S. 151, S. C. 3 Sup. Ct. Rep. 586; and following the ruling therein made, I am compelled to hold that the decree in question is not a bar to the present suit. It follows that complainant is entitled to a decree, as prayed for, quieting his title against all the defendants. It appears from the evidence that the defendants have paid the taxes for several years upon these lands, including interest and certain penalties, and complainant in his bill offers to repay the same. The decree will therefore provide for the repayment of the sums paid by the defendant, with legal interest, the same to be a lien upon the land as against complainant, and in favor of defendants.
CUT'l'ING, Jr., and others.
(Circuit Court, S. D. New York. April 3, 1886.)
CORPORATION-DISTRIBUTION OF FUND-CROSs-BILL-BILL OF INTERPLEADER.
In an action by a corporation for the equitable distribution of a specific fund, the court will consider this fund only, and will not settle all accounts between the corporation and its stockholders; and if a stockholder desires a general distribution of all the property, he must Beek relief by an original bill, or an original bill in the nature of a cross-bill.
In 1885 the Pacific Railway Company of Missouri filed its bill in equity asking for a receiver, the equitable distribution of a certain fund in the hands of its officers, and for an injunction to prevent the bringing of suits by stockholders for the recovery of the fund. Robert S. Cutting and Peter Marie were, by order of court dated April 20 and May 8, 1885, appointed receivers of said fund. By interlocutory decree dated December 19, 1885, the injunction was granted and the matter referred to Edward K. Jones, Esq., with instructions to hear and: determine who was entitled to participate in the distribution of said fund. All the defendants answered, substantially admitting the averments of the bill, and setting up their respective claims to participate in the fund, except one Kerens, who, by an. ex parte order, became a party to the suit. He set up that from the proceeds of the settlement of another suit certain stockholders had received dividends, which should be taken into consideration in the distribution of the present fund .. The remaining facts material to the issue are stated in the master's certificate. The master in this case requested the instruction of the court upon the following question and accompanying statement:
To the Honorable Jndges of the Circuit Court of the United States within and for the Southern District of New York, sitting in Equity:
'fhe undersigned, the master appointed by the interlocutory decree made in this cause on the nineteenth day of December, 1885, respectfully asks the court for its special instruction and direction upon the following question and accompanying statement; that is to say, whether or not. under the pleadings and the interlocutory decree, it is competent for the master, at the i:rr.stance of a dissatisfied stockholder, admitted as a party to the record, or otherwise coming in and proving his claim, to take into account, as against other
PACIFIC R. CO. V. CUTTING.
stockholders coming in and claiming to share in the fund in court, moneys obtained by such stockholders from another fund alleged to belong to the corporation, and to be rightfully distributable among all the stockholders alike. The facts, as I gather them incidentally from the examination of collateral questions, appear to be these: In the year 1875 a suit was brought in the circuit court of the United states, at St. Louis, Missouri, to foreclose the mortgage given by the plaintiff to secure what were known as its "Third Mortgage Bonds." A portion of t.he stockholders of the company, deeming the mortgage to have been unlawfully issued, and claiming that there was fraud and collusion in its foreclosure, met together, and appointed a committee to represent them, and to take such measures in their behalf as the committee should deem proper and effectual to defeat the foreclosure, and to set aside the This committee resorted to various proceedings with a view to prevent the foreclosure, and, pending their efforts in that behalf, also entered into negotiations with the late Cornelius K. Garrison, then, with his associates, in substantial and potential control of the plaintiff, and holding most of its third mortgage bOllds, with a further view of effecting a compromise. The result of those negotiations, as I understand the facts, was an agreement between Mr. Garrison and the committee representing the stockholders above referred to, that, if opposition to the foreclosure were withdrawn, he (Garrison) and his friends would purchase the property of the railroad at the foreclosure sale, organize a successor company, and give to each stockholder in the plaintiff company a corresponding number of shares in the new corporation. Some misunderstanding between the parties seems to have taken place, by reason of which this agreement collapsed, and then a new promise, resting upon the same condition as to withdrawal of opposition to the foreclosure, but upon a different basis as to the-capital stock of the proposed new company, was made by Garrison. This new promise, it is alleged, was that Garrison should organize a successor corporation, as before contemplated, and give to those stockholders only who were representpd by the committee shares in the proposed new company equal in number to their holdings in the old or plaintiff company. Opposition to the foreclosure suit haVing been finally withdrawn, a decree of foreclosure and sale of the property of the railroad covered by the mortgage was thereupon made and executed. A dispute then also arose as to the latter agreement, and it appears that Garrison wholly refused to fulfill the contract. A meeting of stockholders of the plaintiff corporation was afterwards called, and most of the gentlemen composing the stockholders' committee were appointed upon another committee, authorized, it is claimed, to act for and in the name of the corporation; and it has been stated to me in the proceedings in this case that the object in altering the composition of the corporation committee from that of the stockholders' committee was solely to gi ve places upon the corporation committee to citizens of the state of Missouri. The corporation committee instituted various litigations to set aside the foreclosure, and otherwise, whlCh Ultimately resulted in the fund now brought into court. The old 01" voluntary committee lmed Garrison on his contract. All the litigations were settled at one and the same time, and the terms of settlement of each respectively are embraced in one document, which has been produced, proved, and put in evidence before me. Five hundred tllOusand dollars, or thereabouts, was paid by Garrison in settlement of the personal suit against him, and $500,000, less the sum of $41,000, was also paid in settlement of the suits maintained by the corporation. It is alleged before me, and thus far not denied, that the money received from Garrison in settlement of the suit against him personally has been distributed among those stockholders only whose shares were placed at the disposal of the original or voluntary committee, the same being someWhat more than a majority of the whole number of shares. All the shares represented by the voluntary committee, and which participated in the dis-