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upon the issues involved in this suit and af- foundation of any action or application for[144] ter the decision of the other case in this any relief whatever between the parties court, in March, 1891, holding the lease ille- thereto. And this respondent submits that gal and void, the complainant herein, on the the rule which precludes the granting of re25th of April, 1891, applied to the court for lief by any court of either equity or law, leave to dismiss its bill at its own cost. This upon a contract void for contravention of application was opposed by the defendant, public policy, forbade this circuit court to alwho, on the same day, moved for leave to file low such affirmative relief upon this cross a cross bill, in which it said it would avail bill which asserts no claim of right not itself of the tenders of relief made by the founded directly upon the express undertakcomplainant in its bill, and that it would ings of this contract of lease, held void by pray such relief in its cross bill as might be this court itself and by the supreme court pertinent to the case made by the bill. In for the reasons aforesaid." The Pullman December, 1891, complainant's motion for Company therefore denied that it owed any leave to dismiss ite bill was denied, and the duty to the cross complainant which was endefendant's motion for leave to file a cross forceable at law or equity to return to the bill was granted. Thereupon the cross bill Central Company the property assigned unwas filed, in which the Central Company ac-der the lease or to account for any profits deknowledging, under the decision of this rived under and by reason of any property court, that the lease in question was void, delivered to it under the agreement. [143]*claimed to avail itself of the tenders made in Testimony was taken under these pleadcomplainant's bill upon the subject of the re-ings, and the case came before the circuit turn of its property and compensation for court for final hearing, and that court held that which it was impossible to return, and that the cross complainant made out a case claimed, among other things, that the Pull- for an accounting by the cross defendant for man Company should account for all the the value of the property when received, toprofits which it had derived since the making gether with its earnings since, less the of the lease by the use of the property trans- amount paid as rent. The court therefore ferred to it under the agreement, and that referred it to a master for the purpose of asthe amount found due should be paid to the certaining the facts, with directions to report Central Company, and that the Pullman within the time named in the order of referCompany should be adjudged to be a trustee ence. Under this order testimony was taken for the Central Company of all the contracts and the master reported in favor of the Cenfor transportation, whether original, new or tral Company, and the exceptions filed havrenewals, held by the Pullman Companying been overruled, judgment was entered in with railroad companies with which there were contracts of transportation with the Central Company at the time of the making of the lease in February, 1870, and that the Pullman Company should be adjudged to pay the Central Company all such sums as should be due to it by the Pullman Company as such trustee, and that defendant should in the future from time to time account for the sums which should be due by reason of future operations under those contracts. It also prayed for a discovery and an accounting by the Pullman Company of its use and disposition of the property turned over to it by the Central Company.

To this cross bill the Pullman Company filled three demurrers, the first being a general demurrer on the ground that the cross bill was filed contrary to the practice of the court, and also that it appeared that the court had no jurisdiction of the case; the second demurrer related to the portions of the cross bill praying that the cross defendant might be regarded as a trustee and decreed to account accordingly; the third demurrer related to that part of the cross bill which asked for an account of profits since the making of the lease and for future profits.

The demurrers were overruled with leave to present the questions on final hearing, and the Pullman Company then answered the cross bill. Among other things it set up that the agreement in question was void, "and that being null and void between the parties hereto because of such character of the agreement, it cannot be made the lawful

favor of the Central Company for the sum of $4,235,044, together with costs. From this judgment the Pullman Company appealed directly to this court. It also appealed to the circuit court of appeals. The case was there argued upon a motion to dismiss the appeal, and the motion denied, and the further argument was postponed until some disposition was made of the appeal taken directly to this court. 39 U. S. App. 307. A motion has also been made to this court to dismiss the appeal, and thereupon an application was made to us for a writ of certiorari to the circuit court of appeals for the third circuit, and on account of the peculiar circumstances it was granted, and the record has been returned to this court by virtue of that writ.

Messrs. Edward S. Isham, Joseph H.
Choate, A. H. Wintersteen, and Robert T.
Lincoln for appellant.

Messrs. Frank r. Prichard and John
G. Johnson for appellee.

Mr. Justice Peckham delivered the opinion of the court:

The motion to dismiss the appeal in this case is now before the court.

