FULLER V. DETROIT FIRE & MARINE HiS. CO.
contract of November 12, 1884, had been executed; that Parrott and hi.s co-directors were holding over as directors merllly in the interest and for the benefit of the plaintiffs, who were substantially the owners of the stock of the Air-Line Company; and that the action of Parrott was a fraudulent violation of the contract, and an intentional sacrifice of the rights of the plaintiffs; which could not be compensated in damages, for. which an action at law afforded no adequate remedy, and the injurious effect of which could only be prevented by injunction.. The bill was not intended to be a bill for specific performance. I do not find that the contract was an executed one, because I do not think that the unpaid. notes were accepted in payment of the claims against the Air-Line CO!l1pany; but I find that the plaintiffs had substantial pecuniary interesf and ownership i.n said com'pany, which the wrongfully at-, tempted to impair, anq that from the further commission of lik,e they should be restrained until a thorough and investigatio,Ii; shows E'ithe.r that r been misled by qr t911t mayhereafter take place have altered the pqsitionC?f tile Leta temporary h1junctipn issue against H. R.Rarrott F.. W. p'.agott,( 2d, enjoining arid'restraining them, and each ,of them, froin making,any. agreement' or contract, or executing any .or'doing any 'other', act or thing,either directors, agents, or officers of said New Connecticut.i\.ir-Line Railway Company, any manner interfeJ,"es with, affects, influences, or touchel3 the interests of , said plaintiffs, or of either of them, until' the (urthero,rder of the' .court: in the prem4!es. . . '" . . .. .... ..
11. DETROIT FIRE
IN&.Co. tIt' ale .
(Ot"rcuit Oourt, N. D. llUnoia.
October ,.29,·1888.) )
lNsURANCE-,AI'PORTIONMENT OF Loss-EQUITy-JPRlsIHCTION.
2. SAME-PRO all' OF Loss. ' . , .' '. . In such s'daile' it lsnnt necessary for the claimant's to apport,ion. littempt. to apportion. the loss among the different ins-urers. in their preliminary proofs, althopgh the policies require that th" iJ;lsured, shU; in, case ofloss. Jurni:!ib. to the insurer ,a full and detailed statement I>f the loeSS and' amoupt, ClaiJ;Iljld.
Where there is a claim against several insuranpe cOIljplliuies fOT the, !!a\lle. loss, upon different policies. a court of equity bas jurisdiction t6apportion' the loss amlmg'the respective companies, and' require·payment from· each of: the amount .lor which it is liable. , ,
. . ,
InEquity. 'On exceptions;to '.. ; .. i .. : .. , ·.....· Action by, William 4. Fuller and. others .the Detroit & Marine InsuranCEl Compapy and on ',fire ,and ulllrine insurance' P?licies on .the,st.eaQ 13uckeye, toascertair. ,and ler classes of .. ; Af,ter. joineq, , wa.s referred a master, who filed his report in accordance with t46 refer-·, ,eJ1¢e, to whi6hthedifferent claSses of' defexiditQtseicepted·. " " " . . .,
· · . ·- ..... ,,',_ , ·· :.;. ,."J . . ;
.'.: ...; ... _,....
··. , ".J',:,I..;
W. P. Black, for complainants. ' , Schuyler &- Kremer and H. D. Gotdder, for marine 'insurers. E. H. &- N. E. Gary and G. D. Van Dyke, for fire insurers.
