GOLDMARK V. KRELING.
report the exact condition of these matters; the location of the mill; how. it is situated, with relation to the 2,000 feet and in relation to the 2,100 feet; how, in relation to a line of division drawn directly across the proper point, if there can be a line 80 drawn; and how much of the land is adjacent to the 2,100 feet. These questions will have to be determined unless the parties themselves can come to some understanding on the subject, and I shall have to refer the matter to the master to ascertain the facts. If necessary, counsel will have to draw an order for that pnrpose. There will be a decree for the complainant for the conveyence of the portion of. the ledge to which he is entitled, and such portion of the surface land as may be ascertained to properly belong to the 2,000 feet. There is one other remark I wish to make. It is alleged that it was not averred in the bill that this patent was obtained without notice of Thompson and McGee. There is no direct averment of that fact, but there is an averment that it was obtained without the permission of t1le plaintiff's grantors, and against their will, and it is clearly inferable from the other allegations that it was without notice in fact. I think that the testimony objected to is admissible, under the allegations of the bill, as showing the circumstances under which the patent was wrongfully obtained, and I think that, of itself, would be sufficient; but it is a mere formal, technical objection. It is inferable from all the allegations of the bill that it was without notice, and stated to be without permission. I am disposed to think it is not necessary to amend the bill; but if complainant desires to amend by alleging that the patent was obtained without notice, for greater safety, they have leave to do so. The proof must have been the same with or without the allegation, and the defendant can in no way be inj uredby the amendment. Defendant can amend his bill to correspond with the proof that the patent was obtained without notice to Thompson and McGee. There is authority for this in the case of Neale v. Neales, 9 Wall. 1,9. In my judgment it is not necessary; but if complainant desires to make an amendment he can do so.
and others v.
(Oi'rcuit OOU'rt, D. Oalifornia.
INJUNCTION-UNAUTHORIZED PRESENTATION OF UNCOPYRIGIITED OPERA.
The owner of an opera that has not been copyrighted may obtain an injunction, on giving proper security, to prevent its presentation by an unauthorized party. Where the defendants' counsel were not present when the bond on which a preliminary injunction issued was accepted by the court, on proof that !luch
2. BAME-SUFFICmNCY OF BOND.
bond is insufficient, the court may, after proper notice to the parties. require additional security to be given as a condItion of continuing the injunction. S.
SAME - EFFECT OF FAILURE TO GIVE BOND CHECK OR MONEY AS SECURITY. OFFER TO MAKE DEPOSIT OF
When the owner of an uncopyrighted opera files a bill to restrain the unauthorized presentation thereof, and an order to show cause why the injunction should not issue is made, and no cause to the contrary having been shown, an injunction is granted on condition that a bond for $10,000 be given, and the bond offered is not accepted by the court, and the injunction dissolved, on defendants executing an indemnity bond, a motion to set aside the order dissolving the injunction may be granted, when complainant offers to deposit in court as security a certified check for the amount of the required bond, or that amount in coin.
This is a suit in equity to enjoin the production of an opera of which complainants claim to be the proprietors,-a suit resting upon the common·law right of the author, not on a copyright. The sureties offered on a bond required to be given by a prescribed day upon the granting of an injunction, after several hearings, having failed to justify to the satisfaction of the district judge of Nevada, before whom the proceeding was pending, he dissolved the injunction upon that ground, upon defendants' giving a satisfactory bond, in the sum of $10,000, to pay such sum to complainants as should be recovered in the suit. 'rhe complainants, on affidavits showing their good faith, and excusing their failure to present sufficient sureties at the proper time, promptly moved, before respondents' bond had been approved, to vacate the order dissolving the injunction, upon the indemnifying bond given by the defendants, and to restore the in· junction before granted; and they offered to deposit a certified check upon some solvent bank for the required amount,or to deposit the coin in court in lieu of a bond. The application was denied; but, the point being new, and not being entirely satisfied with this action, the judge who heard the application granted a rehearing, and, upon such rehearing, invited the circuit judge and the district judge for the district of California to sit with him. After argument on the hearing, the following oral decisions were rendered. J08. D. Redding, for complainants. H. H. Lowenthal and W. W. Cope, for respondents. Before SAWYER, SABIN, and HOFFMAN, JJ. SABIN, J. I do not deem it necessary to review at length the history of this case, as it is certainly very well understood by coun· sel, and probably by the bar who have been in attendance. We deem the case a very important one. I believe it is the first case of the kind that has ever been brought in this court. While innumerable cases have been brought on copyrights and patents, etc., I believe this is the first case brought in this court, or, possibly, upon this coast, wherein a complainant has sought to restrain a defendant from producing a play, or any matter of this kind, not upon copyright, but upon common.law right. I have been iuclined to look at this case very much from the standard of cases that arE brought upon patents and upon copyrights. I am inclined to thirll,
there is a distinction in the cases, and nearly all the cases cited to the court during the argument on this matter have been cases upon copyrights or patents. There have been, perhaps, three or four cases cited to the court very similar to this, where parties have sought to enforce their common-law rights. They are different, however, from this case, in this: In those cases it was upon motion and argument before the court whether or not an injunction should issue, and not, as in this case, where no argument has been made before the court, as to whether or not an injunction should issue. It was conceded in this case, virtually, at least, that it was a proper case for an injunction to issue. No opposition, as I understand, has ever been offered to its issue. There has been no contest on the suffi. ciency of the bill in this case; therefore, the injunction issued regularly thereupon. The only question really before the court, as I observed yesterday, is, was the order made by myself on the sixteenth of this month, dissolving the injunction upon the defendants' giving security, under all the circumstances of the case, a complete and full indemnity to the complainants in this case? I do not care to review at all my action in regard to the sureties in this matter. I merely desire to say now that the bonds tendered .in this matter, thus far, are not satisfactory to me; nor am I at all satisfied with the manner in which the matter was conducted . . I think bonds could very easily have been procured by complainants . . It was only a small amount,-$10,OOO,-and I have merely to observe now that I do not think the security thus far offered in the case by complainants was such as the court ought to have accepted. I think that my action in that respect was entirely correct. Of course, when a bond is given, it is given in good faith, and for indemnity to the parties who may suffer injury in the action, if the complainant should not succeed in his case. Without ·any further remark on that, I have merely to say that I do not think the bond afforded the security that it was the duty of the court to enforce in a case of this kind. But I am not wholly satisfied that the indemnity afforded by the order of the court, that the respondents give a bond of $10,000, is a full and adequate remedy for the complainants in this case. As I observed, this case is different from a suit brought to restrain an infringement of a patent, or of a copyright, and there is great force in the point urged, that if any parties are permitted, in violation of complainants' rights, to produce this play, it may, and possibly would, cause irreparable damage to the complainants, if they are the lawful owners of this opera of "Nanon," and they only have the right to produce it. As the matter now stands on the bill, unquestionably they are the lawful and exclusive owners, and have the exclusive right to produce it. There is also, to my mind, great force in the sugge8tion that the owner, as in this case, of a play or opera, or other property not protected by patent or a copyright, is entitled to select bislicensee. One party might produce this individual opera, and, perhaps, the
