MISSOURIPAO-. BY. CO. v.TEXll &
BY. CO.
151
ant's patent,but it does not answer fully the third interrogatory. Said interrogatory calls upon him to state whether he made, used, or sold any machines for making semi-circular handles for sad-irons. An averment that the machine referred to in defendant's answer is the only machine made in pursuance to said invention is not an averment that it is the only machine made for making semi-circular handles for sad-irons. The counsel for the defendant, in argument upon these exceptions, substantially stated that one reason for declining to answer said third interrogatory was that the defendant now has an application for a patent pending in the patent-office, and that under the statute he is not obliged to disclose the nature of that application or invention. But the mere statement of counsel in argument does not put the facts upon record in a way that the court can pass upon the legal question thus presented. I think the complainant is entitled to a. full answer to his third interrogatory. I am disposed to encourage this method of discovering evidence in this sort of a case. While it is true that under existing statutes the complainant has a right to call upon the defendant as a witness, and examine him as to all matters in issue, and that this right in alargemeasure supersedes the original object which was the foundation of the practiee oC attaching interrogatories to· bills, yet it does not entirely justify the court in declining to observe and enforce the original practice. By requiring the defendant to answer the interrogatories in proper form, and within proper limits, the evidence is put in the pleadings in a. shape where it is of more advantage to the complainant than it would be in the shape of evidence in a. deposition. If the defendant is protected in law from this interrogatory by any state of facts, he. must fully state such facts in his answer as a. reason for declining to cover fully the scope of the propounded. The court can then, with these averments in this form, decide whether or not the defendant is protected in law from further disclosure. The exceptions are therefore sustained, and the defendant is given leave to file an additional answer to said interrogatories within 20 days.
Mmsowu
PAC.
Ry. Co.
'11. TEXAS
et al., Interveners.)
& P. Ry. Co.,
(SOUTHERN PAC.
Co.
(Circuit Court, E. D. LouiBiana. April 14. 1899.) L EQUITY
While a defendant cannot plead merely the faots avel'1'ed hlthe blll of complaint, but must present his objectlOns to their sufficiency by demurrer, yet he may present a good plea by averring, along with the facts contained in the bill, other and additional facts, provided that both together establish a defense to the bilL
2.
RES AJUDICATA-SEVERABILITY OF CONTRAOT.
In an tlCtion in a state court upon one contract contained in an "omnibus agreement" between several railroads, the court held that this contract had not become res jndicatn, by a certain judgment rendered in a territorial court, because it was IWt included among the litigated contracts, and was separable from the other
Dl)ERAL REPOR'!ER,
vol. 50·
. contracts, and thereupon adjudged this contract to be void. as contravening a state .COnstitution. Thereafter one of the parties brought a new suit, that the contract beld invalid was in its nature, and the considerations out of which it sprang, dependent upon other contracts contained in the omnibus agreement, in such manner that its annulment gave rise to an equity either to rescind the whole a.greement; or to obtain compensation for the loss sustained by the annulment. H;eUt, that the former adjudlCation as to the severability of the contract related to the question wbether the clause was so dependent as to be res ju.dicata by the decision of the territorial court, and did not render res judicata the question whether it was not dependent in such sense as to give a right to the relief asked.
In Equity. Bill by the Missouri Pacific Railway Company against tbeTexas & Pacific Railway Company. Heard on the intervention of the Southern Pacific Company and the Galveston, Harrisburg & San AntonioRailway Company for the rescission of an agreement or compensation for the loss sustained by the annulling of a portion of the agreement. Howec!c Prentiss, for cross complainant, Texas & P. Ry. Co. Leovy c!c Blair, for intervener,Southern Pac. Co. BlLl.:qms, District Judge. In thia ca,se there are submitted two pleas of the interveners. The first is a supplemental plea to a cross bill filed by tlw defendant. '.I,'hesecond is a plea of the interveners to the amended and supplemental cross bill. The questions are as to sufficieney,of tQese two pleas. r will first consider the snpplemental plea to the crossbill. This plea is to, that portion of the original cross bill which seeks to recover from Pacific Railway Company, as the successor to the the Harrisburg & San Antonio Railway Company, certain pool balances under what is known in the argument as the "pooling contract,"which was contained in section 6 of what may be termed the "9mnibus agreement," executed on the 26th day of November, A, D. 1881, by Mr. Huntington and Mr. Gould for a number of railroadB,·which agreement was afterwards ratified by the railroad companies ,thelPselvee. It seems that, after this plea was filed, an amended cross bill was tiled. This amended bill, which is termed an "amended and supplemental cross bill," has taken the place of the as the sole pleadings of the cross comoriginal cross bill, and plainant in the cause. This state of pleading obviates the necessity of any judgment upon the sufficiency of the supplemental plea to the original bill, as the filing of the amended cross bill withdrew the original drdss' bill, and with it went the necessity of passing upon the sufficiency of any plea to any portion of it. This leaves to be coninterveners to the amended sidered the sufficiency of the plea of and supplemental crossbill of the defendant. There is one objection to this plea from its structure, in that it pleads matter which the bill itself avers, to wit, the adjndication of the invalidity of the contract known as the "Pooling Contract." The answer to this objection is that it pleads, not only the adjudication of the invalidity of the contract, but also the severability or separateness. or independence of the contract from the other contemporaneous contracts in the agreement j for while it is true that a defend-
MISSOURI PAC; RY. CO. fl. TE:itAB &P. RY. CO.
