WALSER et al.

v.

MEMPHIS, C. AND N. W. RY. Co.

(Advance Case, Circuit Court, E. D. Missouri. December 3, 1883.)

A corporation is a necessary party defendant to a bill to enforce a judgment against it by compelling contribution from its stockholders.

Where there are two or more plaintiffs and two or more defendants, and one of the plaintiffs and one of the defendants are citizens of the same State, this court has no jurisdiction.

Where a case has been brought here from a State court, no change of pleadings or in the relationship of the parties, by amendments in this court, can give jurisdiction not disclosed by original proceedings in the State court.

MOTION to remand, on the ground that this court has not jurisdiction of this case and the same was illegally removed because the claims and demands of the complainants are several and not joint, and some of them do not exceed the sum of $500, and because the controversy herein is not wholly between citizens of different States, but on the contrary is between citizens of the same State, and the controversy cannot be severed. For a report of the opinion of the court on a former notion to remand, and a fuller statement of facts, see 6 Fed. Rep. 797.

Joseph Shippen and John P. Ellis for motion.

Broadhead, Slayback & Hauessler for petitioning defendant.

TREAT, J.-A similar motion was made and decided by this court at the March term, 1881, by Judge McCrary, in which I concurred. Since then many proceedings and orders have been improvidently had. It may be that in the recent case of Barney v. Latham, 103 U. S. 205, it was supposed that opposite views to those expressed by this court had been established. It seems, however, that after the order of this court to remand the case to the State court and an appeal allowed, a subsequent order was entered vacating said appeal, and leaving open the motion to remand for further consideration. The right to vacate said appeal is questionable. Since that order, an amended bill, a demurrer, and a new motion to remand have been filed. The right to remove the cause was dependent solely upon the condition thereof at the time of the motion inade in the State court; and no change of pleading or relationship of the parties, by amendments thereafter in this court, could give jurisdiction not disclosed by the original proceedings in the State court. The opinion by Judge McCrary, in 1881, has been fully confirmed by the many decisions

16 A. & E. R. Cas.-29

of the United States supreme court since rendered. It is obvious, therefore, that the cause must be remanded, and all orders made since the original order to remand vacated.

An order will be entered accordingly.

Cf. Elkins v. Camden & Atlantic R. Co., 11 Am, & Eng. R. R. Cas, 579.

DINSMORE

V.

CENTRAL R. Co. et al.

(Advance Case, Circuit Court, D. New Jersey. December 7, 1883.)

The objection to a bill that it was not exhibited in good faith, but collusively and in the interests of others, goes to the jurisdiction of the court, and should be raised by plea in abatement and not by answer.

The fact that some of the officials of a rival corporation, with which complainant has close business relations, have been friendly and active in giving him aid in the preparation of his case, will not sustain a charge of bad faith and render his suit collusive.

Upon examination of the bill, answer, and affidavits, no circumstances entitling complainant to a preliminary injunction appearing to exist, the motion, therefore, is denied.

IN Equity. Motion for preliminary injunction.

Roscoe Conkling, Clarence A. Seward, Barker Grunmere, and Edward T. Green, for plaintiff.

Neither the act of March 3, 1875, nor the common law gives this court or any court jurisdiction of a suit which is simulated and fictitious, or in which the reus on either side is not the real party in interest. Such suits are called "collusive" (Gardner v. Goodyear, 3 O. G. 295), and when the collusion is proved the case is summarily dismissed as not within the proper jurisdiction of the court. American M. P. Co. v. Vail, 15 Blatchf. 315; Cleveland v. Chamberlain, 1 Black, 426; Lord v. Veazie, 8 How. 254.

The allegation of collusion-that is, the want of real interest in one of the actors-is an allegation that the court has no jurisdiction by reason of the character in which one of the parties sues or defends. This exception to the jurisdiction is called by the courts a "personal" exception; asserts that the position of a litigant is assumed, and that the party is not an honest reus or actor. Forrest v. Manchester, etc., Ry. Co. 4 De G., F. & J. 131; Colman v. Easter Cos. Ry. Co. 10 Beav. 1; Salisbury v. Metropolitan Ry. Co., 38 L. J. Ch. 251.

That a suit is collusive must be objected to by plea in abatement, and if a defendant answers upon the merits he waives the

objection, and cannot thereafter contest the jurisdiction. Story, Eq. Pl. § 721; Daniell, Ch. Pr. (15th ed.) 630; Underhill v. Van Cortlandt, 2 Johns. Ch. 339, 367; Conard v. Atlantic Ins. Co. 1 Pet. 386, 450; Dodge v. Perkins, 4 Mason, 435; D'Wolf v. Rabaud, 1 Pet. 476; Wood v. Mann, 1 Sumn. 581; Evans v. Gee, 11 Pet. 85; Rhode Island v. Massachusetts, 12 Pet. 719; Nesmith v. Calvert, 1 Wood. & M. 37; Brown v. Noyes, 2 Wood. & M. 81; Webb v. Powers, id. 510; Sims v. Hundley, 6 How. 1; Bailey v. Dozier, id. 30; Smith v. Kernochen, 7 How. 216; Sheppard v. Graves, 14 How. 509; Wickliffe v. Owings, 17 How. 51; Jones v. League, 18 How. 76; Dred Scott v. Sandford, 19 How. 397; Whyte v. Gibbes, 20 How. 542; De Sobry v. Nicholson, 3 Wall. 423; Van Antwerp v. Hulburd, 7 Blatchf. 427; Pond v. Vermont V. R. Co., 12 Blatchf. 297; Gause v. Clarksville, 1 Fed. Rep. 355; Kern v. Huidekoper, 103 U. S. 485; Williams v. Nottawa, 104 U. S. 211; Equity Rule, 39; Livingston's Ex'r v. Story, 11 Pet. 351, 393.