complainant might suffer no very great damage. It might be an advantage in the way of an advertisement, or otb,erwise. Another party might produce it, and it might be of the very highest detriment to the complainant, and absolutely ruin its production elsewhere. As to who shall produce it, even if, as in this case, the parties owning it do not produce it, but merely license other parties to produce it, they have the most indubitable right to say who those parties shall be. I am inclined to think that, perhaps, I gave too much weight to the idea that in the giving of indemnity by these respondents they were giving ample security to the complainants. If I was in error in that, of course the order should be corrected. We have given this case unusual attention. I have invited Judges SAWYER and HOFFMAN to sit WIth me. I have desired to be guided by their very large and varied experience in matters of this kind, for my own experience has been somewhat limited, and this is the second argument I have ordered on this matter. We have given it very careful and anxious consideration, not only to be right as to these complainants, but to be right as to any and all parties,-to establish the true and correct rule. I am inclined, then, as I say, to think that perhaps in the order made by me on the 16th I may have overesti. mated the security I was giving to the complainants in this case; that perhaps I should have given them still further time to have procured sufficient bondsmen. It is true, parties offered on that day, about the time the court was announcing its opinion, to furnish a certified check in the sum of $10,000. It was either offered at that time, or to be ready by 2 o'clock. I declined that, at the time, for the simple reason that I thought sufficient time had been afforded them, and that the security whi'ch I would require the respondents to give would be ample indemnity to complainants. I now think, under the authorities, and under what may occur in this or any like case, that that indemnity is not full and ample. I am inclmed to the opinion that nothing but an injunction in the first instance will reach the case. A motion can always be heard either on the coming in of the answer, or a motion can be heard at any time to dissolve the injunction on affidavits. Of course no steps of that kind have been taken in this case. It stands merely on the bill as presented, without objection made to the bill. Mr. Cope. We could not have done that without waiving our objection to the bond. Judge Sabin. I do not think that would have obtained in this court. In any event, the court, in justification of itself, would have required good security to be given. I would have given you an order to show cause on these sureties at any time. This might often happen. You might give a bond which would be ample to-day, and three months hence a surety might die, and an order to show cause would be granted why you should not prodnce furth6r security. An offer was made the other day by complainants in this case to deposit gold coin in court,
if the court should order it, or a certified check. If the money should be paid into court it would have to be paid into the treasury, and it is considerable trouble to pay it in and get it out. A check, therefore, is more satisfactory. I think, therefore, the order, as made the other day, should be vacated, or at least modified, and the order of the court will be that the order made on the 16th, dissolving the injunction, be vacated; that the injunction heretofore issued be continued, upon the complainants' depositing with the clerk to-day, by 3 o'clock, a certified check payable to the order of the clerk in his official capacity, as clerk of the court, in the sum of $10,000, upon some solvent bank in this city. Leave will be granted to the complainants at any time, upon notice, to withdraw the check, upon giving good and ample security in place of it. Notice of the application and the names of the sureties intended to be offered must be given. I do not want any question to arise again as to the examination of sureties, and their sufficiency.
SAWYER, J., (concurring.) I have considered this matter very carefully, and have come to the same conclusion as my associate. There was an order to show cause, with a preliminary restraining order, granted. The parties appeared in response to that order, and upon the hearing an injunction was granted by the district judge of the district, till the further order of the court, with leave to the parties to move to dissolve it. The parties did not see fit, or were not prepared, to present any matters outside of the bill. The injunction was continued upon condition that by a specified day a bond should be given in the sum of $10,000, to be approved by the clerk. A question arose upon the sufficiency of the proposed securities upon that bond. The clerk was about to pass upon the bond when an application was made to the court, and granted, to transfer the question of approval to the court, and the matter was considered by my associate, the district judge of Nevada, then holding the court during my absence m Oregon. He did not assume to review the prior action of the court as to the injunction granted,-61ther the proceedings of the circuit judge in granting the preliminary restraining order, or of the district judge of this district in granting the injunction on the hearing of the order to show cause. The only question was as to the sufficiency of that bond,-whether the parties had conformed to the conditions of the order granting the injunction. As the matter stands, the injunction granted rests solely upon the bill, and we are satisfied that the bill presents a sufficient ground for the injunction. There was some delay, and the impression upon the mind of my associate was that the parties were not acting in good faith. One surety who had been rejected once was offered again. I am, perhaps, partly responsible for the decision of my a8sociate upon the point under consideration. On mv return I found that he had had several hearings upon the of the sureties,-indulgence having been given from time to time,-and from what had taken place before, he v.25F.no.7-23
was apprehensive that on Friday, the <lay fixed for the next hearing, there might still be further delay. Expressing his apprehension to me, we consulted, and I was of the opinion then that in case there should be further delays, and especially if there should be indications of trifling, the defendants were entitled to have the injunction dissolved, on their giving proper indemnity to complainants. But I had not fully considered the case. It presented questions entirely new to me, and my suggestions, upon imperfect knowledge of the facts, may have influenced my associate in making the order in question. If so, I am willing to take my share of the responsibility. When the examination came on it turned out that the surety was again rejected, and when the judge was about to announce his decision,-indeed, not till he was in the act of announcing it,-an offer was make to deposit the money; but the offer was regarded at the moment as coming too late, and the order complained of made. The only question is whether that offer ought, under the circumstances, to have been ac· cepted. There had been some provocation. The court was impressed with the idea, doubtless, that it was being trifled with. On the appli. cation to modify that order, I think the parties have satisfactorily shown by affidavits that they acted in good faith. They, perhaps, ought not to have offered a rejected surety again. I think they were at fault in that. Still, I am not only satisfied that the solicitor for the complainants, whom I have known for years, was acting in entire good faith, but I believe him to be incapable of acting otherwise. I think, under the circumstances, also, that the complainant Goldmark, a. stranger just arrived from New York, his financial condition being unknown here, and he being in these particulars in an embarrassing position, was acting in good faith. That being so, upon a review of this matter as it now appears to me, I am satisfied that further opportunity should have been given complainants on that occasion to perfect their security, even though the money was not tendered till after the judge had commenced to announce his decision. With reference to the indr.mnity which was given by the respond. ents, although the amount was sufficient and the bond good, it, in my judgment, affords no adequate remedy, if any remedy at all. This case differs from a patent case. Take, for instance, a patent for a sewing-machine. A party may in good faith think that a machine of a certain construction, different in form but in reality the same in principle as the one patented, is not an infringement. There is generally in the case of patented articles a royalty established, upon the payment of which any man is allowed to make or use the patented machine or article. A large manufactory may be erected, and the manufacture of sewing-machines or other patented articles be commenced, and it may turn out that there is an infringement on a patent, although the point, at the hearing of the application for an injunction, may appear doubtful. . To stop that work pending the suit would be to ruin the manufacturer, even if he turns out to be in
GOLDMARK 'V. KRELING.
