cognizant of the facts alleged in the bill for avoiding the con· tract. . The three pleas in bar of the defendants Park and Baxter, the plea in bar of the defendant the Emma Silver Mining Company of New York, and the joint plea in bar of all the defendants, overruled. The first plea in bar of defendant Park overruled i the second and third sustained.
& NEW ORLEANS R. CO. and
(Oircuit Court, 8. D. New York.
DISCOVERy-OFFICER OF CORPORATION.
An officer of a corporation cannot be made a party defendant to a cross-bill, for the purpose of discovery, where he did not derive the desired information in his official capacity.
In such case the discovery cannot be had, although the officer derived his information from a participation in the creation of the corporation.-[ED.
In Equity. Demurrer. F. N. Bangs and F. C. Stetson, for plaintiff. ,J. Emott and Ashbel Green, for defendant Osborn. CflOATE, D. J. The defendant corporation having brought a suit in equity against this plaintiff, the principal object of which was' to ,procure a decree adjudging void certain mortgage hondsof the Mississippi Central Railroad Company, a corporation fOJ;merly owning a railroad now belonging to defcndapt corpotation, this plaintiff had leave of the court to file a cross·bill. In his cross-bill the plaintiff joined as a defendant, for the purposes of discovery, the defendant Osborn, tbe president. of the defendant corporation. One of the defences set up cross-bill is that the title of the defendant to' is derived through the fore· closure of a subsequent mortgage. thereon; that by the terms of the mortgage soforeciosed, and also by the provisions of
.'OOMB V. OHICAGO, ST. LOUIS & NEW ORLEANS R.OO.
an agreement entered into by the bondholders under said foreclosed mortgage made sh!)rtly before the foreclosure, and which by consent of all the parties to the foreclosure and by order of the court was embodied in and made part of the decree of foreclosure, the cause of action existing, if any, against this plaintiff, by virtue whereof the defendant corporation would otherwise have been entitled to have the bonds held by the plaintiff adjudged void, was released, and said bondholders and this defendant corporation are precluded and estopped to set up against the plaintiff the illegalities and alleged frauds by which in the ol'iginal bills the validity of said bonds is sought to be impeached. The defendant corporation, or rather another corporation, the Central Mississippi Railroad Company, which has, with still another corporation, been consolidated into the defendant corporation, became the purchaser of the railroad tram the committee of bondholders who bid off the.property upon its sale in foreclosure, and, for the purpose of this demurrer, may be regarded as having been virtually formed of the bondholders under said foreclosed' mortgage, as claimed by the learned counsel for the plaintiff. The defendant Osborn, who is the president of the defendant corporation, is alleged to have been one of the purchasing committee of "bondholders, and is claimed from this circumstance to have been the agent of all the bondholders in the transaction which resulted in the foreclosure, including the Illinois Central Railroad Company, which was the holder of the largest part of said ponds, and is alleged to have joined in said agreement prior to foreclosure. The defendant Osborn demurs, on the ground tha"t he is improperly joined as defendant. The interrogatories put to the defendant Osborn are "designed to discover what amount of said bonds was held by the Illinois Central Railroad Company, and whether that company. and, if any, what other bondholders, assented to the decree in foreclosure. The demurrer must be sustained. It is proper for a defendant in a bill in equity,. who flIes a' cross-bill, to make defendalltsof parties not parties to the orig-
inal bill, where they are necessary to complete relief. Brandon Manuf'g 00. v. Briner, 14 Blatch£. 371. And the practice is established of joining, for purposes of discovery, an officer of a defendant corporation, where plaintiff is entitled to discovery in a suit against a corporation. The reason of the rule; as stated by Lord Chancellor Talbot in the leading case of W,'I/ck v. Mead, 3 P. W. 310, which seems to have finally established the practice, is that as "the plaintiff ought to have discovery," and as "the defendants can answer no otherwise than under their common seal, and though they answer never so falsely, still there is no remedy against them for perjury;" therefore, "it has beeu a usual thing to. make the secretary, book-keeper, or any other officers o(a, company defendants." As observed in that case,' although the answer of the defendal;lt 'could'not be read company, "yet it maybe of uset:6 direct the plaintiff how to draw and pen his interrogatowards obtaining and "it may be mischievous and injurious the subject to deprive them of 'tliatdiscovery to which" common justice, they are en· titled';'" and, on the other hand, "no manner of inconvenience ensue from obliging officers of a company to an"'Later cases have added but little either.to the extent of the or the exposition of the which it is based. It is conceded to bean exception to the general rule a mere witness cannot" be joined for purposes of discovery. And the rule has been extepded to members o,f a who are not officers. ' Fenlon v. Hughes, 7 Ves. 28'9'; Moodalay v. Morton, 1 Bro. Ch. 469; Dummer v. Ohippel/ham, 14 Ves. 245; Many v. Beckman Iron 00. 9 Paige, 188; U. S. v. Wagner, L. R. 2 Ch. 582; Glasscott v. Iron Co. 11 Sim. 305. No case has gone so far as to join an officer of a corporation for the pmpose of a discovery of matters which were not within his knowledge as such officer, or learned by him while in the service, or as a member of the corporation, nor, as in this case, matters which took place before the corpora· tion was formed, or in which it had no part, though it appears that by and through other sources of information the
TOMMEY V. SP.tRTANBUBG &''!.1I1rlllVILLE B. 00.
offiC'erbappens to bave obta-ined such knowledge. 'Assuming that the matters inquired of are, as' stated by plaintiff's <lOun.. sel, dealings in which he iwas.,agetit for'those who are now stockholders or beneficiaries'df the company, and which dealings were part of the process of bringing that company into life, yet there is no precedent for this bill, as a bill of discovery, against the defendant Osborn, and to sustain it would, I think, be going beyond the recognized limits of this excep· tional rule, and beyond ,the reasons on which the rule' is founded. See Story Eq. Pleadings, (9th Ed.) § 235, notes, and cases cited. ,Demurrer sustained.
(Uircuit Oourt,' W. D:
'.: ...i .
Claims lab'or p,edormed iii'tlie , struction of '<a railroad sulllseqtien't'to ilie execution of a mortgage' the road will, not be allowed; .except as postponed, to the rilottgago debt, and or D,ot mechanics' or laborers'liens have peen, filed in the pIoper court. " ' , . ' , Conttacts made priotto the the mortgage, and work' :done thereunder, oreate no lien superior to that of the mortgagk ' 'c Claims.of Md laborersfO'i' labor performedin-the, COil'"., struction of a railroad s,uQsequent to of a mortgage on the road, to secure Its bonds, will not beallowed,except as t.o the bondholders, notwithstanding the Wotk wasperforined and a mechanics' or lq,borer8' lien.filed in the proper court before 1iheregis-' · tration of the mortgage iu tb,e state where the labor is performed the lien filed. . ,
. . .:
In Equity. This was a bill filed by complainants for themselves, and in behalf of all other holders of the "first mortgage 7 per cent. gold bonds" of the Spartanburg & ABheville Railroad,
-Reported by Thomas M. Pittman, Esq" of the Charlotte, N. C., bar.