TEXAS & ST. L. RY. CO.
SUST.
pledge of such secdrities of other roads, but denies that it.is about to use them for such purposes, and alleges tha t it intends to use them to pay its floatinR debt. It is said in argument that if the defend- . ants should answer fully the in the bill, the intention to aid other roads would appear with much more definiteness. This may be true, but cannot amplify the bill for the present motion. The information thus to be obtained cannot be made available until it is had. These allegations as to intention and purpose of divertwg the funds of the corporation seem to be too meager and indefinite to lay the foundation of a preliminary injunction upon, and, such as they are, they are fully met by the denials of the answer. 'I'be purpose to raise money to meet debts, or for other corporate uses, by pledge of these sureties, seems to be clearly within the scope of the corporate powers, and lawful and proper. The corporation has these securities not yet due. Whether it came by them by stretch of its powers or otherwise, no question is made but that it owns them. The bill proceeds upon the ground that it does. It owes debts, and was created with the expectation that it would owe them, and bas implied power to raise money to pay them. It is not disputed that it could sell these securities to raise money to pay its debts, and the power to pledge them is included fairly in the power to sell for the same purpose. Platt v. Union Pac. R. Co. 99 U. S. 48. The orator does not appear to be entitled to have the corporation restrained from raising the money by the pledge of the securities, for that seems to be entirely lawful; nor.to have it restrained from using the money for outside purposes, for there is no sufficient allegation or admission of any intention of doing so if not restrained. On the contrary, the intention imputed is denied, and the whole equity of the bill, if any, is denied. As the case now stands the orator does not appear to be entitled to the preliminary injunction moved for Motion denied
TEXAS
&
ST.
L. By. Co. in Missouri and Arkansas v. another. April Term, 18S3.)
RUST
and
(Oircuit Go'urt, E. D. Arkansas. 1.
REMOVAL OF CAUSE---:JURIsnICTIOX OF CmCUIT COURT, WHE'" ATTACHES.
2: S.BfE-,-FILIXG OF RECOHD-'-TnIE.
The act of ,congress requires the ·party removing. the cause to file of the record on the first day of the next sessIOn of ,tp..e. circujt c.ourt occurrlllgafter the removal. But it may be filed by either party Lefore that time;·and when
276
FEDERAL REPORTER.
filed, and upon due noticr, the circuit court will make nIeh interlocutor,r orders in the case as may be ner:e.>sary to pre,erve the property or pr0teet the rIghts of the parties. 3. Where an injnnction is granted and a rece.ver appoint eel by the state court without not:ce to the defendants, and no motIOn to di ·solve the injunction and discharge the receiver is made and acted upon in the state court before the removal of the cause such motion may be marie and heard in the circuit court, upon due notice to plaintiff, at any time after the record in the ca.>e is filed in I hat court. SPECIFIC PlmFoIDIANCE-\VHEN DECHEED. Defore a court can decree ,t specific performancc !IADE IN STATE
4.
of a contract, the party seeking tile relief mllst e<tah!ish his right thereto by satisfactory evidence, a.ld this can only be done on the final hear,ng of the cause.
5. SA)m-CASE STATED.
The plaintiff railway comp'llly entered into a contract with the defendants for til' construction by Ihe latter, for the former, of a railro.ld bridge across the Arkansa, rinr. Differences arose between the parties as to their respective rights under the contract, wh ch resulle:l in stopping work on the Imdge. The plaintitI thereupon tiler! a biil, askmg the court to take pos of the defendants' plant an:l complete the bridge, with fuurls to be furnisheJ by the plaltltitf; leaving all questions of difIerence between the parties f"r future settlement or a.ljudicat,on. lldd, that the COtut had no power to seize lind use the defendants' plant, and that it would not undertake the wOlk of completing the bridge.
