213 F. 880 | W.D. Wash. | 1914
The plaintiff is now, and during all
times material to this action has been, a citizen of the state of Pennsylvania. Defendant Bell is and has been a citizen of Glen Falls, N. Y., and defendant Black a citizen of Everett, Wash. The Sunset Mining Company is a corporation organized under and by virtue of the laws of Washington, with its principal place of business at Everett. Defendant Black was judge of the superior court of Washington for
There is no evidence before the court that there was any collusion between the defendants Black and Bell with relation to any of the conduct of the business of the defendant company, _ nor is there any evidence before the court to justify the conclusion tíiat either the defendant Black or Bell had any influence over the board of trustees, or exercised any undue influence of any character in any of the proceedings referred to in the complaint. There is no evidence before the court that any information with relation to the conditions or status of the defendant company’s property was at any time withheld from the plaintiff. By the evidence it is shown that the plaintiff was at all times advised of the financial condition and status of the defendant company, knew of every act and thing that was done by the board of trustees, and that he was advised, more than a year prior to the institution of the foreclosure action, that the company was without funds, and he was requested to contribute as a stockholder to the fund in connection with the other stockholders for the purpose of relieving the financial stress of the defendant company and doing the assessment work, and he declined to contribute anything, and stated that none of the stockholders would contribute. The plaintiff requested the defendant Bell to foreclose his mortgage more than a year prior to the time when foreclosure proceedings were instituted, and that he be given an option to sell the property. He also asked the defendant Black to use his influence with defendant Bell to secure a foreclosure. After the defendant Bell acquired the mortgage from Mrs. Baldwin, defendant Black made a trip to New York for the purpose of inducing the defendant Bell to withhold foreclosure proceedings, stating to defendant Bell that he believed money could be realized within a year to liquidate the indebtedness. Defendant Bell agreed to wait, and at the expiration of a year, no payments having been made, and it being necessary that the assessment work be done to protect the property, sent a circular letter to all of the stockholders, among whom was tile plaintiff, and set forth the status and condition of the company, stating, in substance, that unless payment was made, foreclosure would ensue. None of the stockholders responded, except one small holder, and his check was returned when the other stockholders, including the plaintiff, declined to contribute. The assessment work for 1909 was not done, and the time-in which it was required to be done expired January 1st next ensuing. This notice was dated November 16, 1908, and informed the stockholders of the indebtedness of the defendant company, and that the receivership was threatened, and his willingness to advance funds in proportion to the stock held by him for Mrs. Baldwin if the other stockholders would do likewise. Defendants Black and Bell since acquiring the property have expended in assessment work on the mining claims approximately $25,000. There is no direct evidence before the court as to the value of this property as mineral land.
The complainant seeks to have Black and Bell declared trustees of the property for the defendant company, and in the concluding paragraph of his reply brief says:
*885 “The controlling factors in this case are the withholding by Black of $30,-000, and the manipulation by the defendants of the corporation’s property. Upon these two points the final decision must rest. In comparison with these two points all else is incidental.”
In Twin-Tick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328, the defendant, a director of the complaining corporation, loaned the company $2,000 secured by a deed of trust. At a subsequent sale under this deed, the defendant purchased all of the property of the corporation. In an action brought four years later to have the defendant declared a trustee for complainant, on page 590, 91 U. S. (23 L. Ed. 328) the court said:
“If it be conceded that the contract by which the defendant became the creditor of the company was valid, we can see no principle on which the sub • sequent purchase under the deed of trust is not equally so. * * * Defendant was at liberty to bid, subject to those rules of fairness which we have already conceded to belong to his peculiar position; for, if he could not bid, he would have been deprived of the only means which his contract gave him ol' making his debt out of the security on which he had loaned his money.”
“Thus the case Is brought within the rule recognized by the Supreme Court of the United States, namely, that where the director has acted with that candor and fairness which equity imposes as the guide for dealing between him and the corporation, and the transaction is open and free from blame, the director is not forbidden from making a contract with the corporation, or from entering upon a transaction in which hie is personally interested”— citing Twin-Lick Oil Co. v. Marbury, supra, and other authorities.
In Marks v. Merrill Paper Co., 203 Fed. 16, 20, 123 C. C. A. 380, 384, the court said:
.“The authorities are numerous and controlling to the effect that the mere fact that the sale of property of one corporation to a new corporation, the majority of whose governing officers are the same, will not per se vitiate the sale. The question is always one of good faith and fairness, except in cases where public policy intervenes. The facts in the present ease bring it within the language of the court in Harts v. Brown, 77 Ill. 226: ‘The stockholders had been called together, and they were urged to make advances in proportion to the stock they severally held, and thus relieve the company and preserve its existence, but this they refused to do: and, as it could not be preserved, and must come to an end by a sale under the power in the trust deed, no reason is perceived' why appellants might not become the purchasers at the sale. They were under no moral or legal obligation to advance their own means, pay the debts, arid preserve the property for the use of the other shareholders, who had declined to join in making pro rata advances to relieve it from debt.’ ”
See, also, Janney v. Minnesota Ind. Expo., 79 Minn. 488, 82 N. W. 984, 50 L. R. A. 273; Saltmarsh v. Spaulding, 147 Mass. 224, 17 N. E. 316; Allen v. Gillette, 127 U. S. 589, 8 Sup. Ct. 1331, 32 L. Ed. 271.