BLODGETT, J. This case is now before the court upon exceptions filed by the defendants to the master's report. The material facts set out ,in the bill and shown in the proofs are: That the riomplainantson the 28th day of February, 1885, became the owners of the steamer Buckeye l then lying in the port of Chicago, and on said day took out insurance against fire on the hull, boilers, engines, machinery, tackle, apparel, and furniture of said steamer, to the amount of $12,000, as follows: Sun Fire Insurance Office of London, Eng., $2,500; Louisville Underwriters of Louisville, Ky., $2,500; Reading Fire Insurance Company of Pennsylvania, $1,500; Fire Association of Philadelphia, $2,500; Manufacturers & Builders Fire Insurance Company of NewYork,$1,500; Citizens Insurance Company of Pittsburgh, $1,500. These policies were all for the term of one year, and gave permission to navigate the great lakes and waters tributary thereto; also, to make ordinary alterations and repairs; and permitted other insurance. And on the 30th day of May, 1885, complainants took out marille insurance on said steamer, her engines, boilers, machinery, tackle, appnrel, and furniture, as follows: The Mercantile Insurance Company of Cleveland, Ohio, $5,000; Phrenix Insurance Company of Brooklyn, N. Y., $5,000; the Detroit Fire & Marine Insurance Company of Michigan, $5,000. In the body of the policies it was provided that the insurance was touching the "adventures and' . perils of the lakes, rivers, canals, fires, and jettisuns that shall come to the damage of the said vessel, or any part thereof." In the policy of the ' Detroit Fire & Marine Insurance ComlJany the w9rd "fire" was emsed from the clause abovequllted in the printed torpl, and on the margin of the policy was stamped the following provision: "Warranted free from any claim for loss caused by or in consequence of fire," and substantially the same clause was stamped upon the margins of eaeh of the other policies, but the word "fire" was not erased from the body of the printed form of the policies. For a day or two prior to the 12th day of June. 188,1), the said steamer was engaged in taking on a cargo ofabout 8,000 partlyseasoned cedar railroad ties, at Houston's bay, near the Gran Manitoulin islands, on the north side of Lake Huron; and on the morning of the 12th of June the steamer left Houston's bay, at about half past 5 o'clock, for St. Michael's bay, where she was lO take in tow a schooner for the port of Chicago. The steaI1Jer had on board a pilot and chart, and proceeded at a slow rate of speed, probably not to exceed four miles an hour; and when about half the distance between Houston's hay and St. Michael's bay she struck upon a rock, not" laid down in the chart, and unknown to the pilot, and slid about half her length upon the rock before she stopped. Belore she ran upon the rock she was drawing about 10 of water iorward,and about III feet alt. Tht-rewas a heavy sea running at the time the vessel struck, which caused her to pound somewhat, as she rested upon the rock near her middle, and just forward of'the for-
FULLER 'V. DETROIT FIRE & MARINE INS. CO.
ward Elnd of her The rock seems to have been an isolated one, and all around it was deep water. Fruitless efforts were made by the master and crew by means of her own machinery to back her off from the r09k or to drive. her over it. About of her cargo was stored in her hold, and the remainder was upon her deck, and for the purpose of relieving her so that she could be got off the rock, if p<)ssible, about 2,000 of the ties forming part of her deck-load were thrown board. It was soon found, however, by her master and the crew, that the attempt.to relieve her in this manner only caused her to pound the harder. 600n after she struck she was found to be leaking rapidly, and within less than an hour the water had made such headway as to put out the fires in.her fire-box; and shortly after her fires were extinguitlhed a tire broke out in the forward end of her boiler-room, which spread with great rapidity I and resulted in the complete destruction of the steamer and her machinery. Before the fire was discoverf'd, a small boat and crew had heen dispatched to St. Michael's bay to obtain the assistance of a ful andthoroughly equipped Canadian tug,then lying at St. Michael's bay, and this tug came out to the assistance of the steamer while she was burning, but was unable to do anything towards getting her off, or to extinguish the fire. There is no dispute but what the loss was total, as ,nothing was saved to the complainants from the wreck. It is true that the proof shows that one small anchor was taken from the bow of the steamer by the crew of the tug which was summoned to ber assistance, but the tug crew seem to .have treated it as their own; at least they never delivered it to the complainant, and there is no serious contention that the loss was not total. Proofs of loss as called for by the terms ofthe respective policies were 8ubmittedin apt time by the complainants to the respective insurance companies;. these proofs claiming that the extent of the loss 'sustained by the complainantsfroDl the destruction of the steamerwas $19,950.. of these insurance companies have paid or offered to pay the complainants any part of the loss thus sustained; the fire insurance companies insisting that the loss was wholly by a peril of the sea, while the rnarineio!,urance companiell insisted that the loss was mainly a fire loss, and that. the chief burden of the loss should fall upon the fire insurance companies. The marine insurance companies conceded that they were liable to the extent of the marine injury only; that is, the cost ofgetting the stea,mer off the rock where she was stranded, and to a port of safety, and orauch repairs as would restore her to the condition in which she was at the time of the stranding. The bill asks that the court ascer-tain and determine the amount of the loss sustained, and the portion thereof which should be horne by the respective classes of insurance; that is, how much of the loss shall be borne and paid by the marine insurance companies, and. how mnch shall be borne and paid by the fire insurance com panies, and that the portion of the loss to be borne hy each class be apportioned to companies of such class. AU the insurance companies were made parties to this bill,and appeared and answered, and, after issue joined, the case wa,s referred to the masterto ta::J proofs and report his findings in the premises.