B. Williamson, George M. Robeson, Franklin B. Gowen, James E. Gowen, A. C. Richey, and G. R. Kaercher for defendants.

NIXON, J.-Two questions are presented for the consideration of the court the first having reference to the bona-fide character of the suit, and the second, to the propriety of the interference of the court, under the present aspect of the case, by ordering a preliminary injunction.

The answer of the defendants, after responding to the material allegations of the bill, charges that the bill of complaint was not exhibited in good faith, or for the honest purpose of asserting the complainant's rights as a stockholder of the New Jersey Central R. R. Co., but in the interests of a rival company to the Philadelphia & Reading and the New Jersey Central roads. This is an exception personal to the complainant, and going to the jurisdiction of the court, and if introduced into the pleadings for contestation, it should have been by a plea in abatement. It has no proper place in the answer, and is always regarded as waived after the defendants have answered upon the merits. But as a very large amount of testimony has been taken upon the subject, I have deemed it best to lay aside all technical objections to the informal manner in which the matter has been presented, and to ascertain, if possible, whether the defendants have sustained their allegations by their proofs. After a careful examination of the testimony furnished, I am of the opinion they have not sustained them. The most that has been done is to show that some of the officials of a rival company, with which the complainant has close business relations, have been friendly and active in giving him aid in the preparation of his case. I have never understood that a law-suit is of such an exclusive and sacred character that parties may not

have the sympathies and accept the aid of associates and friends in carrying it on without subjecting themselves to the charge of collusion.

With regard to the second point, the learned counsel, on the argument, took even a wider range than the testimony, and much time was spent in the discussion of questions that more appropriately belong to the final hearing. I do not propose to follow them now. Without intending to intimate any opinion on the merits of the controversy, it is sufficient for my present purpose to say, that, looking at the bill, answer, and affadavits, which furnish to the court the evidence on which to act on the question of a preliminary injunction, I find no circumstances existing and no facts developed which, in my judgment, authorize me to interfere, at this stage of the proceedings, by ordering such an injunction to issue.

The motion is therefore denied, but without prejudice to the complainant to renew it if any subsequent acts of the defendants, before final hearing, should render its renewal necessary or proper.

LEO

v.

UNION PACIFIC RY. Co.

(Advance Case, U. 8. Circuit Court, S. D. New York. January 24, 1884.)

The bill of the plaintiff, a stockholder in the defendant corporation, brought to restrain the corporation from employing its assets in excess of its corporate powers, held insufficient on demurrer on the ground that the allegations and statements should be more specific to show good cause for the relief sought.

In corporations within the scope of the corporate authority the majority rules; beyond this they have no right to go, and one may insist upon stopping at the limits.

Those who become members of a corporation consent to the rule of the majority within the powers of the corporation, but not beyond. As the right to restrain going beyond such powers depends upon the want of consent, if the consent is given the right ceases. Therefore, when such restraint is sought, due dilligence, in the proper direction, to prevent what is sought to be restrained, must be shown as a part of the title to relief.

In Equity.

George Zabriskie and John E. Burrill for orator.
John F. Dillon for defendants.

WHEELER, J.-This cause has been before heard on a motion for a preliminary injunction. It has now been heard on demurrer to the bill. The question then was whether the defendants should

be restrained pending the litigation; it now is whether there is anything in the bill which they ought to answer. The bill is brought by a stockholder to restrain the corporation from employing its assets in excess of its corporate powers; the other defendant is joined as president of the corporation for discovery merely, and no bad faith is alleged or charged. The prayer is that the corporation and its officers and agents be restrained, and for further relief. Any relief for the orator here must be wholly preventive. He could not, and does not ask to, undo what has been done. The avails of it, if held by the corporation, can only be reached through dividends common to all stockholders; if by others, only by proceedings against those who have them.

According to the bill, which is now to be taken as true, the corporation is made up of the Union Pacific R. R. Co., the Kansas Pacific Ry. Co., and the Denver Pacific Ry. & Telegraph Co. The Union Pacific R. R. Co., before the consolidation, having a definite line of road, exceeded its powers if what is now sought to be restrained is an excess, and in the same manner, by lending and advancing moneys to other railroad companies to be used in the construction, maintenance, and operation of their roads, and entered into obligations to furnish further amounts, and received in payment of moneys furnished from time to time stocks and bonds of such roads. Since the consolidation the same course has been pursued; stocks and bonds to which the Union Pacific R. R. Co. would have been entitled, have been received by the defendant, and it has lent and advanced its moneys and credit to the same and other organized railroad corporations for the purpose of, and of aiding in, the construction, maintenance, and operation of their roads. There is no description of the corporations so aided, except that the corporate names of some are stated without their source, whether from State or National authority, and some are stated to be unknown; nor of their lines of road except as branch and connecting roads. Nor is there any statement of the amount of such aid or of the payments therefor, except that it is stated as appearing from the report of the government auditor that the amount of stocks and bonds received from other roads was, by the Union Pacific R. R. Co., June 30, 1878, $5,229,327.84; June 30, 1879, $7,534,243.91; by the defendant, June 30, 1880, $15,338,453.94, and that the orator is informed and believes that the defendant now holds of such bonds $23,749.230.40, and of such stocks, $29, 462,046.98. The orator has at different times been a stockholder to a large amount in the defendant company. He acquired his present stock, November 17, 1882; commenced to object to this course of the defendant the next day, and brought this suit December 22, 1882. In the amended bill now under consideration, it is alleged that at a general meeting of the stockholders, held March 9, 1883, at which the holders of 384,769 shares were pres