96 F. 34 | U.S. Circuit Court for the District of Northern California | 1899
This is an action to restrain the respondent from interfering with the complainant in the occupation,
On April 2, 1898, complainant .filed an amended complaint, in which it alleges, in addition to the foregoing, that any judgment which might be recovered against respondent in an action at law would be wholly worthless, and could not be satisfied in whole or in part; that practically all the property of respondent situated within the state of California is in the county of Siskiyou, the full cash value of which, as stated by respondent to the assessor of that county, and as assessed by him, is the sum of $23,000; that this comprises the whole of the property of respondent, except a tract of timber land in the state of Oregon, of the value of not more than $10.000, which tract of land is mortgaged, and a small tract of land in Minnesota, mortgaged at more than its value; that respondent, for the purpose of placing all of its property beyond the reach of any execution which might be levied against it, mortgaged, on or about the ——- day of February, 1898, all the property belonging to it under the said lease, to the amount of $92,1X11), at the rate of (5 per cent per annum; that the value of respondent’s property does not equal the value of the mortgage liens and other incumbrances with which it is charged, and said property could not be sold for an amount to satisfy the liens existing upon it; that said property and plant were managed by respondent at a great loss of money, in consequence of which management respondent and its officers became indebted to the amount of more than $36,000, of which the sum of more than §12,000 is due to men employed by respondent, who are unable to collect their claims; that respondent did not pay its business obligations, and in consequence thereof many creditors were obliged to bring actions at law, and to attach portions of said lum
Upon the filing of the bill, on March 17, 1898, an order was issued requiring respondent to show cause why an injunction pendente lite should not be granted, and, upon complainant giving a bond in the sum of $10,000, a stay order was issued restraining the respondent from in any manner interfering with, impeding, or hindering complainant in occupying, conducting, managing, and carrying on all the property mentioned in the lease. On April 12, 1898, the respondent moved the court for a modification of the restraining order so that the respondent be not required to surrender the possession of the mill, office, and barn mentioned in the bill of complaint; that the complainant be ordered and directed to restore all of the property mentioned in the bill to the same condition, as regards possession thereof, as the same was in at the time of the filing of the bill, in so far as such possession may have been changed or affected by any order of the court. This motion was denied. Pokegama Sugar Pine Lumber Co. v. Klamath River Lumber & Improvement Co., 86 Fed. 528.
Respondent filed its answer on May 16, 1898, in. which it admits the written agreement made with H'ervey Lindley May 4, 1897, as stated in the complaint, and that the agreement was modified, as stated in the bill. Admits that a lease was made, executed, and delivered to respondent as set forth in the bill; admits that, on the execution of this lease by respondent, Lindley signed and accepted the same, and entered into the property described in the lease, and undertook the management of the logging (lumber) business. Denies that between April 7, 1897, and September 15, 1897, or at any time, Lindley operated and carried on the property pursuant to the terms of the lease, and kept or performed all or any of the conditions provided in the lease to be kept and performed by him, and avers that the lease provided that “the party of the second part hereby binds himself, his executors, administrators, or assigns, to take
On November 17, 1898, complainant, by leave of court, filed an amendment to the bill of complaint for the purpose of presenting its case in another aspect. In this amendment to the bill it is alleged, among other things: That at the time respondent entered into said mill and commenced its interference with complainant, on February 12,1898, respondent declared that it did so because of the noncompliance of complainant with the terms of the lease requiring complainant to operate the said plant to its fullest capacity. Avers that respondent ought not to be heard to say that complainant had forfeited any rights by reason of its operation of the said plant, because during all of the time commencing with April 7, 1897, and ending with September 15, 3897, Ilervey Lindley in good faith had operated the plant in accordance with his best and honest judgment that the plant should be operated in keeping with the best business interests of the parties to the lease, and from the 15th of September, 1897, to the unlawful interference by respondent, complainant continuously operated the said plant in a manner which, according to its judgment, was the only manner in which the plant could be operated to its fullest ca-
