152 F. 372 | 3rd Cir. | 1906
This is an appeal from the Circuit Court for the Eastern District of Pennsylvania. In that court, Brown, the receiver of the American Alkali Company, filed a bill against Kurtz and Magee, to discover the names of the owners of certain stocks registered by Kurtz in the name of Magee, and against which persons complainant proposed to bring suits at law to recover unpaid assessments thereon. To this bill Kurtz demurred. This demurrer was overruled, and the case heard on bill and answer. Magee, the other respondent, did not appear or answer. A decree was entered directing respondents to make the discovery prayed for. From such decree Kurtz appealed.
From the bill it appears the American Alkali Company was a manufacturing corporation created by the state of New Jersey. It had 480,000 shares of common stock, full paid, and 120,000 shares preferred stock. Certificates for the preferred stock were issued, “$10 per share being paid on account of the par value of $50 by the original subscribers thereto, and the balance of $40 per share remained unpaid and subject to call.” The company becoming insolvent, Brown and one Budd, since deceased, were duly appointed receivers thereof by the Circuit Court for the District of New Jersey and also in ancillary proceedings by the Circuit Court for the Eastern District of Pennsylvania. By order of the first-named court an assessment was levied by the receiver on September 19, 1905, on the holders of the said preferred stock of $2.50 per share, for the purpose of paying the debts of the company and the expenses of the receivership. On said date 3,700 shares of said preferred stock were registered in the name of Magee, one of the respondents. The bill then alleges:
“That said Henry G. Magee is not and never was the real owner of the saicl 3,500 shares of the preferred stock of said American Alkali Company, or any of" them, but that they wore purchased by the said W. Wesley Kurtz, trading as W. W. Kurtz & Company, for the purpose of concealing the names of the real owners thereof. That W. Wesley Kurtz was, on November 17, 1900, engaged in the business of buying and soiling stock in the Philadelphia Stock Exchange, and 3,700 shares of American Alkali Company’s preferred stock had been bought by him for clients of his, and it was for their benefit that with the consent of the said Magee he directed the agents of the American Alkali Company to issue the new certificates on November 17, 1900, in the name of said Magee. That your orator is advised that the person or persons for whose account the said 3,700 shares were purchased and placed in the name of Henry G. Magee are personally liable- for the amount of said assessment.”
It is conceded by counsel that unless the ruling of this court in Brown v. McDonald, 133 Fed. 897, 67 C. C. A. 59, 68 L. R. A. 462, is reversed, the decree entered below must be affirmed, and that this appeal was taken that this court might review and overrule that case. In view of the earnest and able contention of counsel, we have considered the questions involved anew; but this examination has deepened our conviction that the decision in Brown v. McDonald, as an
“As tlie object of this Jurisdiction in cases of bills of discovery is to assist and promote the administration of public justice in other courts, they are greatly favored in equity, and will be sustained in all cases whore some well-founded objection does not exist against the dxereiso of the jurisdiction. We shall therefore proceed to the consideration of some of the circumstances which may constitute an objection to such bills, leaving the reader silently to draw the conclusion that if none of these nor any of the like nature inter vene, the jurisdiction to compel the discovery sought will be strictly enforced.’’
Now, none of the 12 principal grounds enumerated by Justice Story for resisting a bill for discovery in aid of law preclude relief in this case. True, he states it is ordinarily a good objection to a bill of discover}- that it seeks the discovery from a mere witness who has no interest in the suit. Unless, therefore, Kurtz stands in the relation of a mere ordinary witness to the cause there would seem to be no ground for denying complainant relief. That he is a witness and not a partá-is clear in that no relief, other than mere discovery, is sought against him; but that he has by his conduct so connected himself with the subject-matter of the proposed suit that he is treated as wholly different from a mere witness is equally clear. In Orr v. Diaper, 4 Ch. Div. 92, a bill was brought by the owner of a trade-mark against shipowners who were mere forwarders of goods intended to counterfeit complainant’s trade-mark. It was there contended such shipowners were mere witnesses and that complainant had no title to sue them. This contention was not sustained, aud it is not without significance, as showing how firmly grounded the right of discovery in aid of a proposed action at law had become in English jurisprudence, that counsel for the hill were not called upon to answer. The court said:
“Tlie plaintiffs state that tliey seek discovery in aid of other proceedings; and for the defendants it is contended that they cannot mean to take any proceedings against them, as they could do that without having tlie names of other persons. The plaintiffs, however, want to bring their aclion against those persons for whom the defendants have shipped goods with counterfeit marks. It lias been submitted that tlie defendants are meie witnesses; but their position, tliey being actual shippers, is different from that of mere witnesses. I think tlie plaintiff's do show a title to sue. * * * In this case the plaintiffs do not know and cannot discover who the persons are who have invaded their rights, and who may be said to have abstracted their property. These proceedings have come to a deadlock, and it would lie a denial of justice if means could not be found in this court to assist tlie plaintiffs.”
If the relation of a shipowner, a mere forwarder of goods, so connects him with the transaction that he is regarded as other than a witness, there can be no question that Kurtz, the active agent to conceal the identity of the owners of this stock, is not to be regarded as a mere witness.
Great stress is laid, and rightly so, on Tweils v. Costen, 1 Pars. Eq. Cas. (Pa.) 373; but the fa'cts on which that case was decided are so wholly different from the present one that apart from being both bills for simple discovery, they have nothing in common. In that case there was a public sale of land with a requirement of a deposit by an accepted bidder. Costen’s bid was accepted,- and he paid the required deposit as the approved purchaser. It will be noted he did nothing
“But here is a prima facie ground of action; the company (the respondent) has put other persons in the way of doing the plaintiff an injury.”
The positive acts of Kurtz, the present respondent, in thwarting complainant in the enforcement of his plain legal right has been noted above and brings this case directly in line with Moodaly v. Norton. He has put the unknown principal in the way of doing complainant injury. To treat an active party in effecting such a result as a party in interest is in line with the principle laid down in 2 Atk. 234, Mitford, 153, that:
“In case of fraud a party to the fraud cannot assert his want of interest in the subject.”
“This is a case where he (the complainant) has no election. He must sue at law. The dry question is this, whether there is any objection, in natural justice, to a defendant giving a discovery in order to found a relief at law.”
The opinion in Brown v. McDonald states we are not willing to hold that the federal statutes affording discovery relief have supplanted relief by bill of discovery. While no authorities are there cited there is no lack of them and reference is made to Snell’s Principles of Equity, 487; British Empire Shipping Co. v. Sombs, 3 K. & J. 433; Lovell v. Galloway, 17 Beavan, 1; McMullin Lumber Co. v. Strothers, 136 Fed. 301, 69 C. C. A. 433; Kelley v. Boettcher, 85 Fed. 56, 29 C. C. A. 14; Ryder v. Bateman (C. C.) 93 Fed. 31; Indianapolis Gas Co. v. Indianapolis (C. C.) 90 Fed. 196. Manifestly such statutes are remedial and enlarging in their nature. They apply to courts of law and are not intended to affect courts of equity or sheer them of recognized powers. The decision of Brown v. McDonald made possible the enforcement of just liabilities, was supported by precedent, and will not be disturbed by this court.
Judgment affirmed.