Ballaine v. Alaska Northern Ry. Co.

• Decision Date: 07 July 1919
• Docket Number: 3158.
• Citation: 259 F. 183
• Parties: BALLAINE v. ALASKA NORTHERN RY. CO. (UNITED STATES, Intervener).
• Court: U.S. Court of Appeals — Ninth Circuit

259 F. 183

BALLAINE v. ALASKA NORTHERN RY. CO. (UNITED STATES, Intervener).

No. 3158.

United States Court of Appeals, Ninth Circuit.

July 7, 1919

For opinion below, see 5 Alaska, 694.

On April 29, 1915, in the District Court for the Territory of Alaska, Third Division, the Alaska Northern Railway Company sued the Alaska Central Railway Company and Frank L. Ballaine to declare a trust for the use of the Alaska Northern Railway Company in and to certain real estate at Seward, Alaska, the legal title to which was in Frank L. Ballaine. In November 1915, after trial, the court dismissed the action, with costs to the defendant therein. Thereafter, on June 24, 1916 Ballaine brought the present action against the Alaska Northern Railway Company to recover damages on the ground that the suit heretofore mentioned was maliciously instituted without probable cause. The railway company pleaded that the property of the corporation at the time the action was brought was owned by the United States, and that in the former suit the company had acted in good faith on the advice of counsel. Ballaine by reply put in issue the defense of advice by counsel.

Thereafter on October 23, 1916, the United States, by leave of court intervened and set up that on April 6, 1915, under the Alaska Railroad Act, approved March 12, 1914, the United States had contracted in writing with certain proper parties for the purchase of the railway and the real and personal property of the Alaska Northern Railway Company, and all the stocks and bonds of that corporation; that such agreement 'expressly excluded from the purchase made by the United States of America from the Alaska Northern Railway Company any claims of the Alaska Northern Railway Company or of the vendors in said agreement against any person or persons whomsoever, with reference to the title of the Seward townsite, otherwise known as United States surveys 726 north and south, of all of which facts plaintiff had due notice'; that the United States has paid in full all moneys agreed by it to be paid under the agreement, and was a bona fide purchaser, owner and holder of the stocks, assets, and bonds of the railway company, and has taken charge and controlled the road in behalf of the United States, and that the United States never has had any interest in the litigation commenced by the Alaska corporation on April 29, 1915, against Ballaine and others; and that that suit was commenced and prosecuted solely for and in behalf of the former trustees and owners of the Alaska Northern Railway Company. In due course Ballaine answered, and set up that the Alaska Northern Railway Company was operating and maintaining the railroad and that a corporate organization was then in existence; that the United States, through the Secretary of the Interior, knew of the claim of Ballaine against the railway company for damages for alleged malicious prosecution prior to the final payment by the United States for the stocks and bonds of the defendant corporation; that the United States has not exercised any of the rights of sovereignty in the conduct, operation, and maintenance of the Railway Company, but is engaged in a commercial business in the operation and conduct of the railway, and acquired the assets of the corporation subject to the unliquidated claim of Ballaine for damages sustained by reason of the acts of the former board of directors of the railway company.

The United States demurred to this answer to the complaint in intervention, and on December 3, 1917, the District Court dismissed the complaint of Ballaine against the Alaska Northern Railway Company, upon the ground that Ballaine's action was one sounding in tort, and that the real party defendant is the United States, and that there was no jurisdiction to proceed with the cause. Ballaine then sued out a writ of error.

L. V. Ray, of Seward, Alaska, for plaintiff in error.

William A. Munly, U.S. Atty., of Valdez, Alaska, and Annette Abbott Adams, U.S. Atty., of San Francisco, Cal., for defendant in error and intervener.

Before GILBERT, ROSS, and HUNT, Circuit Judges.

HUNT Circuit Judge (after stating the facts as above).

The authority of the United States to acquire the railroad came from the Act of Congress approved March 12, 1914, c. 37, 38 Stat. 305 (Comp. St. Secs. 3593a-3593d), entitled 'An act to authorize the President of the United States to locate construct, and operate railroads in the territory of Alaska, and for other purposes. ' The Secretary of the Interior, acting by authority of the President, made the written agreement of April 6, 1915, and one of later date for the purchase of the real and personal...