Upon the issues thus presented by the pleadings, the case was tried upon its merits in November, 1898. Witnesses were called and examined in open court, and documentary evidence introduced in support of the claims of both sides, and particularly with respect to the main question of fact whether on February 12, 1898, the complainant had incurred a forfeiture of the lease by reason of its failure during the preceding 10 months to operate the leased property as a lumbering business to its fullest capacity, in keeping with the best business interests of all concerned. The sawmill and appurtenances constituting part of the lumbering plant described in the bill of complaint are located at Klamathon, on the Klamath river, in Siskiyou county, Oak, near where the California & Oregon Railroad crosses the river. The remainder of the plant consists mainly of a log slide or chute .about 2,700 feet long, 26 miles up the Klamath' river, the franchise
As the conduct of several parties connected with the two corporations that are parties to this suit will be a subject of consideration in determining the questions at issue, it will be necessary to explain preliminarily their relation to the business and affairs of these two corporations. John R. Cook, the president of the respondent corporation, its manager and principal stockholder, purchased in 1892 the property located at Klamathon, which he afterwards developed into the plant in controversy. This develoi>ment lie accomplished by the investment of considerable capital of his own and the incurring of individual obligations in a large amount. These individual obligations appear to have been incurred in the name of the Klamath River Lumber Company, a name assumed by Cook for the purpose of carrying on his personal business. John R. Cook lias two sons, William E. Cook and John S. Cook, who have assisted their father in the management of his business, and who have been and are stockholders in the respondent corporation. In the latter part of 1896 and the early part of 1897 John R. Cook found that his personal obligations in the name of the Klamath River Lumber Company had become so large, and of such a pressing character, that he was unable to continue the operation of the lumber plant; successfully without financial assistance. At this juncture of affairs, Ilervey Lindley, of Los Angeles, Cal., appeared at Klamathon, in January, 1897, and looked over the plant. In February, 1897, he appeared again, and opened negotiations for an option to lease the property, making such representations as to his ability to secure means to operate the plant that John R. Cook, on Febiuary 24, 1897, entered into such an agreement on behalf of the respondent corporation. This agreement provided for the terms of a lease, and provided further that Lindley or his assigns
“After we made this trip over the property, we came to Klamathon, and discussed the matter in the office with the Cooks. John R. Cook, W. E. Cook, ana John S. Cook were there. They were all of them there off and on, and most of them all the time. Mr. Mason said that the time, as contemplated in the lease, was not sufficient to justify the putting in of the money that would he necessary to operate it, and that he would not feel inclined to go into the proposition on a five-year lease. lie said: ‘We are none of us lumbermen. Mr. Lindley has had some experience in lumbering, but none of us outside has, and he has got the trade to learn over again, as he has been out of the business a long while;’ and he said: ‘Unless there is a further extension put into this lease of two years, I would not care to engage in it.’ It was on the statements made by him at that time that the extension of two years was provided for in the lease.”
Lindley was asked if the shortness of the first season entered into consideration in making the extension. His reply was that “it did. The statement was made there by him (Mason) that this year had gone so far past that it could not be anything more than a preparatory year at best.”
George Mason, in his testimony, gives the details of this conversation, as follows:
“I objected to the arrangement on account of the shortness of the time, and during that conversation I called attention to the fact that it was then getting along in the spring pretty well; that the roads were -impassable; that there were scarcely any provisions at the camp, and none down below; and that the length of time that it would require before they could get provisions in there, and before the roads would be sufficiently dried so that they could be hauled up there, and before they could have moved their camp or built another, was necessarily a lot of time; that those things would necessarily take up a lot of time. Then I went on to explain to them that we were new in the business; that we none of us understood the business very well; that, while it was true that Mr. Lindley had previously had quite a good deal of experience in the retail business, even he had had no experience to amount to anything in manufacturing, and that we practically had the business to learn; that we had to close up our affairs where we were, and get moved up there. ■ I told him that we would absorb so much time in those things, — in learning this trade; that the trade was not only new, but that the locality was new, and we had to become familiar with the surroundings, and had to look up and establish*45 markets; and all those ihings would require a great deal of time, and the first tiling we would know the season would have slipped by, and very little lumber would have been cut.”
Jolm R. Cook testified that there never was anything said by Mr. lindley about preparatory year or experiments, or anything ol! that land; that Mr. Mason did intimate something of that kind, and the witness said:
“Gentlemen, if you want this property to experiment with, I don’t want you to talk any more to me. We want money. It takes money to run a sawmill, it yon don’t want to put the money in, I don’t want yon to talk any more to me.”
