Redfield v. Baltimore & O.R. Co.

• Decision Date: 29 July 1903
• Docket Number: 24,25.
• Parties: REDFIELD v. BALTIMORE & O.R. CO. et al. (two cases).
• Court: U.S. District Court — Southern District of New York

124 F. 929

REDFIELD v. BALTIMORE & O.R. CO. et al. (two cases).

Nos. 24, 25.

United States Circuit Court, S.D. New York.

July 29, 1903

Wm. G Guthrie, for demurrers.

Edw. R Andrews, opposed.

PLATT District Judge.

In No 24 the substantial allegations are these: The Baltimore &amp Ohio Railroad Company, having in 1883 acquired 51 per cent. of the capital stock of the Staten Island Rapid Transit Company in return for its guaranty of the latter company's bonds, in 1898, with ulterior motives, defaulted on its own guaranty, and likewise caused the Staten Island Company to default in the payment of the interest on its bonds, although earned; that it thereupon, in furtherance of its design to acquire an undivided title to the property of the Staten Island Company, entered into an arrangement with the Staten Island bondholders to foreclose their mortgage; and that at the foreclosure sale, thus brought about, the Staten Island property was in fact acquired in the interest of the Baltimore & Ohio by the new Staten Island Rapid Transit Railway Company, substantially all of whose stock it owned. The relief prayed for is that a number of shares of the capital stock of the Staten Island Rapid Transit Railway Company equivalent to the Baltimore & Ohio Railroad Company's holding in the old Rapid Transit Company, to wit, 2,550 shares, be assigned by the Baltimore & Ohio to the old Rapid Transit Company. The defendant the Baltimore & Ohio Railroad Company is characterized as a trustee for the defendant the Staten Island Rapid Transit Railroad Company, and the injuries sad to have been sustained by the plaintiff are conceded to be injuries sustained by him as a member of the corporate body.

In No. 25 there are minor differences. The insolvency of the Baltimore & Ohio Company appears as a reason for default on its guaranty.

The relief sought is that the defendant transfer 100 shares of stock in the new Staten Island Company to the plaintiff. The defendant is alleged to be a 'trustee for the minority stockholders and the bondholders and for the Staten Island Rapid Transit Railroad Company. ' The violation of this trust constitutes the gravamen of the bill. In both suits the demurrers challenge the jurisdiction of the court.

In No. 24 the first ground of demurrer filed by both defendants is as follows:

'(1) That this court has no jurisdiction of the said bill because it appears that the plaintiff, and the defendant Staten Island Rapid Transit Railroad Company, an indispensable party defendant, are both citizens of the state of New York.'

In No.25 the first ground of demurrer filed by the defendant is as follows:

'(1) That it appears from the plaintiff's own showing by the said bill that the Staten Island Rapid Transit Railway Company and the Staten Island Rapid Transit Railroad Company are necessary and indispensable parties to this suit and should be joined as parties defendants.'

Since my decision is based upon the points raised in the quotations made, it is unnecessary to state the other grounds set forth in the demurrers.

Let us first take up suit No. 24. The parties are so arranged herein that citizens of New York appear upon both sides of the case. If they belong there, the Circuit Court has no jurisdiction. Amory v. Amory, 95 U.S. 187, 24 L.Ed. 428; Cont. Ins. Co. v. Rhoads, 119 U.S. 240, 7 Sup.Ct. 193, 30 L.Ed. 380; Mex. Railway Co. v. Eckman, 187 U.S. 433, 23 Sup.Ct. 211, 47 L.Ed. 245. The court is asked to extricate the pleader from the sad plight into which his own logic carried him. That the Staten Island Rapid Transit Railroad Company is an indispensable party does not appear to be in contention. Davenport v. Dows, 18 Wall. 626, 21 L.Ed. 938; Swan Land & Cattle Co. v. Frank, 148 U.S. 610, 13 Sup.Ct. 691, 37 L.Ed. 577.

We come at once, then, to the vital question, shall that company be aligned as a coplaintiff? That depends upon the answer to another question, is there such an antagonism between the parties as to forbid such alignment? In determining whether such an antagonism does or does not exist there are two views of the case which demand diligent and thoughtful examination.

The plaintiff has invoked the benefit of equity rule 94. He sets forth that he had asked the Staten Island Company to bring suit in its corporate capacity, and had told it that failure to do so would be considered a refusal, and the company, being under the control of the Baltimore & Ohio, has neglected to bring the suit, just as he supposed it would, and therefore he therefore makes it a defendant. He assumes to sue 'at the special instance and request of the majority stockholders. ' The defendant contends that under the federal decisions such a refusal, after request, in and of itself creates such an antagonism as to make its alignment as coplaintiff impossible. A line of cases is cited, beginning with Dodge v. Woolsey, 18 How. 346, 15 L.Ed. 401, then Memphis City v. Dean, 8 Wall. 73, 19 L.Ed. 326, and Greenwood v. Freight R. Co., 105 U.S. 16, 26 L.Ed. 961; Detroit v. Dean, 106 U.S. 537, 1 Sup.Ct. 560, 27 L.Ed. 300, is considered inferentially favorable; Bowdoin College v. Merritt (C.C.) 63 F. 215, is especially referred to as controlling. In their brief counsel for plaintiff seem to appreciate the force of the Bowdoin College Case, and cite, as against it, Barry v. Mo., K. & T. Ry. Co. and another (C.C.) 27 F. 1. If it were necessary to follow the defendant to the limit in his contention on this view of the case, it is not impossible to distinguish the Barry Case from the Bowdoin College Case, but such a distance my view of this matter does not compel me to travel.

When we look at the facts which are admitted by the demurrer, the antagonism impresses itself quite as forcibly upon me as it evidently did upon the pleader when he told his story of trick, artifice, and fraud....