:OLIREB f1. THE NEBOo·
Second claim is the combination of such filaments with the receiver, made entirely ofglass. Qfc()urBe, the form of 'the filament in the or globe maybe varied at· pleasure. It may be in theshape of acoil,or of a horSeshoe, or it may be wound on a bobbin. All thel?e forms are old. The principal and great thing described is the attenuated filament, aDd its inclosure in a perfect vacuum. There may be a preference of materials 'from which the filament is made. Practice will evolve all these collateral advantages. We think weare not mistaken in saying that, but for this discovery, electric lighting would Iiever have become a fact. We have supposed it to be the discovery of Edison, because he has a patent for it. This may not be the case; It may be the discovery .ofsome other person; but, whoever discovered it, it is undoubtedly the great discov{'lryin the art' of practical lighting by electricity. We have given a more detailed account ofitj in order to illustrate what we mean, when we raise the question whether the claimedliI1ventions of Sawyer and Man were ever successful. They may have made a lamp that wo(tld burn; but. was ita success, or was it a failure? Did it ever go into use? What waS the object of all the experiments made by them and others? Was it not to make an electric lamp tbat c()uld be l?uccessfully lisedby the public, and have a commercial value? Did they succeed in making su{)h a' lamP, or in finding out the principle on which it could be tt1ade? 'Ye.do '!iot so read the evidence. The bill must be dismissed.
KELIHER tI. THE NEBO. (Dl.8tmJt Ocrwrt, S. D. New York. July IS, 1889.)
8mPPlNa-LlAllILITY 011'
A, ctollS-beam belonging to tbesbip N., and supporlinga platform, made under OJ,'dllfB of thll mate,.at ,otthe to aId in discharging the brokll from being'overweIghted, seriously InJunng one ot the men. The captain, knowing the beam to be weak, or without sufficient support, claimed to have cautioned the men not to. put too much weight on it··. .H/ilt;Z, that the ship liable; that ,her omcera h,Ji,(l no right to thus authorize the use of the detective beam, but should havsstopped , .further loading ot cargo on it.· Damages assessed .by the oourt at 11,250. witbcosta. (SytlabuB by the Oourt.)
VESSEL II'OBTORT.
In Admiralty. Libel for personal injuries. Ja'fIU')J H''I11house, for libelant. E. B. C'onver8, for claimant. BROWN, J. I have carefully considered the evidence in the above case. I cannot regard the defense interposed by the master, or his testimony in support of it, as characterized by either good faith or credibility to but a very limited extent. The proof puts it beyond question that the cross-beam was'shipped under the orders of the mate, by the ship's carpenter and seamen, and by them only; and that the mate's order was given, on the request
82
FEDERAL JlEPOJlTER,
vol. 40.
of the stey-adore, to make a. plaMoJ.'m for· use in stowing the cargo. And yet the answer, (paragraph 9,) sworn to by the captain, says that the dore rigged .his platform "without llouthority from the officers of the ship, or any of them, and solely for bis own convenience." Alleged cautions from. the mate to the men a.t work on the platform are testified to, but the mate was not sworn, and all the stevedore's men deny any such cautions. The captain swears that about half an hour before the accident he looked down the main hatch and saw a lot of stuff on the platform, and said to the men:" That beam is not put there to keep all that weight up. It has no slipport underneath, and I would advise you to put that cargo in the between-decks;" and that the men answered, they thought it would stand the few more slings that were on the dock; on which he went to his cabin without any further reply. The captain further says in reference to stowing near the beam that the practice was to "fill up the lower hold until we could stand on the top of the cargo and ship the beam; then we would fill up the hold, but we would take care never to put any weight on that beam." . If this last piece of testimony is to be credited, it qlust mean that that beam was not fit to bear much, if any, weight; otherwise they certainly would not take care never to put any weight on it. And yet the mate caused the bellm to be shipped for UStil in stowing the cargo, whether temporarily or permanently was of no and the captain, after bisalleged caution totbe men, which they deny, walked to bis cabin, acquiescing virtually in the men's putting a few more slings on it, when, as he said, it was already heavily weighted. If the beam was known to be weak, or without sufficient support, neither the mate nor the master had any right to authorize its use for a platform to hold cargo; and, having done so, the ship cannot be exempted from liability simply because they advised the men not to put too much on it, if they did so advise them. The men had no means of knowing or testing its strength. If the master believed that there was too much weight there,it was his business to stop the further loading of it; but the inconsistencies of the defense make it impossible to accept the master's versi()n,in view of the extent to which be is contradicted; . . I find it difficult to determine the. extent of the libelant's injuries.. I do not think a case of paralyBiB agitan8 is fairly established. I award the libelant $1,250, with costs.
