Consolidated Water Co. v. City of San Diego

• Decision Date: 27 March 1899
• Citation: 92 F. 759
• Court: U.S. District Court — Southern District of California
• Parties: CONSOLIDATED WATER CO. et al. v. CITY OF SAN DIEGO et al.

92 F. 759

CONSOLIDATED WATER CO. et al. v. CITY OF SAN DIEGO et al.

United States Circuit Court, S.D. California.

March 27, 1899

Works &amp Lee and Works, Works & Ingle, for complainants.

H. E Doolittle, for defendants.

ROSS Circuit Judge.

To the amended bill in this case all of the defendants, except the San Diego Water Company, have filed exceptions to certain portions thereof, a demurrer, and also a motion for leave to file a plea in abatement. The original bill was brought by the Consolidated Water Company as sole complainant. It is a West Virginia corporation, and sues as the owner and holder of certain bonds issued by the San Diego Water Company secured by a mortgage executed by that company upon the water and water plant with and by which it supplies the city of San Diego and its inhabitants with water for domestic and other purposes. The object of the suit is the annulment of a certain ordinance, enacted by the city of San Diego establishing the rates at which the San Diego Water Company shall supply such water to its consumers; it being alleged, in effect, that the rates so established are so unreasonably low as to amount to a practical taking of the property of the mortgagor without just compensation. On demurrer to the original bill, this court held that the rule which precludes a stockholder from maintaining in his own name a litigation founded on a right of action existing in the corporation, without showing a refusal on the part of the corporation to bring the suit, does not apply to a mortgagee of such a corporation; that such mortgagee is vested by the mortgage with a separate and independent interest, which the mortgagee has a separate and independent right to protect when unlawfully assailed, taking care, of course, to bring into the suit all necessary parties. But, as the original bill showed that the mortgagee in the present case was not the Consolidated Water Company, but two trustees,--Constantine W. Benson and Henry Livesey Cole,-- it was held that the duty of protecting the interest conveyed by the mortgage rested upon them, that they are the proper plaintiffs in a suit of this nature, and that, to entitle a holder of bonds secured by such a mortgage to maintain a separate and independent suit, he must show a request made to the trustee to bring the suit, and a refusal on his part, or some other good reason why the trustee may not represent him in the suit. 89 F. 272, 274. ...