153
ant cannot plead merely the facts averred in the bill of complaint, but if he .objects to their sufficiency to authorize a recovery must present his objections thereto by demurrer, it is also true a defendant may present a good plea by averring the facts contained in the bill, and, along with them, other and additional facts not contained in the bill, provided that the factEl taken from the bill and the new facts together establish a defense to the bill. So that my conclusion is that what may be termed the" structural objection" to the plea is not well taken. The question, then, is presented, ann must be decided, whether the plea is intrinsically sufficient. The bill (so far as relates to the portion thereof answered by the plea) sets up that an omnibus agreement, made up of more or les8 interdependent contracts or stipulations, was entered into by these parties, or those to whose obligations they have succeeded; that subsequently one of these contracts or stipulations, by a court of competent jurisdiction, between these same parties, was adjudged to be void; that this contract was, in its nature and the consideration out of which it sprung, dependent upon the other contracts and their consideration as a part is upon a whole; and that, therefore, there has arisen an equity to the cross complainant, in accordance with which it has a right to demand, and does demand, either a rescission of the entire agreement, or c.()mpensation to the extent of the loss which it has 8UStained by the annulling of the contract which hilS been set aside and avoided. The plea sets up that it has already been adjudged between the intervener and cross complainant, not only that the contract was void, but that it was also a contract independent and separate from the others contained in the agreement. There is a reference in the plea to the record out of which the adjudication came, and that record is made a part of the plea, so that as the case is presented by the plea, and in the arguments of the respective solicitors, the facts which make up the record of adjudication are put before the court, and upon the record o.()f adjudication the court is called upon to decide the sufficiency of the plea. Except that no evidence aliunde the record has been submitted, the case is therefore quite like a case where the plea and a replication had been submitted upon proofs made up of the record of the case in which the adjudication took place. That record shows that a suit was brought in the courts of the state of Louisiana by the cross complainant against the interveners upon the pooling contract. The interveners, defendants in that cause, answered by an exception that the pooling contract was void-Firat, as being against pub. lie policy; secondly, as being against the interstate commerce act of congress; and, thirdly, as being in conflict with the constitution of the state of Texas. Upon this last or third ground the defense was maintained and the pooling contract adjudged void. This judgment was affirmed by the supreme court of the state of Louisiana, (6 South. Rep. 888,) and afterwards was affirmed by the supreme court of the United States, {ll Sup. Ct. Rep. 10j) this last affirmance being on the ground that no federal question was presented in such a way that the federal court could review the cause upon its merits. The opinion of the civil district
t04
.ll"EDERAL REPORTQ.
vot50.
