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was seriously embarrassed for the want of ready money; that in this situation McCormick applied to Crimp, a stranger, so far as the record shows, for assistance to enable the company to go on with the drainage contract, "and nothing more"; that the contract relates solely to the work to be done under the drainage contract; that the mere fact of Crimp's $25,200 having been advanced to the construction company imported an obligation on the part of the company to refund it; that the stock belonged to McCormick, and, however intimate his relations with the company, the two are distinct, "and cannot be, and must not be, confounded"; that the drainage contract was the property of the construction company and not of McCormick; and that, by the fourth and eleventh articles, the $25,200 advanced are to be "repaid" or "returned." The contract, however, does not show that the company was not able readily to obtain from other sources needed money, nor that McCormick applied to Crimp, nor, even by suggestion, that they were strangers, but, to the contrary, expressly recites that Crimp was "desirous of becoming interested in the construction company" upon the terms and conditions mentioned. That the contract does not relate solely to the work to be done under the drainage contract is shown by the last article, as already explained, and though it is provided, in terms, in the eleventh article, that, upon the performance of the things there mentioned, "this contract shall be ended," it is evident that, for the purposes of the twelfth article, it would continue in force. And, if presumptions are to be indulged, it is probable that the money paid by McCormick for stock went to the company because McCormick had not paid therefor, or was otherwise indebted to the company, and that thereby the shares became, as recited in the contract, "full-paid and nonassessable," and the requirement of the seventh article, that the money be applied in the particular way specified, was made reasonable, when it otherwise would not have been. It is not true, in law, that the mere fact of Crimp's money having been advanced to the construction company, under the cir cumstances, imported an obligation on the part of the company to refund it. But, as bearing upon the question of construction, the more important fact, evident upon the face of the contract, as it seems to us, is that all the parties, and certainly Crimp, entered into the agreement anticipating large profits from the performance of the contract with the drainage district; and, if that had been the outcome, it may be assumed that Crimp would have insisted upon the construction which the court placed upon the contract, because it would have been more beneficial to him than any other. On the theory of a loan, he could have claimed rightfully only the return of his money with lawful interest, and perhaps reasonable compensation for his services. All besides would have been usurious. If the transaction was in fact a loan, the contract was, on Crimp's part, most unconscionably exacting; and there is no rule of construction or interpretation which requires the court, in order to fasten such a character upon a writing, to v.72F.no.4-24

ignore any of its provisions, or to force upon them strained and unnatural definitions. As a shareholder in a speculative enterprise, it was legitimate that Mr. Crimp should make large profits, and take security for their realization. As a lender of money he was entitled only to lawful interest, for the payment of which and the repayment of the principal sum he was entitled to exact such security as he was willing to accept, but, as a good citizen, nothing

more.

It is insisted in behalf of the appellant that, somehow or other, a construction shall be invented or forced which will relieve from the disaster of a condition of affairs which was not apprehended, and against which no stipulation or security was provided, or, indeed, could well have been provided, in so far as it was the result of the alleged fraudulent conduct of McCormick, made possible, and perhaps suggested, by Crimp's physical inability to interfere. It is said, further, that the contract "needs and must have construction, and not simply interpretation, in order that it may, if possible, be brought into line with the reasonable and probable intention of the parties to it. If this cannot be done, then it would be the duty of the court to pronounce the contract void for uncertainty, or fraudulent for its gross injustice, and to determine the rights of the parties, independently of the jargon of words to which their signatures were appended." And yet it is by virtue, and upon the assumed validity, of the contract, that the appellant sought relief and has whatever standing she has in court. Without it she has no pretense of a lien upon the drainage contract, or the fund realized from its sale, and she has asserted no right not dependent upon it. Besides, there is no issue in the case, nor proof, upon which the court could have considered whether the contract was for any reason invalid or fraudulent; and, if it be true, as asserted, that McCormick misappropriated or converted to his own use the money advanced by Crimp, and even if that was his intention from the beginning, it does not affect the question of the right interpretation or construction of the contract.