On the twenty-second of April, 1882, a contract was entered into between the plaintiff railwlty cIl\npany and Rust & Coolidge, the defendants, for building a railroad bridge across the Arkansas river. Tne were to complete the bridge by the first of November, 1882, and were to receive therefor the sum of $305,000, to be paid on "pro rata monthly estimates, ninety per cent. thereof to be paid during progress of the work. upon material furnished and work performed, and balance due upon completion thereof." The contract contains this provision: "In case of non-completion of the bridge IIpon Novemher 1,1882, or of providing a crossing for trains uy said dale, then, iu such event, the sl1m of S l,UUJ per week, for the ppriod of ti me such completion or provision for crossing of trains is delayetl. shall be deducted from said contract price; anll in like manneL', should the uritl;J;e ue completed at an earlier date than November 1, then, in such event, the sum of Sl,OOJ per week shall be adtled to said contract price for the period uv which said fixed date of completion shall be anticipated." ·
. Rust & Coolidge entered upon the work of building the bridge, but It was not completed the first of November, and is not yet completed. defendants continued to work on the bridge, and their monthly estlmates for work done and materials fUI'nished were honored and by the railway company down to and including the month of April, 1R83. The total amount thus paid by the railway company to the defendants unrler the contract was $2ti8,OOO. The May estimate for work done and materials furnished, amounting to $15,932.58, after deducting the 10 per cent., the railway company refused to honor. In a letter of the defendants of June 29, 1883, they atate that unless the differences between the parties are
TEXAS & ST. L. BY. CO. V. BUST.
277
adjusted at a proposed conference, "we shall, npon Saturday, July 7, 1883, stop or suspend work upon the Arkansas river bridge uutil a definite understanding is reached." A conference took place between tho president of the railway company and the defendants at Pine Bluff on the sixth of July, 1883. They were unable to reconcile their differences, and on the same day the plaintiff brought suit, by attachment, in the Jefferson circuit court against the defendants for $35,000, being $1,000 per week for the number of weeks that had elapsed since the first of November, 1882, and caused the defendants' pLmt at the bridge, consisting of machinery, tools, houses for hands, camp, camp equipage, and provisions to be attached. The noxt day the plaintiff filed a bill against the defendants on the equity side of the J etferson circuit court, setting up, in substance, that the road was completed and ready for trallic, and that tue running of trains thereon was only prevented by the non-com pietion of the bridge; that t.he bridge could be completed in 20 or 30 days; that the defendants harl been paid the full contract price for bililding the bridge, counting as part payment the weekly forfeiture of $1,000 for 35 weeks; that at the conference between the president of the railway company and tile defendants, the day previous, the latter demflnded of the plaintiff, as a condition of going on with the work, a release from all claims for damages by reason of the dolay in the completion of the bridge, and also $20,000 for extra work and matel'ials, and threatene<l, if these demands Were not acceded to, to stop work on the bridge and remove their plant out of tho state; and that piailltill believed they would carry their threat into execution, unless rest.rained; that the plant for the construction of the bridge was of such a character that, if removed, it would cost a large sum of money and take months to replace it; an 1 that the plaintiff and the public were deepl'y interested in a speedy completion of the brid;je, to the end th tt the railro<td might be opened for traffic. '1'he bill concludes as follows: "The plaintiff is willing to pay into the registry of this court such sum as shall Lie neces:mry for the c"lI1pletion of sail! worl" if slll'h !'onrt shall order and dirt'ct the progress uf tile work by a receiver appointe,! by the conrt. The prell1isps considered, the plaintiff prays for acconliw; to law that the said defendants, their agents, servant,.;, or employes, anll all other pllrsons, be restraine,! an,! enjuined from dpstroyin!