This witness was subsequently interrogated as follows:
“Mr. Lindley says ih;rt it was represented to you that they could not go to work that year; that iho first year would be a preparatory year; and, upon that representa Sion being made to you, you agreed to the extension for two ¡tears. Is that true? A. No, sir. Q. Yon say that, is not true? A. No, sir; that is not true. Q. That you are certain about? A. That I am certain about. That is emphatically not une. Q. What did induce you to make this extension? You made it? A. Yes, sir. I cannot think of anything any further than Lindley talking to my oldest son, and insisting on his getting my consent to this extension for fear Mr. Mason might hack out of the whole trade, and it would fall through, t can’t think of anything' else.”
W. E. Cook, in his testimony concerning this same conversation, denles ihat any thing was said about the first year being a preparatory or experimental year. He was asked the question:
“Was anything said about the first year being an experimental year? A. No, sir. Q. Was there anything said about extending 1he agreement in regard to using the first year for preliminary work, or anything of that character? A. No. sir. (>. When was it agreed upon that they should commence operations? A. They were to commence immediately. Q. And how should they run alter commencement? A. To tlielr fullest capacity. And they were to make certain improvements. They were to add a re-saw to Increase the capacity that year.”
Jolm S. Cook testified that he was present during most of the time the negotiations were in progress which led up to the extension of the lease for the period of two years beyond the original stipulated time. He was asked what occurred. He said:
“The entire negotiations seemed to be hanging fire just about that time. Mr. Mason did not seem to be very anxious to g'o in, and my father did not seem to care very much about having him come in. Finally Mr. Mason said that he did not like the terms as they then stood, and he thought they needed more time all round; that the present one would probably be a short season, and if they decided not to buy, or not to extend the lease, that they wanted more time to clean up in. He said they would have a great deal of money in ihe business by that time, after these number of years of operating, and it would take some time to get this money out, and he did not want to put Ids money In on such a short term of lease. Q. What was said about the .first year being experimental or preparatory, if anything? A. 1 don’t remember anything of that kind at all. Q. Would you have remembered it if it had occurred? A. I think so; yes, sir.”
Ho says, however, that about that time be was called into another room by Lindley. This testimony was not admissible as varying the terms of the written contract entered into by the parties at that time, but, considering it as showing the circumstances under which the contract was made, it certainly does not establish the
This brings us to the consideration of the testimony relating to the management of the plant by Lindley in his own name from April 7, 1897, to September 15, 1897 (when the lease was assigned to complainant), and as the manager of the complainant corporation during the remainder of the year 1897. The lease of the property by the respondent to Hervey Lindley was executed April 7, 1897, and on April 12, 1897, Lindley entered into an agreement with one David Horn wherein the latter agreed to commence logging immediately on section 31, township 40 S., range 5 E., W. M., situated in Jackson county, Or., cut timber as directed, and load the same on the cars at $1.85 per 1,000 feet, payable in cash on demand upon the scale certificate of logs having been loaded on the cars. There is testimony directed to the question whether it would not have been more advantageous to have commenced logging on section 29 in the same township, rather than on section 31, for the reason that' the location of section 29 was claimed to have been such that a larger and earlier stock of logs could have been secured from it than from section 31; but the testimony does not establish the fact that logging could have commenced on section 29 any earlier than on section 31, but rather the contrary. It does appear, however, that section 29 was nearer the line of railroad, after the road was extended, than was section 31, and that after such extension logging was in fact carried on more rapidly than on the latter section. In this connection it is claimed by the respondent that the mill coxfid have been started up, had reasonable diligence been exercised, in six weeks after the lease was made, and could have been kept continually running up to the date when the Cooks undertook to obtain possession of the plant, in February, 1898; and the fact that logs were not delivered to the railroad in the timber until six weeks after the signing of the lease, and none were delivered at the mill in quantity until a drive of logs
Turning now to the railroad, we find in its later operations, during the season, evidence of the same purpose not to carry logs to the river so that they might be driven down the river to the mill in large quantities during the summer and early fall of 1897, but a design to postpone this work until the nest season. The first logs were delivered at the railroad on May 19th, and these were hauled to the log chute or slide on the river and deposited in the river on the same day. The evidence shows the operations of the railroad as follows:
Logs hauled and placed in river between May 19th and 31st. 504,368 feet.
