Simpson v. Union Stock Yards Co.

• Decision Date: 23 September 1901
• Docket Number: 264.
• Parties: SIMPSON v. UNION STOCK YARDS CO. OF OMAHA, Limited, et al.
• Court: U.S. District Court — District of Nebraska

110 F. 799

SIMPSON v. UNION STOCK YARDS CO. OF OMAHA, Limited, et al.

No. 264.

United States Circuit Court, D. Nebraska.

September 23, 1901

J. M Woolworth and W. D. McHugh, for complainant.

F. N Prout, Atty. Gen., and Norris Brown, Asst. Atty. Gen., for respondent attorney general.

McPHERSON District Judge.

The complainant, a citizen of Massachusetts, is a stockholder of the defendant company, the Union Stock Yards Company, praying that both defendants, citizens of Nebraska, be enjoined from putting in force a statute of Nebraska of 1897, known as 'Senate File No. 33.' The complainant brings himself within the terms of equity rule 94, by showing that long prior to the date of the act of the Nebraska legislature he became the owner by purchase of his corporate stock of defendant company, and at all times since has owned it, in an amount something like $80,000 par value, and of a still greater actual value. He alleges with particularity the fruitless effort he made to get the company to bring the action; and he alleges generally that there is no collusion between him and the company to confer jurisdiction upon this court. The bill further alleges that the alleged statute was never legally passed,-- a point to be enlarged upon later. The alleged statute attempts to fix the rate for yardage and feeding of live stock at the company's yards at South Omaha, which complainant insists is illegal for two reasons (a) The company is a private corporation, and is not engaged in a public business, and therefore its business is not subject to legislative control; (b) the rates fixed by the legislature are confiscatory. The defendant company makes no appearance. Atty. Gen. Smythe, by plea and answer, makes the following defenses:

1. That the action is the result of collusion between complainant and the company, so as to vest this court with jurisdiction. Briefly stated, the facts are as follows: Mr. Woolworth for several years had received annually a retainer from the company. The company opposed the passage of the act in question by the legislature, and tried to induce the governor to veto the measure. But in all this Judge Woolworth took no part. After the governor had signed the measure, a follow stockholder wired complainant that his (complainant's) interest in the stock yards was in jeopardy because of the passage of the act. Complainant wired back to employ Judge Woolworth. Later on complainant and Judge Woolworth had a conference. Judge Woolworth accepted employment to oppose the enforcement of the alleged statute in question, and to do all needful things to protect complainant and his New England friends, to whom he had sold the company's corporate stock. In obedience to his employment, and as was his duty, he served written notice upon the company to take steps to oppose and refuse compliance with the alleged statute. The company, by resolution, refused to comply with the demand, believing that the act was not a valid law, but, recognizing some doubt about it, could not affirmed, if mistaken, to be subjected to the large penalties. Thereupon this action was brought by complainant, by Judge Woolworth, as his solicitor. Out of all the evidence upon the subject but two facts can be mentioned as in the most remote degree tending to support the attorney general's plea. The one is that Judge Woolworth was annually retained by the company. It was to the interest of the company to have the statute held invalid by the courts. No doubt every stockholder desired that result. No doubt that every stockholder hoped that able counsel would be employed to defeat the statute. But the board of directors could thus desire, and still refuse to incur the penalties. After the action was brought, in due time, on appropriate proceedings, Judge Munger ordered a temporary injunction against respondents. While this was on complainant's motion, the result was to the benefit of every stockholder, and to the company as an entity. Shortly thereafter the company, recognizing the benefit it had received, paid Judge Woolworth for his services to that date. No other showing than this appears from the evidence; and this is not collusion, and is not in the slightest degree in contravention of the rule in equity. Aside from these facts, there could have been no collusion, because there can be no collusion without reason or motive, or to subserve some purpose. The company, although a corporation and citizen of Nebraska, could have brought this action in this court, as complainant, against the Nebraska citizens and officials. The right of the state to pass the act in question is a federal question, concerning which this court would take jurisdiction regardless of citizenship; and, taking jurisdiction by reason of the federal question, this court would also take jurisdiction of the question of whether the act was legally passed; and it would retain jurisdiction, and adjudicate that question, even though the federal question was held to be wholly without merit. All recognize the correctness of this. Therefore it is wholly immaterial whether Mr. Simpson brought the action in this court, or whether the company brought it.

2. The complainant insists that the act was never legally passed and is therefore not a statute. Each house or branch of the legislature passed a measure, and the governor signed one. But the...