Finally, it is said:

"The trouble with the opinion of the court is that it is all the time sticking to the literal and technical meaning of the words employed in some of the articles of the contract. It does not try to bend that [meaning] into harmony with a reasonable intention of the parties. The effort is all the time to interpret and not to construe, to find inconsistencies and not to harmonize them. and in doing this it gives the widest and most sweeping effect to words and clauses which seem to open wide the door for successful rascality, and visits the consequences of the iniquities of the construction company and McCormick upon the victim of those iniquities in every possible way. The 126 shares of stock would be as much involved and as completely liberated from the claims of Crimp and his representative, by the forfeiture of the 99 shares under article 10, as would the drainage contract. The theory of the opinion makes Crimp agree that if the construction company and McCormick fail to perform their part of the contract, and thereby ruin the entire enterprise, he will accept 99 shares of the stock, made worthless by their defaults, in full satisfaction of his money advances and expected profits. As already said, nothing short of inexorable necessity should compel such a conclusion, and the hesitancy and want of positiveness of the opinion, if nothing else, indicate that

no such necessity exists. As the 99 shares were transferred as a security for profits mainly, it would be easy, other parts of the contract considered, to limit the effect of their forfeiture to the loss of the profits, and no rule of construction would be violated by so doing. If the court will force upon the appellant the ownership of these 99 shares by virtue of the provisions of article 10, and against her will, for the villainous conduct of McCormick and his company (which ought not to be done), we insist that the consequences should extend no further than the most rigid and limited construction of their rights absolutely requires."

To all this the opinion itself, and what we have already said here, would be sufficient answer. The theory of the opinion, neither by construction nor interpretation, can be made to bear the implication suggested. On the contrary, the opinion says that, “if that remedy" that is, the forfeiture of the 99 shares-"were asserted, the absolute ownership of the 225 shares of stock would become vested in the appellant as the representative of the second party.” Upon the construction given by the court to the contract, that is clearly so, because, on that theory, Crimp was already the owner of the 126 shares, and by reason of the default of the other parties was released from the obligation to resell. And while "the right of the company to retake possession of the drainage contract, which could not be included in the forfeiture, would immediately revive," the beneficial ownership of that contract would follow the ownership of the stock, subject, of course, as on that theory it ought to be, to the payment of the debts of the company. The suggestion, in the first lines of this last quotation, that the court ought "to bend" the meaning of the words employed in some of the articles. of the contract "into harmony with a reasonable intention of the parties" is a begging of the question. The "reasonable intention" is to be sought, not assumed; and the intention contended for cannot be found in "the literal and technical meaning of the words employed" in any of the articles of the contract. It might, perhaps, by construction, be deduced from some of the articles, but not from the entire contract, without ignoring or forcing from their true significance the plain and unequivocal words and expressions of other articles. The court's construction puts upon no word, phrase, sentence, or article a strained or unfamiliar sense. Upon that construction, every provision of the contract was upon its face favorable to the appellant's testator, and if, in the outcome, there has been misfortune or injustice, it is attributable to causes outside of the contract, against which no safeguard was devised, or, perhaps, thought to be necessary. The petition is overruled.

FVOODBURY et al. v. ALLEGHENY & K. R. CO. et al.

(Circuit Court, V. D. Pennsylvania. August 26, 1895.)
No. 33.

1. STATE AND FEDERAL COURTS-JURISDICTION-PENDENCY OF FORMER SUIT. The A. Ry. Co., a corporation of the states of New York and Pennsylvania, most of whose property lay in the latter state, made a mortgage to the C. Trust Co. to secure an issue of bonds. Pursuant to a provision of

the mortgage, a majority of the bondholders requested the trustee to foreclose the mortgage, and it accordingly commenced suit in a court of the state of New York. The railway company thereupon commenced a suit in the same court, in which it obtained an injunction restraining the trustee from proceeding with the foreclosure. The bondholders then requested the trustee to bring suit for the foreclosure of the mortgage in Pennsylvania, and, upon its refusal to do so, themselves filed a bill in a federal court in Pennsylvania for the foreclosure of the mortgage. Held, that the mere pendency of the suit in the New York court in which the trustee had been enjoined from proceeding did not oust the jurisdiction of the federal court to proceed to decree foreclosure of the mortgage on the property in both states.

2. DEEDS-ALTERATION-RATIFICATION BY GRANTOR.

The mortgage was made jointly by the railway company and one B., its president, who pledged certain lands owned by him as additional security for the bonds of the railway company. After the directors of the railway company had authorized the execution of the mortgage in such form as should be approved by counsel, to secure the bonds, the mortgage was drawn, executed, and acknowledged by the railway company and B., and submitted to complainants, brokers, who were to purchase a part of the bonds. They objected to the provisions relating to the pledge of B.'s property, requiring that certain reserved interests should be included in the mortgage. After negotiation and correspondence between complainants, B. and his counsel, who was also counsel of the railway company, and W., the ,secretary of the railway company, a new clause was drawn up by B. and his counsel, including the interests in question, approved by complainants, and then inserted by W.. under B.'s direction, in the mortgage, to which W. then obtained the acceptance of the trustee. B. then had the completed mortgage recorded, and, as president of the railway company, executed the bonds reciting the mortgage. Part of the bonds were then delivered to the complainants, who paid cash for them, which was used in paying the indebtedness of the railway company. Held, that the bonds were not void or voidable, either by B. or the railway company, on the ground of unauthorized alteration, the change in the mortgage having been fully ratified both by B., whose interest was alone affected, and by the officers of the railway company, who had authority to execute the mortgage in any form approved by counsel.