ThEl master's rElport filed in pursuance of this reference in substance finds the extent of complainant's loss by the stranding and, burning of the steamer to be $18,000; that up to the time the fire broke out the loss was wholly a maritime loss, to be borne solely by the marine insurance; and he finds the amount of such loss to be $6,000,-that is, he finds that it would have cost $6,000 to have got the steamer off the rock, tow her to a port of safety, an<l make the repairs necessary to restore her to the serviceable condition in which she was immediately preceding the stranding. He also finds that the stranding was the proximate causeof ithe fire; and that the marine and fire insurance were concurrent, as to , thelos8by the fire, to thEl extent of $9,000; and that the fire insurance companieg are solely liable for the excess of the loss above the total amottnt of the marine insurance, which is $3,000, and apportions the loss as follows: Marine loss from stranding alone, before the fire broke :out, and to be paid solely by marine insurance companies, $6,000; concurrent insurance, to be divided between the two classes of insurers, :$9,000, of which the marine companies areto pay five-ninths, $5,000, , and the fire companies are to pay four-ninths, $4,000; and the amount 'to he paid solely by the fire companies, $3,000. , Both classes of defendants have filed exceptions to the master's report, but Ido not dElem it necessary to consider them in detail, as most ·of , them relate to the master's findings of tact upon the proof before him; and, aftElr It careful review of these proot's,I am satisfied that his findings upon all the questions of fact are correct, and should be sustained. It is true there is much conflict in the testimony; a large portion of it being as tothEl cost of rescuing and repairing the steamer, and as to the probability of saving her, and as to the origin or cause of the fire and , the value of the steamer.. Very much of it consists of the opinions or judgments of witnesses more or less familiar with the subject UpOll which they testify ,and I will merely say that it is my COllclusion that the master has carefully analyzed this mass of testimony, and found the facts intelligently, according to the preponderance of the proofs. Others of the exceptions go to the finding of the master in regard to apportionment of the loss between the two classes of insurers, and, after a full discussion by the counsel for the objectiIiI?; companies of the apportionment made by the master, and the rulings and reasons by which he reached that apportionment,I am of opinion that he has adopted the correct rule, and made a just and propel' apportionment according to the relative liabilities of the two cll1ssesof insurers, and of the companies constituting those 'two classes. Tw'o questions of law are, however,. raised by the exceptions filed in . behalf of the fire insurance companies, which require some considera,tion: (1) Has a court of equity jurisdiction, upon the caBe made by the ,bill and ptoofsin this case, to apportion this loss among these respective defendants, and require payment from each of the amount for which it . is liable? (2) Were the preliminary proofs of loss presented by the COm· plainants to the fire companies a Ilufficient compliance with the conditions of the policies?
