VENNER V. FITZGERALD.
DALLAS, Circuit Judge. We all concur in the conclusions of the circuit court, and in the reasons therefor expressed in its opinion. That opinion is so full and satisfactory that any further discussion of the case is needless. The decree is affirmed.
VENNER v. FITZGERALD et al.
(Circuit Court, S. D. New York.
INllor,VENT CORPORATIONS OF STOCKHOLDERS.
January 10, 1899.)
POWERS OF REORGANIZATION COMMIT'l'EE -
A reorganization committee, appointed by holders of the stock and securities of an insolvent railroad corporation, In whose hands have been placed many millions of dollars' worth of different securities, held in many rights, for the purpose of effecting a reorganization of the corporation upon the same franchises, must necessarily be accorded a wide discretion; and where, by the agreement under which it acts, it is given "absolute and complete discretion and latitude in the use, disposition, and distribution" of the reserved securities of the new corporation, a court of equity will be authorized to interfere with such distribution only upon a consideration of the entire arrangement of compromises, concessions, and inducements made by the committee; and a bill by a stockholder, merely alleging that certain acts of the committee, in purchasing securities of the old company, and in distributing securities of the new, are foreign to the purposes of the committee, and unauthorized, is insufficient to show an equitable right to an injunction or to an accounting by members of the committee.
This is a suit in equity by George L. Venner against Louis Fitzgerald and others, members of a reorganization committee of the stock and security holders of the Union Pacific Railway Company. Heard on demurrer to the bill. George H. Yeaman, for plaintiff. Rush Taggart, for defendants. WHEELER, District Judge. The bill alleges that the plaintiff, a citizen of Massachusetts, was the owner of 200 shares of the capital stock of the Union Pacific Railway· Company, which was insolvent, of the par value of $20,000, and that were, with many millions of other stocks and securities, placed in the hands of the defendants Fitzgerald, Schiff, Depew, and Hughitt, who, with T. Jefferson Coolidge, Jr., and Oliver Ames, 2d, also citizens of Massachusetts, constituted a reorganization committee of the stock and security holders, for whom the defendant the Mercantile Trust Company is a depositary, pursuant to a plan by which. the plaintiff would become entitled to the same amount of common stock of the Union Pacific Railroad Company, a new cQrporation with the same franchises; that the committee has, from assets of the old company, paid to the defendants J. P. Morgan & Co. at one time $2,250,000, and at another time $3,330,000, for bonds and securities, which purchase, "and various others of like character, was wholly foreign to the objects and purposes of the said plan and agreement of reorganization"; that $2,122,000 of par value of pre· ferred stock of the new corporation has been delivered to the reorganization committee, $1,273,200 of which is to be distributed by J. P.
9] FEDERAL REPORTER.
Morgan & 004 without consideration, to holders of trust notes of the oldcol'por'3.tion, $424,000 of whiCh is to be delivered as a bonus to a syndicate,and $424,400 of which is to be retained by that firm for its own compensation; that thecom.mittee tthave, in divers ways and for different purposes, and which your orator cannot specifically state, expended and disbursed large sums of money coming to their hands as aforesaid, without authority and for no legitimate purpose of executing and carrying into effect the said plan and agreement for reorganization,"*andr prays for an account of the 'taets and proceedings of thesa,id defe:o.dants, composing said committee, in and about the issue, receipt,trallsfer, and disposition of the preferred stock," bonds, securities; and moneys, and for an injunction restraining the issuing or the and for further relief. The to for want of parties,· citizens of the same state as ,the plaintiff, and others, and for ,want of equity; and the dem.urrerhas now been heard. That no rights of those not parties, and no 'rights of those whoJl.re that cannot be separated from the rights are not,can properly be adjudged is not, and could not be, dililputed; but the charges against the committee are said to be for breaches of the trust, in ,w hich each· would· act outside their com· mon dl1tyf,oi' himself, and not for the others, .and the collateral note to be so constaJ;\tly changing thatthey cannot be made holders parties,bnt,arerepresented byJ. P. Morgan & 00., trustees. The account prayed is, however, of the acts and proceedings of all the members of'the convnittee, in whicH all would be involved,and none could be separa,ted. injunction. might, perhaps, run against some, when reached, to. prevent a wrongful violation by those 'all. could nqt. within 'of equitable' rights, if such should be found to exist. By the plan of reorganization, as understood, the plaintiff was to have stock of the new company in equal amount for that of the·old; and the gist of his complaint seems to be that, by these acts and proceedings of the committee, his new stock will be diminished in ,,",alue, through the :depletionofassets, and. of preferred stock. so created. The agreement tinder which the' 'plaintiff deposited his' stock appears to provide thlit: .... . i'
"The sMll and complete discretion and latitude In the use, dlSposltlon,.ordlstrlbtition of all 'securities of the new company. which are specifl.edlnthe plan lL!lreserved for [the purposes therein stated; and which are In,eXlless of the. sequritles there e,mbraced in the. defined Issues for purposes; it may use. dispose of. dlstrpJute. or appor· tlon any or securities of the .new compans. In manner and upon any terms 'which It may !deem expedient or advisable, to promote or flccompllshthesubstantlal objects and purposes of the. plan and of this agreement."
