496
FEDERAL REPORTER.
NEAL t1. ,FOSTER
et al. April 5, 1888.)
, (Oiruit Oourt, D. ()regon.
1.
EQUlTy:-hEADING-CRoss-BILL-RIGH'l' TO FILE-DEMURRER.
A cross·bill is a mode of obtaining relief or making a defense to which a defendant may resort as agains.t the plaintiff or a co-defendant in the original bill, without leave of the court, and the question of his right to file the saBle when and as it may be done, may be made and determined on demurrer. '
S.
BAME-TIME TO ]!'rLE-All'TER PUBLICATION OF TESTIMONY.
Where a cross-bill does not seek to introduce new or,further testimony on the matters in issue in the original suit, it may be filed after publication has passed, or the testimony thereabout is taken.
As the testimony in equity cases is no longer taken secretly or kept from the inspection of the parties until what was called publication, the mere fact of publication having passed or,the testimony being closed in the original luit, ought not to prevent a defendant from filing and maintaining a bill even touching mattetll in issue in said suit. (8yllabua by eM Gourt.)
8.
SAME.
In Equity. On demurrer tocross.,biU. ,Action to set aside conveyances" Earl 0., BroTlXJ,ugh, for plaintiffs. , Ja'fM8 K·. Weatherford, for defendant. DEADY, J. The originall>il1 in this case was filed on July 1, 1886, against James H. Foster, J{)hnA. Crawford, William Crawford, Ashby Pearce, John R. Baltimore, J. L. Tiles, E. Walden, and W. H. Goltra, andthe;object ofit was to have certain conveyances of real property sit,uate in Albany, Linn county, theretofore made by Foster to the Crawfords and Ashby I'earce, setal;iide as fraudulent. The other parties, including Goltra, were made defendants in the bill, because they. were, or claimed to be, judgment creditors of Foster's, and .in their answers they set up their claims accordingly. The Crawfords and Fos,ter answered the bill, denying that the conveyances were fraudulent. The plaintiff replied, and on October 7, 1886, the case was referredby the circuit judge to a master, who on August 29, 1887, filed evidence taken by him, and also his conclusion of fact andltl,w thereon, as directed by the order of reference. . In his answer Goltra states that in February, 1886, he obtained judg" ment in the state circuit court for the county of Linn against Foster on Q.ivers claims for the sum of 816,118.84, for which he claims a lien on the property in q u e s t i o n . ; On November 14, 1887, the defendants Foster and John A. and William Crawford, had leave to file what is 'ltyled therein, "a supplemental cross-bill," in which it is alleged as a bar to Goltra's claim to enforce his judgment against the property in question; that on February 10, 1886, he commenced a suit in the state circuit court aforesaid against the plaintiffs in the cross-bill to enforce the lien of his judgment against the property in question, on the ground that the conveyances thereof by Foster
NEAL V. FOSTER.
497
to the Crawfords were
because made with intent to defraud Goltra and other creditors of Foster; that the defendants in said suit answered the complaint, denying the allegations of fraud, and averring that the conveyances were made in good faith, and for an adequate considerati<;m; that Goltra filed a reply to this answer, and upon the issue thus raised the cause was, on July 9, 1886, heard by said court, which found that the conveyances in question were made to theCrawfords in good faith, and for an adequate consideration, and decreed that the bill be dismissed, and the defendants recover their costs; that Goltra appealed from said decree to the supreme court of the state, where, on April 11, 1887, said appeal was, by the order o(said supreme court, dismissed at the cost ofthe appellant, whereby the decree of said circuit court of July 9, remains in full force and effect, and is now binding between the p,artiesthereto. On December 31, 1887, GoItra demurred to the cross-bill. On the argument .the objections made to the filing of the bill when the application was made therefor were restated, and insisted upon. The point was also made that the cross-bill does not state. the facts of the original bill· . ·Thebillstates the commencement of the original suit, giving the date thereof, and the names of the parties thereto, and adds, "the object and purpose of said original bill being as therein stated and prayed." The proceedings on the original bill are then stated as above, down to the filing of the master's report, to which is added the allegation that Goltra was made.a. defend.ant in the original bill, as one of the creditors of ]'oster, while his interest was that of a plaintiff; and by said bill and the report ofthe master, Goltra is represented