Logs hauled and placed in river between June 1st and 24th . 913,288 “
Logs hauled and placed in river between July 7th and 14th. 485,612 “
Logs in river on July 14th. 1,903,268 “
On July 14, 1897, the first drive of logs was made from the chute to the mill. The drive was completed on August 11, 1897, and resulted in delivering at the mill about.,. 1,000,000 “
Leaving in the river between the mill and chute 903,268 “
Logs hauled and placed in river between August 11th and 31st. 1,207,589 “
Logs hauled and placed in river between September 1st and 22d. 995,787 “
Logs in the river September 22, 1897, when cutting on section 31 had been completed. 3,106,644 “
Between May 19th and July 14th the railroad was in operation 35.days, and idle 13 working days. It is explained on behalf of the complainant that these idle days were caused by the breaking of the log chute. Between July 14th and September 22d the railroad was in operation 34 days, and idle 26 working days. It is explained that these idle days were also caused by the breaking .of the chute, and the further fact that the railroad train was in the custody of the sheriff for the period of 10 days under an attachment against the property of John R. Cook. Deducting these 10 days when the train was in the hands of the sheriff as not properly chargeable to any fault of the complainant or his assignor, there remain 28 working days in a period of 4 months for which there is no explanation except that the train was stopped because the log chute was being repaired. It must be apparent that in an enterprise of this character, where
When cutting on section 31 had been completed, on September '*2, 1897, there remained on that section logs skidded up alongside of the railroad to the amount of... 342,527 feet.
Logging was then commenced on section 29, township 40 8., range 5 E., W. M., but these logs were not hauled to the river. They were skidded up near the railroad track, and kept there until the next year.
The logs skidded were as follows:
September 30th.... ' 135,705 “
October 1st to 31st... 2,423,016 “
[November 1st to 8th.. 562,149 “
Total logs skidded. 3,463,897 "
Why were not these logs hauled to the river, and floated or driven to the mill during the months of September, October, and November? There were logs left in the river from the July drive amounting to about 908,268 feet, which would have made the total quantity about 4,366,665 feet. Lindley was asked this direct question when he was on the stand:
“Why did you not put any more in the river, and why did you not make a drive? State why yon did not. and why you skidded the logs alongside of the railroad track.” His reply was: “We made that one drive, and it was expensive. 1 talked with Air. Will Cook In particular about it, and he advised me not to drive any more. We had In the river as many logs as we cared to take the chances of losing in the freshets in the winter rains. We did not dare put any more in the river for fear we would lose them. We thought the best way was 1o skid them along the railroad track. I instructed them to skid them here at the top of the log chute, but they failed to do it. They did skid them along the track, which was better than to drop them in the river, and take the chance of losing the logs by a rush of water in the winter time. They claimed that that river was susceptible to floods at certain seasons, — in January, and perhaps February, — and they have floods there that have taken large quantities of logs over the dam. When they go over the dam, they are lost.”
Lindley's theory was that, as the river was subject to floods in January and February, the logs in the river at that time were liable to be carried down the river, and over the dam, and lost, and that the better policy was to accumulate a stock of logs at the log chute, on the river bank, and commence depositing these logs in the river as soon as the danger of a flood had passed in February, and continue this operation daring the months of March, April, May, and June. In this way it was claimed that many logs would reach the mill without driving, and the expense under such circumstances would be from 15 cents to 25 cents per 1,000 feet, while driving the
Lindley’s next reason for not driving the river after August, 1897, was that William E. Oook advised Mm not to drive any more. William E. Oook testifies that he gave no such advice; and John R. Oook, whose experience and interest entitle his views to some consideration, testifies that he urged Lindley to keep putting in more logs. He was of the opinion that the river could be driven every day of the year, and that the work should not be stopped. Lindley’s next reason for not keeping logs moving down the river in the fall was that they had in the river as many logs as they cared to take the chances of losing in the freshets in the winter rains. These freshets, he says, were liable to occur in January and February; but, notwithstanding his apprehension in this respect, it appears that the railroad did commence hauling logs again on December 28, 1897, and between that time and February 10, 1898, — the most dangerous period of the year,- — there were placed in the river a stock of logs amounting to 927,758 feet, which, together with the logs already in the river (3,106,644 feet), made an aggregate of 4,084,402 feet of logs in the river during all the winter months. Whatever danger there may have been in the loss of a considerable quantity of logs from freshets in January and February was, therefore, in fact incurred by the accumulation of this large stock of logs in the river. It is manifest that under these conditions the safer course was to have driven these logs down the river to the mill, and had them taken out and sawed into lumber; and this was precisely the plan of operation pursued during the season of 1898, when, notwithstanding the water was lower in the river than in 3897, over 9,000,000 feet of logs were driven down the river between May and Novem-
