Carter v. Fortney

170 F. 463 | U.S. Circuit Court for the District of Northern West Virginia | 1909

DAYTON, District Judge

(after stating the facts as above). It is my purpose to dispose of this demurrer as briefly as possible, and to abstain from any expression touching the facts involved. The demurrer admitting the allegations of the bill to be true justify me in giving them construction liberal to the interests of the complainants without in any manner, in case the demurrer is overruled, prejudicing judgment upon final hearing.when the evidence shall disclose to what extent these allegations are sustained by the facts. It seems to me that this demurrer substantially involves these propositions:

First, lack of interest in plaintiffs: (a) Because the object of the bill is alleged to be to protect the Merchants’ Coal Company in a contract made by it with its employés, to which the plaintiffs are not parties. (b) Because the bill alleges the interest of the plaintiffs to be solely a bonded or trust indebtedness of the company owned by them of $24,-000 in the aggregate, with no allegation that the company’s bonded indebtedness exceeds this sum, while the value of its property is alleged to be from $250,000 to $500,000, whereby is clearly shown that no danger of irreparable injury to plaintiffs’ interests is apparent. (c) Because the plaintiffs, as bondholders of the coal company, secured by mortgage .on its property, given to trustees, cannot maintain action in their own name without showing that the trustees have refused to bring an action, (d) Because the bill contains no sufficient allegation that the plaintiffs have applied to the company to bring suit to protect its own interests and thereby those of these plaintiffs.

Second, for want of parties. No decree can be entertained in the cause that does not directly affect the business and property .rights of the coal company, therefore it is a necessary party.

Considering these, it is hardly necessary now to say that injunction will be granted “where the members of a labor organization, or other employés, conspire unlawfully to interfere with the management or business of another, and to compel the adoption of a particular scale of wages, by congregating riotously and in largd numbers in and near the place of business of such other person, and for the purpose of preventing other laborers from entering into such other person’s employment' or remaining in such employment, by intimidation, consisting in physical force or injury, either actual or threatened, to person or property.” Hogg, Eq. Principles, 387, § 278.

Such acts on the part of employés are common results of a strike on their part. A strike may be entirely legal where it is a voluntary refusal on the part of such employés to work for their employer because of conditions existing and his refusal to correct the same in accord with their lawful demands. On the other hand, it becomes illegal if it be the result of .an agreement depriving those engaged in it of tlieir liberty of action, and it becomes criminal if.it be a part of a combination for the purpose of injuring or molesting either masters or men. Arthur v. Oakes, 63 Red. 310, 11 C. C. A. 209, 25 L. R. A. 414.

Oti the other hand, there may be a combination of persons not em-ployés created “for the purpose of injuring or destroying the business of another, either by efforts to prevent, by unlawful means, the sales of his products to the public or the use of some particular thing in his business, or by materially lessening or entirely stopping the manufacture of his products, through the loss or want of the necessary or proper employés, vehicles, or machinery, the lack whereof is caused or brought about by the illegal acts of such combination, - or by the union of both of these unlawful and unwarranted agencies operating at the same time upon the business of such other person.” Such combination is known as a “boycott,” and is condemned alike by the common law and modern decisions as illegal. Hopkins v. Okley Stave Co.. 83 Fed. 912, 28 C. C. A. 99; Hogg’s Eq. Principles, 387, § 279.

The allegations of this bill, in effect, charge a conspiracy involving the elements of both the strike and of the boycott. It is charged that the employés of the company in March, 1908, refused to accept a wage reduction, and, as they had right.to do, surrendered their employment, and the company in consequence ceased operation; that in August following, when it sought to resume work, upon the continued refusal of its old employés to accept the reduction and upon their interference with the operation, the company again shut down and remained so until the last of December. Thus a period of nine months substantially elapsed during which these men were not in the service of this company and could not he considered its employés in any sense of the term. It is then charged in effect that these defendants, some of whom had formerly worked for the company and some had not, formed a combination or conspiracy, with others unknown, to prevent this company from resuming operations, from mining its coal, and complying with its contracts to deliver the same to its customers, and thereby destroy its business and the value of its property; that this is sought to be accomplished by menaces, threats, assaults upon, and intimidation of, its employés designed to compel them to cease laboring for the company, and by like illegal acts to prevent others from entering such employment. It would seem that more of the elements of the boycott are present than of the strike. It may be well termed a lawful strike that has degenerated into a boycott in many respects not only illegal but criminal in character. Counsel for these defendants has most ably argued that the purpose and object of the bill must be construed from its allegations to be only to protect the coal company in its contract with its present employés, to which contract -the plaintiffs are not parties and therefore have in law naught to do. If I could construe this to be the true purpose and object of the bill, T would have no trouble in sustaining the demurrer; To so protect the tnen from intimidation and injury may be an incident of the relief sought, but the scope of the bill I conceive to be much broader. It may, it seems to me, be epitomized from its apt allegations to be to protect the property of this company, depending for its sole value, as alleged, upon its- ability to profitably mine and dispose of its coal in place thereon, which mining can only be done by individual employés; to protect it from inevitable breach of contracts with its customers whereby loss and damage will be incurred; to enable it lawfully to carry on its business, a property right it has, without illegal and criminal interference on the part of these alleged conspirators defendants, and this in order that the value of its property may not be lessened or destroyed, the lien of plaintiffs’ trust bonds be thereby impaired or rendered valueless, but on the contrary, it may be permitted to fulfill its trust contract with plaintiffs by paying them the semiannual interest and the bond principal when due.