BAltES t'. BURNS.
8.8,
HAKES v. 1.
BURNS
et. al.
(Oircuit Oourt, D. Oolorado. October 1, 1889.) RElIfOVAL OP CAUSES-CITIZENSHIP.
A sherUf levied on a stock of goods sold by a failing debtor to oneR., who aft, erwards replevied the goods from the sheriff in the state court. In the replevin suit a verdlct was rendered in favor of H., which the court set aside. One of the attaching creditors was added, on request, to the sheriff, as a party defendant; and asked a removal to the federal court, on account of citizeDllhip. HeliL, that the application, after one trial, in which the creditor was represented by the sheriff, came tOO late, when the new trial was to be on the same issues and questions.
2. BUlE-LocAL PREJUDICE. . An affidavit, made by an agent, for removal on account of prejudice, under the act of congress of 1887, is insufficient, which alleges that" I have reason to believe" in ,the existence of prejudice, and does not cause the prejudice to "be made to appear to the. court. .. ,
BREWER, J. The question in this case is one of removal. The facts. are.these:On June 29, 1888, John Davis, a merchant in Trinidad, Colo., Illade a bill of sale of his entire stock to the plaintiff, W. H. Hakes, IJ:e was largely indebted to his creditors, the Trinidad National Bank ,f,lJ;ld N. K. Fairbank & Company. Immediately thereafter, these creditors commenced suit, and levied attachments upon the stock; the bank levy being prior in time. Under these attachment writs, defendant W. T. Burns,as sheriff, seized the property, and held it until July 21, 188.8, when Hakes commenced a replevin suit. It is claimed that the T!1inidad National Bank, the first attaohing creditor, entered into a cpnspiJ;Qcy with Hakes, with a view of appropriating all of the property to the sat,., isfaction of its debt, leaving nothingJor Fairbank & Company, although the property was sufficient to pay both claims. Burns, the sheriff, filed answer; and the case, as a suit between Hakes and Burrs, went to trial in the latter part of December, 1888, and a verdict was returned in favor of Hakes, which was Ret aside by the judge on the 4th of January, 1889. On the 20th day of July, 1889, Fairbank & Company presented an intervening petition, stating that they were the real parties in interest; that the defendant Burns, sheriff, was only a nominal party; a.nd asking to be substituted in lieu of defendant Burns. On this application, the court made an order them to intervene, anp. be made party defendant with the sheriff, Burns, but refused to substitute. Immediately thereafter they filed' a petition for removll1 to this court, on the ground of diverse citizenship and local prejudice. The state court declined to grant a removal; and, under the rule in force in this district, the clerk of this court will not file removal papers, in such a case, without a.n order of .the judge. That.order is now. a$ked for. v.40F.no.2-a" . .. >.,
FEDERAL ftEPoBTER,
I think the action of the state court correct, and that the petitioners are not entitled to a removal. i SO':f'ar as the matter of citizenship is concerned, the application is not in time.. There had been one trial of the issues; and it is immaterial)'whether Burns, the sheriff, was a substantial, or only a nominal, party. It is claimed that he was only a n9IrliI¥" party; bUil,.if so, he represented Fairbank & Company; and with him, :t;ep'l'esehtative, one trial has been had. TlJ,eintroduction of Fairbank& 'Company as a party. defendant presents no new ,question for trt.:U. There is n()J1ew right asserted;: ,and as Burns, their representative, could Dotf after ,answer and one trial,obtain a regrouJ:ld, of neither can they, by being moval on Illl,\4e apaJ;b,l arter the first tnttl.. Wpatever might be the rule if an intervenor presented aome new and-independent·interest or question, when he simply comes in to carryon the litigation over the same issues and questi,ons no different, fraIl} that possessed