as being entitled to share in the proceeds that may accrue to the creditors of. Foster by virtue of any decree of tl).is court in the original suit. It is said that the cross-bill should state the original bill, or the parties, prayer, and. object of it, the. proceedings thereon, and the right .of the plaintiff therein, which is sought to be made the subject of the crosslitigation. Story, Eq. Pl. § 401; Adams, Eq. 403. In England, where this rule had its origin, a cross-bill might have been filed in another court,than that in which the.original was pending. Story, Eq. PI. § 400. In SllCh case it would be necessary to set forth the matters in the original bill, and its prayer and object, together with the proceedings thereon, if any, so that the court might be possessed of the whole case, of which the cross-bill is only a part. But this practice never obtained in this country. In the national courts, at least, the cross-bill must, from the necessity of the case, be filed in the circuit court where the original bill is depending. In such case there is no necessity of bringing .the facts of the original bill or its object or prayer to the attention or knowledge of the court by repeating them in the cross-bill, and a mere reference to the bill, which is already before the court; and a part of the case is sufficient for all .practical purposes. Of course, it is necessary to set forth in theci'osspill so 'much of matterin the original bill,8.nd the subsequent pleadv.84F.no.7-82
1rigsahdpt-oceedings astIlaybe nec'essary to show whatnght is sought to be' brolightbefore 'the court for adjudication, and tOtXl'1'loke 8. proper case therefor. 'rHhfhas been done in this case. Ghltra, a defendant in the original ilJill,but'whose interest in the ilUitis that of a plaintiff, seeks by his answer; ibcase the court should find that the convejancesby Foster to the Crawfords are void as to the creditors of the former, and order a sale to have his judgment against his co-defendant Foster satisfied out' of the proceeds of the property;! And now his co-defendants in the origthM bill, Foster and theCra'wfords, seek by the cross-bill to set up i1.s against him the defense of aptior adjudication bY' the state court, as between them, of the question ohhe validity of the conveyances. , It ill: admitted that the defense as stated is a barto the demand of Gqltra to have his claim satisfied out of the proceeds of this property; litigated question of the validity of'the conveyances of the sMie as against theerE!ditors of the grantor in the state court with him 'and ;his grantees, is estopped to allege or claim anything to the contraryofthe decree in that suit. ' A ,is generally considered and used as a, matter of defense, and p-tiiy answer fIle purpose a plea puis darrein cOhtinuance, where the matter (/f the defense arises' after answer., A ,cross.bill is, either brought the plaintiff in the' ci,riginal bill or due' or Inore of the defendants the origihalartd,' 'eross-bill are considered' one cause. 1 Smith,Oh. Pi'. 459; 402; J!1ield v. 7 Jtlhns. Ch.252;Oro88v. De Valle, 1 Wall. 14. , ' , ' It is '8.1s'Q ntaintaine,dtMt the eross-bill is filed too late, and that nothing na$' arisen since the CO(Dmencetnent of the suit which, would j\.1stify its filin'g.: This point tnli.de and argued on the application-for leave to file the and it iicontended that the question cannot now be raised 'again po the demurrer; "Bot the rule, is otherwise. ' It was not riedessaryto give notice of the' application for leave to file a cross-bill; nor, so farasI am advised,to obtain leave be,foredoing so. The only Case I ha\l'e on the subject is Bronson v. Railroad Co., 2 Wall. 283. Th,ere filed withoutlEllive. of the court was set aside as irregular. But'it'WM filed bya person not a partyto'the' suit, who petitioned the cou:rt:f6tleii\fe to answerfora defendant corporation, then in default, of which he wa& a stockholder, and rtlso to file a cross-bill. was given to file the'answer, hut as 'to the cross-bill the order of the court was silent. The party filed: th'e answer for the corporation, and. also a cross-bilI, which was subseque,ntly set aside becaUSe filed without leave, by a stranger to the suit"" ·· , :' ' " A is a regular and proceeding in a court of equity, to which defendant fuay resort in a proper case, without any speciallea\l'e of the court. 'But in doing so he must conform to the law or rule which 'goiverns the case, or take the consequence. Story says, "A' cross-bill will be open to 8., dem urrer if it is filed (Eq. PI;' § contrary to'the practice of the court, and under circumstances in' which a pu:re croSs-bill is not tiHowed. ll And as an he cites the case
"'itS
· NEAL V. FOSTER.
