« ПредыдущаяПродолжить »
been paid at the proper time. On the 26th day of May, 1893, the court passed an order with reference to the filing of claims against the Western & Atlantic Railroad Company, as follows:
"It being made to appear to the court that this cause has been pending in this court since the 20th day of December, 1890, and all parties having claims against the defendant have had since then to file the same, and it being desirable to end the litigation and distribute the assets as early as possible, it is, upon motion of complainant's solicitor, ordered, adjudged, and decreed that all persons having claims or demands against the late the Western & Atlantic Railroad Company, defendant in said cause, intervene in said cause and file a full and complete statement of their said claims or demands on or before the rules day in August, 1893, so that the same may be heard and adjudged. It is further ordered, adjudged, and decreed that all claims or demands not made as provided herein be and the same are barred from participating in any part of the assets of said the late the Western & Atlantic Railroad Company. It is further ordered, adjudged, and decreed that the receivers in said cause cause notice to be published for a period of sixty days prior to said rules day in August in some one of the daily papers published in the city of Atlanta.”
It is contended that, under the terms of this order, these claims for exes are presented too late. It may be true that the officers charged with their collection have not been as diligent as they might have been in presenting their claims for the same to the court, yet it is equally true that under the view entertained by the court these receivers should have returned the property for taxation, or at least have asked the direction of the court in respect to it Officers charged with the collection of the state and municipal revenue must depend, to a large extent, upon those whose duty
a it is to make return of the same. Especially is this true as to the kind of property in the hands of these receivers. These petitions will be entertained, therefore, and the amount of tax due by the receivers on the assets in their hands determined. The court will not, however, entertain these claims for double taxation. The petitions set out that, under the law, persons failing to return their property for taxation in a certain time are subject to double taxation. If the attention of the court had been called to this matter by proper petition it would have been disposed of long ago, and there can be no possible ground, on a petition presented at this late date, to ask for a penalty against these receivers.
An answer has been filed in this case for the complainants in the bill, by their solicitor, which it is unnecessary to consider at present, as the case is now heard on demurrer filed by the receivers to the petitions. It does raise questions of fact which will be important for consideration hereafter as to the extent to which the assets can be taxed. This legal question is raised by the answer, that the funds in the hands of the receivers is net income, and that the net income has already paid its tax from year to year, and should not be subject to additional taxation. This position appears untenable.
The company was subject to a tax of one-half of 1 per cent. on its net income during the lease. The lease expired in 1890, and this property has been held during these years in the hands of the receivers, as has been stated, and it seems to be true that it is net income or profit, as claimed, arising from the operation of the railroad by the company; but it comes back to the same question at last,—that it is property in the hands of receivers of court, as to which there is no exemption if the exemption it had, strictly construed, ended with the lease. The facts of this case are so peculiar and unusual that the decisions which have been cited have been of little use in determining it. It is left after all to be controlled by the general principles stated in the beginning of this opinion. The case has been held up for some time, and doubts have been entertained as to the correct solution of the matter, but if this condition of mind still existed it would not justify the court in deciding against the right to taxation. The existence of the exemption, under all the authorities, must appear beyond a reasonable doubt, to justify its allowance. An extract from the opinion of the court in the case of Bank v. Tennessee, 104 U. S. 493, expresses the well-settled rule on this subject in this way:
“That statutes imposing restrictions upon the taxing power of the state, except so far as they tend to secure uniformity and equality of assessment, are to be strictly construed, is a familiar rule. Against the power nothing is to be taken by inference and presumption. Where a doubt arises as to the existence of the restriction, it is to be decided in favor of the state."
It certainly cannot be said that the right of this property in the hands of the receivers to be exempt from taxation is free from doubt. The conclusion is that the assets in the hands of these receivers are subject to taxation, but not to double taxation or penalty, and that the order of May 26, 1893, will not be enforced as against these claims. The demurrer will be overruled except as to the claim of double tax.
NATIONAL FOUNDRY & PIPE WORKS, Limited, v. OCONTO WATER
CO. et al.
(District Court, E. D. Wisconsin. July 17, 1895.)
1. JUDGMENTS-PRIVIES-STOCKHOLDERS IN CORPORATION.
Persons who, at the time of the commencement of a suit against a corporation and the rendition of judgment therein, hold, as collateral security, stock in such corporation, which has been transferred to them on the books of the corporation, and who participate actively in the management of such corporation, are so far stockholders as to be privies to the judgment, and
estopped to attack it in a collateral proceeding.