the right; whereas all that the patentee wants, or can obtain incase he succeeds, is his damages, and a. remuneration according to the amount which he has fixed as his royalty. Providing he can get that, the more machines there are manufactured and sold the better it is for him. In such cases, in matters of donbt, whether the machine is an infringement or not, whether the patent is valid or not, or whether it has been anticipated or not, where the complainant can be fully indemnified if he succeeds, and where the defendant would be ruined by an injunction if the complainant fails to sustain his suit, courts, in view of the great disproportion of the hardship that may result to the respective parties, have very often declined to grant or continue an injunction on the infringing party's amply indemnifying the patentee. An adequate indemnity is given where the patentee's royalty, profits, and damages are perfectly secured. In these classes of cases there is usually some tangible, appreciable, fixed, and ascertainable measure of the amount to be recovered. Besides, in a patent case, by the express terms of the statute a patentee in a suit in equity to enjoin an infringer can not only recover the profits or royalty, but also any damages he may sustain in addition to the profits. It often happens that the profits of an infringer in a patent case are greatly less than the damages sustained by the patentee by the infringement; be.ause the patentee is entitled to fix his royalty, and to fix the price for which he will sell his invention, and that must be sufficient to give him his established compensation for his invention, in addition to the cost and profits of manufacturing. Take a sewing-machine, and suppose the royalty is fixed at $50 over .and above the profits of the manufacture,-and I think some are higher,-tbe infringer may manufacture and sell at sucb low prices as to give him a bare profit on his investment and the manufacture, so that the profits might be just enough to compensate for his investment and labor, leaving nothing for the royalty. Tho patentee, however, in addition, is entitled to recover his royalty. The profit which the infringer may make at the price he sells would often afford no compensation to the patentee for his invention. He would be remediless if tbat were his only right. The act of congress itself provides that the patentee may not only recover the profits, but also his damages, in the same suit, in addition to the profits. Not only that, but the court is authorized to treble the damages, in order that the patentee may be completely and thoroughly indemnified against, the acts of the infringing party. That is all by virtne of the statute. Otherwise, if the patentee wanted damages, he would have to proceed by his action at law. The statute authorizes him to domand both of these remedies in the same suit, and then authorizes the court to treble the damages. I myself have had occasion to impose the penalty, where the infringement had been a gross and willful violation of the patentee's right, and where the infringement had been continued by the same party after one or more recoveries. So, in a. copyright
case, the only compensation for the party owning the copyright is the amount he charges for his copyright fees. He fixes his copyright fee. If this were a case of copyright there would be a distinct, definite, appreciable, fixed, ascertainable measure of damages, which would be the copyright fee; and, no matter who infringed the copyright, when the infringer has paid that fee he has paid the full amount the party himself is entitled to receive, and the more there are sold the better he will be off, provided his fee is perfectly secure. His right exists under the statute. Under the statute both the profits and the damages might be recovered in the same suit. An indemnity in doubtful cases, secured for the infringement during the litigation, would afford an ample remedy. But this case is wholly outside of any statute. It rests simply upon the common law. A party has either his action at law for his damages, or his bill in equity to restrain the defendant, and recover such profits as he can obtain. The only measure of his compensation in a suit in equity would be the profits received by the wrong-doer. 'l'hat is all that would be recovered in this case. The bond given by the defendants, in fact, only provides for the payment of such profits as may be recovered by the violation of complainant's rights in this case. What is the measure of the compensation in this case? There is no definite measure. The profits are merely conjectural. There may be no profits. The parties who infringe the complainants' right may put their prices at such figures that there could be no profits. The injured party must,go to the wrong-doer to ascertain what their profits are. The expenses and the prices of the representation are under their control; and the performance may only be ancillary to some other business upon which they rely for their principal profits. It will be safe to say that the profits recovered are likely to be very limited. Prior to the filing of this bill there were two performances. The bill simply asks for an accounting of the profits down to that date. There were two performances that would be covered, unless the bill is amended or the complainants are otherwise entitled to the profits down to the accounting, and the profits that can be proved are certain to be very small. There is no knowing how long the infringement may go on before the final decree, or under what circumstances. The interest of defendants will be to delay a final hearing as long as possible. The opera may be performed under such circumstances as to render its performance by the owner futile. The owner is entitled to select his licensee, and to determine the conditions upon which his work shall be presented. This must be essential to any adequate protection, and any proper complete enjoyment of his property. On the bill, as it now stands, there is a clear right to this injunction, upon giving the proper security. This is the only adequate remedy. As we now regard it, we hold the bill to be sufficient. What view we may take after argument, or on a showing upon any application to dissolve that may be made, I do not know. There is,
GOLDMARK V. KREUNG.