{, injuring, or interfpring with, or removing, said tuu,:!, machinery, or appliance:! nececisary to said work. or the materials usp,! therein; am! that a re,:eiver he appoi It.e.! hy the cOllrt to take charge of said work, alltl the matprial, fixtures, and tools uscJ therein, and pruceel! to carry out anti complete the same in accor,lallce with tllP specilications thereof, an'( for said pllrpose he fUlly allthurizell to employ men and labur, allLI use the tools of defendant therefur." Upon filing this bill, without notice to the defendants or their agents, tlJe state court made an order enjoining the defendants from taking posseision of, using, or in any manner interferll1g witll their plant at tue and appointing a receiver "with fnll power and aut!lOnty, so far as possible fur him to do, to carry out and execute
278
in full, and according to the specifications the'reof, the contract tween the plaintiff and defendants in relation to the building of said bridge, and for said purpose he is hereby authorized and empowered to take charge of and use all material now in the vicinity of said work, together with all the tools, machinery, or other appliances necessary to the work thereon, offices and houses for hands, kitchen and dining-room furniture," and concludes with an order to the sheriff to turn over to the receivel' the defendants' plant in his ,custody on the writ of attachment. The order does not state from what source the receiver is to obtain funds to carryon the work. On the ninth of July the defendants filed in the state court their petition and bond for the removal of the cause to this court, on the ground of the citizenship of the parties. The record in the case was filed in this court on the twelfth of July, and afterwards the defendants, upon due notice to the plaintiff, moved to dissolve the injunction and discharge the receiver. 'l'hereupon the plaintiff moved for leave to amend its bill, which leave was given, and an amerided bill filed accordingly. The amended bill sets out at length the contract and correspondence between the parties; repeats the allegations of the original bill, with some variations of statement and addition of detail; alleges that the defendants, in making their proposal and estimates for the building of the bridge, included in the same the value of the use of the plant, tools, and machinery required to be used by the defendants in the construction of the bridge, and that the estimates that were made from time to time included the value of the use of said plant, and entitled plaintiff to the use of said plant until the completion of the bridge; that at the Missouri and Texas state lines the plaintiff's road connected with roads in these states, making the road in this state a connecting link in a continuous line extending from Gatesville in Texas to Cairo, Illinois, a distance of about 750 miles, and that as soon as the bridge is completed so that trains can cross thereon, the United States mail will be carried over the whole of said line; that the bridge is so nearly completed that the same can he finished in' 20 days, at an expense of not more than $10,000, "in conneCltion with the use of the materials, tools, machinery, and plant now at said, bridge," but that if defendants are allowed to :remove their plant the bridge cannot be finished in a less period than six months, and at It cost of not less than S50,000; that plaintiff "is willing to pay and indemnify the defendants from any and a1110ss which they may sustain by reason of the institution of this suit, if wrongfully brought, and the use of the plant and property of the defendants by the re-, cei,er in the completion of said bridge." The bill does not allege that the defendants are insol\ent. The defendants have filed an answer to the original and amended bill, in ,,:hich the delay in th'e con-' s'truction 'of the bridge is stated to have arisen from sickness of labonirs"particularly'skilled laborers, whose place.s couldn,ot" be supplied,-'-'-from bad weather, repeated and unlooked-for floods in the'
'JEX.\ll &. ST. L.
m:.
CO. V. r:U;jT.