When a federal court has made a decision respecting the rights of parties before it in particular property, based on the rulings of the highest court of a state as to the interpretation of a statute of such state, and the state court afterwards reverses its ruling, it is not the duty of the federal court to reverse its decision as to the rights of the parties in the same property
in proceedings subsequently arising. 3. CORPORATIONS — RATIFICATION OF UNAUTHORIZED ACTS — RIGHTS OF THIRD
An instrument claimed to be a mortgage was executed on September 13th by officers of a corporation, without authority of the board of directors and without the corporate seal. It was not delivered on that day, but on September 15th was placed with a bank which, on that or the next day, made an advance of money. On September 15th a mechanic's lien accrued on the property alleged to be covered by such mortgage. On October 29th the mortgage was latified by the directors and stockholders of the cor
poration, and a formal instrument executed under the corporate seal, antedated to September 13th. Held, that such mortgage could not operate to create a lien superior to the mechanic's lien accruing before the ratification. SAME-LIABILITY OF STOCKHOLDERS.
A corporation was organized in July, 1890, and its stock subscribed but not paid for. In September the corporation agreed with A. and W. that its entire stock should be transferred to them as collateral security for moneys to be advanced. On October 2d certificates of stock were issued to the subscribers, and immediately transferred by them in blank to A. and W. Soon after, upon request of A. and W., these certificates were surrendered and new ones issued to A. and W. in their own names, for which they gave receipts to the original subscribers stating that such stock was held by them as collateral for moneys to be advanced. A. and W. also subsequently caused the stubs of their certificates to be indorsed with memoranda that the shares were held as collateral. In January, 1891, the original subscribers assigned all their interest in the stock and in the company to dummies nominated by A. and W., and were thereupon released from liability as indorsers on notes given to A. and W. for advances to the corporation, which was thereafter actually managed and controlled by A. and W. Held, that A. and W. became by these transactions the absolute owners of the stock, and liable for the amounts unpaid thereon to the extent necessary to discharge the indebtedness of the corporation.
Miller, Noyes, Miller & Wahl, for complainant.
JENKINS, Circuit Judge. I have given due consideration to the
. evidence and the able arguments submitted at the hearing. I deem it essential only to state as briefly as may be the conclusions to which I have arrived, without stopping to elaborate the reasons compelling thereto.
First. I cannot doubt that Andrews and Whitcomb are concluded by the mechanic's lien decree rendered October 3, 1892, against the Oconto Water Company, so far as the determination of the lien is concerned, if that decree ought now to be enforced,—a question subsequently considered. A judgment is conclusive against the parties and privies, unless impeached for fraud or want of jurisdiction. A stockholder of a corporation is so far a privy to a judgment against the corporation that he cannot attack the judgment in any collateral proceeding. Sanger v. Upton, 91 U. S. 56, 59; Graham v. Railroad Co., 118 U. S. 161, 177, 6 Sup. Ct. 1009; Hawkins v. Glenn, 131 U. S. 319, 329,9 Sup. Ct. 739; Glenn v. Liggett, 135 U. S. 533, 542, 10 Sup. Ct. 867; Chicago & A. Bridge Co. v. Anglo-American Packing & Provision Co., 46 Fed. 584, 587; Bennett v. Glenn, 8 U. S. App. 419, 5 C. C. A. 353, 55 Fed. 956. Garland and Todd, who held $99,700 of the capital stock out of a total of $100,000 of capital, transferred their stock to Andrews and Whitcomb as collateral security. This stock was surrendered to the company and, at the request of Andrews and Whitcomb, new certificates for a like amount of stock were issued to them on the 18th day of October, 1890. Such stock has since stood and now stands in their names. The mechanic's lien suit was brought on the 30th day of January, 1891. At the commencement of and during the pendency of that suit, not only were Andrews and Whitcomb the holders of the stock standing in their names on the books of the company, but they actually controlled the business of the corporation. As appears by the letter book of the company,
offered in evidence, Mr. Andrews conducted the correspondence,--sometimes in his own name, sometimes in the name of the corporation. It is true they held this stock all this time as collateral security, but it is also true that they actually participated in, and in fact controlled, the policy and operations of the company at and after the commencement of the suit. The employment of counsel to defend that suit, if not actually authorized by them, could not, under the circumstances, have been unknown to them and unapproved by them. Counsel defending that suit was at the time, and since has been, the counsel of Andrews and Whitcomb. Holding the stock, although as collateral security, coupled with the active management of the affairs of the corporation, in my judgment, constitute them stockholders, so far as to conclude them by the judgment rendered against the company. They are not in a position to attack that judgment collaterally. The case of Hassall v. Wilcox, 130 U. S. 493, 9 Sup. Ct. 590, is not in conflict. That was a case of bondholders, not of stockholders. In such case no like privity exists upon which to rest the conclusiveness of the judgment.