It would seem clear that the allegations of the bill justify an injunction in the premises at the instance of the coal company, had it applied for it to a court of competent jurisdiction. . The question then resolves itself into whether this court has right to grant it at the instance of these trust bondholders. The first objection that these bondholders hold an indebtedness of $24,000 only, with no allegation of other like bonded indebtedness outstanding against a property charged to be worth from $250,000 to $500,000 in value, would have been sufficient to refute the idea of irreparable injury to their rights and interests possibly, if the other allegations were not in the bill that the sole value of this property depends upon the ability of the company to operate at a profit the mining of its coal and the meeting of its interest charges and the payment of the principal of its indebtedness when due. Under these averments it must necessarily depend upon the evidence whether such allegations of the bill can be sustained. No matter how strong the presumption to the contrary may be upon final hearing, these allegations upon demurrer stand for confessed as true.

The second objection, that bondholders secured by a trust deed cannot maintain suit without alleging the refusal of the trustees to institute the same, is not tenable for these reasons: That a lienholder has right to an injunction against a trespasser, whether an owner or an outsider, is well settled. And it has been held that a mortgagee, a judgment creditor, a vendor’s lienholder, and a bondholder secured by mortgage have a right to such relief. 1 Spelling, Ex. Rem. §§ 266, 267, 271, and 462. The right in such case is inherent in the person holding the lien security, and the form by which such security is held would seem to be immaterial. It would hardly be in accord with the true principles of equity practice to hold that a principal in interest could pnly act through his representative having no substantial interest but only as a trustee. The function of the trustee to preserve and maintain the existence of the property might possibly be broad enough to authorize him to maintain a suit for that purpose, if the creditors secured direct him to do so, but it is certainly not so broad as to prevent these creditors from protecting their own interests in the premises unless he shall permit them to do so.

My predecessor, Judge Jackson, in several cases similar to this, but not reported, has sustained injunctions awarded to bondholders, and no question has been heretofore raised as to the correctness of his ruling in this particular. I am persuaded that no good reason exists for now reversing it. I am aware of the fact that it is counter to the ruling oí Judge Ross in Consolidated Water Co. v. City of San Diego (C. C.) 89 Fed. 272, but with the utmost respect for the judgment of this learned judge, it seems to me there is a marked distinction between the cases cited by him in support of his position and the one here, or, to an extent, to the one he was deciding. A trust mortgage generally by its own express terms is a tripartite agreement between creditors, debtor, and trustee whereby the creditors as a class loan their money upon certain stipulated terms and conditions to the debtor, who secures these loans upon like terms and conditions by a lien upon designated property. To properly secure this lien, and further to create an agent for both creditors and debtor to secure performance oE the mutual terms and conditions agreed upon, inter par-tes, the property is conveyed to a trustee with express powers to perform these conditions. Under such circumstances it has been well held that individual bandholding creditors thus secured must, before bringing suit themselves, request the trustee to sue touching all matters relating to the obligations'inter partes created by the terms of the trust itself, such as the demand for accounting from the trust debtor or the demand for a foreclosure and sale. The reason in such cases is clear; the creditors are by the terms of the trust created a class with equal rights, and the trustee is created an agent for them as such. In many cases it would be distinctly against the interests of the other creditors to allow one or more of their number to institute proceedings for selfish reasons against the property, involving its management and calculated to destroy its credit or value. Stick are the cases cited by Judge Ross. But in a case like this, when the' boudholdiug creditor is not seeking to interfere with but to maintain the trust obligations and the trust subject from interference and destruction from outside sources, over which neither bondholder, debtor, nor trustee have any control, I can perceive neither any power, or at least obligation, on the part of the trustee, limited by the terms of his trust, himself to site without direction from the bondholders or to prevent the bondholders from suing.

The third objection, that such bondholder before suing must allege that he has applied to the company to bring such suit, is fully answered, in my judgment, by the reasoning in the cases of Mercantile Trust Co. v. Texas & P. Ry. Co. (C. C.) 51 Fed. 529, Consolidated Water Co. v. City of San Diego (C. C.) 84 Fed. 369, and second decision in same case, 89 Fed. 272.

This brings us to the last objection made, that the coal company is a necessary party. Touching this question an apparent conflict of authority exists between the ruling of Judge Ross in Consolidated Water Co. v. City of San Diego, supra, affirmed by the Circuit Court of Appeals for the Ninth Circuit, 93 Fed. 849, 35 C. C. A. 631, and that of Judge Goff in Fx parte Haggerty (C. C.) 121 Fed. 441, but, as Judge Goff has pointed out, in this latter case radical difference in conditions existed, making the conflict only apparent and not real. Judge Goff in this Haggerty Case has so fully aiid lucidly set forth the reasons why in cases like this the company is not a necessary party that I can add nothing thereto.

The demurrer must be overruled.