river, and other causes of like nature; that from these and like citnSes the plaintiff was delayed in the const!uction of its road, and liad no me for the bridge down to the time of the institution of this suit; that plaintiff never complained at the delay in the construction of the bridge, and paid the monthly estimates for work and material promptly down to and including the April estimate, and that it waived the weekly forfeiture of $1,000 for the non-completion of the bridge after the fll'st of November; that the whole of the May estimate was to them, and that plaintiff's refusal to pay same was without excuse or justification; that there is a large sum due defendants for extra work and materials; that defendauts did not stop work on the bridge of their own will" but that the work was stopped by the levy of the plaintiff's attachment on the defendants' plant; that defendants did not iutend to stop work after their interview with the president of the company, and that at such interview they did not threaten to stop work on the bridge and remove their plant unless the plaintiff would release all damages for non-completion of the bridge and pay them $20,000 for extra work; denies that the defendants or arw of their agents, with their knowledge and consent, injured or damaged ,the plant or materials for. the bridge in any way; and denies that plaintiff has paid for the use of defendants' plant, or is entitled to the use and possession thereof. , Several affidavits were filed in support of the answer. II. K. J'; N. 1'. White, Phillips J'; Stewart, and John :McClul'e, for plaintiff.' . M. L. Bell and U. lJI. d': G. B. R9se, for defendants. CALnWELL, J. It is settled that upon filing the required petition and bond in the state court, in a cause removable under the acts of con!!;ress, the jurisdiction of the state court ceases, and that of the ,eircuit court of the United States immediately attachetl. The en,tering of a copy of the record in U:" circuit court is necessary to enable that court to proceed, but its jurisdic;::{,)n attaches when the requisite petition and bond are filed in the state court. Nat. Steamship Co. v. Tugman, 106 U. S. 118; [So C. 1 Sup. Ct. Rep. 58;] Railroad Co. v. Koontz, 104 U. S. 5. 'l'he aet of congress requires the party removing the cause to file it copy of the record on the first day of the next session of the circuit court occurring after the remoml. But it may be filed by either "arty before that time. And where any order or direction of the C?urt is necessary to preserve the property in litigation, or protect the nghts of the parties before the next session, the court will grant leave to either party to file the record, and will make such interlocutory orders as the case seems to require, and as it would have po",er· to make between the commencement of an' action originally ht'ought in that court and the term at which it could be tried.. Section 6 of the act of }larch .3,1.875, provides ,that the 'circuit shall llroceed
280
in a removal cause as if had been originally commenced in that court, "and the sallie proceedings had been taken in such suit in said circuit court as shall have been had therein in said state court prior to its removal." Undoubtedly, if this cause had been commenced in this court, and an injunction granted and a receiver appointed without notice, the court, upon notice to the plaintifJ, would have heard a motion to dissolve the injunction and discharge the receiver before the term at which the case would be triable. If this oouse had remained in the state court, the defendants would have had the right to make this motion and had it determined before the term to which the writ was returnable. Gantt, Dig. §§ 34773480. But the defondants were not bound to make the mot:on and submit it to the detennination of that court. If they had done so, and that court had denied the motion, and they 11ad then removed the cause, this court would not have entertained the motion on the same record until the hial term. Flot Springs Cases, MS. Op. But the injunction having been granted, and the receiver appointod without notice to the defendants, and no motion to disl;olve the injunction and discharge the receiver having been made in the state court, such motion may be made, upon notice to the plainttff, in this court at any time after the record is filed. Dillun, TIem. § p. !H); MahollfY Mining Cu. v. Bennett, 4 Sawy. 280. In disposing of the motion before tlle court it is not nocessary to determine whether a court of chancery will, in any state of case, undertake to enforce specific performance of a contmct to build a railroad bridge. The plaintiff's bill is not one for specific performance of the contract to build the bridge. The bill is an anomaly in equity pleading. No precedent for it has been produced, and it is believed noue can be found. It is not framed to secure a spn.cific performance of the contract by the defendants, nor to settle tue controversy bet,,·een the parties. Whether the plaintiff waiyed the right to the el,OOO per week arterthe first of Novf-'ffiber; whether the dorendants were entitled to be paid the May estimate; and whether they are entitled to receive anything for extra work and materials,-are matters which are material and necessary to be determined before specific performance of the contract 'auld he decreed, if, unner any circumstances, a court of equity woald unrlertake to enforce specific performance of such a contract; and yet all these disputed qnestions, the determination of which would be ahsolutdy essential Lefore it could be known whether the plaiutiff was entItled to the aiJ of a court of equity to enforce "pecific performance (Jf the contract, are by the bill in terms left to Le determined after the court has taken it upon itself to seize the property of the and complete the bridlle; and then these questions are not to be determined in this Buit, but in
TEXAS & ST. L. RY. CO. V. RUST.