then, a right to this injunction, or to some equally adequate remedy; and the indemnity by giving bonds is plainly not an adequate remedy. Where the profits are under the control of, and depend upon, the acts performed and evidence furnished by the infringing party, there is likely to be a very poor compensation if this case should run on for some time. The profits are liable to be extremely small, 80 far as the complainants would be able to prove them. .A bond for these profits, we are satisfied, would afford no reasonable remedy. The case, as we have seen, is not like that of a patent, where it makes no difference who makes the machine, provided the patentee gets his royalty. It is not like a copyright case, where the right and measure of compensation are fixed,-where the main elements by which the amount can be determined are known beforehand. In this case the amount is indeterminate, and depends altogether on the action of the party who wrongfully infringes the rights of the complainants,-who tortiously appropriates complainants' property. In view of these considerations, I think the distinction between the cases of patents and copyrights, and this case, very broad. It is true, in one or two cases recently reported in the newspapers a similar order was made, but it was not made under similar circumstances. That order was made on the hearing of an application for the injunction, where the defendants came in and put in their proofs, and made a very strong case. Take the most prominent case, Tracy v. Janisch. The defendant put in her proofs fully by affidavits. It appears, according to the numerous affidavits, that defendant was a citizen and resident of Paris, and she alleges-and the proofs went far to show-that the work had been published in that city from year to year for some years, with the owner's knowledge and consent, and that the complainant's right had been consequently lost. A number of affidavits were put in to sustain the proposition. It was extremely doubtful whether the complainant had any rights at all. That was on the hearing of the application. If this was on the, hearing, that case would have some application, and it would be proper to quote it. But there it was a case of extreme doubt whether the party was entitled to an injunction at all. If not, the hardship on defendant was peculiar and great. Her injury would have been irreparable had she been enjoined, and the court exercised its power, under the great hardship of the case, because the defendant, had had the work prepared from what she maintained was a public work in Paris; had come to this country expressly to perform it; had organized her troupe; and had no other piece to perform. The failure to produce that piece would be the loss of her season, and the entire destruction of her enterprise. Under these circumstances and proofs it was extremely doubtful whether the injunction should be granted at all. When this case comes to be heard on the answer, evidence, and proofs, the court may find occasion to change its order. It may be that there are some special circumstances to be developed which will
change the entire aspect of the case. But they are not yet developed, and on the case as it now stands there is a right to this injunction, or some other adequate remedy, and we know no other that would be adequate. A sufficient certified check having been offered before the ordsr for dissolution was made, I now think the order dissolving the injunction upon the bond of defendants was made without due con· sideration of the inadequate remedy afforded, and the consequences to complainant. I therefore concur in the present order. With reference to the hardship that may occur in this case, it is proper to observe that no general appearance has yet been entered by the defendants, unletls the appearance to respond on the bill to the order to show cause can be held an appearance within the mean· ing of the statute. Whether or not it is, I am not prepared now to say. It was within 20 days of the rule-day when this suit was commenced, and the defendants had till the rule-day of the following month in which to appear. They had over 40 days within which to appear,-the rule-day in November being the day upon which they would be required to appear. They could, therefore, rest on their oars until that time, and not appear. Having formally entered their appearance, they would then have until the rule-day of the following month in which to answer or demur. They were bound, however, to appear to the order to show cause. They did appear, and the injunction was granted without a showing, other than on the bill, against it. Suppose this injunction is dissolved, and defendants do not appear at all until the rule·day in November, and then take until the following rule-day, which they have the right to dO,-because the law gives them that right,-in which to answer. They may then demur. In that event·, the case will go upon the demurrer calendar of the next rule-day, and, under the press of business, it may be months before the demurrer can be decided or regularly reached. It might be overruled, and a plea put in, and several months more be consumed in disposing of that plea. Then, after at last filing an answer, there are three months in which the party is entitled to take testimony. Should this injunction be dissolved, the performance by defendants might run through a year or more, and everything there is worth having in this opera, so far as its performance on this coast is concerned, might be appropriated by the defendants, and at the end there be no profits by reason of the expenses, manipUlation, low prices, or improper production by the wrong-doers. \'Ve think it would be a great hardship on the complainants to allow the matter to stand in that position. These possibilities should be taken into consideration in determining the right of complainants to have the order complained of vacated. On further refloction we are satisfied that additional time should have been given to the complainants to produce other and sufficient sureties, or that the certified check should have been taken in lieu of them. These are our more mature convictions. If I made a mistake in advising my aS80-
GOI,DMARK V. KRELING.
ciate on an imperfect knowledge at the time of all the facts of the case, and without due consideration of the consequences of the action of the court, I am desirous now to correct my error. With all the care I take, mistakes will sometimes occur. So far as my responsibility as to that order goes, I am prepared to remedy it now. I desire, in connection with this matter, to make some other observations. There was manifestly a misapprehsnsion on the part of counsel as to the practice of this court in a justification of sureties" It was insisted by counsel for defendants, yesterday, that they would have waived their right to object to the sureties had they come in with their affidavits and opposed this injunction, or had they moved, under the leave given in the order granting the injunction, to dissolve it. I think they are entirely mistaken. The two motions might have been made simultaneously, and gone on together, pari passu. It was announced here that they were bound under the rules of the court to except in five days to the sureties, or there was a waiver. I stated at the time that I recollected no such rule. There is no such rule of this court. If there is, I have been unable to find it, either in the equity rules prescribed by the supreme court of the United States, or in the rules adopted by this court. Counsel seem to have been misled by the Code of Civil Procedure. They are entirely mistaken as to the practice of this court. Where counsel have not had an opportunity to be present at the approval of a bond by the clerk, when it has been ordered to be approved by him, upon a petition to the court, made promptly, or affidavits showing the sure· ties to be iusufficient, and notice to the other side, I suppose the court has full authority, without regard to other proceeding, at any proper stage of the case, to require an additional bond to be given, as a condition of the continuance of an injunction. Upon the equity side of the court, at least, I have no doubt that it is within the authority of the court in this manner to require insufficient security to be made ample; it is only on the law side that the practice act of the state in such matters prevails. Doubtless the application should be promptly made, and an unreasonable delay would be regarded as a waiver of a right to object. But the matter would rest in the sound discretion of the court. Again, after a bond is given, the sureties may become insolvent. I have uo doubt of the authority of the court, npona petition, stating the facts, and notice to the other side, to examine that matter, and if it is found that the sureties are insufficient, that additional sure· ties may be There must have been a misapprehension by the parties as to the practice on the equity side of this court in that particular.
HOFFMAN, J., (concurring.) I do not know whether I have a right to partake in this decision, or whether I form a part of the court. The circuit judge issued an order to show cause why an injunction
should not be granted. That order was returnable on a day fixed. It came up before me. Counsel were not ready. It was postponed by consent to a further day. On that day counsel again announced that they were not ready. Thereupon the injunction issued, no cause being shown against it, with leave to move to dissolve at any time. The order was on the condition tliat the complainants give se· curity. They attempted to give security. I concur in all, and more than all, that my associates have said as to the insufficiency of the sureties offered. But the question is: Did the failure to offer that se· curity forfeit the right to an injunction, and forfeit the rights of com· plainant, which he must be presumed to have, under the allegations of the bill ? I think it did not. When he offered to remedy his previous neglect by depositing a certified check or money, the court obtained all it. originally asked for, and the injunction should have gone, and been continued, subject always to the right of the other party to move to dissolve it. On this motion to review the action of the court it appears to me that the question whether the injunction ought to be dissolved or not, upon a proper application and hearing, has no relevancy. I do not pretend to have considered this matter as thoroughly as my associates have done. The bill in this case, it seems to me, is like a bill to restrain a person from destroying heir·looms or publishing family letters, where, if the thing is done, the injury is irremediable. It is easy to see that an accounting for profits would not afford any indemnity. It is the right of an owner of a piece of literary property to be protected. His pride as an author must be considered. He has the right to choose his own licensee. His play might be played for months, not at a profit, but a loss. In the mean-time, not only will the market be spoiled for a subsequent production oy the owner of the opera in this town, but the reputation of the opera injured. It appears to me it is a case for an injunction. But that is not the ' point on which I base my concurrence in the ruling of the court. I think that, on a review of the order dissolving the injunction, the question is, not whether the injunction should originally have gone, or should now be continued, but whether, under the circumstances, it ought to have been dissolved. There is no absolute forfeiture of the right to an injunction because complainants have failed, under the circumstances, to comply with the order of the court requiring them to give security. If the opposite side are advised that the injunction ought to be dissolved, lei them move to dissolve on notice to complainants.