8. RAILROAD BONDS-BONA FIDE HOLDER-PENNSYLVANIA CONSTITUTION.

The mortgage was given in pursuance of a series of contracts between B. and B., the principal stockholders of certain railway companies which were consolidated to form the A. Ry. Co., a firm of brokers, who were to assist in extending the railroad and negotiating the securities of the company, for which they were to receive a part of such securities as commission, and to turn over the proceeds of others to B. and B., and a construction company, which was to build the extensions of the road. Under such contracts, the stock of one of the constituent companies, a New York corporation,, was largely increased, and the bonds were to be used in part in retiring the securities of the constituent companies. A large proportion of the bonds issued under the mortgage were sold to the complainants, who paid for them in cash, which was applied to the payment of the debts of the constituent companies, and who had no knowledge of the contracts leading up to the making of the mortgage and the issue of the bonds. Held that, without regard to such previous contracts, the bonds bought and paid for by the complainants were not within the prohibition of the constitution of Pennsylvania that no corporation shall issue stocks or bonds except for money, labor done, or money or property actually received; the validity of the bonds could not be questioned, and the complainants were entitled to a foreclosure of the mortgage.

4. MORTGAGES-PENNSYLVANIA STAY LAWS.

The stay clause in the Pennsylvania statute of 1705 (1 Smith's Laws, p. 60) applies only to scire facias sur mortgage, and not to a bill in equity to foreclose.

C. Walter Artz, for complainants.

Jack & Roberts and A. Moot, for defendants.

Before ACHESON, Circuit Judge, and BUFFINGTON, District Judge.

BUFFINGTON, District Judge. This bill in equity was filed August 23, 1892, by Woodbury & Moulton, a firm whose members are citizens and residents of the state of Maine, against the Allegheny & Kinzua Railroad Company, a consolidated corporation of the states of Pennsylvania and New York, Spencer S. Bullis and Sarah E., his wife, the Central Trust Company, a corporation of the state of New York, and others, to foreclose a joint mortgage given by the said railroad and Bullis to the said trust company. The mortgage is dated February 1, 1890, is recorded March 10, 1890, in McKean county, Pa., and in Cattaraugus county, N. Y., and is to secure payment of $500,000 of the bonds of said railroad. Of the bonds, $200,000 are in the trustee's hands, unissued. Of the $300,000 issued, $15,000 were paid under a sinking-fund provision, leaving $285,000 outstanding. Default was made of the semiannual interest due February 1, 1892, and on the principal of $15,000 of bonds then payable under the sinking-fund clause. Pending such default, the trustee (upon the written request of more than 50 per cent. of the bondholders to so declare and to foreclose), in pursuance of the provisions of the mortgage, declared the entire outstanding issue of bonds due. In pursuance of the above request of the bondholders the Central Trust Company, the trustee, in April, 1892, began an action to foreclose in the supreme court of the state of New York, Cattaraugus county. Thereupon the railroad company filed a bill in said court against the trustee and others, in which, on July 26, 1892, that court, by an order which is still in force, enjoined the trustee from proceeding in said action. On August 17, 1892, the present complainants, the owners of $50,000 of said outstanding bonds, and who had joined in the previous noted request to the trustee, requested the trustee, among other things, to bring an action to foreclose in Pennsylvania, where most of the mortgaged property was situate. This the trustee declined to do, on account of the pending order above recited; whereupon the complainants filed the present bill to foreclose on behalf of themselves and other bondholders. it the trustee has made no defense or objection. On October 5, 1892, the railroad company and Bullis filed separate demurrers, alleging the bill contained no averment that "a written request of the holders of a majority in amount at par value of the outstanding and unpaid bonds issued under the mortgage sought to be foreclosed by said bill, accompanied by proper bonds of indemnification, was made to the trustee under said mortgage, requesting the commencement of this suit by it." They also filed special pleas to the effect that the trustee had, before the bringing of this suit, brought a bill to foreclose the same mortgage in the supreme court of New York, Cattaraugus county, which suit was pending

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