« ForrigeFortsett »
scope were explained on behalf of that com- I might have been taken without an undue mittee in each house, and those explanations declared the object to be as above indicated. Although the authority conferred as to the times of killing and the number to be killed was continuing and discretionary, and although the company in the present lease covenanted that it would not kill in any year a greater number than was authorized by the Secretary, yet we think it would be going much too far to hold that the original provision for a maximum number, and a proportionate reduction of the fixed rental in case of a limitation, was done away with by plication.
diminution of the seal herds." And it appears that the United States originally presented as part of its case a claim for the recovery of the damages which it and its lessee had sustained by reason of the limitation to 7,500, but this claim was certainly not presented as a claim which the company could maintain against the United States under the lease, and it involved no question of the power of the Secretary in respect of the lessee under the covenants of that instrument. There was no element of estoppel about the transim-action, and counsel had no authority to bind the government for any other purpose than the pending cause.
Repeals where the intention to do so is not expressed are not favored, and moreover, here the mischiefs sought to be remedied are quite obvious. One was that it was evidently thought that seals might properly be taken during the first half of August, and the existing statute forbade this; the other was, that the maximum was fixed for each island, whereas it had probably been ascertained that the distribution was erroneous, or that the numbers that might be safely taken on one or the other might vary, and consequently that greater elasticity was desirable. The language by which these objects were at tained was entirely reconcilable with the prior law so far as it did not purport to change it.
The legislation from the beginning was directed to the preservation of the fur seals, and the act of 1870 recognized that it might be necessary to such preservation that the number to be killed in the different years should be varied, and the discretion to do this was vested in the Secretary, but while this authority was made more comprehensive by the act of 1874, and a redistribution as between the two islands authorized, we cannot accept the view that it was the intention by that act to wholly change the scheme of leasing by making the discretion of the Secretary purely arbitrary, and dispensing with any maximum or reduction.
 *It should be added that the action of the Treasury Department in the matter of the abatement of rent for 1890, 1891, and 1892 does not impress us as amounting to such departmental construction as entitles it to any particular weight, and the views of the Department of Justice were conflicting.
Reference is made to article 5 of the treaty of 1892 extending the modus vivendi and the action taken under it before the tribunal of arbitration, as if amounting to an estoppel, or an admission against interest, or at the least as having some considerable bearing on the construction of the lease and the statutes. That article provided, among other things, that "if the result of the arbitration shall be to deny the right of British sealers to take seals within the said waters, then compensation shall be made by Great Britain to the United States (for itself, its citizens and lessees) for this agreement to limit the island catch to 7,500 a season, upon the basis of the difference between this number and such larger catch as in the opinion of the arbitrators
Moreover, counsel for the United States were constrained to expressly admit that the evidence failed to establish that an additional take over and above the 7,500 could have been safely allowed. In the argument on behalf of the United States, Judge Blodgett, one of the counsel, and all the counsel concurred, made this statement: "Frankness requires us, as we think, to say that the proofs which appear in the counter case of the United States as to the condition of the seal herd on the Pribiloff islands show that the United States could not have allowed its lessees to have much, if any, exceeded the number of skins allowed by the modus vivendi of 1892 without an undue diminution of the seal herd, and upon this branch of the case we simply call the attention of the tribunal to the proofs, and submit the question to its decision." And later, counsel announced that the United States would not ask the tribunal for any finding for damages upon and under article 5.
Our opinion is, that, assuming that the lessee took all the risk of a catch, reduced by natural causes, yet that when the number that might be killed was limited by the act of the government or its agent, the Secretary, the company was entitled to such reduction on the rental reserved as might be proper, and that the rule to be observed in that regard would be a reduction in the same proportion as the number of skins permitted to be taken bore to the maximum. This would reduce the annual rental for the year under consideration from $60,000 to $4,500; the tax due would be $15,000, and the per capita $57,187.50, making a total of $76,687.50.
2. Laying out of view the concession under the first proposition, the company further contended that the prohibition by the United States, by agreement with Great Britain, of seal killing in excess of 7,500, to be taken on the islands for the subsistence of the natives, relieved the company from its covenants for the payment of rent and royalty, and that no action could be maintained therefor on the lease.