SEELEY V. REED.
(OW-cult Oourt. D. Oregon. November 2, 1885.,
SUIT TO RESCIND CONTRACT ON THE GROUND OF FRAUD·
.A. court of equity will decree a rescission of a contract obtained by the fraudulent representations or conduct of one of the parties thereto, on the complaint of the other, when it satisfactorily appears that the party seeking the rescission has been misled in regard to a material matter by such representation or conduct, to his injury or prejudice.
But when the facts are known to both parties, and each acts on 1).is own judgment. the court will not rescind the contract because it mayor aces turn' out that they, or either of them, were mistaken as to the legal effect of the facts,. or the rights or obligations of the parties thereunder; and particularly when such mistake can in no way injuriously affect the of the party complain: ing under the contract, or prevent him from obtainlllg and receiving all the benefit contemplated by it, and to which he is entitled under it. " '.
Suit to Rescind Contract. Thomas N. Strong. for plaintiff. George H. Williams and George H. Durham, for defenqant. DEADY, J. This suit is brought by the plaintiff, a citizen of, Ohio, " against the defendant, a citizen of Oregon, to have a contract enter'ed . into by the parties on March 27. 1884, canceled, and a certain promissory note and certificate of stock then delivered by Seeley to Reed in pursuance thereof, returned to him. The bill was filed July 29,1884. The case was heard and submitted on the bill, answer, and replication, and the testimony taken by the plaintiff. The execution of the contract in question is admitted. At the date of it the parties were in New York, and the plaintiff was a stockholder in the Oregon Iron & Steel Company, a corporation formed under the laws of Oregon, of which the defendant was then the president. It begins with are· cital that Reed is willing "to advance or loan" said company, including the amount theretofore "loaned or advanced" to it. the sum of $150,000; that Seeley "is willing and desires to obtain an interest of $50,000" in said loan, and to that end has given his note for that sum to Reed, payable in two years thereafter. with interest 7 per centum per annum, and "delivered, as collateral security for said note and the interest thereon,361 shares of the capital stock. full paid," of said company; in consideration whereof Reed agrees, on the payment of said note, to redeliver to Seeley said shares of stock, "together with one· third of such bonds, stocks, notes, or other securities" as he may obtain from said company, "in consideration of his said advance of $150,000;" and Seeley authorizes Reed in default of payment of said note "to sell or dispose" of said 361 shares: of stock, and the said one-third of the securities received from said company. subject, however, to the stipulation that if the proceeds of such sale or disposition are not sufficient to pay said note at the
See note at end of case.
turity thereof, Seeley shall not be further liable thereon, but the same shall be delivered to him; and in consideration of the premises Seeley also agrees, if requested by said company, to act as its general manager for the period of two years, at a salary not exceeding $3,000 per annum. The bill alleges that on August 22, 1883, the capital stock of the company was reduced from $3,000,000 to $1,500,000, and the number of shares thereof reduced correspondingly, but Seeley's certificate No. 10, for 722 shares, was not surrendered and reduced to 861 shares, of which it is, and in making said contract was considered, the equiyalent; that at the date of the contract the company was financially embarrassed, and the sams was executed solely for the purpose of aiding it in raising funds; that Seeley had not been in Oregon for a. long time, and got "almost all" his information concerning the condition of the company from Reed, who "falsely and fraudulently represented" to him that he had advanr.ed over $100,000 to the company, when in fact he was then, and still is, largely indebted thereto; that said certificate was delivered to Reed in trust until he should make the loan to the company and obtain the securities therefor, when it was to be held as collateral security for the payment of the note, which latter was delivered without any consideration except the contract; that shortly after Seeley arrived in Oregon, on and after July 10, 1884, he first examined the records of the company and discovered that Reed and his associates, "fraudulently contriving" "to wreck" said company, had "fraudulently and illegally appropriated and converted to their own use over $400,000 in money and properties of its assets;" whereupon he commenced a suit in this court against Reed and others, comprising the firm of Smith Bros. & Watson, and W. S. Laud and others, comprising the firm of Ladd & Tilton, and E. W. Crichton, C. R. Donahue, and H. A. Elliott, to compel the return to the company of said assets, which suit, the bill therein being held multifarious, was on November 12th dismissed, when he commenced two suits in this court for the same matters, the one against a portion of said parties and 'the other against them all, which suits are still pending, and SeGley's right to maintain them depends on his being a stockholder of said company; that on July-, 1884, and divers days thereafter, Seeley demanded of Reed to return said certificate and note or perform his agreemeut and advance $150,000 to the company, the former of which he refused and still refuses to do, and the latter of which he is now unable to do, and "is fraudulently attempting to make said company insolvent and financiallyembarrassed and unable to pay its debts;" that said 361 shares of stock bave not been transferred on the books of the company, and the legal title thereto is still in Seeley, but that on July 16, 1884, and since, Reed, to prevent Seeley from maintaining said suits, and to enable him the better to carry out his scheme of wrecking said company, did fill up said blank transfer and power, and attempt to have said shares
of stock transferred to himself, and unless restrained will yet do so, for he and his associates have the control of said company, to the "irreparable injury" of the plaintiff and sail! company, and "to the manifest and irreparable subversion of justice in the premises." The defendant, by his answer, denies positively and specifically every charge in the bill of false, fraudulent, or illegal purpose, representation, or conduct, or that he is or ever was indebted to the company, and alleges that at and prior to the date of said contract Seeley and himself were in New York conferring together concerning the financial troubles of the company with a view to its relief, at which time the latter knew that the defendant had advanced in the neighborhood of $100,000 to the company and was fully advised of the proceedings of the directors; that Seeley then knew the financial condition of the company otherwise than from the defendant, and was in close relationship and correspondence with E. W. Crichton, the secretary and one of the directors of the company; that Seeley then and there proposed that if the defendant would buy of him 62! of the reduced shares of the company's stock at its par value, $6,250, and would enter into said contract and take his non-negotiable note and Said 361 shares of stock as collateral security for its payment, he would come out to Oregon and attend to the business of said company and relieve the defendant from further anxiety about the same; that Seeley, who was much better acquainted with said business than tbe defendant, represented to him that if this arrangement was made he could put the business of the company on a satisfactory footing, whereupon the defendant accepted the same and signed said agreement and at this same time, and as a part of the same transaction, and to accommodate Seeley, he purchased from him said 62! shares of stock, and then and there paid for them, by cash, $4,090, and by the surrender of Seeley's note of May 21, 1883, for $2,000, with interest from date at 8 per centum, making in all $6,250; that thereupon Seeley delivered to defendant certificate No. 22 for J 25 shares of stock, with an indorsement thereon dated March 27, 1884, signed by him, and to the effect that it was to be surrendered and a new certificate issue in its place for half the amount, together with a power of attorney for the transfer of the same, and on April 8, 1884, delivered to the defendant certificate No. 10 for 722 shares of the company's stock, mentioned as 361 shares of said stock in said contract, with a like power of attorney and indorsement thereon; that defendant did not want said 62!- shares of stock, nor were they worth the price paid for them, and the chief inducement for their purchase was to get Seeley to come out to Oregon and take charge of the company's business, for which reason, at the latter's urgent request, he also, on April 10th, advanced him $500 to defray his expenses to Oregon; that soon after, Seeley came to Oregon, arriving in Portland on April 17tb, for the purpose, as defendant understood, of carrying out said contract, but instead of so doing, returned to New York about June 10th, and