But another aspect of this case remains to be considered. The Cooks resided at Klamatlion, and during the season of 1897 they observed the plan pursued by Bindley and his associates in carrying on the work and business affairs of the plant, and, while it is true that John R. Cook continually ui-ged Bindley to adopt methods of operation that would have secured more immediate and possibly better financial results, he gave no notice or warning to the lessee that he would claim a forfeiture of the lease until he and his sons undertook to regain possession of the plant on the night of February 12, 181)8. When the placing of logs in the river from section 31 was suspended, oil Heptember 22, 1897, the Cooks knew that no more logs were to be driven down the river that season, and no more lumber could he sawed at the mill until the next season. Indeed, ibis fact was known to John R. Cook as early as September 1, 3897, when Mason testifies that he had a conversation with Cook about the operations of the plant, and the. latter complained that Bindley had promised to assist him in getting a loan, and had failed to do so. Mason says:
“lío [Cook] said lip might be njistaken; he hoped he was (the old gentleman talked very nicely about it); but he said he did not think Mr. Lindley was going to be a success in the business. I asked him why, and he said there was not being as much accomplished as there should be; that we had virtually*52 gotten through sawing, and that there would not he any more cut. That was understood in our conversation, — that they would not do anything to saw any more that year, — and he seemed to think there had not heen as much accomplished in that way as there should have been. I called his attention to the conversation that we had had in the spring, and told him that we had gotten along about as well as I had supposed we could in getting ready; and when X called his attention to that conversation it seemed to change his mind quite a good deal.”
Here was a period of more than sis months, during which time all the facts were present upon which a forfeiture could be claimed by the respondent on the ground that the plant was not being operated as a lumbering business to its fullest capacity, but the Cooks stood by during all this time, and made no move, except that John R. Cook, in September or October, communicated to one of his Eastern creditors the information that the contract was not being carried out, and he believed that it was going to be a “freeze out.” This information appears to have been the commencement of negotiations with other parties for the formation of a corporation to operate the plant after possession had been obtained by the forcible seizure of the mill and appurtenances as finally executed by the Cooks on the night of February 12, 1898. But all these proceedings prior to the assertion of a claim of forfeiture of the lease were carried on without the knowl-' edge of Lindley or his associates. The bad faith involved in these proceedings on the part of the Cooks is disclosed by a brief statement of some of the acts of Lindley and his associates in carrying out the terms of the lease upon the plan of operations adopted by them. One of the reasons given by John R. Cook for leasing the property was that it could only be operated successfully by the investment of a large amount of capital. There is no complaint that this was not done by the lessee. It appears from the testimony that prior to February 12, 1898, the complainant had expended upon the plant and in securing the stock of logs then on hand upward of $70,000, and the only means it had for reimbursing itself for this outlay were these logs and the proceeds from the sale of about 1,000,000 feet of lumber. The value of the logs to the complainant was dependent almost entirely upon having possession of the mill, and being able to cut them into lumber, since there was no other mill in the neighborhood. With the mill in the hands of the respondent or a corporation under the control of the Cooks, the complainant would be helpless to protect itself in disposing of this large quantity of logs. It appears further that no timber lands were included in the lease, but logs were obtained by the complainant from lands purchased from the California & Oregon Railroad Company, the complainant succeeding to the interest of the Cooks in certain contracts between them and the railroad company. The last of these contracts assumed by the complainant was for the purchase of 13,851 acres of timber land at $0.50 per acre, amounting to $90,000, and the contract between the complainant and the railroad company was dated December 6, 1897. But not only did the Cooks give a passive assent to these extensive preparations for future operation of the plant, but it appears that they conferred with Lindley with respect to certain details. About September 24, 1897, Lindley visited the East to see about the placing of lumber in
“Hervoy Lindley, Esq., Klamathon, Cal. Dear Sir: Please prepare and forward a statement of the business of the Klamath Kiver Lumber & Improvement Company from the time you took possession under your lease until the present time, showing condition of the business under your management. This request is made upon you under the terms of the lease. Your prompt attention and compliance with this request will greatly oblige,
“Yours, voi-y truly,
“Klamath Kiver Lumber & Improvement Company,
“By James Steel, Secretary.”