The evidence disclosed that prior to 1890 the number of seals annually resorting to these islands was rapidly diminishing. This was attributed to the open sea or pelagic sealing, whereby the seals, especially the females, who were exempt from slaughter under the laws of the United States, were interrupted in
their passage to the islands by the crews of hibited and prevented the said company from foreign vessels and were killed in great num- taking any seals whatever from the said bers while in the water. For several years islands during the year 1893, and thus dethe United States, asserting that it had terri-prived the said defendant of the benefit of its torial jurisdiction over Behring sea, had been said lease." We think this so far partakes of striving to prevent vessels of foreign nations a conclusion of law that we are not shut up to from seal hunting on the open waters thereof. treating it as a finding of fact. The power to Great Britain denied the territorial jurisdic-regulate the seal fisheries in the interest of tion of the United States and denied that the the preservation of the species was a sovereign United States *had a right of property in the protective power, subject to which the lease fur seals while on the high seas during their was taken, and if the government found it progress to or from the islands of St. Paul necessary to exercise that power to the exand St. George, and it became necessary to re- tent which this finding asserts, and if we assort to international regulation to prevent the sume that the company might thereupon have extermination of the seals. Indeed, it ap- treated this contract as rescinded, it is suffipears that the Treasury agent in charge made cient to say that it took no such position, but a report to the Secretary of the Treasury af- accepted the performance involved in the deter the season of 1890, in which he strenuous-livery of the 7,500 skins. The company did ly urged the necessity of stopping sealing for not wish to rescind or abandon, and it could a number of years absolutely upon the islands not but recognize that, as the modus was enas a necessary measure for the preservation tered into in an effort to save the seal race of the seals. On the 15th of June, 1891, an from extermination, and thereby to preagreement for a modus vivendi was concluded serve something for the future years of the between the government of the United States lease, the prohibition was so far for its beneand the government of Her Britannic Majesty fit.
"in relation to the fur seal fisheries in Behring Again, although the government acted in
And under the same date the modus vivendi was renewed during the pendency of the arbitration. 27 Stat. at L. 952.
The company could not object that the Secretary was constrained to impose the limitation, for the Secretary was bound to obey the instructions of his principal, and the company could not make it the subject of a con- test in pais as to whether the preservation of the herd in fact required the limitation. The whole business of taking seals was conducted under the supervision of the government, and by § 1973 the Secretary was authorized to appoint agents, who were charged with the management of the seal fisheries.
The record shows that instructions were issued to the government supervising agent on April 26, 1893, and a copy delivered to the superintendent of the company before the
The learned circuit judge held that the limitation under the modus vivendi was not a designation by the Secretary, but was a commencement of the season of that year. prohibition by the government; and, conse- These instructions directed the number quently, that if the lessees had not received of seals to be taken during the season of 1893 any skins the action could not have been to be limited to 7,500. It was stated by the maintained. But he held that as the 7,500 Secretary that it was believed "that if the skins were received by the lessees they must killing be confined between the first of June make compensation for them; that a proper and the tenth of August, a better quality of way to determine *this was to ascertain what skins would be obtained and less injury the fair product of the year, which might would be done to the rookeries;" and he safely be taken, was, and compute what each added: "This matter is, however, left, as skin would have cost the company, assuming above stated, to your discretion, and in referthey had taken that number; and by this ence thereto you will confer fully with the mode of computation, having found that representative of the company, its interests 20,000 might properly have been taken, he and those of the government in the preserreached the sum of $94,687.50 as the amount vation of the fur seals being identical." due to the government.