proposed to the defendant that he should acquire the property of the company and convey one-fourth thereof to himself, one-sixth to Crichton,and one-twelfth to Donahue, with the management of the whole, for which Seeley was to give his note for $150,000, payable in 30 years, with interest at 6 per centum per annum, and said Crichton and Donahue were to give similar notes for $100,000 and $50,000 respectively, to be secured by a mortgage on the property, and that this proposition was accompanied with a threat that unless it was accepted, Seeley would sue the defendant, exhibiting at the same time an opinion prepared by his counsel, in which it was said; "In the hands of a skillful lawyer their mistakes, [referring to the directors of .the company,] however innocent they might have been, would appear very suspicious, and the wreck of this fine property appear a premeditated affair, "-which proposition the defendant declined, and insisted on the arrangement of March 27, 11:;84; that about June 16th the defendant, in pursuance of said contract, advanced the company $30,000; that defendant arrived in Portland about June 30th, and on July 7th proposed to the company to make it an advance sufficient, with that already advanced, to make the sum of $150,000, which proposition, by the votes of Crichton and Donahue, who were then in the .board of directors, was laid on the table, but was repeated on September 23d, and laid on the table until October 21st, when it was duly accepted, and thereafter, on October 23d, the defendant, in pursuance thereof, advanced and loaned to the company $20,847.91, which, with his former loans and advances, made the sum of $150,000; and that the blank assignment and power given to tbe defendant by Seeley, with the certificate No. 10, was filled up by the former in the due course of business before the commencement of the suit by Seeley against Reed and others, and according to the understanding with Seeley at the date of the contract; but the secretary of the company, Crichton, acting in collusion with Seeley, illegally refused to make the transfer to the defendant on the books of the company. , The defendant, also, in his answer, offers to rescind the contract and return the note and both the stock certificates if Seeley will return him the money paid on No. 22,-$6,250,-which he avers was a part of the consideration of the contract. The testimony taken by the plaintiff was quite voluminous and covers a wide range. By far the greater portion of it relates to matters mooted in the other suits of his pending in this court, and have little or no application or weight in this. answer of the defendant is under oath, and so far as it is responsive to the bill it is taken as true until the contrary is clearly established by the testimony of at least two witnesses, or one witness and clear, corroborating circumstances. Hough v. Richardson, 3 Story, 692; Story, Eq. PI. § 875a; Tobey v. Leonards, 2 Wall. 423. The only ground on which the court can give the relief prayed for in this bill is that, by the fraudulent representation or conduct of the
defendant in or about a matter material to the subject of this contract, the plaintiff was misled to his injury. Story, Eq. Jur. §§ 201, 202, 695; 2 Pom. Eq. J ur. § 910; I-IrYUgk v. Richardson, 3 Story, 690 j Smith v. Richards, 13 Pet. 36. The allegations of fraud are vague and indefinite. They may be condensed into two statements. One, that the defendant, at the time of making the contract, told the plaintiff that the company owed him about $100,000, when in fact he was indebted to it. The other, that sometime before that date the defendant and his associates, without saying who they are, had fraudulently appropriated to their own use $400,000 of the assets of the company. The only evidence in Slilpport of the first allegation is the testimony of the plaintiff, which is contradicted by the answer of the defendant. Looking into the evidence to see on what this question of indebtedness turns, I find that the company was organized in April, 1882, with 18,000 shares of stock of the par value of $100 each, which was subscribed by W. S. Ladd, W. M. Ladd, and E. W. Crichton, the latter taking 17,700, and the others 150 shares each; that in the fall of 1882 the company purchased the property of the Oswego Iron-works, valuecl at $600,000, for 12,000 shares of its stock, valued at 50 cents on the clollar, and issued the same to S. G. Reed, H. Villard, and D. O. Mills, 3,000 shares each, and to W. S.Ladd, L. B. Seeley, C. P. Donahue, and E. W. Crichton 750 shares each; that soon after the remaining 6,000 shares were issued to Crichton as paid-up stock, to be disposed of as such at 50 cents on the dollar, for the purpose of purchasing machinery for the company, which stock Crichton soon after surrendered, and the same was reissued to the defendant for that same purpose, and that he disposed of one-half of said shares for the sum of $150,000, for which he accounted to the company, but being unable to dispose of the remainder, he returned to the company, when the directors, at a meeting held on September 24, 1883, accepted the same, and returned his receipt therefor, and at the same time, in pursuance of a vote of the stockholders, at a meeting thereof held on the same day, the directors reduced the stock of the company one-half, and ordered the unsold shares returned by the defendant canceled; and that the defendant, pri!?r to the making of said contract, had in fact advanced to the company near about $100,000. It also appears from the testimony of .the plaintiff, as well as otherwise, that all these matters were known to him at and before the making of the contract, and that he and the defendant acted on the assumption that such were the facts, without either relying on the other for his information; but afterwards, and before commencing this suit, the plaintiff, on the advice of counsel probably, came to the was and is that the deconclusion that the legal effect of the fendant was a subscriber for said 6,000 shares of stock, and not the mere agent of the company for its disposal, and therefore was still indebted thereon to the company in the sum of $150,000, from whieh
the directors had no power or right to release him, and that, deJucting his advance from this snm, he remained and was indebted to the corppany in the sum of $50,000. Now, admitting that the plaintiff's present view of the defendant's liability in regard to this stock is the correct one, there is no ground for saying that the plaintiff was misled in this matter by the defendant. The plaintiff knew as well as the defendant that the directors had accepted the return by the latter of the 3,000 shares of this stock, and the facts relating to it, and could and did judge for himself as to the effect thereof. At least the defendant does not appear to have been either his informer or adviser in the premises, while he does appear to have been in close correspondence with his friend E. W. Crichton, who has been a director and superintendent of the company since its formation, and the secretary thereof since December 1, 1883. But, admitting that the defendant was indebted to the company in the sum of $50,000, instead of the company being indebted to him in the sum of $100,000, and that the plaintiff was ignorant of that fact, the knowledge of it would not have prevented him from entering into this contract, but, on the contrary, would have been an additional inducement to do so. In this matter the defendant appears to have songht and obtained an opportunity to take an interest with the defendant in a loan to the company, not simply for the good of the latter, 80 far as appears, but his own good as well. The state of the account between the company and the defendant was So matter of no importance in the premises to the plaintiff, except as it indicated the solvency or not of the former and its ability to repay the loan with interest. So that, the defendant being abundantly able to pay this supposed indebtedness to the