hy"hllli. wlfb bM beencarrjing on 'the litigati6n lis' his representative. The application for removal on the ground of diV'erse citizenship came too late. Parties cannot experiment on' the result of litigation in the state court, and, finding it unfavorable, then; fol' toe' first timc,seek a removal i,nto thefederal court. Neither can the application be sustained on the gtounBrOfl()cill prejudice,' The affidavit made by an. agent is insufficient. ,,' Tqis is language: ."1 have reason to believe, and dab&- . Heve, thati;from prejudice andlbcfLl influence,'the N. K. Fairbank & COmpany, will not obtainJ'listice," etc. It is an affidavit which, if made by ll;petitioAer himself, wot1ld have been sufficient under the law of 1867; b\1ttbelawof1887.haschanged the rule. Shorty. Raitway 00., 34 Fed. Rep. 220/ .'Now, there mUSt be a affidaVit. The court <tt; in the language of the act, it mttst Hbe made to is' to appear to the cburt" 1 considered -this question in the case of Short v. Rafl,way'Oo., 8ilPra, and it is unnecessary to add anything to what was' said. .. For these reallohs the application now presented will be , J
SPIES (Oi1'eu4t
t1.
Ca::rc.!GO & E. 1. R. Co. :! ·,1, , '
Court, 8; D: New YOTk. October ·10,1889.) AIql¥oaTGAGEs-INWME · ¥OBTG,lGE.
tr,
"j
I
!.",':"
,. An income mortgage, made by'a railway company, conve>:ad, as security to the' '. bondholders, st:lv'era.llines of railroad running between'specIfied termini, constitut-' the compants system ,of and pilldged the nlll! earnings of this system. of. lines as lle(lurity for t):le payment \>f annual interest. TJ;le mortgage provided that in eachYe8lr dui'ing .the bonds the board of directors should asoer. ; ,', anddllAlare wn,at amp'¥nt of ·net earnings had ,been made during the fiscal year tl1epaymeht or on the bonds; that in such ascertain·. ment,tllere:should be dedullted from the gross income the operating expenses, j .til'xes, ip,terellt, toget):ler,witJi.,8uch ElJlipenditures for renewals, repairs, and bettertnents as mIght be requisite to maintain the Une of railroad and Its appendages ill i ia,1h;1lt;.class condition; that afte!j,deducting such expenses the board of directorll should thereupon ," " whether a.ny, .IIo,l1d if IjO how much, net income exiStbd alii)lioable to tlie 1I1terestilpon the bonda; that if, on suohu.
c.cl.lflo'n1Jll)m, of should adjudge no I).et InCll!De had beenrealizEld dlinng'tl, e 't, eat h such interest,. theiradi,Udication 'shou1i1. be final aitll ,(!OpclU$iY101llolliall' award, aDd Illa.iID of any bondholdeJ:";for inte.l'6st':for such' Y,'!laf"tpat,U .th.filY,should llodjudge a specUlo sum to applicable out of the earnings '. 8S interest; such interest shOUld 'be811owed and paid;, and that no right of action' ..hQuld 6xil!t'in ,favo;tJ',of any bondholder for interesj; until the same should' first b$ adjufllled anq.awarded as aforesaid. Subsequent to theeJteoution of the the railway cOtnpany acquired additional lines of railway. :, Distinct accounts' were Dot kepj;- of the income of the original lines, but the earntngs and expenses of those li;oes and of the new lines conjoil,ltly were kept .as The .bQard of drrectors, 'without endeavoring to ascertain whether net income had been earned bytlle original lines, resolvedthatno.income had to inter:e,st. In an brought bY 11; was p"Yl\b1e, ,for an accounting, heW, (1) that the hnes specifically descnbed lD the mortgage oonetituted the income fund pledged. to the bondholderj; ,(2): that it was the duty:<lf the 9(lmpany to feep a!!eparate account of earnings ,andli'xpenses o't ,tg"ese lines, ann of the board 'of direotors to make an ascertainment annually whether income had been earned; (8) that the cOlDpany could not charge against the income of the original lines the expenses or losses incurred in,opere.ting the new lines; (4) that the fact that no award of interest had been made by the board of direCtors was 'not . a:defense to the action. : ,' !', I
I.