Second. In National Foundry & Pipe Works v. Oconto Water Co., 52 Fed 43, affirmed, upon appeal, 7 C. C. A. 603, 59 Fed. 19, involving the mechanic's lien claim here asserted, this court held that under the law of Wisconsin a mechanic's lien existed for the materials furnished the Oconto Water Company in the construction of its plant. Since the affirmance of that decree by the circuit court of appeals, the supreme court of Wisconsin, in the case of Chapman Valve Manuf'g Co. v. Oconto Water Co., 60 N. W. 1004, with respect to the construction of the plant in question, has held that no me chanic's lien exists under the laws of Wisconsin for labor and supplies furnished a quasi public corporation furnishing water supply to the public. This decision reverses the former holdings of that court referred to in the opinion of this court reported in 52 Fed. 43, and in conformity to which holdings that decision was made, and changes the public policy of the state in respect to the application of the mechanic's lien law to a quasi public corporation. The question is therefore sharply presented whether this court should, in regard to this particular property, in respect to which it has determined that a lien exists, recede from its position in deference to the changed position of the supreme court of Wisconsin, and should followits latest holdings. It is without question the duty of the federal court to avoid conflict with the well-settled decisions of the state courts, and they will lean towards an agreement of views if the question is balanced with doubt; but where, at the time of a decision by a federal court, there has been no settled construction by the supreme court of a state of a statute of that state, the duty is devolved upon the federal court to determine that question independently, and a federal court is not called upon in such a case to reverse its judgment in that case because the supreme court of the state has subsequently reached a different conclusion. It is much more the duty of a federal court to stand by its judgment when, as here, the decision of this court was
founded upon the construction placed by the supreme court of the state upon this very statute, applying it to public corporations by a series of decisions covering a period of nearly 30 years, declaring it to be the public policy of the state that the mechanic's lien law should extend to and include the property whether of public or private corporations, except property owned by a municipal subdivision of the state. Hill v. Railroad Co., 11 Wis. 215; Purtell v. Forge & Bolt Co., 74 Wis. 132, 42 N. W. 265. It cannot be doubted that these cases are in fact, although not in terms, overruled by the decisions referred to and by the principles asserted in Chicago, M. & St. P.Ry.Co. v. City of Milwaukee (Wis.) 62 N. W. 417, 419, 420. It is, of course, competent for the supreme court of the state to recede from its former rulings, and to establish a different policy for the state. It will doubtless be proper for this court, in any case hereafter arising, where rights have accrued subsequent to the last decision of the supreme court of the state upon the question, to give due consideration to the later rulings of that tribunal. But, with respect to the rights here involved, which had accrued before and had been determined by this court prior to these later decisions, I can only say in the language of the supreme court of the United States, that:
"It can hardly be contended that the federal court was to wait for the state courts to decide the merits of the controversy, and then simply register their decision, or that the judgment of the circuit court should be reversed merely because the state court has since adopted a different view. If we could see fair and reasonable ground to acquiesce in that view we should gladly do so, but in the exercise of that independent judgment which it is our duty to apply to the case, we are forced to a different conclusion." Burgess v. Seligman, 107 U. S. 20, 35, 2 Sup. Ct. 10.
I am therefore constrained to the conclusion that it is my duty in this case to adhere to my former decision, to the effect that the complainant and R. D. Wood & Co. were entitled to mechanics' liens upon this property.
Third. The instrument claimed to be a mortgage, under which Andrews and Whitcomb assert their right, is dated September 13, 1890, signed by Garland as president and Todd as secretary of the Oconto Water Company. Its execution was not authorized by the board of directors, nor was the instrument sealed with the seal of the company. It was not delivered on that day, but was placed with the bank on the 15th, on which or on the subsequent day an advance of money was made by the bank on a draft of Andrews and Whitcomb on Maine, which was paid by the latter some few days thereafter. The 15th of September was the date that the mechanic's lien accrued upon the property, as decreed in favor of the complainant and R. D. Wood & Co., although it appears from the stipulation filed that the first delivery of material to the Oconto Water Company was on the 8th of September. This instrument of mortgage, executed by Gar
. land, was formally ratified at a meeting of the stockholders of the company on the 29th of October, 1890, and by the board of directors of the company on the same day, and at that time the formal contract or mortgage was executed by the officers of and under the seal of the company, but antedated to September 13th. Assuming this instrument to cover all the property of the company, it could not oper