It will be observed that it is expressly stated that the demand is inside under the terms of the lease. This communication was acknowledged by Lindley under date of November 22, 1897, and a statement forwarded in a letter dated December 17, 3897, as follows:
“James Steel, Ksq., Secretary Klamath River Lumber & Improvement Co., Portland, Oregon — Dear Sir: In accordance with your request, we hand you herewith balance sheet December 1, 1897. We have everything in good shape for a business of 15,000,000 this year, and have 10,000,000 logs now cut. Will start the mill in January, weather permitting. Hope to have a railroad from mill to timber next season. The river is the trouble here.
“Yours, truly, Hervey Lindley, Manager.”
A further statement was called for by Steel under date of December- 21, 1897, to which Lindley replied, under date of December 24, 1897, as follows:
“James Steel, Esq., Secretary Klamath River Lumber & Improvement Co., Portland, Oregon — Dear Sir: Your letter 12/21/97 at hand, and in reply to your inquiry as to general information about the business we are doing will say we sawed in all a little over a million of our own stock. Getting a late start, and everything disorganized, we could only make this year virtually a preparatory year for the coming- one, and we hope, barring accidents, to cut 15,000,000 this coming- year, and expect we have 10,000,000 now cut, and expect to start the mill in January, and run it ten months, and hope we may get good results, and, with market as a.t present, prospects are good. We have had a great deal of expense, almost as much as we should have for a full year’s business, and this plant can only be operated on a large scale to pay,*54 and we will try that, and see If that can he made profitable. With compliments of the season, and. expressing our desire to hear from you often,
“Yours, truly, Hervey Lindley, Manager.”
To these statements by Lindley as the manager of the complainant no objection was made by. the respondent, and no complaint made that the lease had been forfeited. About the 4th or 5th of February, Lindley had a conference with John E. and William E. Cook concerning the addition of a box factory to the plant. There was one already on the premises, not in use, belonging to the Pioneer Box Factory, holding a lease from the respondent. The Cooks undertook to negotiate on behalf of the complainant for the right to use this factory in connection with the sawmill, and one of them did write a letter in this behalf to the party controlling the right; but pending further negotiations the mill and other property belonging to the plant was seized by the Cooks in the interest of a combination to which they were parties, and formed for the purpose of operating the plant when possession of it should be obtained.
Assuming that the complainant failed to fully perform the conditions of the lease entered into with the respondent, as stated in a former part of this opinion, and that this failure resulted in the right of the respondent to demand a forfeiture of the lease in September, 1897, it is nevertheless clear that the subsequent transactions just related give to the case a different aspect. Every consideration of right and justice required that under the circumstances the forfeiture should have been asserted promptly, and a return of the property demanded as soon as the default of the complainant had become an established fact. But here we have the officers of the respondent standing by while large expenditures were being made for the benefit of the plant, and dealing with the manager of the complainant with respect to important matters with every appearance of assenting to the continuance of preparations for the future operation of the plant on a large scale. The fact that John E. Cook persisted in his objections during the season of 1897 that the plant was not being operated successfully, or to its full capacity, is not sufficient. He knew all the facts, and should have asserted then the right of forfeiture now claimed by the respondent as a defense to this action.' It is assumed that Cook’s complaints were not merely personal, but that he represented the respondent in his relations with the complainant and in his dealings with its officers. This cpnduct, under the circumstances, amounted to a waiver of the forfeiture, and the respondent will be estopped from afterwards exercising its legal right to claim it in opposition to such waiver. Bishop, in his work on Contracts (Enlarged Edition) states the rule, in section 792, as follows:
“Waiver is where one in possession of any right, whether conferred by law or by contract, and of full knowledge of the material facts, does or forbears the doing of something inconsistent with the existence of the right or of his intention to rely on it. Thereupon he is said to have waived it, and he is-precluded from claiming anything by reason of it afterwards.”