Counsel for the Pullman Company took the appeal directly from the circuit court to this court on the theory that the case involved the construction or application of the Constitution of the United States, because of the holding of the court below that the cause of action alleged by the Central

Company in its cross bill was under the cir- | the impossibility of returning a large portion cumstances a proper subject of equitable cog- of the property which it had received; it an nizance, and counsel claimed it was really nounced its willingness to make substantial nothing but a legal cause of action in regard performance of its contract contained in the to which the cross defendant was entitled to lease, and it asked the court to aid it therein a trial by jury under the Constitution of the by decreeing exactly what it should do for United States. There being room for doubt the purpose of carrying out equitably and in regard to the soundness of such conten- fairly its obligations incident to its termination, the counsel also took an appeal to the tion of the lease under the clause above mencircuit court of appeals, and we think that tioned. The other theory rested upon what by this action he did not waive any right of was a substantial allegation of the invalidity[147 appeal which he would otherwise have had. of the lease as having been made without auWhichever route may be the correct one, thority of law, and therefore in violation of either directly from the circuit court or the corporate duties of the Central Company, through the circuit court of appeals, it is un- and on that account not enforceable against necessary to decide, because the case is now the Pullman Company beyond the obligation properly before us either by appeal or by the of the latter company to make return of just writ of certiorari; and we therefore proceed compensation for the property demised. Upto determine it upon the merits. on that theory the bill asked, not that the court should set aside or cancel the lease, but that it should aid the parties by decreeing just what relief should be given by the complainant to the lessor in the execution of its duty to make some compensation for the property it received and which it stated its willingness to make, and to that end, that an accounting might be had and the amount ascertained that should be paid to Central Company in discharge of the obligations of the complainant in that behalf. Thus the Pullman Company came into a court of equity and in substance alleged that the lease had been terminated by it under the eighth clause, and it also alleged that the lease was void as ultra vires, and in either event it tendered such relief as the court might think was proper and fair under the circumstances.

The Pullman Company, complainant in the original suit, insists that it had the right to discontinue that suit at its own cost before any decree was obtained therein, and the refusal of the court below to grant an order of discontinuance upon its application is the first ground of objection to the decree herein. The general proposition is true that a com[146] plainant in an equity *suit may dismiss his bill at any time before the hearing, but to this general proposition there are some well recognized exceptions. Leave to dismiss a bill is not granted where, beyond the incidental annoyance of a second litigation upon the subject-matter, such action would be manifestly prejudicial to the defendant. The subject is treated of in City of Detroit v. Detroit City Railway Company, in an opinion by the circuit judge, and reported in 55 Fed. Rep. 569, where many of the authorities are collected, and the rule is stated substantially as above. The rule is also referred to in Chicago & Alton Railroad Company v. Union Rolling Mill Company, 109 U. S. 702 [27: 1081].

From these cases we gather that there must be some plain, legal prejudice to defendant to authorize a denial of the motion to discontinue; such prejudice must be other than the mere prospect of future litigation rendered possible by the discontinuance. If the defendants have acquired some rights which might be lost or rendered less efficient by the discontinuance, then the court, in the exercise of a sound discretion, may deny the application. Stevens v. The Railroads, 4 Fed. Rep. 97, 105. Unless there is an obvious violation of a fundamental rule of a court of equity or an abuse of the discretion of the court, the decision of a motion for leave to discontinue will not be reviewed here.

Upon an examination of the facts relating to the motion, we think the circuit court was right, in the exercise of its discretion, in denying the same. The original bill was framed really on two theories: One, that by reason of an election male under the eighth clause in the lease, the Pullman Company had terminated the lease, and it was therefore bound under its provisions to return the property which it had received from the Central Company. It stated in its bill

the

A large amount of proof had been taken under the issues made in this original bill and the answer thereto, and before the case was concluded the decision of this court was made in which the lease was declared to be void. The only obligation left under the original bill of complainant after the decision of this court was the obligation to return such portion of the property received by it as the court should determine to be right, or to make some compensation to the Central Company for the same. And this obligation it had offered in the original bill to carry out.

The Pullman Company had also obtained an injunction in the original suit, restraining the Central Company from commencing further legal proceedings to recover rent under the lease, and after obtaining this injunction and taking the testimony relating to the subject-matter of the original bill, the complainant should not be permitted under these circumstances to dismiss that bill and thus withdraw the whole case from the jurisdiction of the court, and thereby blot out its *tenders of[148] relief contained in its original bill grounded, among others, upon the allegation that the lease was void, and asking the aid of the court to decree the precise terms upon which its obligations to the Central Company might be fulfilled.

The denial of the motion was made in connection with the application of the Central Company to file a cross bill in which it would

e was taken to the supreme court of the territory. In that court, as we have seen, the action of the trial court was reversed and ■ decree rendered in favor of Mrs. Amy. The assignments of error are twenty-four in number, and the argument by which their correctness is sought to be maintained has taken a much wider range than the condi-jecting the evidence which it had received, tion of the record justifies. It is settled that on error or appeal to the supreme court of a territory this court is without power to reexamine the facts, and is confined to deter184 mining* whether the court below erred in the conclusions of law deduced by it from the facts by it found, and to reviewing errors committed as to the admission or rejection of testimony when the action of the court in this regard has been duly excepted to, and the right to attack the same preserved on the record. Harrison v. Perea, 168 U. S. 311 [42: 478], and authorities there cited.