, to. make him exchange his bonds for certain conilol bonds,' willfully made a' ficti.
,
The bill filed 1:)y the holder of incolDe bonds charged that the directors, in ordel'
O}l'
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'
.:
tious, false, and fraudnlent ,ascertainment of the incolDe earned, and adjudged that no incolDe applicable to interest had been earned; and it appearing that the directors erroneously,but in good faith, made'the ascertainment ,by mingling the accounts of the original railway lines mortgaged with those subljequently acqUired, neld, the bill should be 'dismissed, because 'the complainant, having-ala case ot fraud, cannot be·permitted to support hill case on any other groutld.
InEquity. On bill for anaccQunt. Fpr .report of opinion on demurrer, see 30 Fed. Rep. 397. , John W. for complainant. AU8ten G., Fox, for defendant. WALLACE, 'J. The cause has been brought to hearing upon bill and an. swer, with a stipulation admitting that the complainant's title to the bonds which are the foundation of his claim is to be deemed as established by tha pleadings. The complainant is the owner of certain income bonds secured by a mortgage executed in 1877 by the defendant, pledging the net earnings ,of its line of railway for the payment of interest. The mortgage includes "all and singular the line of railways belonging or hereafter to belong to the party of the first part, ,and extending from Chicago, Cook county, Ill., through the counties of Will, Kankakee, Iroquois, and Vermillion, to the city of Danville, together with a branch from Bismarck's Junction easterly through Warren and Fountain counties, Ind., to Snoddy's Mills, and its equipments and appendages, and the net income thereof." The bonds are conditioned for the payment of such interest on the principal, not to exceed 7 per cent. for any ,one year, as shall be declared and fixed by the board of directors in each year in accordance with the mortgage. The that in each year during the currency of the bonds,. beginning withth." year 1878, the board of directors shall in the month of October ascertain, fix, and declare what amount or net earnings has been D;lade preceding fiscal y!'lar ending the 1st day of September, and is ble to the of interest o;D.such issue of,ll1Qome bonds; an4in stich ne.t shall be
i'EDERAL .REPORTER,
,Qperating. expenselh 'taxes, insurance, liability for either inincome: terest or sinking fund on any of: the existing bonds of the company, necessary rentals, and purchase oJ;' hire of equipments, together with such expenditurE)s for renewals, repairs, and betterments as may be proper and requisite to maintain the line of, railroad and its appendages in a firstclass condition for effective service; and that, after deducting all such payrnents,e;xpenses, and liabilities from the amount of gross income received during the year, the board of directors shall thereupon fix, establish, and adjudge whether any, and. if so, how much, net income exists which is applicable to the payment of interest on the said issue of income bonds. The lnortgage.further provides that if on such ascertainment the board of directors adjudge that no net income has been realized during the year applicable to such interest payment, they shall thereupon enter a resolve to that effect on the journal of their proceedings, and the adjudication shall be final and conclusive as an award, and shall operate as a perpetual bar against any claim or demand of any holder of such income bonds for the payment of interest for ,such year; and that, if the said board shall, on such ascertainment of net earnings, adjudge that a specific sum is available out of the net earnings for such interthen a resolve shall, be entered in their minute of proest ceedings in the nature of a final and conclusive award, fixing and declaring what ascertained sum is properly available out of that year's net earnings for the payment of interest on such income bonds. and the payment or rate of interest to be allowed and paid. The mortgage further provides that no right of action shall exist in favor of any holder of such income bonds for any alleged liability for interest, until the same shall first be adjudged and awarded as aforesaid.