company, the fact of its exist· ence, instead of operating as a fraud on the plaintiff as a party to to this contract, was an advantage to him, both as a creditor and a stockholder, to the extent that it increased the company's assets. As to the other charge, the material facts appear to be that in the spring of 1883 negotiations were opened between the company and the firm of Smith Bros. & Watson, of this city, for the purchase of their foundry property,' that resulted in a proposition by the latter to sell the same, at a valuation.of $225,000, for 4,500 shares of the company's stock, valued at 50 cents on the dollar, and at a stockholders' meeting held on March 20, 1883, it was voted to authorize the directors to make the purchase, and upon the receipt of proper deeds and bills of sale of said property, to issue to Smith Bros. & Watson 4,500 shares of paid-up etock of the ,company; but the directors took no action in the premises, nor did the former ever make any conveyance ortrausfer of their property to the company. Subsequently they proposed to withdraw their proposition of sale, and at a meeting of the directors held on September 24, 1883, request was unanimously comr1ied with. In the mean time,between the making of the proposition and the withdrawal of the same, the two concerns maintained
intimate business relations, but were carried on separately and wjth. out any consolidation. In this time Smith Bros. & Watson put up the large iron transfer or ferry boat for the Northern Pacific, to be used on the Columbia river, at Kalalila, by which it is said they cleared $100,000, and did work for the company for which they were allowed and paid on settlement $40,000. The charge that the defendant and his "associates," meaning, I suppose, his co-directors, W. M. Ladd, E. W. Crichton, C. R. Donahue, and F. C. Smith, the persons constituting the board when Smith Bros. & Watson were allowed to withdraw, appropriated $400,000 of the assets of the company to their own use, is based on these facts. In other words, it is boldly assumed that the company not only lost the value of the foundry property, the alleged profits of the transfer-boat construction, and the money paid for work done for it, in all $365,000, by the illegal action of the defendant and his co-directors on September 24th, but that those parties thereby wrongfully appropriated the same to their own use. To begin with, the company could not have lost anything by not getting the foundry property, unless it was worth more than it was to give for it, which does not appear, and that it could possibly have lost $225,000 thereby, or any considerable portion of that sum, is, under the circumstances, simply absurd. There is no proof of the profits made on the construction of the ferry-boat, but it is highly probable that there were profits, and it may be admitted for the purpose of this question that they reached the figure stated, $100,000. The $40,000 paid for work done could not have been lost to the company unless the transaction was fraudulent or fictitious, which does not appear, but rather the But, admitting that there is no ground for the general allegation that the defendaut and his associa.tes converted these sums to their own use, it is alleged that the defendant was at the date of the transaction complained of a secret partner in the firm of Smith Bros. & Watson, and that whatever the company lost by it he, as a member of that firm, got a share of. Granting for the time being that the defendant was a melllber of this firm, it does not follow that he was a gainer by any transaction between it and the company, even if the latter was the loser thereby. Taking the plaintiff's contention for true, the defendant was one of five persons constituting the firm of Smith Bros. & Watson, while it appears from the evidence that he was and is the owner of one-fifth of the stock of the company, and was therefore liable to lose on the one hand as much as he could gain on the other. And as to the question of whether the defendant and his co-directors acted wrongfully or even improvidently in consenting to the withdrawalof Smith Bros. & Watson's proposition, it must be remembered that it was done nnder the advice of eminent upon the very plausible ground, to say the least of it, that they could not be held thereto; the same not having been accepted by the directors, and the sto(Jkholders having no power under the corporation act to transact
any such business. But, however this may be, it is a sufficient answer to this charge, and to any claim the plaintiff may make on the facts involved in it, that he knew all about these matters at and before he executed the contract, and was in no way misinformed or misled by the defendant concerning them. With full knowledge of the facts, he then appears to have regarded the transaction as legal and honest, and if he has since come to a different conclusion, or been advised that the company has a valid claim against the defenda.nt and his ·'ltssociates" for $400,000 on this account, what possible cause is that for canceling a contract for an interest in a loan to the company? When the plaintiff executed this contract he must have supposed the company was more or less financially embarrassed, and yet he was not only willing but desirous of taking a considerable interest in a large loan to it; but now that he finds it has a valid claim, of which he was then ignorant, against solvent parties for $400,000, a sum greatly beyond the company's indebtedness, he wishes to be released from his engagement upon the plea that this claim arises out of the previous misconduct of the defendant and his associates, which made this loan necessary. Neither is the plaintiff entitled to have this contract rescinded by reason of anything that has happened or been omitted since it was executed. The defendant did not undertake absolutely to make this loan to the company or to do so within any specific time; and, in any event, the consent of the company must first be obtained, and the $100,000 already advanced was to be considered a part of it. Doubt· less was bound to make the loan in a reasonable time, the circumstances considered, or return the plaintiff his note and certificate of stock. But the loan has been made in pursuance of the contract, and as soon thereafter as the company would accept it, and give the plain. tiff the proper acknowledgment thereof and obligation to repay it. And now whether as a result of this transaction the plaintiff is or may become a non-stockholder in the company, and therefore unable to maintain any suit for relief against these transactions, if wrongful and injurious to the stockholders, is altogether immaterial, so far as this case is concerned. An otherwise valid contract cannot be canceled on any such irrelevant ground or apprehension as this. If the plaintiff, by pledging his stock to the defendant as collateral security, with a blank assignment and power of tansfer, has deprived himself ofthe right and privllege of a stockholder in the company during the existence of the pledge, he must submit to such deprivation until he is ready to redeem the same by the payment of his note. On the argument it was maintained on behalf of the defendant that the sale and purchase of the 62t shares of stock was a material part of the transaction resulting iuthe contract of March 27th, and therefore no decree of cancellation ought to be made under any circumstances, unless the plaintiff is required to return the $6,250 received
for this stock, on which terms the defendant, waiving all other objections, offers to consent to a rescission of the contract. The evidence tends strongly to show that the transfer of this stock was a part of the transaction, and a substantial element in the considerations which induced or caused the parties to enter into the contract of March 27th. Seeley, who seems to have been without present means and in debt to Reed, appears to have made his coming to Oregon and taking charge of the company's business, as the latter desired, conditional on the purchase of this stock, while Reed appears to have made his consent to advance money to the company conditional on Seeley's taking charge of its business; and so it would seem that the three things-the purchase, management, and loan-were dependent parts of one whole. But, as in my view of the matter, the plaintiff is not entitled to the relief sought irrespective of this question, I do not further consider it; and if the parties wish to rescind on. such terms, they can do so without the aid of the court. There is no equity in the bill, and it must be dismissed; and it IS so ordered.
