&: B. W. BY. CO.
The question as to what sort of business transactions by a foreign corporation within a state will justify the finding that it is engaged in business therein. and validate a service of process had upon its agent, was also elaborately considered in the case of U. S. v. Teleplwne Co., by Judge JACKSON, reported in 29 Fed. Rep. 37-41. It was there held that a corporation must transact within the state some substantial part of its ordinary business through an agent appointed for that purpose. According to the rule announced in that case, it is clear that if a corporation merely makes an occasional purchase of goods in a foreign state, but neither keeps an office or maintains an agent therein for the transaction of its business, it cannot be said "to be engaged in business in such state," and for that reason service of process upon an officer or agent of a corporation found in such state will not be effectual, in the federal courts at least,to confer jurisdiction over the corporation. Such seems to be the conclusion reached by all the federal courts that have thus far had occasion to consider the question as to what constitutes a carrying on of business within a state, and in that conclusion I concur. When it is said that a corporation is engaged in business in a foreign state, and for that reason has voluntarily subjected itself to the operation of the laws of such foreign state regulating the service of process on foreign corporations, reference is plainly had to business operations of the corporation carried on within the state through the medium of agents appointed for that purpose, that are continuous, or at least of 80me duratim&,.and not to business transactions that are merely casual, such as an occasional purchase of goods or material within the foreign state. The resultis that the service in the present case must be held insufficient to sustain a judgment against the corporation, because the corporation in question was not engaged in business in this state within the meaning of the various decisions of the supreme court on that subject. There will be a judgment for the defendant on the plea to the jurisdiction.
FARMERS' LOAN & TRUST Co.v. BURLINGTON & S. W. Ry. Co. and others.
In re NEUMAN and others.
«(Jircuit Oourt, W. D. Mi88oUri.
December 10, 1887.)
RECEIVER-SALE UNDER CONTRACT WITH-ENFORCEMENT.
Intervenor had a lien on a line of road leased by the defendant, which lien defendant agreed with its lessor to pay. Defendant made the leased portion a part of its own line, and placed a mortgage on the whole line. The road wenl into the hands of a receiver, who, acting under an order of the court made a contract with the intervenor to purchase his interest, and pay him from the proceeds of the sale of the road under the mortgage. The sale was made and conditionally confirmed The claim of Intervenor not having been paid, he applied for an order setting aside the sale. Held, that the contract with the intervenor having been made by the order of the court, the court is bou,nd. to it. The sale should be set aside, and the receiver placed agam ID posseSSIOn.
f \ ' " , i ,.'"
The following are the principalfacts: Prior to 1872 the Lexington, . Lake & Gulf Railroad Company., a corporation organized under the laws of thes.tateof Missouri for the purpose of buildinK ,a railroad from the city.ofI.Jexington southw8J:d, had expended large sums of money in grading and tieing a portion of its.road, and upon such road was an exhlting lien of something over $10,000, evidenced by a note and trust deed,and given for liabilities iucurred in its construction. In that year it leased its road in an incomplete condition to the Burlington & SouthWestern Railway Company. The latter united this leased road with that portion of its own road running northward from Lexington to Unionville, making it one property andJine of road with common stock and one franchise, and known as "the Linneus Branch of thEi Burlington & South, Western Railway Company. " Upon this Linneus branch in its entirety was placed a mortgage of $1,600,000. By the term of a contract entered into between the parties about a year after the lease, as well as after the execution of said mortgage, the lessee agreed to pay the liabilities of the lessor to the extent of $20,000, which included, as admitted, the debt above described. That debt became, by transfer, the property of the intervenors.. In 1877 certain proceedings were bad, by which, as it is claimed,this deed was foreclosed, and the legal title to the road, upon which it .had been given, to-wit, the road south of Lexington, vested in the interveJ;lors. In the mean time, default having been made in the payment of the coupons on the $1,600,000 of bonds, a suit in this court to foreclose the mortgage. The inhad been tervenors were not made parties to that suit. A receiver was appointed, who took charge of the whole line, and in April, 1876, a decree of foreclosure was entered, but no sale was made until 1880; the road in the mean time being operated by the receiver. In 1879 the intervenors, who claimed to own that portion of the road south of Lexington, entered into one Brown for the sale of it to him for $50,000, whereupon the receiver obtained from this court an injunction restraining the parties from interfering with his possession, which injunction broke up the negotiations. Thereafter the receiver entered into negotiations with the intervenors for the purchase of their claim and interest. Before tnesenegotiations were consummated, the receiver applied to the court for authority to issue receiver's certificates, to amount not exceeding $500,000, for the purpose of completing the road south of Lexington, and at the ,same time, and by the same petition, applied for authority as follows: "Your petitioner also asks for authority to settle and adjust, by payment or purchase, any claims against said Lexington, Lake & Gulf Hallway Company which may seem tobe prior or adverse to the claims of the Burlington & South-Western :&ailway Company under the contract by which said Lexing,:ton, Lake & Gulf property was acquired. " Upon this petition,the receiver obtained authority to issue such certificates, and also the following authority in reference to the purchase of claims: .