of the supreme,coul't of the state of Innisianads ;ehtboratel and is given in full in the record which has been sllbmittedl,and;showsthat that tribunal did decide that this, the pooling contract; was not only void, but was a separate or independent contract. B,ut thatseparatEllless or independence was declared in conneetioltwith this state of facts. This entire omnibus agreement had, by consent of all parties, been made the subject of a judgment in two cases pending in the territorial courts of the United States. The supreme court:dfthe state held that the territorial judgments took hold of and made things. adjudged. of the litigated contracts alone. of which this pooling contract was not one. Hall the contracts had become things adjudged, the defendants (the interveners here) could not have inter'posed the exception of invalidity. The judgment would have cut them off;!' The court was therefore compelled to decide whether the pooling ccmtractwas among those contracts which passed into things adjudged in the decrees of the territorial courts, and decided that it did not, because onlyJhose in litigation passed into judgment, and the pooling contract was not in litigation, and provided only for the future transactions between the pal ties. It Was in this connection that the court took up and decided aato the independence of the pooling contract. The matter 'presented in the cross bill is that, by reason of the annulling of this pooling contract, an equitable right ofreparation has sprung up and vested in it. Risin connection with this claim that the matter of the independenceofthe contract in this case is to be considered. In the other, the adjudged case, the independence of the contract was considered only in connection with the question whether it was in its terms affected by the terms of the contracts which were in litigation. Where some of the contracts contained in an omnibus agreement were held to be included in an adjudication, and others were held to be excluded from it, the ground of discrimination being whether they were in litigation ol'not, the question of independence had relation merely to ,the termsofthe contract, which were looked at and compared with the terms of those in litigation. In this respect the question of independ.eilce was decided, and whatever was said in the. opinion beyond this was said obiter. Here the question is as to the-independence of this contract with reference to, its consideration and that of the other contracts, .for the considerationcOf[l!i contract must be the determining matter with .reference ,to compensation or reimbursement in case of annulment. The law of the case has been most fully presented by the solicitors on either side. All the well-considered Cases are harmonious. In ascertaining the extent of the binding force of an adjudication, that is held to be decided which Was "necessary" or" essential" to the decision, and ;that. is held not to be decided which was merely "incidental" or "collateral." Applying this test to this case, it BE-emS to me that the question whether the pooling contract, so far as relates to the consideration which led to its being entered into, was a contract independent of the other oontemporaneous contracts, was a question not adjudged in the former
155 case. If the former decree settled the independence of this contract, it settled it only with reference to whether its terms or provisions were distinct from the terms or provisions of those contracts which were crystallized into the territorial judgments1and not whether the contract was distinct from the others as to its consideration, or as to the motives which induced it, to such an extent that, if either party was deprived of the right to enforce it, he should not have indemnification for his loss arising from such dl>privation as a matter connected with the right of the parties arising from the other contracts. It must be borne in mind that the question presented is not whether the cross complainant is entitled to the redress sought by his cross bill, but whether he is prevented from urging his claim for such redress by the force of the previ. ous judgment between these same parties. My conclusion is that the plea must be adjudged to he insufficient. The respondents to the cross-bill may have until the next rule day in which to answer the bill.
MVERStl. HAZZARD
et ale
COircuit Oourt. D. Nebraska. 8eptember, 188Ll 1. CHATTEL MORTGAGES-NEGOTIABLE INSTRUMENTS-BoNA !i'rnE PORCHA.II..
A bona fide purchaser before maturity of negotiable notes secured by a chattel mortgage given by one having the legal title to the chattels takes both notes and mortgage freed from the claims of the assignee in bankruptcy of a third person, who has an undisclosed interest in the chattels and notes. The chattels being still in the hands of the mortgagor at the time the notes were purchased, the fact that the assignment walJ made prior thereto does not al!ect the purchaser's rights under the mortgage, as the property was not in CU8todia l$, so as to al!ect him with constructive notice.
B. SAM_BANItRUPTCY.
.
8.
NEGOTIABLE INSTRUMENTS-LIS PENDENS.
The doctrine of H, penden8 does not apply to negotiable paper, and a bmm ftiJ,e purohaser thereof before maturity takes a perfect title, although a suit to enjoin negotiating the same is pending at the time.
Bill in equity, brought by complainant, as assignee in bankruptcy of George Hazzard, to set aside as fraudulent certain promissory notes, and a mortgage given to secure them, upon a herd of cattle, and to subject the interest of the bankrupt in said cattle to the payment of the debts of the bankrupt estate. The bankrupt was at the time of his bankruptcy undoubtedly the owner of'a large interest in the herd of cattle, and comall the plainant was clearly entitled to recover that interest as Pllrties concerned except respondent Coates, who claimed to be an inno. cent purchaser without notice of the negotiable promissory notes above mentioned, secured by mortgage upon the cattle, under which mortgage he had taken possession. The cattle being beld in the name of the firm in fact in part owned by George Hazof Foster & Struthers, but zard, were mortgaged to John W. Hazzard to secure a number of negoti. able promissory notes, with the understanding that said John W. Haz-