whatever the object was, it is clear that it was not to benefit the Keystone Bank, and did not interest it. It is conceded that the object was to benefit themselves, alone. The erroneousness of the decree maybe illustrated by another statement. The Keystone Bank cannot claim to be placed in a better position than it occupied at the date of its failure, or to be benefited by its refusal to keep its contract and the action forced on the other banks thereby. Yet it is indisputable that the decree does place it in an infinitely better position-gives it, in effect, over $80,000 as a premium for its faithlessness. Let us see if this cannot be demonstrated. If the bank had kept its contract, it would have paid out $47,000, which would have been lost to the receiver and creditors-by diminishing the assets for distribution that much. It would then receive $117,000, not of money, but of its own nearly wortWess obligations, for cancellation. The receipt of these obligations would have benefited the receiver and creditors just to the extent of the dividend the obligations would draw if not canceled. Now supposing the dividend rate to be 30 per cent. (which is doubtless much too high) the dividends on the $117,000 of obligations would be $35,100. To redeem and cancel them costs $47,000; deducting the $35,100 from this shows a loss to the receiver and creditors of $11,900, as the result of carrying out the contract. The receiver acted wisely therefore in not carrying it out; he saved $11,900. But because he did not carry it out and the committee and the other banks entered into the subsequent transaction on their own account, and for their own exclusive benefit, he is given an additional sum of $70,000; and' is thus made a gainer in $81,900 by the failure to keep the contract. If the banks had intended to annul the exchange of obligations (which they could not do after the receiver's rights attached), they would of course have returned the obligations received by them from the Keystone, and set off against them the obligations of that bank which they held. To pay it, or for it, $70,000 in money, as it is alleged they did, would have been an act of folly incompatible with sanity. Of .course nothing of the kind was intended or done.
654 U")jl
FEDERAL REPORTER,Vol.1' ,1'
1,,·,;'[
i:'.:";.,
,) VENDOR
('
:,.! l
)dYERSv.LEAGUJi)"et.,I/.l. {jourt ,Of Appetils, Fiftli !(jrrcttlt 'May 1, 1894.) .: ',,' ., ., . ,:, r " .' No. 193 . 'I: OF ESSENCE ot".cONTRACT.
A the sale of tra,cwof land for acartain price, part In aildthe remainder in notes, the vendors to furnish abstracts of title, provld,ed that the title was to be good or to be made good, or the contract to be detei'U1ined; sale to be closed. and notes executed, within 45 days from:dl;lUvery of complete The market value of the lands 'Was. increasiI)g ra;Ilidly, ,and all the were dealing in them as a commercllil specullttion.TheIr subsequent correspondence and conduct showed that the vendors regarded the time limited as an essential element, and that thiswasrecognizedbY',the purchaser. After expirationof that time" tlle purchaser l"epeatedly. .a,pplied for an extension, but faIled to accept. the terxDs offered by the and thereafter negotiations prQceedei( on the vnderstanding on. tlie vendors'part, tacitly asthat the contract was at an end. Held, that sented to by it must be implied that tlll1e was ·of the essence of the contract, and that the paJ;1:ies were '. estopped from denyIng that they agreed that the con. tract. was ended. r
Appeal' frotntne Court of United S'tates for the Eastern District!. 6f This was a suit by Henry H. ¥yers ua1nst J. C.·League and J. R. Coryell, for specific pe'l'formance of a. conJi'act for . the 'sale of land by defendants to complainant. At the bearing the circuit court dis,missed the bill; .bl1t decree4. that. defendant League sh(mld repay to complai:ilant a certaIn sum of money paWby complilinant as part of the contract COllilprainant appealed, R.. R. :Bfiggs,'fQt . " . JOWlS & Wld A.R.Campbell, for appellees·. . . . , Before PAltDEE and'M,cCORMICK, Circuit Judges. and PARLANGE, District. Judge. ',,"
.'
.
Circuit Judge. In 189Qthe appellant was a resident :citizen of tlw state of' Minnesota. He and his brothers were in business in.. the city of Duluth, undertbe firm name o( Myers Bros. TheiI,' attentio):l was drawn to Galveston, Tex., by tp,e .projectedgQvernrp.ep:t work on harbor. The appellant and one of his brotheI,'s visited in October, and, after studying the situation tllere, concluded .to try and acquire a body of land, made uP of different adjoining surveys, anq. owned by <lifferent parties, situated, on the main lall,d fronting on Galveston b\l:yand on inJets fmm, .H. The appellees' attention: had been to tbe s/lllIeobjecti . League and Coryell bad acquired foul' surveys in the locauty. ,Three of thesl:l"described as the Grant,lfergus9n,: .and Smith !3Urveys, embraced togetb.er 4,214 acres, more or theothe:r, described as the Johnson survey, contained 1,476 acres, all being parts of it body of 8,542 acres, which appellant wished to acquire. All the parties were dealing in these lands as a commercial commodity, having an eyeto how the same would be affected by the harbor improvement