The findings of fact and conclusions of law of the supreme court are as follows:

"Eleventh. The court further finds that the said Jennie Amy was married to one Elliot Butterworth in 1875.

committed in admitting certain evidence. But all the evidence objected to was received by the trial court subject to the objection, and the question of its admissibility turned on that of its irrelevancy or the quantum of proof which it would establish if considered. The ultimate action of the trial court in resubject to objection, amounted, in effect, to a decision that the evidence did not establish that the judgment in the divorce proceedings had been rendered after due publication of summons in accordance with the laws of the territory, and therefore the evidence was insuficient. But the express finding from all the evidence by the supreme court of the state is that the summons in the divorce suit was duly issued and published according to law, and that the defendant had, besides, personal notice of the pendency of the suit. This conclusion, being binding on us, establishes that the evidence was relevant and material, and that there was 1.0 ground to reject it. We cannot, therefore, say that the evidence should have been disregarded because it did not establish the facts, which we are bound to conclude it did fully prove. If specific findings of each item of evidence and the conclusions deduced from the separate items had been made, as in Cheely v. Clayton, 110 U. S. 702 [28: 298], the case would present a different aspect. Considering, however, the state of the record and the nature of the findings of fact certified, we cannot determine the correctness of the objections to the evidence without going into its weight and making independent conclusions of fact; in other words, without disregarding the findings made by the court below, by which we are concluded. The same reasoning is applicable to the other assignments of error. Thus, the thirteenth, fourteenth, seventeenth, and eighteenth assert "That the said Elliot Butterworth married that the court erred in holding,*as to the bur-[186] a second wife on the 11th day of October, den of proof, that it erroneously treated the 1880, being the year after said decree of di- denial of the validity of the judgment of divorce was rendered; that his second wife is vorce by the maternal aunts as a collateral still living, and she and the said Elliot But-attack by them on such judgment. But terworth are still husband and wife; that as the issue of said second marriage the said Elliot Butterworth and his present wife have seven children, ranging from two years to fifteen years old.

"That on the third day of September, 1879, the probate court of Washington county made and entered a decree of divorce, dissolving the bonds of matrimony theretofore existing between the said Jennie Amy and the said Elliot Butterworth, and absolutely releasing the said Jennie Amy and the said Elliot Butterworth from all the obligations of said marriage; that the said probate court so granting said decree of divorce was a court of competent jurisdiction and had jurisdiction of the subject-matter of said divorce action and of both the parties thereto.

"That the said defendant therein, Elliot Butterworth, had knowledge at the time of the said divorce proceedings and was duly served with process in said action.

there are no findings which raise these questions. On the contrary, the facts found render them wholly immaterial, for it is obvious that if the evidence affirmatively established, as the findings declare, that the judginent of "That afterwards, to wit, on April 4, 1886, divorce was rendered after due summons, and the said Jennie Amy, the claimant in this that the defendant had personal notice of proceeding to the estate of the said Oscar A. the proceedings, the questions of burden of Amy, deceased, was duly and lawfuny mar-proof and collateral attack are wholly irrele ried to the said Oscar A. Amy, and continued vant. Again, the twenty-first and twentyto be and was his lawful wife at the time of second assignments of error complain that the his death." court erred in holding that it was not necesFrom these findings it deduced the follow-sary that there should be an order of the ing legal conclusion: 185] That the said Jennie Amy is now the widow of said Oscar A. Amy, deceased, and as such widow she is the successor to the whole of his estate, consisting of the property hereinabove described."

court directing the publication of the summons in the divorce proceeding, and that the court erred in holding that the only papers necessary in proof of publication were the complaint, summons, and affidavit of the printer and judgment. But there are no We will consider the assignments in their findings which raise these questions. On the logical order. The first to the eleventh, in- contrary, the facts found are that the sumclusive, and the nineteenth complain of er- mons were duly published, and that the derors which it is alleged the supreme court | fendant had besides personal notice. To 171 U. S. U. S., Book 43

9

129

field in Holman v. Johnson, 1 Cowp. 341, decided in 1775, that "the objection that a contract is immoral or illegal as between the plaintiff and defendant sounds at all times very ill in the mouth of the defendant. It is [151]not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. The principle of public policy is this: Ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act."