FULLER "'. DETROIT FIRE &: MARINE INS. 00·
.As to the first question, it is ob\Tious that, in separate Buits at law against each of these insurers, the complainants would have been required to establish byproof to a jury, or to the judge in case a jury was waived, the proporti9n of loss to be borne by each class of insurers, as well as the amount to be paid by each member of that class,-thatis, how much' of the loss, if any, should be borne alone by the marine insurance, and how much, if any, should be borne alone by the fire insurance, and how much, if any, should be borne by the two classesjointly; and it is clear that courts and juries might, and probably would, have differed widely as; tothe division of the loss between the two classes of insurers, if not a8to the division between the members of such classes, and' hence the complainants in suits at law would have been in peril of failing to recover perhaps a large portion of their actua.l loss by reason of different findings of juries or courts upon the same evidence. And, when several parties are liable to contribution for the payment of a common debt or obligation, an apportionment of the amount to be contributeduJ1.d paid by each has always been deemed within the field of equity jurisprudence. 1 Story, Eq.Jur. § 492. And the same learned writer, in section 478 of the same work, gives the reasons for such exercise of jurisdiction as follows: "J3ut there are mll-ny difficulties in proceeding in cases Where, an apportionment or contribution is allowed at the common law; for, where the parties are' numerous, as each is liable to contribute only for his own porUMl, separate lj.nd verdicts may become necessary against each other, and thus a multiplicity of suits may take place; and nojudgment in one suit will be conelusive in regard to the amount of contribution in a suit against another person; ... ... ... whereas in equity all parties can at once be brought before: the court in a ,single su it, and the decree apportioning Will thus be cOI;1,clu.llive, u,pon all parties in interest." And in a case,of general average, where a part of the cargo ofa ship has: been sacrificed for the purpose of saving the ship and the remainder of the cargo, a court of equity has always been held the propex.tribunaLto apportion the contribution to be made by the ship, the freight, and the cargo saved, to compensate for the property sacrificed; and, the reasons fOfsuch jurisdiction aIle fully stated as follows, in section 491 ofthework from which I have just quoted: "It may readily be perceived how difficult it would be for a court of law to apportion and adjust the amount which is to be paid by eitch distinct which Is involved in the common calamity and expenditure. Take, for instance, the common case of a general ship or packet trading between LiverPQOl and New York, and having on board variotlsshipments of goods, not unfrequently exceeding a hundred in number, consigned to different persons, as owners or consignees; and suppose a case of general average to arise during the voyage,and the loss or expenditure to be apportioned among all these various shippers according to their respective interests, and the which the whole cargo is to contribute to the reimbursement thereof. By the gen7 eral rule of the maritime law, in all cases of general average, the' s\Jip, the freight for the voyage, and the cargo on board, are tocontributetosllch r&. imbursement, according to their relative values. The first step in the process of general average is to ascertain the amount of the loss for whichcol1tribu. tion> is to btl lllade; as, fodnstance, in the case .of,jettison, the value..ofthe
property thrown overboard, or s3criflcedfor the common preservation. The value is generally .·ndefinite and unascertained, and from its very nature, rarely admits ot an exact and fixed computation. ThE!. same remark applies to .the case of ascertainment of the value of the contributory interest, theship. the freight, and the cargo. These are generally differtmtIy estimated by different persons, and rarely admit ofa positive and indisputable estimation in price or value. Now, as the owners of the ship, and the freight, and the cargo, may be, and generally are, in the supposed case, differellt persons, haviog a sepal1ateinterest, and often an adverse interest to each other. it is obvious that unless all the. persons in interest can be made parties in one common suit, so as to have the whole adjustment made at once, and made binding upon all of them, infinite embarrassments must arise in ascertaining and apportioning the general average. In 3 proceeding at the common law, every party haVing a sole and distinct interest mnst be separately sued. and, as the .verdict and jUdgment in one case will not only not be conclusive, but not even be admissible evidence in another Buit, as it is re..sinter alios acta, aodas the' amount to be reco,vered must in each. case depend upon t1).e valu,e of all the interests to be affected, which, of course. might be differently estimated by different juries, it is manifest thattbe grossest injustice or the most oppressive litigation, might take place in all cases of geneml average on board of general ships. A court of eqUity,. haVing authority to bring all !the, parties before it, and to refer the whole matter to a master to take an account, and to adjust the Whole apportionment at once, affords a safe, convenient,and expeditious remedy;' and it is accordillgly ,the custvUlary mode of remedyjn all cases where, a contl'Oversy arises. and a court of equity exists in the capable of administering the remedy;" " , ,