281
suit at law already pending, and such other suits as may hereafter be brought, or by convention of the parties, or by arIJitmtion. The exact language of the bill on this point is that.. The plaintiff is willing to waive for the time being all qnestions anrl differences in relation to the construction to be placed upon the said contract between the complainant and the defendants, as well as the amount that may may be due from one to the other, and hereby proffers to advance this cOllrt, or to the receiver hereinafter prayed for, such a sum of money as will fUlly pay for the completing of said lJridge, leaving all questious of clifterpnces and the defendants to be hereafter settled without between the prejlldice to the rights of either of the parties hereto, by compromise, arlJitratiun, or in due course of law, as the said parties Illay eleet."
It is an elementary principle of equity la w, that, before a court can decree a specific performance of a contract, the party seekillg such relief must establish his right thereto by sati::;factory evidellce, and this can only be done upon final hearing of the cause. It cannot be done upon an ex parte statement, and without notice to the party against whom the relief is sought. In this case, as it stands, there is nothing from which the court can form any opinion to the merits of the case. There is no evidence on the essential points of differance--nothing but the opposing statements of the palties. If, as claimed by defendants, the plaintiff waived the weekly forfeiture, and they are entitled to compensation for extra work and labor, then they were entitled to have the May estimate honored, and the party in default is the plaintiff. So far from asking that the defendants be required to specifically perform the contract on their part, the court is asked to take from them their tools, machinery, camp, and camp equipage, and enjoin them from doing anything in the premises. Stripped of its irrelevant and declamatory statements, the case made by the bill is this: That the plaintiff and defendants have It misunderstanding as to their respective rights under the contract for building the bridge; that the materials are on the ground to complete the bridge, and that with the use of the defendants' plant-consisting of machinery, tools, and camp equipage-it can be completed in a short time; but that without the use of this plant the completion of the bridge will be much delayed and its cost enhanced, to the great damage of the plaintiff and the inconvenience of the public; and that the nse of the defendants' machinery and tools is absolutely necessary to avoid the delay and damage to the railroad company and disappointment to the public. Upon this showing, an injunction is prayed against the defendants, enjoining them from using or taking possession of their machinery, tools, and entire plant used in carrying on the work on the bridge; and the COllrt is asked to take possession of this plant, and go forward with the work and complete the bridge "in accordance with the specifications;" the plaintiff generously promising to furnish the means to discharge the pecuniary obligations incurred by the court in carrying out the enterprise, and also offering to give a bond
"'FEDERAL REPORTER.
to pay the defendants the value of therEmt of the tools duiing the: time they are used, by the court. It is the defendants' plant for' building the bridge, and not the materials which enter into the C011-; struction of the Lridge, which the court is asked to seize and use. The materials for the bridge belong to the plaintiff; the plant to the defendants. What authority has a court of chancery to seize and use the property of one citizen for the benefit of another, without a trial or a hearing? No exigency of a railroad company, and no considera tions of public convenience, however great, will justify the act to the law. If the necessities of the plaintiff, and the public necessity, will warrant the seizure and nse of the defendants' tools and machinery, it is not perceived why the same considerations would not make it the duty of the court to seize and use the tools of other citizens, or the mules of the neighboring planters. Courts possess no such absolute and despotic power over be property of the citizen. The citizen cannot be deprived of his property or its possession "without due process of law," and a simple bond to pay the owner the value of a forced loan of his property is not the eqnivalent of the due process of the law contemplated by the constitution. In effect, the court is asked to compel a forced loan of the defendants' tools, machinery, and camp equipage, and when it secures possession of them it is asked to use them in completing the bridge, and to appoint an agent for that purpose. A receiver is the agent of the court; he is an offi" cer of the court, and his possession is that of'the court. He is not the agent of either party, and neither party is responsible for his mis-, feasance or malfeasance. And for this reason courts should not assume to place the private property of the citIzen, or the conduct of his business, in the hands of a receiver, except where both the right and the necessity to do so are clear. Courts are poorly adapted to the business of building railroad bridges. If not properly constructed, the most serious consequences to life and property are likely to result. Their proper construction requires a high degree of engineering skill, which this court does not possess. Any court which engages in the business is liable to commit grave mistakes, and inflict great wrong and hardship, for which the injured parties will have no redress; for the errors and mistakes of the court, though they may ruin a citizen, are placed in the category of injuries produced by the law, and for which the law furnishes no redress. Certainly no court ought to engage in the business, when it would have to resort, in the beginning, to the exercise of such questionable powers to get the tools to carryon the work. It is obvious that the sale object of the bill in this case is to obtain,' the agency of the conrt, the use of the defendants' plant' unhl the bridge can be finished. If the court should contir ue the. forced loan of the defendants' tools and complete the bridge, it would baye to settle with the plaintiff for t:16 money received, and there
TIeE V. SCHOOL-DIST. NO. 18.