The circuit court found that the United States, pursuant to the modus vivendi. "pro
In the letter of the attorney of the company of November 15, 1893, he said: “During the present year this company, in strict com
The arbitral tribunal sat in Paris in 189293, and the prohibition covered the killing period for which recovery is sought in this
pliance with the orders of the Treasury De- erred in its disposition of the counterclaim. partment, restricted its catch to 7,500." In *The seal fisheries of the Pribiloff islands other words, it appears that both parties re- were a branch of commerce and their garded the Secretary of the Treasury as au-regulation involved the exercise of power as thorizing the taking of 7,500 skins in the a sovereign and not as a mere proprietor. year 1893. Such governmental powers cannot be contractUnder the law of 1870 and the various sec-ed away, and it is absurd to argue that in this tions of the Revised Statutes the power was instance there was any attempt to do so, or expressly reserved to the government to make any sheer oppression or wrong inflicted on the whatever restrictions of the business it might lessee by the government in the effort to prosee fit to make; the lease recognized this to tect the fur seal from extinction. the full extent; and it was, moreover, expressly stipulated that the company was not to kill or permit to be killed a greater number than the Secretary might authorize. The company was offered 7,500 skins for 1893: took them; paid the amount fixed by the Secretary under the lease for compensation to the natives for taking and loading the skins, and subsequently tendered the sum of $23,789.50 as, according to its computation, the full amount due under the lease. These particular seals *were killed by the government agent, but notice of the killing, from time to time, was given to the company, and the company requested to select the skins it desired, which it did. The government did not regard the lease as broken, but proceeded under it, and delivered the 7,500 skins as full The judgment of the Circuit Court is reperformance of the covenant on its part, for versed, and the cause remanded with a directhe privilege of taking the seals was subject tion to enter judgment in favor of the Unitto such limitation on the number as the gov-ed States for $76,687.50, with interest from ernment believed it necessary to impose; and the company acquiesced in that view by taking the 7,500 skins without dissent.
The privilege leased was the exclusive right to take fur seal, but it was subject, and expressly subjected, from the beginning, to whatever regulations of the business the Unitjed States might make. If those regulations reduced the catch, the company was protected by a reduction of the rental, and paid taxes and per capita only on the number taken. The other expenses to which it bound itself were part of the risk of the venture. The catch for 1893 was lawfully limited to 7,500 and the company accepted and disposed of the skins. It cannot now be heard to insist that that limitation was in breach of the obligations of the government, for which, though still claiming the contract to be outstanding, it is entitled to recover damages.
the first day of April, 1894; and to enter
It was after this that the question arose, not of breach of contract, but as to what sum, if any, was due from the company under PULLMAN'S the lease more than it had tendered. the company entitled to a reduction on what it had agreed to pay, and, if so, how much?
3. Finally, the company claims that the United States are liable to it in damages to the extent of $287,725 for skins it could have taken during the season of 1893, without unreasonable injury to or diminution of the seal herd, and which the United States prevented it from doing; and that it can avail itself of this claim in this suit by way of recoupment and counterclaim.
The circuit court rejected this counterclaim on the ground that the claim had not been presented and disallowed by the accounting officers of the Treasury, and dismissed it, not on the merits, but without prejudice. The company prosecuted its writ of error from the circuit court of appeals for the second circuit, and assigned as errors, among others, that the circuit court erred in adjudging that its claim for damages was not duly presented; that the court did not allow its counterclaim; and that judgment was not directed in favor of the company. From what we have already said it will have been seen that we are of opinion that the company cannot maintain this claim for damages, and that, assuming that the claim had been duly presented and disallowed, and that, if meriorious, it might be availed of by way of recoupment in this action, the circuit court
(See S. C. Reporter's ed. 138-161.)
The right to appeal—when a complainant in
1. The right to appeal directly to this court
from the circuit court because of a constitu
NOTE. As to what acts and contracts of a corporation are ultra vires; contracts in viola tion of statute or public policy; executed contracts; instances; estoppel or ratification of transactions ultra vires, see note to Central Transp. Co. v. Pullman's Palace Car Co. 35: 55. As to what laws are void as impairing obli gation of contracts, see note to State, Ranger, New Orleans, 26: 132.
As to what remedy at law will prevent rem
in equity, see note to Tyler v. Savage,
As to account stated; bar to bill in equity, defenses must be made in original action,--see note to Chappedelaine v. Dechenaux, 2: 629.
tional question is not waived by taking an
appeal also to the circuit court of appeals.
[Nos. 141, 496.]
2. A complainant in an equity suit may gener. Argued March 24, 25, 1898. Decided May 31, ally dismiss his bill at any time before the hearing; but leave to dismiss a bill is not granted where, beyond the annoyance of a second litigation upon the subject-matter, such action would be manifestly prejudicial to the defendant.