In Swain v. Seamens, 9 Wall. 254-274, the rule is stated in the following language:
*55 ‘‘tVlun'o a person tacitly encourages an act to be done, he cannot afterwards exercise his legal right in opposition to such consent, if his conduct or acts of encouragement induced the other party to change his position, so> that he will be pecuniarily prejudiced by tiie assertion of such adversary claim.”
This doctrine is too well established, and the cases where it has been applied too numerous, to require any further reference to authorities. It is sufficient to say that it is peculiarly applicable to the facts of the present case, and determines that the respondent was not, under the circumslanees, in a position to demand a forfeiture of the lease, or disturb the complainant in its possession of the biased property on February 12, 1898, because of the failure of the latter to operate the plant, to its fullest capacity prior to that date. In this view of the case, other questions discussed by counsel in their briefs need not be considered.
The question of the equitable jurisdiction of this court was necessarily involved in the motion to modify the restraining order (Pokegama Sugar Pine Lumber Co. v. Klamath River Lumber & Improvement Co., 86 Fed. 528), and in the proceedings for contempt (Id. 588), and, while not discussed in the opinion, was considered and determined in favor of the equitable jurisdiction of the court.
The respondent: contends that upon the facts stated in the bill of complaint there was for the injury complained of a remedy at law. Beet ion 723 of theltevised Statutes provides that suits in equity shall not be sustained in either of the courts of the United States in any case where a plain, adequate, and complete remedy may be had at law. Under this statute the remedy at law, in order to exclude equity, must he as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity. Boyce’s Ex'rs v. Grundy, 3 Pet. 210, 215; Insurance Co. v. Bailey, 13 Wall. 616, 620; Tyler v. Savage, 143 U. S. 79, 95, 12 Sup. Ct. 340. In the present ease the prompt interposition of a court of justice was imperative to preserve the property for the benefit of both parties. The respondent had taken possession of the property without regard to the requirements of law in such proceedings, and for a time maintained the possession thus illegally obtained by the display of force. The court cannot close its eyes to the real meaning and character of such proceedings. They were inaugurated in defiance of law, and were meant to be maintained against its ordinary processes. This is shown conclusively by the fact that this court was only able,to enforce its orders at first by resort to the power of punishment: for contempt, and any delay or hesitation at this time would unquestionably have resulted in the destruction of valuable property, and possibly in the loss of life. But it is contended the complainant might have proceeded in the proper court, under a statute of this slate, for forcible entry or forcible detainer. The diverse citizenship of the parties entitled the complainant to come into this court with its cause of action, and obtain the remedy which this court has the power to give. The civil action of forcible entry and detainer has been provided by the law of this state, but not by the laws of the United States. The remedy at law that will oust this court of its equitable jurisdiction is not what may be found in the state laws, but
The action of ejectment is subject to the objection that it did not afford an adequate remedy. As against the legal forfeiture of the lease claimed by the respondent, the complainant asserted certain equities to defeat respondent’s right of possession based upon such forfeiture. But in an action of ejectment in a United States court, where the legal title prevails, such equities could not be considered. Miller v. Courtnay, 152 U. S. 172, 14 Sup. Ct. 517; Carter v. Ruddy, 166 U. S. 493, 17 Sup. Ct. 640. I think it sufficiently appears from the testimony that complainant would have suffered irreparable damage had not the respondent been enjoined from committing the acts of interference complained of in the bill of complaint. The facts need not be repeated. They have been sufficiently referred to in this opinion and in the previous opinions that have been rendered in the progress of this case. Here is a large plant, embracing various properties, depending for its success and value upon capital and management, the supply of timber, and the conditions of distant markets. The complainant had furnished the necessary capital, found a profitable market, and, independently of the lease, had secured and obligated itself to purchase a large tract of timber land, which, at that time, at least, furnished the only supply of logs in quantity accessible to the mill. The possession of the mill by the respondent under its claim of right would have given it no claim or title to these timber lands. What, then, could it have done in the way of operating the plant, under the existing conditions, except to make more certain the condition of financial embarrassment from which it and its principal stockholders were trying to escape? The fact that a new corporation was to take hold of the property simply furnishes additional evidence that whatever damages the complainant might suffer by the proceedings would be irreparable.
Let a decree be entered in favor of the complainant in accordance with this opinion.