499
of a cross-bill filed after publication of the testimony in the original suit, which seeks to introduce new testimony aa to ,matters already in issue " , ' ,' . therein. It is generally stated in the books that a cross-bill must be filed before is before the taking of testimony in the original case .is closed, and the same opened to the inspection of the parties or published,-unless where some new matter, as a release, arises afterwards, or the case appears at the hearing too imperfect to reach and settie the rights of all the parties. As an illustration of the reason of this restriction, Chancellor KE!\T, in Field v. Schieffelin, 7 Johns. Ch. 253, says: "It is too late, after publication, to introduce new and further testimony to the matter in issue by the contrivance of a cross-bill. It would be doing, in an indirect way, per obliquum, what is forbidden to be done directly,"-referring to Ham6'f8ly v. Lambert, 2 Johns. Ch. 432. The reason given for this is that, if after the publication of the testimony, and the defendant has found out wherein it is defective, he was allowed to supply the same by suppletory proof tak:en on a cross-bill, there would be great danger of perjury and fraud. Field v. Schieffelin, 7 Johns. Ch. 254; Story, Eq. PI. § 395. But the Jact on which this artificial superstructure of caution and prevention is raised has long since ceased to exist in the courts of the United States. At one time all testimony taken in a suit in equity was taken by examiners or commissioners on written interrogatories, and neither the parties nor their attorneys were allowed to be present at the e;xamination, while the persons before whom the ter::timony was taken were sworn to secrecy. 1 Smith, Ch. Pr.40, 356-359, Ml-374.The testimony was then returned into court sealed up, and remained so until, the taking of testimony in the case was closed, when an ol"der of publication wall passed, and/the depositions were opened. Now, however, under equity rule 67, the testimony may be tuken orally before an examiner in the presence of the parties and theirattorneys, who propound the.interrogatories, and, when taken on commission and written interrogatories, the depositions may be and usulllly are opened and inspected as spon as returned to the clerk's office. In other words. there is nQ lunger any secrecy in the premises, and there is now period pr fact of publication should be arbitrarily preno reason why, scribed as the point of time beyond which a cross.bill cannot be filed. The court may, BUa sponte, direct the filing when it appears necessary to a complete determination of the case, at any time before final decree; and, in my judgment, there ought to be no fixed rule against a defendant's filing a cr')ss-bill in a proper case before the final hearing; the objection of laches being disposed of in each case on the particular circumsLnces thereof, or by rule of court or the supreme court. But even under the old state of thinp;s the objection to filing a crossbill after publication had passed was really confined to cases, or at least the reason given for it would so confine it, where the cross-bill sought to
500
FEDERAL·· REPORTER.