3. Legal prejudice to defendant to authorize a denial of a motion by plaintiff to discontinue must be other than the mere prospect of future litigation.
4. The decision of a motion for leave to discontinue will not be reviewed in this court except for abuse of the discretion of the court, or an obvious violation of a fundamental rule of a court of equity.
5. Leave to discontinue a suit in equity to re
strain bringing suits for rent, alleging an elec-
ant opposes such discontinuance and asks
7. The right to a recovery of property transferred under an illegal contract is founded upon the implied promise to return or make compensation for it.
6. A cross bill for affirmative relief is properly allowed to be filed by defendant for the return of property delivered under an illegal lease and to determine the liability of the complainant, where he has alleged an election
Statement by Mr. Justice Peckham: The record in this case shows that in 1870 the Central Transportation Company, hereafter called the Central Company, was a corporation which had been in 1862 incorporated under the general manufacturing laws of the
should decree to be just.
to terminate the lease, and also alleged its in-state of Pennsylvania. It was engaged in validity and offered to do what the court the business of operating railway sleeping cars and of hiring them to railroad companies under written contracts by which the cars were to be used by the railroad companies for the purpose of furnishing sleeping conveniences to travelers. The corporation at 8. The right to recover property delivered un- this time had contracts with a number of difder an illegal contract rests upon a disaffirm-ferent railroad companies in the east, princiance of the contract, and is permitted only to pally, but not exclusively, with what is do justice to the party who has thus deliv-known as the Pennsylvania Railroad system, and it had been engaged in its business with those companies for some time prior to 1870. In the year last named the Pullman's Palace Car Company, hereafter called the Pullman Company, was a corporation which had been incorporated under the laws of the state of Illinois. It was doing the same general kind of business in the west that the Central Com
9. The market value of the stock of a corporation is not a proper measure of the value of its property transferred by an ultra vires lease, and which must be returned or paid
APPEAL from a judgment of the Circuit Court of the United States for the Eastern District of Pennsylvania and also on certiorari to the United States Circuit Court of Appeals for the Third Circuit to review a judg ment of the Circuit Court in favor of the Central Transportation Company against the Pullman's Palace Car Company, for the sum of $4,235,044, for the value of certain property which was leased by the Central Transportation Company to the Palace Car Company by an ultra vires lease, and which was to be returned or paid for by the latter company. Reversed, and case remitted to the United States Circuit Court for the Eastern District of Pennsyivania with directions to enter a judgment for the Central Transportation Company in accordance with the opinion.
See same case, 139 U. S. 24 [35: 55], also same case below, 39 U. S. App. 307, 76 Fed. 401, 22 C. C. A. 246.
11. The earnings of property transferred under an ultra vires lease cannot be included in the compensation to be paid the lessor in lieu of the property on disaffirmance of the contract. 12. The loss sustained by the lessor in an ultra vires lease on account of the breaking up of its business and the loss of contracts with
third persons when the lease is repudiated cannot be recovered as part of its relief, ou recovering compensation for the property
transferred and not restored.
10. The value of contracts with third parties, or of patents owned by a company when it transfers its property under an ultra vires lease, and which bave expired when the obli-pany was doing in the east. For reasons not gation to restore the property or make com- material to detail, the two companies entered pensation therefor is enforced, cannot be con- into an agreement of lease, which was exe. sidered in determining the value of such prop-cuted February 17, 1870. erty, when payment for the use of such patents and contracts for the time they were By its terms the Central Company leased used was included in the rent paid, and they to the Pullman Company its entire plant and had become valueless at the time of their personal property, together with its contracts expiration. which it had with railroad companies for the use of its sleeping cars on their roads, and also the patents belonging to it. The lease was to run for ninety-nine years, which was the duration of the charter of the Central Company.
It was also agreed that the Central Company would not engage in the business of manufacturing, using, or hiring sleeping cars while the contract remained in force.