FARMERS' LOAN & TRUST CO. 'II. BURLINGTON &: S. W. RY. CO.
" And the :said receiver is further authorized and directed to settle and adjnst, by payment or otherwise, any outstanding claims against the Lexington, Lake & Gulf Railway Company under the contract before mentioned, and to purchase in any outstanding'or adverse lien, or title to any portion or all of said property, and any right or title so acquired to be conveyed to him, as receiver, for the benefit of the in interest herein." The authority to issue receiver's certificates provided that thosecertificates should be a first and specific lien only upon that part of the road south of Lexington. In fact, no receiver's certificates were issued, and nothing done towards the completion of that part of the road; but in March, 1880,a contract was made between the receiver and the intervenors by which the latter sold their claims and interest for $17,750. That contract provided for payment by the receiver out of the money coming into his hands from that part of the road south of Lexington, or from the sale of receiver's certificates which had been previously authorized as above stated, or from any earnings of that portion of the road,or arising from the. sale thereof under the decree heretofore entered. On' the thirtieth of November, 1880, the road as a whole, and without any separate appraisement of the two parts south and north of Lexington, was sold for $1,000,000, payment of which. sum was made in mortgage bonds, as authorized by the terms of the decree. On July 5, 1881, this sale was confirmed, .with a reservation of power to make any further orders, decrees" and directions in respect to the property, and with· regard to any claim, right, interest in, or lien upon it. And now the claim of the intervenors not having been paid as adjusted by the terms of said contract, they insist that, unless it be paid within some reasonable time; the order of confirmation should be wholly set aside, and possession of the entire road again taken by the court. On the other hand, while it is conceded by the ,receiver and the purchasers at the sale that the intervenors have a priorlien upon that part of the road lying south of Lexington, they insist that the only order should be one fixing the amount of such lien, and d.ecreeing a sale of that portion of the road for its satisfaction. . J. W. Noble and G. F. Davis, for intervenor. G. W. Smythe, for the railroad company. BREWER, J. The question is as to the duty of a court in respect to ll. contract made by its receiver under its djrections. The theory of the one side seems to be that the issue of receiver's certificates, or the execution of other similar obligations, simply gives· to the holder a lien which he may enforce in any of the ordinary methods of judicial foreclosure. He is not a party, must intervene if he wishes to insist on payment, and, intervening, occupies the position of any other lienholder. He has advantages in that his priorities are judicially declared in advance, but beyond that, nothing. Thus it is conceded that the inter...; venors lire now in court, that they have a prior lien on the road south of Lexington, and that the court may adjudicate its. amount, and order. .. sale therefor. But all that any lienholder·· may acquire. The inter-
venors might have done this before their the receiver. Did that profit them nothing? On the other hand it is insisted that it is the qut.y of tho court to see that contracts made by its orders are performed; thatit ought not to remit the holder of such a cOI:\tract to the remedies of lien or debt holders; but onthe mere suggestion of omission or failure itself, take measures to secure performance, and such measures as will most certainly and promptly sedure it. In other words, it owes to the holders of its contracts, not the duty merely of providing a forum in which such holders may enforce performance; it owes performance. To that end it should continue its receivers in office, and retain possession of the property until every contract has been fully performed, and if purchasers of the property fail to discharge all the obligations it has placed upon such property, it should not let the purchase stand. The condition of a final and absolute confirmation is the satisfaction of all such obligations. Here a sale has been conditionally confirmed. An obligation cast by the receiver under orders of the court remains unpaid. The confirmation should not be made absolute, or the property passed from the control of the court, with that obligation outstanding. I agree with the last-named views. The court should be chary of promise, but eager of performance; careful not to hurden property in its possession obligations, and equally car0ful to see that