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tions, the Pullman Company agreed to pay property, contracts, and rights of the said de annually the sum of $264,000 during the enfendant, the Central Transportation Com. tire 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 (140] "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, the purpose of its incorporation, as by the said differences arose between the companies. charter, to which, for greater certainty, refThe Pullman Company claimed the right to erence is made, your orator is advised it will terminate the contract under the eighth appear; that the said contract of lease was clause thereof, or else to pay a much smaller never susceptible of being enforced in law by rent. The merits of the controversy are not your orator against said defendant, and can. material,

not 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 renttor; 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 persation 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 will. error the judgment upholding this defense ing and now offers to do.” was, in March, 1891, sustained in this court.

In the prayer for reliet it was also askelCentral Transportation Company v. Pull- “That the court may consider and decreo man's Palace Car Company, 139 U. S. 24 (35: whether said contract of lease was not made 55].

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 du. and before the question of ultra vires had ties, so as not to be enforceable against your been 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(i 12) 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 youi 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 therein contained. It denied that the Pullthe lease under the provisions of the eighth man Company had ever elected to terminate clause thereof, and the willingness of the the lease under the provisions of the eighth company to pay what should be found by the clause thereof, and it alleged that the lease court to be equitable and right to the Cen was still in existence, and that it had the tral Company on account of the property right to recover from the Pullman Company which had been transferred by that company the amount of the rent named in the lease, to it, and to this end it prayed the aid of the and that no valid agreement had ever been court. The bill also contained the following made between the companies in any way alallegation:

tering the lease or reducing the amount of [141] *“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.
à copy whereof is hereto attached, marked ing of suits for the collection of rent ac-
Exhibit G, and referred to as part of this bill; cruing after July, 1886, but it declined to en-
but 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

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upon the resues 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 re-
25th 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 al-
who, 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 undertak
complainant 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 en-
defendant'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 un-
was filed, in which the Central Company ac- der the lease or to account for any profits de-
knowledging, 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 plead-

complainant's bill upon the subject of the reings, 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 refer. Company 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 Company ing been overruled, judgment was entered in with railroad companies with which there favor of the Central Company for the sum of were contracts of transportation with the $4,235,044, together with costs. From this Central Company at the time of the making judgment the Pullman Company appealed of the lease in February, 1870, and that the directly to this court. It also appealed to Pullman Company should be adjudged to the circuit court of appeals. The case was pay the Central Company all such sums as there argued upon a motion to dismiss the should be due to it by the Pullman Company appeal, and the motion denied, and the fur. as such trustee, and that defendant should ther argument was postponed until some disin the future from time to time account for position was made of the appeal taken die the sums which should be due by reason of rectly to this court. 39 U. S. App. 307. A future operations under those contracts. motion has also been made to this court to It also prayed for a discovery and an ac- dismiss the appeal, and thereupon an applicacounting by the Pullman Company of its use tion was made to us for a writ of certiorari and disposition of the property turned over to the circuit court of appeals for the third to it by the Central Company.

circuit, and on account of the peculiar cirTo this cross bill the Pullman Company cumstances it was granted, and the record filled three demurrers, the first being a gen. has been returned to this court by virtue of eral demurrer on the ground that the cross that writ. bill was filed contrary to the practice of the court, and also that it appeared that the Messre. Edward S. Isham, Joseph H. court had no jurisdiction of the case; the seco Choate, A. H. Wintersteen, and Robert T. ond demurrer relate to the portions of the Lincoln for appellant. cron bill praying that the cross defendant Me-878. Frank P. Prichard and John might be regarded as a trustee and decreed G. Johnson for appellee. to account accordingly; the third demurrer related to that part of the cross bill which Mr. Justice Peckham delivered the opinasked for an account of profits since the ion of the court: making of the lease and for future profits. The motion to dismiss the appeal in this

The demurrers were overruled with leave to case is now before the court. present the questions on final hearing, and Counsel for the Pullman Company took the Pullman Company then answered the the appeal directly from the circuit court to cross bill. Among other things it set up this court on the theory that the case inthat the agreement in question was void, volved the construction or application of "and that being null and void between the the Constitutio:1 of the United States, beparties hereto because of such character of cause of the holding of the court below that the agreement, it cannot be made the lawful 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 men. circuit 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 cir:uit 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 The Pullman Company, complainant in the court should set aside or cancel the lease, but original suit, insists that it had the right to that it should aid the parties by decreeing discontinue that suit at its own cost before just what relief should be given by the comany decree was obtained therein, and the re- plainant to the lessor in the execution of its fusal of the court below to grant an order of duty to make some compensation for the discontinuance upon its application is the first property it received and which it stated its ground of objection to the decree herein. willingness to make, and to that end, that an