or paid for. The former is impossible. The property has substantially disappeared. It has become incorporated with the business and property of the plaintiff, and cannot be separated. Compensation must therefore be made. What, then, is the measure of compensation? Clearly, we think, the value of the property when received, together with its earnings since, less the amount paid as rent. In ascertaining the value the annual rental may be considered, but it does not afford a conclusive nor an entirely safe measure of value because the unlawful consideration (that the Central Company would abstain from exercising its franchises) entered into it. The cases upholding this doctrine are nu- For the same reason the earnings cannot be merous and emphatic. Indeed, there is really measured by the rent. The value of the no dispute concerning it, but the matter of property and earnings must be ascertained controversy in this case is as to the extent from a careful examination of the property, to which the doctrine should be applied to the business. and its earnings at the time the facts herein. Many of the cases are re: they passed into plaintiff's hands and subseferred to and commented upon in the opin-quently. It is not their value to the plainion delivered in the case in 139 U. S. 24 tiff we want, but to the defendant; in effect, [35: 55], already cited. The right to a recovery what is lost by parting with them. The of the property transferred under an illegal value of both property and earnings may contract is founded upon the implied promise have been worth more to the plaintiff with to return or make compensation for it. For the business united, but this cannot be conillustrations of the general doctrine as applied sidered." to particular facts we refer in the margin to a few of the multitude of cases upon the subject.†

They are substantially unanimous in expressing the view that in no way and in no channels, directly or indirectly, will the courts allow an action to be maintained for the recovery of property delivered under an illegal contract where, in order to maintain such recovery, it is necessary to have recourse to that contract. The right of recovery must rest upon a disaffirmance of the contract, and it is permitted only because of the desire of courts to do justice as far as possible to the party who has made payment or delivered property under a void agreement, and which in justice he ought to recover. But courts [152]will not in such endeavor permit any recovery which will weaken the rule founded upon the principles of public policy already noticed. We may now examine the record herein and learn the grounds for the recovery which has been permitted, and determine therefrom whether the judgment in favor of the Central Company should be in all things affirmed or if not, then how far the liability of the cross defendant extends, and, if possible. what should be the amount of the judgment against it.

In referring the case to the master for the purpose of taking the account between the parties the learned district judge stated the principle upon which the liability of the cross defendant rested. He said:

"The property must therefore be returned ¡Coppell v. Hall, 7 Wall. 542 [19:244]; Con- | gress & E. Spring Company v. Knowlton, 103 U. S. 49 [26:347]; Logan County Nat. Bank v. Townsend, 139 U. S. 67 [35:107]; St. Louis, V. &T. H. Railroad Company v. Terre Haute & 1. Railroad Company, 145 U. S. 393, at 408, 409 [36:748, 754, 755]; Manchester & L. Railroad Company v. Concord Railroad Corp. 66 N. H. 100 (9 L. R. A. 689, 3 Inters. Com. Rep. 319]; White v. Franklin Bank, 22 Pick. 181: Utica

Acting under these directions of the court, the master in his opinion said:

"Passing to the consideration of the main question raised in the present reference, viz., what the Central Transportation Company lost by the transfer of its property to the Pullman *Company, the measure of damages[153] as determined by the court requires the master to ascertain:

"(1) What was the value to the Central Transportation Company in 1870 of the property transferred?

"(2) What was earned by the Pullman Company between January 1, 1870, and January 1, 1885, from the use of the property transferred?

"(3) The difference between the amount so received by the Pullman Company and the rental paid by it to the Central Transporiation Company for the above period.

"(4) The total amount to be paid by the Pullman Company, as of January 1, 1885, deduced as above, together with interest thereon from January 1, 1885, to date of final decree.".

The master proceeded to determine the value in 1870 of the property then transferred. In ascertaining it he said:

"The value of the stock on the street is a positive indication of the estimate placed on the property by the public. That it is not entirely a satisfactory measure of value must be conceded, but in the judgment of the master, supported as it is by the best independent estimate that the evidence affordis, Insurance Company v. Caldwell, 3 Wend. 296; Atcheson v. Mallon, 43 N. Y. 147 [3 Am. Rep. 678]; Leonard v. Poole, 114 N. Y. 371 [4 L. R. A. 728]; Snell v. Dwight, 120 Mass. : Davis v. Old Colony Railroad Co. 131 Mass. 258 [41 Am. Rep. 221]; Holt v. Green. 73 Pa. 198 [13 Am. Rep. 7371; Johnson v. Hulings, 103 Pa. 498 [49 Am. Rep. 131]; Thomson v. Thomson, 7 Ves. Jr. 470; Sykes v. Beadon, L. R. 11 Ch. Div. 170; Brooks v. Martin, 2 Wall. 70 [17:732).

