CHICAGO, M. & ST. P. RY. CO. V. PULLMAN PALACE-CAR CO.
Y. & ST.
CO. '11. PULLMAN PALACE-CAR
(Circwtt Court, N. D. 1lZ1nlois. December 81,1891.)
INJUNCTION-RESTRAINING ACTION AT LAW-RELIEF IN EQt:'ITY.
Complainant railroad company and defendant car company entered tnto a con· tract for the joint ownership and operation of parlor and sleeping cars; tb'3 aecounts to be kept by defendant, and monthly balances and payments to be made; complainant, in case of termination, to pay defendant the cash value of its interest in the joint property. On the termination of such contract, the property being in custody of complainant, defendant brought trover to recover its interest in· the property, whereupon complainant filed a bill in equity for an accounting, alleging incorrect and unfair accounts by defendant of tb,e receipts and expenses, and the retention by defendant of profits in excess of its interest in the property, ar.d asking to restrain the action at law. Held that, as the rights of both parties could be completely protected in equity, the action at law should be enjoined.
In Equity. Walke'r« Eddy and John W. Carey, for complainant. Isham « Beale, for defendant.
GRESHAM, Circuit Judge. Having owned and operated sleeping-cars on its own lines prior to September 22, 1882, the complainant on that day entered into a contract with the defendant, under which the latter acquired the right and assumed the obligation of operating sleepillg-cars, parlor-cars, and hotel-cars, on all lines owned by the complainant, for 15' years, for the joint benefit of both parties. The cars previously owned by the complainant became joint property,the defendant paying for a one-fourth interest in them. It was contemplated that additional equipment would be needed, and it was obtained. The complainant was to have three-fourths of the profits, and the defendant one-fourtb, and losses were to be borne in the same proportion. It was made the duty of the defendant to keep accurate books of account, showing receipts and expenses, and losses, and balance the books monthly. Payment was to be made by one party to the other, on such showing, before the end of the succeeding month. The complainant had the right to inspect the books at all reasonable times. Section 22 ofarticle 3 of the contract reads: "Incase either of said parties shall at any time hereafter fail to keep and perform any of the covenants herein contained, to be by.such party kept and performed, then and In that case, after written notice shall have been given to the defaulting party of the default complained of, if the said defaUlting party shall refuse or neglect to make good, keep, and fulfill sllch unfulfilled covenants and conditions of this agreement. within a reasonable time after such notice, the other party shall be at liberty to deelare this contract ended, and nolonger in force. The railway company reserves the option and may elect to termi nate the contract set out in the article at the end of five (5) years or at the end of eight (8) years or at the end of eleven (11) years from the thirteenth day of September, 1882: provided that, if it shall elect to terminate it at any of the above-named periods, it shall give notice in writing to the Pullman Company of such election at least six (6) months befl,lrethe day or days on which it may so elect to have this agreement end. lithe agreement Bet out in this article is terminated. accordihgtothe terms hel'eof, by the
election of the railway company, and withont any fault or neglect on the part of the PulllJlan Company, the railway company shall purchase the Undivided interest of the Pullman Company ina1l sleeping and hotel cars jointly owned by both companies, and pay the fair cash value thereof. If the rail way company.sball eJect to terminate said contract bllcause of the neglect or refusal of the Pullman Company, as herein provided, or the contract shall terminate by expiration of the time for which it is agreed it shall remain in force, the railway company shall have the first right and opportunity to purchase the interest,;ofthe Pullman Company in any or all cars thus jointly owned, by paying cash value .thereof." "In all cases the fair cash value to be paid by the railway company tor the interest of the Pullman Company shall, in detaulllof agreement by the parties, betixed by the decision of arbitration, as provided in the twenty-fourth section of .this article."
On March 12, 1890, .8 written notice was served on. the defendant by the complainant that the latter had elected to terminate the contract on September 30, 1890. After this notice was given, the parties commenced negotiating for a DeW contract; and, in order to enable them to continue their negotiations, it was agreed, on September 26th,that the terms of the old contract should remain in force for 30 days after the 30th day of the same .month, and, in case a new contract should be made, "it shall take effect from and after the 30th day of Sf'ptember instant, and whatever business:· is transacted during the thirty days succeeding shall. be considered as transacted and performed under said new contract; butt in case no new contract shall be made, then it is understood and agreed that said' business shall be settled and adjusted in pursuance of the terms of the old contract as it now exists." un is further mutually understood and agreed that this stipulation and extension of time shall have no effect upon the rights of the respective parties, except as herein stated t and that, ffno; contract shall be completed, then and in that case the original contrnbt shall cease and determine at the. expiration of said thirty days from the 30th day of September, and no other further or ad. ditional notice shall be necessary or required for the purpose of termi. nating the same." The parties failed to agree upon a new contract, and after the additionaJ30dayshad expired, the cars being in the custody and use of the complainant, the defendant commenced an action of trover in this court against the comphiinant to recover the value of its one-fourth interest in the joint property on the ground that it had been unlawfully converted, and forda1nages for breach of the contract; and subsequently .the complainant :brought this suit for an accounting·. The bill alleges that to perform the covenants ill the contract; that ,it rendered monthly accounts of receipts and expenses, which were incorrect an!! unfair; .that it retained mOle than its share of the joint profits;. that ,it was notified from time to time that the accounts rendered did not shovrthe correct amount of profits due the complainant; and 'that the an,u)upt .still due largely exceeded the value of the deJEmdant's in the joint property. The court is asked to restrain the prosis finally heard. ecution of .the laction at law until this lng to either party the right to annul the .contract. for failure of the other
CHICAGO, M. &:
PULLMAN ..P.ALACE-CAR CO.