Co,) 19 How. 312. In the latter case the jurisdiction of a court of equity
And tqe same 1s stated in Adams,
Eq. *268, and
to apportion and enforce payment of a loss,· where there was large number of insurerEl,wasfully sustained, both on the ground of the right of a court of equity to apportion among contributors, and' also to prevent a IDultiplicityof suits; there being-fifteen insurers inthat case, whilebere there are nine. These authorities, and others to which my attention bas called, seem to me to amply support the jurisdiction of this court to give the relief asked by this bill, while the complainants' remedy at law would almost necessarily be uncertain and incomplete. A court of equity, with all the parties before it, can do complate justice, not only as between,the complainants and the two classes of defendants, but as between the defendants in the two classes in relations. to each other under their respective policies. By the second point, the fire insurance companies insist that they are not liabl,e, they say, that all the policies require that the insured shall, in case of loss, furnish to the insurer a full and detailed statement of the loss, and the amount claimed. In the proofs qflossserved by the complainants upon the fire insurance companies, they simply state the value of the steamer, her engines, etc., and that the loss was total, and did ndt attempt to compute or state the share of the.loss to be borne by each ,fire do, not think, it for the complainants apportion, to apportion, among the different underwriters in their preliminary proofs. It was sufficient if they stated the amount ofthe loss :and the amount of the insurance; and this they
did, leaving.each underwriter to make the computation of its own share of the las!!. I do not, therefore, deem either of the exceptions filed by the defendants to be well. taken, and the same are each and overruled, and'the master's report confirmed, and a decree may be prepared in accordance with the recommendation .of the report.
PORTER et· al. fJ. SABIN Oirc'Uit CO'Urt, D. Minneaota.
1; .RECEIVERS'-AOTIONS-CORPORATIONS-STOCKHOLDERS. In an Bctlon against former directors of a corporation. by stockholders, for loss incurred by the corporation on account of defendants' unauthorized in· dorsements of the company's name, it is not enough to show the failure or refusal of the recei ver of the corporation to bring the action. but he must be made a party defend,ant in order that the corporation may be bound. 1a. SAME-FEDERAL COURTS-JURISDJOTION. Where tbe state court refuses to permit the receiver either to sue or to be made a party defendant, the jurisdiction of thtl. federal court fails.
In Equity. Com plaint by Henry H. Porter and RansoOl R. Cable against Dwight M. Sabin, Joseph C. O'Gorman, the Northwestern Manufacturing & Car Company, and the Minnesota Thresher ManUfacturing Company. Clapp & Macartney, J. M. F'lnwer, and S. U. Pinney, for complainants. George B. Young, Fayette Marsh, and Davis, Kellogg & Severance, for defendants.
BREWER, J. This case is now submitted on demurrer to an amended and supplemental bill. Complainants are citizens of the state of Illinois. and stockholders in the Northwestern Manufacturing & Car Company, and bring this suit in behalf of themselves and all others in like estate. The defendants are all citi7Jens of the state of Minnesota. Two of them, Sabin & O'Gorman, were directors of the car company, and had the entire management of its business. \ While so managing the car company, they used its credit by indorsing in its corporate name a large amount of paper for the benefit of third parties, which resulted in great loss to the car company. These transactions were so carried on as to give an undoubted right of action in Javor of the car company against them. On the 10th of May,1884, the car company failed, and one Edward S. Brown. was appointed receiver in a suit by the creditors commenced in the state court. The complainants, as stockholders, applied to such receiver, and through him to that court, to bring a suit against the defendants Sabin & O'Gorman to ascertain and recover the damages sustained by the corporation by reason of their fraudulent and unauthorized acts, which application was denied. Thereupon this suit was brought by the filing of the original bill, and on .the same day the complainants made a motion in that COU1·t
to b'e allowed to make the receiver apal'ty defendant·. They also subsequently moved to exclude from a contemplated order of sale all causes of action wijichstockholders might maintain in right of the corporation, and which the corporation itself or its receiver had refused to bring, both of which motions were denied; and that court entered an order directing a sale as a whole of the entire assets and plant of the car company, the description in the order being as follows: ..All the stock. property, things in action, and effects of the defendant the Northwestern Manufacturing and Car Company, of which E. S. Brown has been appointed receiver, in this action; or to which the receiver may be entitled as the same shall exist at the time of the sale; including all real estate, buildings, machinery, ,to()ls; patterI).s. jixtul'lls. materials, articles. man ufactured, unmanufactured, or in process of manufactnre, cash in hand. book-accounts, letters patent, choses inqaction, bills receivable, and of all property, assets, daims; liens,· and 'deman<\S of every name and nature, either in law or in eqUity, and wherever situated." . .