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it should be accepted as the fairest criterion | man Company, nor were the shares of the
of value."

He accordingly reported the value of the property when received as $58 a share (the par value being $50 per share or a total par value of $2,200,000) making the total market value of the shares $2.552,000, which sum he reported as the value of the property transferred.

When the report came before the court, exceptions having been taken, among other things, to the findings of the value of the property when delivered, the court said:

capital stock of the Central Company, all of which remained in the hands of its original owners. The probable prospective capacity for earnings also enters largely into mar-[155] ket value, and future possible earnings again depend to a great extent upon the skill with which the affairs of the company may be managed. These considerations, while they may enhance the value of the shares in the market, yet do not in fact increase the value of the actual property itself. They are matters of opinion upon which persons selling "It is the value of the property at the time and buying the stock may have different it should have been returned that the Pull- views. A liability to return or make comman Company should be charged with. In-pensation for property received cannot be asmuch as this value would be difficult of properly extended so as to include other conascertainment by the transportation com-siderations than those of the actual value pany except by reference to the value in of that property. 1870, it was considered proper to direct the inquiry to the latter date. Presumably the value increased; the evidence fully justifies the presumption. If it decreased, the Pull-of renewals of the contracts owned by the man Company could and should have shown [154]it. The master's *valuation in 1870 is therefore to be taken as the value in 1885, when the property should have been returned. The payment of this sum, with interest from January 1, 1885, seems necessary to a just settlement, treating the value of the use and the rents paid prior to that date as balancing each other. A decree may be prepared accordingly, dismissing the exceptions and confirming the report.'

In this particular case a consideration entering into the market value of the shares must have been the probability or possibility

company for the use of its cars upon the
railroads of the companies with which it had
such contracts and the possibility of extend-
ing its business in the future under contracts
with other railroads. These considerations,
while they affect more or less the value in
the market of the shares of a corporation, do
not constitute the value of the property
which a party impliedly promises to pay for
upon the agreement being determined void
under which the property was received. The
faith which a purchaser of stock in such a
company has in the ability with which the
company will be managed, and in the capaci
ty of the company to make future earnings,
may be well or ill-founded. It is but mat-
We are of opinion that the court erred in ter of opinion which in itself is not property.
the manner of ascertaining the value of the While the value of the property is one of the
property transferred by the Central Com-material factors going to make up the mar-
pany. The market value of its stock was
not a proper measure of the value of the
property, and such error resulted in largely
increasing the supposed value of the property
which the cross defendant was under liability
to account for.

Judgment based upon the value of the property at $2,552,000 on the 1st of January, 1885, with interest from that time, was therefore entered, and it amounted, as stated, to the sum of $4,235,044.

ket value of the stock, yet it is plainly not
the sole one. Mere speculation has not un-
commonly been known to exercise a potent
influence on the market price of stock. The
capacity to make any future earnings in
this case by the lessee arose out of the trans-
fer of the property to it and grew out of the
lease itself, and that capacity would there-
fore be partly founded upon the illegal con-
tract and could not otherwise exist.

The capital stock of this corporation had
been increased from an original amount of
$200,000 in 1862 to $2,200,000 in 1870. Dur-
ing this time it had been doing an increasing
and a profitable business, and it was sup-
posed that such business might increase in
the future. The market price of the shares
of stock in a manufacturing corporation in-
cludes more than the mere value of the
property owned by it, and whatever is in-
cluded in that price beyond and outside of
the value of its property is a factor which in
a case like this cannot be taken into consid-
eration in determining the liability of the
cross defendant. Whatever that something
may be it is not that kind of property which We must therefore take the property that
was delivered or that can be returned or actually was transferred and determine its
compensation made in lieu of its return. It value in some other way than by this resort
is not property at all within the meaning of to the market price of the stock. The prop-
the word as understood in such a case as this. erty transferred consisted (a) of cars, bed-
The value of the franchise for one thing en- ding, etc.; (b) contracts which the Central
ters into the computation of market value. Company owned with railroad companies for
This was, of course, not assigned to the Pull-the use of its cars on their roads; (c) patents

As the market value of the shares of this
stock was made up to some extent, at least,
of certain factors which the lessee cannot,
under the rules of law, be held responsible for
in this case, it follows that such value cannot
furnish a safe guide in measuring the respon-[156]
sibility of the lessee in an utterly void lease.
The court therefore erred in taking the mar
ket value of the shares of this stock as a
proper or just measure of the value of the
property transferred.

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