Horn v. Detroitco

• Decision Date: 18 December 1893
• Docket Number: DRY-DOCK,No. 129,129
• Citation: 14 S.Ct. 214,37 L.Ed. 1199,150 U.S. 610
• Parties: HORN v. DETROITCO. et al
• Court: U.S. Supreme Court

150 U.S. 610

14 S.Ct. 214

37 L.Ed. 1199

HORN

v DETROIT DRY-DOCK CO. et al.

No. 129.

December 18, 1893.

The single question presented by the record in this case is whether the action of the court below, in sustaining the plea in bar of the suit and dismissing the bill, was correct.

The appellant, who was the complainant below, alleged in her bill that in July, 1880, she was the owner of the steamers Garland and Excelsior, which were used and employed in navigating the Detroit river and the connecting waters; that the Detroit Dry-Dock Company, one of the appellees, held mortgages on these steamers aggregating $22,643, the equity of redemption in which was of considerable value; that on July 22, 1880, the Garland, under command of George Horn, son of the complainant, while proceeding down the Detroit river, collided with the steam yacht Mamie, which had on board an excursion party, several of whom were drowned as the result of the collision; that the personal representatives and heirs of those drowned, claiming that the Garland was in fault, commenced suits in admiralty in the United States district court at Detroit to recover damages on account of their deaths; that the Detroit Dry-Dock Company furnished bond for the steamer Garland, and became responsible to counsel for their fees, it being agreed between the complainant and the company that the latter should hold the title to the steamer Garland, in connection with its mortgage, as security for the indebtedness of the complainant, and of all liabilities incurred on her bahalf; that shortly after the collision various suits were commenced in the state courts against the complainant personally for damages on account of the collision and also a prosecution against her son George Horn, as master of the Garland; that the complainant employed counsel to defend these suits; that at or about the same time a suit was commenced in the maritime court of Ontario against the Garland for supplies furnished the boat by parties residing in Canada, under which an attachment was issued, and the vessel was levied upon and ordered to be sold pendents lite, and at the sale thereof the Detroit Dry-Dock Company purchased the steamer for $17,050, which sum it was alleged the company advanced on agreement with the complainant, thus making her total indebtedness to that company amount to the sum of $39,693; that the sum for which the Garland was thus sold, and which was paid into the maritime court of Ontario by the dry-dock company, was in excess of the claims proved in that court, and that the dry-dock company subsequently filed a petition to have the surplus proceeds, amounting to about $11,000, paid over to it as mortgagee, which sum it agreed to credit to the complainant after payment of all expenses and costs for collecting the same; that subsequently, on September 21, 1880, the complainant conveyed the Excelsior, subject to the mortgage aforesaid, to her son John Horn, and shortly afterwards an execution against him was levied upon the steamer, which was sold thereunder, and purchased by the Detroit Dry-Dock Company, in the name of its secretary, for the sum of $505, which was paid by the company under an agreement that it would hold it and the steamer Garland as security for the indebtedness of the complainant and advances made by the company, and would run and operate both vessels, and render an account of their earnings, and, when her indebtedness and advances were paid, return the steamers to the complainant; that the Detroit Dry-Dock Company organized a corporation called the Detroit River Ferry Company, to which the steamers were conveyed, as trustee, to carry out the agreement with complainant, all of the stock in which corporation was subscribed for and held by the stockholders of the Detroit Dry-Dock Company, and actually belonged to it; that shortly thereafter the dry-dock company purchased, for the sum of $23,000, the steamer For- tune, and caused her to be conveyed to the Detroit River Ferry Company; that this last-named company and the Detroit & Windsor Ferry Company, engaged in a similar and rival business, were thereafter consolidated and incorporated under the laws of Michigan under the name of the Detroit, Belle Isle & Windsor Ferry Company, and the three steamers were conveyed to the consolidated company for the sum of $83,000 of its capital stock, the steamers Garland and Excelsior being estimated at $60,000, of 600 shares of the stock of the concern, which were held by the Detroit Dry-Dock Company on the same terms it held the steamers Garland and Excelsior; that the par value of the $60,000 of stock was actually worth $70,000.