every obligation is discharged before that possession is finally surrendered. It owes performance, and should assume all its burdens, and not turn the holder of its contracts otT with simply the assurance that he has a valid lien which he may foreclose. The confirmation which was entered was only conditional and with a reservation, such as gives the court still full control. Burnham v. Bowem, 111 U; S. 776, 4 Sup. Ct. Rep. 675. Doubtless the court might, prior to the sale, have modified the decree so as to prOVide for separate sale of the two parts of the road lying respectively north and south of Lexington; in which case, even if the rights of the intervenors had not been protected by the purchasers, only the sale of the latter part need have been disturbed.. But the sale was made of the road as a whole, and there is nothing before me to justify an apportionment of the proceeds. Counsel for the receivers and purchasers say that the road south of Lexington had ceased to be of any value, and that to set aside the sale of the whole, unless this debt, chargeable only upon a vlllueless part, is paid, would simply be coercing the purchasers and owners of valuable property to pay for other property which they do not want. Assuming it to be valueless, although it is in evidence that $600,000 was expended in work upon it, and still there are strong equities why the intervenors should not be remitted to a foreclosure of their lien, and some equities in favor of charging their debt upon the entire road. This now claimed valueless part was valuable enough to be included in the mortgage, the decree, and the sale. When negotiations were pending for a sale by the intervenors, the receiver, representing the entire properties, deemed it of sufficient value to interfere by injunction, break up the negutiations, and prevent the intervenors from realizing on their elaim. Subsequently he deemed it of sufficient value
AMERICAN ZYLONITE CO. V. CELLULOID MANUF'G CO.
to apply for and obtain authority to' borrow $500,000 on receiver's certificates to complete the road, and further authority to purchase the claim ofintervenors. After thus baffling and delaying them, it may inequitable to hold that the road, as a whole, should bear the burdens and losses of delay. But it is unnecessary now to determine absolutely the rights of the parties. It is enough to hold that the sale of the propertyasa whole should not stand, with this receiver's obligation ona part unsatisfied. The order will· therefore be that the order of confirmation and the sale be set aside, and the receiver directed to take possession' of the property, unless within 90 days the claim ofthe intervenors be paid. If it be paid, the order of confirmation will be final. .
AMERICAN ZYLONITE Co. V. CELLULOID MANUF'G Co.
(Oircuit Oourt, B. D. Ne1JJ York.
PRACTICE IN CrVIL CASES-DISMISSAL OF CASE.....:.EQUITY.
Prior to the term, the complainant, without application to the court, entered a rule in the common rule b..ook discontinuing the cause on payment of costs. Held, that the complainant in an equity action cannot in this manner discontinue a suit. An order of the court is necessary. In an action for the infringement of a patent, the complainant askedtp discontinue on payment of costs. Defendant objected, for the reason tha\ the testimo;ny relied upon to show prior invention was of such a character that defend'aDtIliight not be able to procure it again. Held that, as a condition of the discontinuance, it should be stipulated that defendant's record may be . used in any, new suit brought against it by complainant.
SAM;E).,-PATENTS FOR lNVENTIONS.,..-lNFRINGEMENT SUIT.
In JQquity. Prior to the term, the complainant, without application to the court, entered a rule in the common rule book discontinuing the cause on payment of costs. The defendant, having printed its proofs, placed the cause upon the calendar, and, when it was reached on the regular call, insisted that it should be argued or dismissed upon the merits; that the complainant could not, without the consent of the defendant or the court, discontinue an action in equity; and that it was discretionary with the court to grant or refuse such permission. The court adopted the view that the cause was not discontinued, and set it down for a day certain, to be then disposed of. The complainant now moves for leave to discontinue, on payment of costs. E. M. Felt and H. M. Ruggles, for complainant. Frederic H. Betts, for defendant.
COXE, J. The ex parte entry in the rule-book was a nullity. plainant in an equity action cannot in this manner discontinue An order of the'couri is necessary. Conner v. Drake, 1 Ohio 'The right,however, of a complainant to dismiss a bill before
A comthe suit. St. 170. hearing,