A public sale was made in pursuance of this order, and the property sold to the Minnesota Thresher ManUfacturing Company. 'fhis sale was confirmed, and the property delivered about the 1st of January, 188S: The last-named company. which is made a defendant to this suit, was organized in 1884 for the express purpose of acquiring the property and continuing the business of the car company. During thewinter Sabin' &O'Gormanobtained the control of the directory and management 'of the Thresher company, and, for the purpose of preventing an investigation into their management of the car company's business, made application to have the car company's assets sold as a whole, which application was successful; and also resisted the application ofthese complainants to have suit brought in the name of the receiver. To this bill the defendants have, as stated, filed It demurrer, and upon such demurrer the quesJticin 8Irises:. .' . . . , It is conceded j and the law undoubtedly is as conceded, that the cause fof action stated in .the bill is one primarily in favor of the corporation, 'and that, upon the appointment of the receiver, !Ouch. right of action to him, and he was the party to institute the suit. There can 'also be no donbt that under some circumstances a cause of action existin favor of a corporation may be at the suit of a 'But in the view which I take of the case it is unnecesary to consider at large any of these questions. 'I'he pivotal question is whether this suit can be maintained without the presence of the receiver as a party. The authoritipsall seem to agree that where there is no receivership, and a stockholder is seeking to enforce by a suit a right in favor of the corporation, the corporation is an indispensable party defendant, and that, if :for any reason the corporation cannot be made a party defendant, the suit must fail. . The reason for this is that, unless the corporation is a party, it is not concluded by thejudgment or decree, and the defendant to anotherstiitby it, and perhaps many suits by other may be stockholdersjbut when the corporation is a party ,then the judgment or decree binds it; and the defendant is from further litigation
, :RORTER t7. SABIN.
upon that cause of action. See Samuelv. Holladay, Woolw. 400; Greaves v. Gouge, 69 N. Y. 156; Brinckerhojf v. Bostwick, 88 N. Y. 52; Colqnitt v. Haward, 11 Ga. 569; Insurance Co. v. Sebring, 5 Rich. Eq.342; Davenport v. Daws, 18 Wall. 626. In the last case the supreme court thu8 disposes of the matter: / "That a stockholder may bring a suit when a corporation refuses, is settled in ])odge v. Woolsey, 18 How. 340, but such a suit can only be maintained on that .the rights of the corporation are involved. , These rights the the individ'ualsbareholder is allowed to assert in behalf of himself and associates, becliuse the directdrs of the corporation decline to take the proper steps to assert them. Manifestly the proceedings for this purpose should be so conducted that any decree which shall be ,made on the merits shall concl ude the corporation. This can only be done by making the corporation a party defendant. The relietasked is on bepalf of the corporation, not the indi vidual shareholder; and, if be granted, the complainant derives only an incidental benefit from It wOlild be wrong, in case the shareholders were unsuccessful, to allow the corporation to renew the litigation in another suit involVing precisely the To avoid such a result, a court of equity will not take cognizance of a bill brought to settle a question in which the corporation is the essential party in interest. unless it is made a party to the litigation." It is not enough to allege and show that the corporation has failed to bring suit, or refused upon demand to bring it; such facts disclose merely the right of the stockholdp-r to maintain the suit. The same reason makes the receiver also an indispensable party, for, when appointed, he has, in place of the corporation, the right to such an action; if he be not made a party, then the defimdant may thereafter be subjected to a /luitat,his instance. This was recognized in the case of Brinckerhojf v. Bostwick, supra, in which the court uses this