Brown, v. McDonald

• Citation: 133 F. 897
• Decision Date: 09 January 1905
• Docket Number: 38.
• Parties: BROWN v. McDONALD et al.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

133 F. 897

BROWN v. McDONALD et al.

No. 38.

United States Court of Appeals, Third Circuit.

January 9, 1905

Reynolds D. Brown, for appellant.

John G Johnson, for appellees.

Before ACHESON and GRAY, Circuit Judges.

ACHESON Circuit Judge.

The bill as amended was purely and simply a bill of discovery in aid of a proposed action or actions at law. The defendants demurred. The demurrer was sustained, and the bill was dismissed.

The plaintiff in the amended bill is Arthur K. Brown, who has brought the same as surviving receiver of the American Alkali Company, a corporation organized and existing under the laws of the state of New Jersey.

The amended bill shows that on September 9, 1902, the plaintiff and one Henry I. Budd, Jr. (who since died), were appointed receivers of the American Alkali Company by the Circuit Court of the United States for the District of New Jersey, and the bill recites an order by that court on November 14, 1902 whereby the receivers were 'authorized and instructed to collect from the holders of the preferred stock of the American Alkali Company, for the purpose of paying the debts of said corporation, the balance of the first installment of $2.50 per share of the call made by the board of directors on September 16, 1901. ' The amended bill further sets forth that on September 16, 1901, William J. McDonald, one of the defendants, was the registered holder of 1,100 shares of the preferred stock of the American Alkali Company; that said McDonald then was and is now a clerk in the employ of John W Sparks and J. Maurice Wynn, copartners trading as J. W Sparks & Co., the other defendants, who were stock brokers; that the plaintiff is informed and believes, and therefore avers, that said McDonald is not and never was the real owner of said shares of preferred stock or any of them, but that they were purchased by said Sparks and Wynn for the account of persons unknown to the plaintiff, and were placed by them in the name of McDonald for the purpose of concealing the names of the real owners thereof; that the plaintiff is advised that the persons for whose account the said shares were purchased and placed in the name of McDonald are personally liable for the payment of the call or assessment made on September 16, 1901; that the plaintiff has demanded of the defendants that they disclose to him the names of such persons, but they have refused so to do; and that the first plaintiff proposes to bring suit against such persons to recover said first installment of said assessment, amounting to $2,750, as soon as he can discover the same. And the bill prays that the defendants be compelled to answer the bill, and that they be ordered by the court to disclose and discover to the plaintiff the names and addresses of the persons for whose account the said 1,100 shares of preferred stock were purchased and placed in the name of McDonald.

The question we are called upon to determine upon this appeal is whether the plaintiff's amended bill presented a case entitling him to the discovery sought.

It is urged on behalf of the appellees, first, that a bill of discovery merely in aid of a purely legal right is no longer maintainable in a court of the United States; and, second, that if such a bill can now be maintained in a federal court this is not a case in which such a bill is allowable. In support of the first of these propositions we are referred to what was said against the maintenance as a general rule of a bill solely for the sake of discovery, by Mr. Justice Brewer, when sitting at circuit, in Preston v. Smith (C.C.) 26 F. 884, 889, and to what was said by the Circuit Court of Appeals for the Fourth Circuit in Safford v. Ensign Mfg. Co., 120 F. 480, 56 C.C.A. 630. Now, undoubtedly, section 724 of the Revised Statutes (page 583, U.S. Comp. St. 1901), which empowers the courts of the United States in actions at law to require the parties to produce books and writings, and section 858 (page 659), which makes the parties to a suit at law competent witnesses therein, have removed the necessity of resorting to bills of discovery in ordinary cases, but we are not willing to hold that the statutes have altogether abolished the equitable remedy by bill of discovery. Moreover, this bill is not for the mere discovery of evidence to be used in a trial at law, but it is to ascertain the names of persons against whom intended suits are to be brought to enforce alleged legal claims. There are precedents for such bills of discovery, although the cases are of rare occurrence.

Perhaps the earliest cases sustaining the right to file a bill of discovery to ascertain the proper persons to make d...