OVERTON, Trustee, v. MEMPms& LITTLE
R. Co., as reorganized.
(Circuit Court, E. D. ArJ,:ansa8. March 24,1882.)
EQ,UITY-RELIEF, WHEN REFUSED-DISPUTED EQUITABLE CLAIM.
Where the relief sought is founded upon a disputed equity, a court of equity will with great reluctance and hesitatic;m take the possession from a defendant holding a clear legal title. So, none of the actual holders of the stock or bonds of a railroad company who would be afIected similarly with the plaintifI were before the court, the court oughtto hesitate before appointing'a receiver, on the ground of It possible injury to one holding nothing more than a disputed equitable claim for deferred stock.
SAME-RECEIVER, WHEN NOT, APPOINTED.
It is not the province of a court of equity to take possession of the property and conduct the business of corporations or individuals, except where the exercise of such extraordinary jurisdiction is indispensably necessary to save or protect some clear right of a suitor, which would otherwise be lost or greatly endangered, and which cannot be saved or protected by any other action or mode of proceeding.
In a cause pending in the supreme court of Arkansas, on appeal from the chancery court of Pulaski county, wherein the state was complainant and the above-named railroad company (as intervenor) was defendant, that court decreed foreclosure of a mortgage executed by a former company, owner at time of the road, and ordered a sale of the road and rolling stock. Four days after this decree was rendered, complainant filed in this court his bill 'claiming to be entitled to some deferred stock of the railroad company, and praying the court to compel issue thereof. The company disputed his right to such deferred stock. Afterwards complainant filed an amendment to his bill, setting up the judgment of the supreme court and decree for sale of the road; the rapid approl1ch of the day of sale; that the officers of the defendant company were taking no steps to prevent a sale; alleging his inability to raise the large sum required to pay the judgment; averring that he was informed and believed that certain holders of the bonds of the defendant railroad company would raise the money "if they could be assured of repayment by reception of the income of the property," and praying the appointment of a receiver with power to borrow the money, pledging the income of the road, and pay the judgment. T. B. Tnl'ley and W. M. & G. B. Rose, for complainant. B. C. Brown, for defendant. CALDWELL, D. J. 1. The plaintiff is not the legal owner or holder of any of the stock or securities of the defendant company. He
OVERTON V. MEMPHIS & LITTLE ROOK B. CO.
claims in his bill to be equitably entitled to $1,500,000 of deferred stock, but his right to this is disputed by the company. "Where therelief sought is founded upon a disputed equity, a court of chaneery will with great reluctance and hesitation take the possession from a defendant holding the clear legal title." Schenckv. Peay, 1 Woolw. 175. Not one of the actual holders of the stock or bonds of the company, who would be affected similarly with the plaintiff by a sale of the road under the decree, are before the court. In view of this fact the court ought to hesitate before appointing a receiver on the ground of a possible injury to one holding nothing more than a disputed equitable claim for deferred stock. 2. While the bill alleges the trustee is unable to raise the money to provide for the decree "on his own account," it does not allege that his cestui que trust cannot do so. And it. does allege "that the· bondholders of said road and others interested therein, as he is informed and believes, would and will advance the money to provide for said decree, if they had any assurance that it would be refunded to them out of the earnings of the road." No order of this court, in advance, is necessary to give this assurance, or for the protection of such of the holders of the stock and securities of the company as may provide the money to day the decree or purchase the property at the sale. Upon payment of the decree they are entitled to be reimbursed their money, and, to this end, to be subrogated to all the rights of the state under the decree, or, upon a purchase, they are entitled to all that a sale under the decree can including the right to the immediate possession, and, of course, the right to receive the earnings of the road, as against all junior encumbrancers, until they are reimbursed, and a receiver of this court would have no greater powers. 3. Suppose the receiver to be appointed and the proceeding to run its course, as contemplated in the bill, it is quite obvious the court would be burdened with the administration of the business affairs of the company for a long period. Undoubtedly there are cases in which a court of equity may, through its receiver, take possession and control of the business of corporations and individuals. But it is a jurisdiction to be sparingly exercised. None of the prerogatives of a court of equity have been pushed to such extreme limits as this, and there is none so likely to lead to abuses. It is not the province of a court of equity to take possession of the property, and conduct the business of