language: "The'bank was a proper, and even a necessary, party defendant. It continued to be a corporation notwithstanding the appointment of a receiver. and the receiver may bring actions in its name. The recei vel' was also a necessary party, as it was through him that the amount which might be adjudged d'h'ectorswas to be collected and paid over. The presence of both of these parties was necessary to a final determination of the controversy." Now, when one is ali indispensable party, the inability to make him a party does not have the effect to give the court jurisdiction of the action as against the other parties; but prevents it from taking jurisdiction. This is familiar law; and itmatters not how this inability arises, whether because resides beyond the reach of the process of the court, or because through the action of some other tribunal it is impossible to makehim a party. That the receiver cannot be made a party without the leave of the court is settled. Barton v. Barbour, 104 U. S. 126. Now, the state court which appointed the receiver, for reasons satisfactory toit, and which must be assumed were good and sufficient, notonly declined to permit the receiver to sue at the time the application was made to it, but also declined to permit the receiver to be made a party defendant to this suit. Hence no decree can be rendered here binding thereceiver,,,lind, none which would prevent the receiver from asserting the right of the corporation ina SUbsequent suit. He is an indispensable party. and this court is powerless to make him a party, and therefore
the jurisdiction of 'this court to proceed in this action cannot be sustained. I have riot stopped in this opinion to consider whetlier the sale made of the assets of the car company transferred this right of action to the Thresher company. I have assumed that it did not, as claimed by counsel for complainant. It is not expressly mentioned in the order of sale, nor is it expressly excluded; the language of that order is general in its terms. IUt were such an asset as is assignable, then the general terms of description would probably convey it, and the conveyance, beingat a publkjudicial sale,would doubtless transfer a good title to the purchaser,-a title. which could not be assailed by these complainants simply as stockholders in the car company. For these reasons I think the demurrer to the amended bill must be sustained. I have held this case for sometime, and given the matter much thought, for I was impressed at theargllment with the idea that somehow this action ought to be sustained; and only what seemed to me the settled laws of adjudica.tion have forced me to a different conclusion. The demurrer will be 8UStained.
SHERWOOD tI. M:OEUE
((h"rouit (Jourt, D. Nebraska.
October 29, 1888.)
VENDOR AND VENDEE-BONA FTDEPURCHASERS-QUITCLAIM DEEDS.
A grantee in a warranty deed, whose grantor has a warranty deed,.and who acts in good faith. and without actual notice. is entitled to protection as a bona fide purchaser, notwithstanding the existence of a qUitclaim deed in the chain of title. l
In Equity. On rehearing.' Bill by James K. O. Sherwood against Theodore J. MocHe to remove cloud from title. Before Circuit Judge, and DUNDY, District Judge. Montgomery « Jeffrey, for plaintiff. Harwood, Ames« Kelly, for defEmdant.
BREWER, J. This case is now submitted on petition for rehearing. When first it was decided upon the proposition that one who takes title by a mere quitclaim deed cannot be considered a bonafide purchaser, and a decree was ordered accordingly in favor of the defendant and cross-complainant. In this petition for rehearing that proposition is challengeJ, as well as its application to the facts in this case. Of the soundness of the proposition as a gelleral one I have no doubt, although it ma'y be possibly subject to some limitations. It has been
. lAs to the rights of a grantee of land under a quitclaim deed, or in whose chain of title-there is a quitclaim deed, see Lumber Co. v. Hancock, (Tex.) 7 S. W. Rep. 724, and note; Gest v. PackWood, 34 Fed. Rep. and note; O'Neal v. Seixas, (Ala.) 4 South. . Rep. 745, and n o t e . . ·No opinion was .flIed on the original hearing.