Fraudulent Representatiom. Where fraud has been committed, and by it plaintiff has been injured, equity will relieve again,t it, Singer Manuf'g Co. v. Yarger, 12 Fed. Rep. 487; EIfelt v. Hart, 1 Fed. Rep. 264; Taylor v. SaurIllan, 1 At!. Rep. 44; otherwise, however, ifno damage is sustained. Dunn v. Remington, 2 N. W. Rep. 230. Misrepresentations are fraudulent, Lynch v. Mercantile Trust Co., 18 Fed. Rep. 486; Buckner v. Street, 15 Fed. Rep. 365; Chandler v. Childs, 3 N. W. Rep. 297; Cavender v. Roberson, 7 Pac. Rep. 152 i even when believed to be true by party them, Lynch v. Mercantile '£rust Co., 18 Fed. Rep. 486; Seeberger v. Hobert, 8 N. W. Rep. 482; and the vendor cannot purge himself of fraud by ofIe ring to rescind. Lynch v. Mercantile Trust Co., 18 Fed. Rep. 486. Fraudnlent representations must be material, Hall v. Johnson, 2N. W. Rep. 55; and must have been relied on. Lynch v. Mercantile Trust Co., 18 Fed. l:tep. 486 i Seeberger v. Hobert, 8 N. W. Rep. 482. But the purchaser need not suppose every statement made to him literally true in order to entitle him to relief. Heineman v. Steiger, 19 N. W. Rep. 965. Where the vendor honestly expresses an incorrect opinion lIS to the amonnt, quality, and value of the goods he disposes of in a sale of his business, and good-will thereof, and the purchaser sees or knows the properLy, or has an opportunity to know it, no action for false representations will lie. Collins v. Jackson, 19 N. W. Rep. 947. And mere "dealing talk" in the sale of goods, unless accompanied hy !ome artifice to deceive thEt purchaser or throw him offhis guard, or some concealment of intrinsic defects not easily detected by ordinary care and diligence, does not amount to misrenresentation, Reynolds v. Palmer, 21 Fed. Rep. 433 j unless there be false statements in some manner affecting the character, quality, value, or title of the articles sold. Bank of Barnesville v. Yocum, 9 N. W. Rep. 84. But a statement recklessly made without knowledge of its truth is a false statement knowingly made within the settled rule. Cooper v. Schlesinger, 4 Sup. Ct. Rep. 360. Whether or not omission to communicate known facts will amount to fraudulent representation depends upon the of the particular case, and the relations of the parties. Britton v. Brewster, 2 Fed. Rep. 160. Where a vendor conceals a material fact, which is substantially the consideration of the contract, and which is peculiarly within his knowledge, it is fraudulent misrepresentation. Dowling v. Lawrence, 16 N. W. Rep. 552. Fraud is a good defense to an action on a contract, but it is not sufficient to plead fraud in general term. The specific statements and acts relied upon as constituting the fraud must be sets out. Mills v. Collins, 25 N. W. Rep. 109. See VanWeel v. Wins· ton. 6 Sup. Ct. Rep. 22. Evidence of fraudulent representations III nst be clear and convincing. 'Wickham T, Morehouse, 16 Fed. Rep. 324. Where a man sells a business, and the contract of sll'e contained a clause including all right to business dOlle by certain agents, evidence thl>t
the seller was willing to engage in the same business with such agents is not proof of fraud in making the contract. Taylor v. Saurman, 1 Atl. Rep. 44. Equity will not presume the ratification of fraudulent contract. Northern Pac. R. Co. v. Kindred, 14 l<'ed. Rep. 77. St. Paul. Mill»JAB. M. KERB.
and another v.
(Oircuit Oowrt, E. D. Mi8souri.
October 31, 1885.j
MORTGAGE OF PROPERTY HELD IN TRUST-EsTOPPEL.
In Equity. Foreclosure suit. Bill of review and cross·bill. Most of the material facts are stated in the opinion of the court. Aaron Purdy left seven children. Haley Parkins is a married daughter. Martha J. Chapman is a deceased married daughter, and Maud Chapman is her only child and heir. The bill of foreclosure was brought to foreclose a deed of trust executed bv Nancy Purdy, and conveying the real estate purchased by her and her husband's other executors to James Hagermann, as trustee, to secure the payment of certain promissory notes executed and delivered by her and William Purdy to W. F. Shelley, trustee. The heirs in their answer and cross-bill state that said notes were given for an antecedent debt of William Purdy's, and that Nancy Purdy was an accomodation maker; that the conveyance from John J. and William M. Purdy to their mother was by a quitclai.m deed and without consideration; and that the com· plainants knew when said deed of trust was executed and delivered that the real estate conveyed was held in trust by Nancy Purdy. The prayer of the cross.bill is that the complainants in original bill be divested of all title in and to the mortgaged premises, and that the same be vested in the heirs of Aaron Purdy. The words used in the granting clause of the deed from John J. and William M. to Nancy Purdy are "demise, release, and forever quitclaim." The consideration recited is $500. H'rgennan, McCrary Hagerman, for complainants. c/; Dryden, for respondents and complainants in the crossbill.
by Benj. F. Rex, Esq., of the St. Louis bar.