The bill also alleged that on June 27, 1881, the complainant entered into a written contract with the dry-dock company, which, after reciting in its preamble the history of the litigation growing out of the Garland's collision with the Mamie, and the transfer of the two steamers to the Detroit, Belle Isle & Windsor Ferry Company, and the desire of Sarah Horn to purchase a part of the stock held by the dry-dock company, stipulated that the dry-dock company agreed to sell and deliver to the complainant, her executors, administrators, or assigns, 600 shares of the capital stock of the Detroit, Belle Isle & Windsor Ferry Company, each of the par value of $100, and that it would advance and pay the complainant's attorneys their disbursement, expenses, and charges for services rendered, or to be rendered, in all suits above referred to, growing out of the collision, and would also any to the complainant, or apply to her indebtedness, whatever might be paid to the company by the maritime court of Ontario out of the proceeds of the steamer Garland, after deducting costs and expenses, and that in consideration of this agreement the complainant agreed to pay the dry-dock company the sum of $51,000 within three years from the date thereof, with annual interest at the rate of 10 per cent., and also such sum or sums of money as might be paid by the company to her counsel, and any other sums that might be paid by the company on any decree or decrees that might be rendered against the complainant or the steamer Garland, growing out of the collision with the steam yacht Mamie,—all sums so paid to her counsel, or upon any decree or decrees in the pending suits, were to be added to and form a part of complainant's indebtedness, which was to be paid within three years from the date of the agreement, with interest at the date of the agreement, annum; that 600 shares of stock were to be delivered upon the payment of such sums, and upon the failure to pay the same within the time provided the dry-dock company might sell enough of the stock, upon 10 days' notice, to pay the same, but at not less than its par value. It was further agreed that any dividends received by the dry-dock company upon the stock should be applied upon the indebtedness. It was further stipulated that 'the said Sarah Horn, in consideration of the said agreement of the said Detroit Dry-Dock Company, does hereby release, discharge, convey, and quitclaim any and all interest, claim, or demand of any kind or nature whatsoever she may have, or pretend to claim to have, against said Detroit Dry-Dock Company, to either of said boats, or to the earnings or the proceeds of the sale received or to be received by said Detroit Dry-Dock Company, or by either of said ferry companies.'

The bill also alleged that, on the day following the execution of this agreement, her son-in-law, Albert R. Schulenberg, having falsely and fraudulently represented to her that the Detroit Dry-Dock Company would not carry the 600 shares of stock for her account, suggested that his father (the appellee, Frederick Schulenberg) would advance the money to pay the dry-dock company, and would assume all liabilities which that company had assumed on behalf of the complainant, and would pay her the sum of $200 per month for three years, for living expenses, and would take and hold the stock and manage the same, and at the end of three years deliver to her $25,000 of the par value of the stock, free and clear of all incumbrances; that the complainant relied upon this representation, and agreed to that proposal; that Albert Schulenberg thereupon brought her a paper signed Frederick Schulenberg; that upon reading it she discovered that it only referred to the monthly payments, and was silent as to the $25,000 of stock which the said Schulenberg had agreed to return to her free of all incumbrances at the end of three years; that she refused to accept the paper, on the ground that it did not represent the agreement of Frederick Schulenberg; and that her son-in-law, Albert, upon her refusal, said that 'it would make no difference, that his father would carry out the agreement to the letter,' and thereupon placed the paper in a desk in the complainant's house, where it remained.

The bill then states that Frederick Schulenberg paid the complainant during the next three years the sum of $200 per month, as agreed, but at the end of three years repudiated his agreement to return to her $25,000 of the par value of the stock; that she thereupon brought suit against him in the circuit court of the United States for the eastern district of Michigan, and that it was held by that court that she had no remedy at law, and directed a verdict in favor of the defendant Schulenberg, and for greater certainty reference was made to the files, records, and proceedings in that case.

The bill also sets out that Frederick Schulenberg held all of the 600 shares of stock, except 175 shares held by the Detroit Dry-Dock Company; that in equity and good conscience the complainant was entitled, if the agreement with Frederick Schulenberg is valid, to the $25,000 of the par value of the stock, and the earnings thereof; that all of the claims, suits, and proceedings against the steamer Garland and against the complainant, arising out of the...