Swan Land & Cattle Co. v. Frank

• Decision Date: 22 July 1889
• Citation: 39 F. 456
• Parties: SWAN LAND & CATTLE CO., Limited, v. FRANK et al.
• Court: U.S. District Court — Northern District of Illinois

39 F. 456

SWAN LAND & CATTLE CO., Limited, v. FRANK et al.

United States Circuit Court, N.D. Illinois.

July 22, 1889

Swift Campbell & Jones, for complainant.

Kraus Mayer & Stein and J. W. Woolworth, for defendants.

BLODGETT J.

This bill is now before the court upon a demurrer filed in behalf of all the defendants who have been served with process. The bill seeks relief against the defendants as stockholders in certain corporations organized under the laws of the territory of Wyoming. The bill avers that in November, 1882 there were existing and doing business in the territory of Wyoming three corporations organized under the laws of said territory, engaged in the business of breeding and dealing in cattle, known respectively as 'The Swan & Frank Live-Stock Company,' 'The National Cattle Company,' and 'The Swan, Frank & Anthony Cattle Company. ' That on the 27th of November, 1882, said three companies joined in making a written contract with one James Wilson, of Edinburgh, Scotland, by which said companies agreed to sell to a limited company, to be thereafter incorporated under the laws of Great Britain and Ireland, by said Wilson and his associates, as promoters, for the sum of $2,553,825, all and singular the lands and tenements possessory rights to lands and tenements, water-rights, improvements upon lands, houses, barns, stables, corrals, cattle, horses, and mules belonging to said three Wyoming corporations, or any or either of them; also the live-stock brands, tools, implements, wagons, harnesses, ranch, camp and round-up outfits, and branding irons belonging to said Wyoming corporations, or any or either of them, which said lands and tenements, possessory rights, goods and chattels, and live-stock, were particularly enumerated and described in certain inventories annexed to said written agreement, and made a part thereof. That said contract contained, among other provisions, the following covenant:

'And it is further agreed on the part of the said first parties, as to all live-stock mentioned and described in said inventories, that said first parties shall and do hereby agree and guarantee to and with said second party that the herd-books of said first parties, showing the acquisition, increase, disposition of, and number of cattle now on hand, of the said first parties, respectively, have been truly and correctly kept.'

That after making said contract, Wilson proceeded to Scotland, and there succeeded in organizing the complainant company, a limited liability company, as contemplated in said contract, under the laws of Great Britain and Ireland, and secured subscription for and payment into the complainant company of sufficient capital stock to consummate the said contract; and that some time in April, 1883, the full purchase price called for by the Wilson contract, less certain agreed deductions for expenses, etc., was paid to the three vendor companies, and bills of sale and deeds for the property of the vendors were delivered to the complainant, and complainant thereupon took possession of the property so transferred to it by the vendors.

It is also alleged in the bill that the vendor companies represented to the complainant in the bill, and to the promoters of the complainant company, and to the shareholders of the complainant company, that it was impossible to count the cattle which the vendor companies agreed to sell the complainant, and that the complainant would be obliged to take possession of the same wherever they might be ranging, without any count whatever, and without any or further act on the part of the vendors than the delivery of the bills of sale and deeds; that complainant, relying upon the representations made by the vendors that the inventories attached to and made a part of said agreement of sale, and upon the representations of the vendors that the death losses in their herds were made good by the number of calves which escaped branding at the regular branding season, and their further representation that they undoubtedly had the full number of 89,167 head of cattle in their said herd, and relying upon the joint guaranty of the vendors that their herd-books truly and correctly showed the number of cattle then on hand, and upon the guaranty that the calf brands of the year 1883 would amount to 17,868 calves, and fully believing, as stated by the vendors, that it was impossible to count said cattle, complainant consented to receive delivery of said cattle, and did receive the same without any count, and take the same wherever they were ranging, without any other act on the part of the vendors than the delivery of said papers by the vendors.

The bill further states that one Alexander H. Swan was the active agent of the vendor companies in the negotiation and consummation of said sale to the complainant; that Swan was connected with all the vendor companies as a stockholder, and was an officer in all of them; that he had had large experience in the management of such properties, and that by reason of said Swan's knowledge of said properties and the business of the vendor companies, the complainant made an agreement with him to continue in charge of said herd, as manager for complainant, at a large salary; and that Swan at once, after said purchase was consummated by complainant, took charge of said herds and all the said ranch property, as manager for complainant, and continued to be such manager until a very recent date before the filing of this bill. It is further averred that Swan, as such manager, reported to complainant that 17,932 calves were actually branded at the branding season of the year 1883, and further says that said report was false, and intentionally made so in order to deceive and defraud the complainant.

The bill further says that complainant has now learned 'that the representations made by the vendors that they had 89,167 head of cattle to sell to complainant were grossly untrue and the representations made by said vendors that the number of calves in their herd which escaped branding at the regular branding season was sufficient to offset the death losses in said herd were also grossly untrue,' and avers that the fact that said representations were untrue was known to the vendors, and that the vendors were unwilling to have said cattle counted at the time such purchase was consummated, because they well...