In consideration of these various obliga
tions, the Pullman Company agreed to pay | property, contracts, and rights of the said deannually the sum of $264,000 during the en-fendant, the Central Transportation Comtire term of ninety-nine years, in quarterly pany, and including a covenant on the part payments, the first quarter's payment to be of said defendant corporation not to transact made on the 1st of April, 1870. during the existence of said lease any of the  *From the time of the execution of the con- business for the transaction of which it was tract its terms were carried out, and no par- incorporated, was never legally valid beticular trouble occurred between the compa- tween the parties thereto, but was void for nies for about fifteen years. During this time the want of authority and corporate power and up to the 27th day of January, 1885, the on the part of the defendant to make the Pullman Company paid to the Central Com- said contract of lease, and because the same pany, as rent under the contract, the sum of was in violation of the charter conferring the $3,960,000, without any computation of in-corporate powers of said defendant, and of terest. About or just prior to January, 1885, differences arose between the companies. The Pullman Company claimed the right to terminate the contract under the eighth clause thereof, or else to pay a much smaller rent. The merits of the controversy are not material.
the purpose of its incorporation, as by the said charter, to which, for greater certainty, reference is made, your orator is advised it will appear; that the said contract of lease was never susceptible of being enforced in law by your orator against said defendant, and cannot therefore be construed and held to conThe two companies not agreeing, and the tinue in force and obligatory upon your oraPullman Company refusing to pay the rent tor; and that your orator can be under no stipulated for in the lease, the Central Com- other legal obligation or equitable duty to pany brought successive actions to recover the defendant than to return such of the the instalments of rent accruing. In one of property assumed to be demised as is capathem the Pullman Company pleaded the ille-ble of being returned, and to make just comgality of the lease, as being ultra vires, the pensation for such other of the said property charter of une Central Company. The plea as under the said contract of lease it ought prevailed in the trial court, and upon writ of to make compensation for, which it is willerror the judgment upholding this defense ing and now offers to do." was, in March, 1891, sustained in this court. Central Transportation Company v. Pullman's Palace Car Company, 139 U. S. 24 [35: 55].
In the prayer for relief it was also asked"That the court may consider and decree whether said contract of lease was not made without authority of law on the part of the After the bringing of several actions for in- defendant and in excess of its corporate stalments of rents by the Central Company powers and in violation of its corporate duand before the question of ultra vires had ties, so as not to be enforceable against your beeu argued in this court, the Pullman Com- orator beyond the obligation of your orator pany on the 25th day of January, 1887, com- to make return of or just compensation for menced this suit by the filing of its bill the property *demised; and that an account[1  against the Central Company in the circuit may be taken between your crator and decourt of the United States for the eastern fendant, and that the amount may be ascerdistrict of Pennsylvania. The bill asked for tained that should be paid by your orator to an injunction to restrain the bringing of the defendant on any account whatever; more suits for rent. It gave a general history. . and that an accounting may be had beof the transactions between the companies tween your orator and defendant as to all the from the execution of the contract between matters and things set out in this bill.” them in February, 1870, down to the time of The Central Company answered the bill, the filing of the bill, and it alleged the elec-denying many of the material allegations tion of the Pullman Company to terminate the lease under the provisions of the eighth clause thereof, and the willingness of the company to pay what should be found by the court to be equitable and right to the Central Company on account of the property which had been transferred by that company to it, and to this end it prayed the aid of the court. The bill also contained the following allegation:
therein contained. It denied that the Pullman Company had ever elected to terminate the lease under the provisions of the eighth clause thereof, and it alleged that the lease was still in existence, and that it had the right to recover from the Pullman Company the amount of the rent named in the lease, and that no valid agreement had ever been made between the companies in any way altering the lease or reducing the amount of  And your orator shows that in said lease the rent payable thereunder. It denied that it is recited that the said contract of lease is the lease was illegal, and it alleged that even made on the part of the defendant, the said if it were, the illegality did not justify the Central Transportation Company, under an complainant in applying for any equitable act of the general assembly of the common- relief whatever. Upon application on the wealth of Pennsylvania therein named, ap- part of the Pullman Company the court proved the 9th day of February, A. D. 1870, granted an injunction restraining the bring a copy whereof is hereto attached, marked ing of suits for the collection of rent acExhibit G, and referred to as part of this bill; cruing after July, 1886. but it declined to enbut your orator is advised, and therefore sub-join those already pending for rent accruing mits it to the court, that the said lease being before that date. a grant, assignment, and transfer of all the After considerable proof had been taken