to fulfill any of its covenants, the section above quoted authorizes the complainant, "withofitanyjanlt .or neglect on, the part of the Pullman Company," to terminate the agreement at the end of three named periods. The complainant served a propet notice on the defendant for the annulment of the contract at the end of eight years from September 30, 1882; and it would have terminated on that day but for the agreement of September 26th, which continued it in force for 30 days more. It is :oowcontended, however, that, because the complainant did not pay the defendant for its interest in the cars within six months after service Qfthenotice, the contract is yet in force. Even if the language of sectio022 is thus construed, the defendant I:ltands confronted with the conCluding paragraph of the agreement of September 26th, which. it may safely be assumed, the defendant entered into under the advice of coul111e1. If the complainant cannot terminate the contract without paying for the defendant's interest in the joint property within six months after the giving of the notice, the latter can maintain the partnership relation, notwithstanding the notice, by refusing to have the value of that interest ascertained as provided. In view of the explicit language of section 22, and the no less express language of the agreement of September 26th, it is not a debatable question whether or not the agreement has been terminated. A single contract is the foundation of both suits. Damages are claimed for its breach in both suits, and the defendant can accomplish nothing by its action at law that may not be accomplished by filing a cross-bill in this suit. It is clear that, in this suit. in equity, all controversies growing out of the contract can be finally determined, and a decree entered against the party found to be indebted; and it is equally clear that the same result cannot be reached in the action at law. If the complainant should be permitted to prove the damages it alleges it has sustained in consequence of the defendant's breaches of the contract, by way of recoupment, in the action at law,-and I do not hold that it could,-it would be necessary for the jury to examine and pass upon numerous books and accounts, covering a period of eight years; and it is not to be expected that the verdict would be satisfactory. It is the peculiar province of a court of chancery to pass upon such aecounts, and adjust the equities of the parties. There is no necessity for prosecuting both suits at the same time, and in this suit in equity the court can afford complete protection to all the rights of both parties. An order will therefore be entered, staying the prosecution of the action at law until the further order of the court.
REPORTER, vol. 49.
(Circuit Court, S. D. Georgia, E. D. January 4, 18ll2.)
NotwithStanding Act Cong. 1889. (5St. at Large, p. 821, § 1,) and rule.7 for the equity practice of the circuit courts. passed in, pursuance thereof, relieving plain- , . turin equity from the obligation of making persons in interest parties the 'effect of their joinder would oust the court of jurisdiction, nodeoree cali. be made between the parties. before the court, involving the rights ofs,uchomitted party.
&H_TRANsFER OJ' COlU'ORATE FRANCHISEs-CANCELLATION...,.NlllCESSA"RY PARTIES.
JURISDICTION ()J' ¢9URT-DEORIllB.
Plaintiftil. alleged that they were promoters of the. E. G. & F.' R. Co., organized for the oohtltruction of a railroad ; that they entered into a centract :With McC. & Co. tor the construction of the road, by which the company's right of wa::"andimprovements were conveyed to McC. & Co., 'who were tb build the road, pllimtiffilto,receivein return certain litock and first mortgage bonds of the road, lmd, a considerationt that McC. & cO' having obtained control of all the capi. tal stock and, property or the company, e lected a board df directors. composed of themselves 'and others, and sold out the whole property to defendants. a competing companl' without attempting to road; that defendants took with full notice 0 ,plaintiffs' rights. The bill prayed that the transaction might be held void, and' d,efenaants de,c,lared, trustees for Pl,aintifrS, etc., but sought no, affirmative relief against McC. & Co.' Held, that McC. & Co. were not indispensable parties to the 6uit; Railwau 00. v. Mill8, 5 Sup. Ct. Rep. 456. 118 U. S. 256, distinguished.
PARALLllL' RAILROADS-ILLEGAL PURCHASE BY COMPETING ROAD.
The purchase by defendants of the road in question, which· was parallel to that. oftbeir own, was illegal and void, under Const. Ga. 1877, art. 4,§ par. 4, forbidding one corporation to make any contract with anotber tending to llefeat or lessen competition, in their respective businessell, Langdo1lJv. Branch, 87 Fed. Rep. 449, 1'eaflirmed. . A'leaseorsale of the corporate frauchises of a railroad company to another co1'poratioIl,bywhich it to operate its ,lines, is an ,aballlionmElnt of its duty to the puoli.c, is ultra Vires, and is absolutely null and void. Central TraMp. 00. V. PUZTRna.wPalace Oar 00., 11 Sup. Ct. Rep. 478, 139 U. S.
4.RAiLitO.UlC01l1PANIES-LlIIASE OR ,SALlll 01' FRANCHISII-V ALInITY·
In Equity. Oharlton.J: Mackall, for plaintiffs. lPrwint, ,l)uBignon 4& Ohisholm, for defendants.
SPEER, District Judge. Charles H. Hamilton, a citizen of New and William F.Bishop, a citizen of Connecticut, filed this bill against the& Western Railway Company,a corpdration created under the laws of Georgia, and a citizen thereof, the East Georgia & Florida RailrMdCompany, also a corporation created under the laws of Georgia, and a: t}itizenthereof, "and against William V. McCracken, George A. Evans, andqNeil McDonald,who orators aver are citizens of the state of New York, and residents of the city of New York, in said state, copartners under the firm name and style of W. V. McCracken & Co." The complainants by their bill make the following case: They are copartners under the firm name of Hamilton & Bishop. The East Georgia & Florida Railroad Company was incorporated under the general laws of Georgia, for the purpose of constructing and operating a railroad from Buffalo to or near St. Mary's. The certificate of incorporation is attached to the bill, and it shows that L. M. Lawson, Samuel Thomas, and H. S. Terrell, of New York, and C. D. Willard, of Washington, D. C., were the incorporators. Afterwards the route was changed from the southerv terminus northwardly, by the most direct and practicable line, througb