The handling of' such imtnense amounts. of different securities, held ·in so trianyl·rights, for the ;purpose of: l1eorganizatioB' upon the same for the .committee, very in all directions, Thelplaintiff must! :haveunderstood that, in depositing his ;st0ck underi:the agreement,' tit would necessarily be liberally construed towardscbnferring the powers required for accomplishing the desired result, He so agreed that 'they should do what they should see fit to' .1J0 not seem to be entitled:to have the business stopped
SOMMERS V. CARBON HILL COAL CO.
:or criticism of its methods, although some of them, by. themselves, may appear extravagant and unwarrantable, or even unconscionable. The whole arrangement of compromises, concessions, and inducements must be considered together, in order to understand whether any of them are so wholly without the scope of what was intrusted to the comn;littee that they should be suspended. The allegation of the for· eign .character of the purchases of securities, without setting forth what securities they were, or whether they were brought into the ar· rangement, or were used to bring it about, does not show that the money paid was so lost· to the assets as to affect the amount of pre· ferred stock that might properly be issued; nor does the allegation of the delivery of preferred stock to note holders, or to a syndicate, or for commissions, in matters of such great magnitude, show such a breach of trust by those of the committee participating in it that it should be stayed. There does not seem to be enough set forth of tile whole proceedings to show that the plaintiff is equitably entitled to have this part stopped for the preservation of the value of his holding. The general allegation of misapplication of money, which is so unknown that it cannot be stated, adds nothing to what is otilerwise in, suffiCient.
SOMMERS v. CARBON HILL COAL CO.
(Circuit Court, D. Washington, W. D.
December 28, 1898.)
The mere fact that a party was surprised by the testImony of a witness Is not ground for a new trial, but it must also be shown that Its effect was to deprive him of a fair trial; and where he was advised that the witness would not testify as he expected, and, in consequence, declined to call him, leaving the opposite party to do so, there Is no ground for supposing the testImony would be less prejudicial on another trial.
TRIAL-INSTRUCTIONS-COMMENTIl'W ON THE TESTIMONY.
A provision of a state constitutIon that judges, In Instructing juries, shall not comment on the evidence, is not appllcable as a rule of practice in a federal court, and in such court it is proper for the judge to comment fairly and impartially on the testimony, fcir the purpose of more clearly defining the Issues submitted, and of assisting the jury In reaching a just conclusion. Plaintiff, a coal miner, In an action against the owner of the mine In which he worked to recover for injuries alleged to have resulted from an explosion of gas following his striking a match to light a fuse, testified that he tested the locality 15 minutes before, and it was clear of gas, and also that the presence of gas in sufficient quantity to cause the explosion would have been indicated by the flame of his lamp. Held, that a verdict for defendant would not be disturbed, as the facts stated did not indicate that It negllgently permitted the accumulation of standing gas, as allegei:l, but were only consistent with the theory that the gas suddenly escaped from some part of the surrounding wall, and that the negligence, if any, was on the Part of plaintiff in not observing his lamp immediately before striking the match.
MASTER AND SERVANT-ACTION FOR PERSONAL INJURy-SUFFICIENCY OF EVIDENCE.
This ca'se has been argued and submitted upon a motion by the plaintiff for a new trial.