· 'Ihe bill alleges that prior to September 1, 1883, interest on the bonds had been ascertained and declared by the board of directors',and duly paid to the holders of the bonds; but'th!l.t thereafter the defendants and its officers and board of dil'ectors conspired to frandulently compel the complainant and other holders ofsfiid income bondstb surrender the same, and exchange them created, and to fraddulently withhold d first a portIon and then the whole oithe net earnings which were properly p'ayableuponsaid bonds; and with a view to carrying this evil design into effect they willfully, maliciously, and fraudulently failed to make any true ascertainment in the month of October, 1884, or in the month ofOctober, 1885, of the np.t earnings for the preceding fiscal year, and willfully Il1ade a fictitious, false, and fraudulent ascertainment of the same, whereby they sought to make it appear that nothing had been earned on account bf such interest; and that the officers and board of directors well'knewat the time of each of said pretended ascertainrnents that the net earnings, if the same had been ascertained in the manner prescribed by the mortgage, were more than suffi'cient to have paid 7 per' cent. interest upon the principal of said bonds. The bill then sets out what devices were resorted to by the board of directors to cover up and defraud the holders of income bonds out Of the net earnings propertyapplicable to interest thereon,-among others, the mingling of the
an
SPIES
o.
CHICAGO .. E. I. B. CO.
87
a.ccounts of the division of the railway covered by the mortgage with the accounts of consolidated, constructed, and leased lines aoquired by the fendant after the execution of the mortgage, including charges for additional equipment for the new lines. The answer fully meets and denies all the averments of fraud and conspiracy, but it admits that separate accounts have not been kept by the defendant of the net earnings of the original lines; that the accounts of the earnings and expenses of these lines and those subsequently acquired have been mingled and that the board of directors did not attempt to make any ascertainment in 1884 or 1885 of the net earnings of the original lines. It appears by the bill and answer that the new lines built, acquired, or leased by the defendant embrace a large mileage, and have cost the defendant a large sum of money; and that in June, 1884, the defendant issued cousol bonds bearing interest at 6 per cent. per annum, secured by a mortgage upon its property, which have been used in part to pay for the new lines and their equipment, and has used part of its earnings to pay interest thereon. The bill prays for an accounting, and a decree for the payment of what is ascertained to be due from the defendant. . When the case was before the court on a former occasion upon a demurrer for want of equity, and alleging that the trustee named in the income mortgage was a necessary party, the demurrer was overruled by Judge WHEELER, (30 Fed. Rep. 397.) The questions then considered and decided adversely to the defendant cannot be appropriately reconsidered now. It must be held, therefore, for present purposes, that the complainant is entitled to the relief sought, unless the material averments of the bill are sufficiently met and denied .by the answer. Under the terms of the income mortgage it was the duty of the defendant to keep an account of the earnings, expenses, and net income of the lines included in the mortgage, as distinct from those subsequently acquired. The granting clause in the mortgage subjecting to the lien the "line of railway belonging or hereafter to belong" to the defendant is qualified by the description of the line which follows it; and the words "hereafter to belong" refer to such lines between the specified termini as the company did not then own,-like the road from Chicago to Dalton then leased by the company, and constituting the link by which its line of railway extended from Chicago to Danville. If the mortgage provides expressly or by implication that the board of directors are to set apart the income of the railway lines particularly described for the payment of the maturing interest upon the bonds, the bondholders are entitled to that in"" come; and their pledge is not to be transmuted from one upon the earnings of a particular line of railway to one upon the earnings of a system of which the line may be a part. This would dilute their security upon a designated fund into a nebulous lien upon the profits of such new enterprises as the corporation might see fit to undertake. The terms of the mortgage are that in ascertaining net earnings there is to be deducted from gross income expenditures or liabilities for ordinary expenses, interest, or sinking-fund requirements, and for renewals, repairs, and betterments requisite to maintain the line of railroad in a first-class condi-