, this case would end, leaving every question is dispute between the parties where it stood when this case was begun. This would be proceeding by imersion. ,The method has too much the air of that pro,ceeding by which a man is first hung and tried afterwards to find favor in a court of equity. , Let an order be entered dissolving the injunction and discharging the property from the custody of the receiver, and requiring him to 'return the same to the officer or person from whom he received it, and to pass his accounts in the master's office without delay. "ee City of Chicago v. Hntchinson, 15 FED. REr. 129; Glover v. Shepperd, rd. 833: Plurnix Mut. Life Ins. Co. v. Walrath, 16 FED. REP. 161; 1'1tblic Grain & Stud. Exuhan:;e v. Western Union Tel. Co. rd. 2SU.--[ED.
TreE
v.
SCHOOL-DIST.
No. 18,
ADAMS CJUNTY, NEDRASKA.
(Circuit Court, D. Nebras 7 .a. 1.
August, 18.33.)
CmcuIT COUIlT-CIIAKCERY JUln"DICTIOK-STATE STATun:-NEw THlALS.
:.0.
The statnte of Nebraska, regnlating the practice of the state court in determining applications for new trials, is not binding upon the circnit court of the United States when exercising its chancery juriscEction; llnd the limitation in the state statutc which forbids the stare cO:lrts to grant trials after one year, so far from being a limitation upon the circuit court, sitting in chancery, may be the very ground of its jurisdiction; especially whe:'e the facts which make it proper that the judgment should be set asiue have been fraudulently secreted until the year has SA)[E-JUI:I£,DICTJOK, now COKFERHED. The chancery jurisdiction of the circuit court is confer,cd by the constitution of the United States and the acts of congress, and is not derived from or limited by stale laws, The rules governin!! its exercise are the same in all the state", and are according to the practice of courts ofcquity in England, as contradistinguished from eourts of law. SA)[E-STATE STATUTES OF LnlITATIOxS.
3.
Federal courts of equity usually follow by'analogy state statutcs 01 limitations, but they will not do so when the effect of such a statute in any case is to limit their general chancery jurisdiction; and altbough a state statute of limitations may make 110 exc"ptioll in favor of it part)" who is prcvented from suing hy rea,on of a concealed fraurl, they will cnforce such an exception because it i, a p'lrt of the ch:l11eery law us admiuistereJ in those courts, whieh tllA cannot ch::lnge. TmA1,-POWElt OF ClIAXCEI:Y CounT TO DECHEE.
It is a general principle of law that a court of chancery may decree a new
trial after the courts of law are barred by lapse of time from so doing.
On Rehearing. 1 Bill in equity brought to set aside a juogment at law in this court, and for a new trial upon the gr.ound of surprise at the trial, and newlydiscO\-ered eyidence. The original suit "as brought hy the plaintiff to recO\-er judgment upon certain bonds alleged to ha,e been issued l:3Ce.S. C. 14 FED.HEP.
SSG.