In Twin-Lick Oil Co. v. Marbury, supra, the Supreme Court of the United States, on page 591, 91 U. S. (23 L. Ed. 328), said:
“Tbe doctrine is well settled that tbe option to avoid such a sale must be exercised within a reasonable time. This has never been held to be any determined number of days or years as applied to every case, like the statute of limitations, but must be decided in each ease upon all the elements of it*887 which affect that question. These are generally the presence or absence of the parties at the place of the transaction, their knowledge or ignorance of the sale, and of the facts which render it voidable, the permanent or fluctuating character of the subject-matter of the transaction as affecting its value, and the actual rise or fall of the property in value during the period within which this option might have been exercised.”
After stating that the plaintiff had taken no action for four years, while the defendant had been putting his skill, energy, and money in the enterprise to make his purchase profitable, the court concludes:
“We think, both on authority and principle—a principle necessary to protect those who invest their capital and their labor in enterprises useful but hazardous—that we should hold that plaintiff has delayed too long.”
In Rothchild v. Memphis & C. R. Co., 113 Fed. 476, 51 C. C. A. 310, the minority stockholders did not bring an action until 17 months after the sale at which the majority stockholder bought the property, and the court held that the complainants were guilty of laches. The plaintiff waited more than three years after confirmation of sale before bringing this action.
The authorities cited by the plaintiff are merely to the effect,that a court of equity is not governed by the statute of limitations, that a mere lapse of time will not impute laches, and that the court is not bound by hard and fast rules in the determination of what will constitute such laches as will bar a recovery. 19 Am. & Eng. Encyc. of Law, 162; 15 Am. & Eng. Encyc. of Law, 1206; Michoud v. Girod, 4 How. 504, 561, 11 L. Ed. 1076; Sullivan v. Portland, etc., R. Co., 94 U. S. 806, 24 L. Ed. 324; Stearns v. Page, 7 How. 819, 12 L. Ed. 928; Godden v. Kimmell, 99 U. S. 202, 25 L. Ed. 431; Payne v. Hook, 74 U. S. (7 Wall.) 430, 19 L. Ed. 260; Stevens v. Grand Central Mining Co., 133 Fed. 28, 67 C. C. A. 284; Burns v. Cooper, 140 Fed. 279, 72 C. C. A. 25; Davis v. Louisville Trust Co., 181 Fed. 22, 104 C. C. A. 24, 30 L. R. A. (N. S.) 1011; 16 Cyc. 152, and cases there cited; Street’s Federal Equity Practice, Secs. 211, 212.
It is unnecessary to determine to what extent a court of equity, while not considering itself bound by a state statute of limitations, will rely upon such a statute for aid in determining a doubtful case, because I am convinced from the facts and circumstances here presented that the plaintiff has been guilty of such laches as should preclude his recovery by the operation of the rule as laid down in Twin-Lick Oil Co. v. Marbury, supra, without resort to the statute of limitations. While the court is not bound by hard and fast rules, yet no such case is here presented as would justify the court in disregarding the rules which have been laid down merely because it is recognized that a wide discretion is vested in the court which applies them.
“A judgment is not and cannot be an estoppel as to facts which did not occur until after the judgment was rendered, and which were not involved in the suit in which it was rendered.”
It seems that counsel has confused the acts of the defendants with the act of the court. The acts of the defendants charged by the plaintiff as affording ground for relief occurred prior to the confirmation, and the confirmation was a determination by the court that these acts w;ere not sufficient to prevent a confirmation of the sale which the plaintiff is here seeking to set aside. The only distinction between that action and this is that there the plaintiff was attempting to- prevent that court from doing that which he asks this court to undo. The same elements entered into the court’s determination, there as are involved here, the prior acts and conduct of the defendants, and no additional element was introduced by the act of the court in the confirmation. The relief here sought is in effect the setting aside of the judgment of the state court in confirming the sale. The fraud upon which the hope of such relief is based was involved in the issues raised in the state court, and was necessarily determined by its judgment. Intermela v. Perkins, 213 Fed. 106, filed in this court, April 20, 1914; United States v. Throckmorton, 98 U. S. 61, 25 L. Ed. 93; Vance v. Burbank, 101 U. S. 514, 25 L. Ed. 929; Cromwell v. County of Sac, 94 U. S. 351, 24 L. Ed. 195; Stockton v. Ford, 18 How. 418, 15 L. Ed. 395; Mitchell v. First Nat. Bank of Chicago, 180 U. S. 471, 480, 21 Sup. Ct. 418, 45, L. Ed. 627; 2 Black on Judgments, 504; Willoughby v. Chicago, etc., 50 N. J. Eq. 656, 25 Atl. 277; Hearst v. Putman, 28 Utah, 184, 77 Pac. 753, 66 L. R. A. 784, 107 Am. St. Rep. 698.
It is needless to discuss the further contentions of the parties. From what has been said the conclusion is inevitable that the complainant’s bill must be dismissed.
Decree accordingly.