or individuals, except where the exercise of such extraordinary jurisdiction is indispensably necessary to save or protect some clear right of a suitor, whioh would otherwise be lost or greatly endangered, and which cannot be saved or protected by any other aotion or mode of proceeding. If, as in this case, the loss or danger can be averted by the lawful action of the suitor, or those he represents, he oannot sucoessfully invoke the exercise of the extraordinary powers of a court of equity, because that course would be more agreeable or convenient. Should the plaintiff, Or those he represents, pay off the deoree, or purohase under it, the rights and equities thus aoquired will be olear, and within the proteotion of a court of equity. 4. The danger that all holders of stook or seourities junior to the terms of the deoree will be cut off ·by a "stranger, or third party," purohasing at the sale, is too slight to be seriously considered. The disproportion between the value of the property and the amount of . the deoree preoludes the idea of anyone being permitted to purchase the property disoharged from a trust in favor of the stock and bond· holders. It is the duty of the directory to proteot the interests of the stockholders of the company, and they are not likely to inour the liability that a negleot of that duty would impose. But should they do so, it is, as we have seen, within the power of the plaintiff, and other parties in interest, to proteotthemselves against loss by reason of the fraud or negleot of the direotory. And, if tho decree is not satisfied, and the property goes to sale, it is as certain as any future event can be, that it will be purohased by or for the oompany, or by or for some one or more of the stook or bondholders, whose relations to the company and the other stockholders will be such that they will take the property charged with a lien in favor of the latter. Motion for receiver denied.
SOli'l'JlEH1'l ,b;XPHESS CO. V. ST. L' J 1. M. & S. RY. CO.
SOUTHERN EXPRESS CO. V. ST. LOUIS, IRON
By. Co.(Circuit Court, E. D. Missouri.
March 2G, 1882.)
In Equity. Final decree. The opinion in the above-entitled cause was delivered on the twenty-first day of February, 1882. A full report will be found at page 210, ante. The following final decree was rendered in the case, by Judge McCrary, on the twenty-fifth day of March, 1882:
And now this day come the parties aforesaid, and by their counsel, then and there present, bring on this cause to be heard on the pleadings and proofs, and the same were then and there presented to the court, and the argument of counsel for the respective parties is heard, and the said cause is then and there submitted, and due deliberation having been thereupon had,n is by the court ordered, adjudged, and decreed as follows: (1) '£hat the express business, as fully described and shown in the record, is a branch of the carrying trade that has, by the necessities of commerce and the usages of those engaged in transportation, become known and recognized so as to require the court to take notice of the same as distinct from ordinary transportation of the large mass of freight usually carried on steam-boats and railroads. (2) That it has become the law and usage, and is one of the necessities of the express business, that the property confided to an express company for transportation should be kept, while in transit, in the immediate charge of the messenger or agent of fluch express company. (3) That to refuse permission to such messengers or agents to accompany such property on the steam-boats or railroads on which it is to be carried, and to deny to them the right to the custody of the property while so carried. would be destructive of the express business, and of the rights which the pUblic have to the use of such steam-boats and railroads for the transportation of such property so under the control of such messengers or agents. (4) That the defendant, its officers, agents, and servants, have no right to open or inspect any of the packages or express matter which may be offered to it for transportation by the plaintiff's company, or to demand a knowledge of the contents thereof, nor to refuse transportation thereof, unless such inspection be granted or such knowledge be afforded. (5) That it is the duty of the defendant to carry the express matter of the plaintiff's company, and the messengers or agents in charge thereof, at a just and reasonable rate of compensation, and that such rate of compensation is to be found and established as a unit, and is to include as well the transporta*Reported by B. F. Rex, Esq., of the St. Louis b.lr.