introduce new or further testimony- concerning the matters already in isForum Romanurn,46. But this bill seeks nothing of the kind. It sets up a prior determination between the plaintiffs therein and the defendant Goltra of the question of the validity of the conveyances to the Crawfords, a matter which is not mentioned in the original bill, or the answers thereto. and about which no testimony could have been taken, and concerning which there can be no danger of perjury, for it must be proved, if at all, by the record. The application for leave to file the cross-bill was placed on the ground that the defense did not lirise until April 11, 1887, when the suit of Goltra against Foster and the Crawfords was finally determined in the supreme court by the dismissal of the appeal, and therefore it was in the nature of a plea pui8 darrein continuance. This conclusion was based on the theorv that the decree of the state circuit court in Goltra v. Foster et ale was suspended during the appeal, and could not be used as an estoppelwhile the appeal was pending, according to the ruling in California under a similar statute, which declares that "an action or suit is deemed to be pending from the 'commencement thereof until its final determination upon appeal, or until the expiration of the period allowed to take an appeal." Code Civil Proc. Or. § 505. See Sharon V. Hill, 11 Sawy. 302, 26 Fed. Rep. 337. But the su?reme court of the state, in Day v. Holland, 15 Pac. Rep. 855, have since held otherwise, and said, in effect, that the decree of the lower court was operative for all purposes during the appeal as well as the period allowed for taking it. And so, in the light of this decision, the right to file the cross-bill cannot be rested on this ground. . It may be taken for granted that the plaintiffs in the cross-bill could not have the relief prayed for therein as against their co-defendant Goltra, by answer, or otherwise than by cross-bill. The filling of the bill took place before the cause was submitted for final hearing. It sets up a simple, distinct defense against Goltra's right to have his judgment satisfied out of this property. As it rests on an alleged record, the determination of its truth or sufficiency cannot matethe final disposition of the case. Under the rially delay or circumstances, I do not think the demurrer to the bill ought to be sustained on the ground of delay in filing the same. Some other causes of demurrer are assigned, but as ttley were not noticed in the argument, and do not appear to bem/lterial, they need not be considered. The' demurrer is overruled.
GtmTHER tI. LIVERPOOL & LONDON & GLOBE INS. CO.
501
GUNTHER
et al.
fl. LIVERPOOL
&
LONDON
GLOBE INS. CO.
(Oircuit Oourt, E. D. New ,f01'k. March 17, 1888.) INSURANCE-CONDITIONS OF POLIcy-WHAT CONSTITUTES BREACH.
A policy of insurance containing a clause that kerosene shall not be stored on the premises insured, excepting to use for lights, if the same be drawn and the lamps filled by daylight, to which is attached two riders, bestowing the privilege of keeping not exceeding five barrels of such kerosene, and using it for lights on such premises, provided the lamps are trimmed and filled by daylight, is avoided by drawing kerosene by lamplight to loan to a neighbor, causing an explosion by which the entire building was burned.
At Law. On motion for new trial. Action by Amelia A. Gunther, executrix, etc., and others against the Liverpool & London & Globe Insurance Company on a policy of insurance Issued by such company. C. Bainbridge Smith, for plaintiffs. William Allen Butler, for defendant. LACOMBE, J. When the testimony in this case waS closed, defendant .:noved for the direction ofa verdict. The court Was inclined to grant iluch motion on the ground that it appeared by uncontradicted evidence i.hat the cause of the fire was the drawing of kerosene by lamplight. Inasmuch, however, as much testimony had been introduced bearing on another defense, viz., the presence or use of gasoline or benzine on the premises, the motion was denied, with leave to renew after verdict as a motion for direction of judgment. All question as to the drawing of kerosene by lamplight was withdrawn from the jury; and upon plaintiffs' case, and the other defense, their verdict was for the plaintiffs. The deftmdant now moves for a new trial on the same ground as that urged when the case was closed; not making the motion reserved to it, for the nason that such motion is "not in consonance with federal practice," because a compulsory nonsuit is not permitted here, and its practical equivalent-the power to direct a verdict-does not exist after verdict rendered. Under the authorities it is no doubt true that the very same process by which a state judge nonsuits a plaintiff on the whole case on grounds oflaw, is called the" directing a verdict," when practiced by a federal judge. Oscanyan v. Arms Co., 103 U. S. 261. It would be mat-' ter of regret, however, if the federal courts should by sticking in the bark of mere verbal dialectics be unable, despite section 914, Rev. St., to avail themselves of a state practice so sensible, and efficient AS that of directing judgment of nonsuit upon reserved points of law after verdict. Shepherd v. Bishop, 6 Bing. 435; Downing v. Mann, 3 E. D. ,Smith, 36; l1l8Urance Co.v. Minard, 2 N. Y. 98; SheUington v. Howland, 53 N. Y.371. By the·refusal of the court, however, to charge his last five requests, and by the denial of his motion to direct a verdict in his favor, counsel for the defendant is entitled to apply for the relief he now· .asks. . nor a careful examination : Neither the plaintiffs' extended .of the authorities cited in his brief, ,hasalteredt4eopinion expressed on,;