The general proposition is true that a com- accounting might be had and the amount [146]plainant in an equity *suit may dismiss his ascertained that should be paid to the

bill at any time before the hearing, but to Central Company in discharge of the obliga. this general proposition there are some well tions of the complainant in that behalf. recognized exceptions. Leave to dismiss a Thus the Pullman Company came into a bill is not granted where, beyond the inci- court of equity and in substance alleged that dental annoyance of a second litigation upon the lease had been terminated by it under the the subject matter, such action would be eighth clause, and it also alleged that the manifestly prejudicial to the defendant. The lease was void as ultra vires, and in either subject is treated of in City of Detroit v. event it tendered such relief as the court Detroit City Railway Company, in an opinion might think was proper and fair under the by the circuit judge, and reported in 55 Fed. circumstances. Rep. 569, where many of the authorities are A large amount of proof had been taken collected, and the rule is stated substantially under the issues made in this original bill as above. The rule is also referred to in and the answer thereto, and before the case Chicago de Alton Railroad Company v. Union was concluded the decision of this court was Rolling Mill Company, 109 U. S. 702 [27: made in which the lease was declared to be 1081].

void. The only obligation left under the From these cases we gather that there must original bill of complainant after the decision be some plain, legal prejudice to defendant of this court was the obligation to return to authorize a denial of the motion to dis- such portion of the property received by it as continue; such prejudice must be other than the court should determine to be right, or to the mere prospect of future litigation ren. make some compensation to the Central dered possible by the discontinuance. If the Company for the same. And this obligation defendants have acquired some rights which it had offered in the original bill to carry out. might be lost or rendered less eflicient by the The Pullman Company had also obtained discontinuance, then the court, in the exercise an injunction in the original suit, restraining of a sound discretion, may deny the applica- the Central Company from commencing fur: tion. Stevens v. The Railroads, 4 Fed. Rep. ther legal proceedings to recover rent under 97, 105. Unless there is an obvious viola. the lease, and after obtaining this injunction tion of a fundamental rule of a court of and taking the testimony relating to the subequity or an abuse of the discretion of the ject-matter of the original bill, the complaincourt, the decision of a motion for leave to ant should not be permitted under these cirdiscontinue will not be reviewed here.

cumstances to dismiss that bill and thus withUpon an examination of the facts relat. draw the whole case from the jurisdiction of ing to the motion, we think the circuit court the court, and thereby blot out its *tenders of[148 was right, in the exercise of its discretion, in relief contained in its original bill grounded, denying the same. The original bill was among others, upon the allegation that the framed really on two theories: One, that lease was void, and asking the aid of the by reason of an election made under the court to decree the precise terms upon which eighth clause in the lease, the Pullman Com- its obligations to the Central Company might pany had terminated the lease, and it was be fulfilled. therefore bound under its provisions to re- The denial of the motion was made in conturn the property which it had received from nection with the application of the Central the Central Company. It slated in its bill Company to file a cros3 bill in which it would

seek to avail itself of the tenders made by the because in unreasonable restraint of trade, Pullman Company in the original bill. Such and werefore contrary to public policy. Lo an application for leave to file a cross bill making the lease the lessor was certainly me seeking affirmative relief, while at the same much in fault as the lessee. It was argued time availing itself of those tenders of relief on the part of the Central Company that even made by the original coinplainants, would if the contract sued on were void, yet that furnish additional ground for the exercise of having been fully performed on the part of the discretion of the court in refusing to the lessor and the benefits of it received by grant the application for leave to discontinue the lessee for the period covered by the dec. We think there was no error committed by laration in that case, the defendant should the court below in refusing the leave asked be estopped from setting up the invalidity for.

of the contract as a defense to the action to The further objection is made by the coun. recover compensation for that period. But sel for the Pullman Company that it was er. it was answered that this argument, though ror to allow the cross bill to be filed in this sustained by the decisions in some of the case. Counsel for the Puiiman Company as states, finds no support in the judgments of sert that the cause of action for a return of this court, and cases in this court were cited the property is a purely legal one of which a in which such recoveries were denied. court of equity has no jurisdiction, and that It is true that courts in different states it can acquire none simply by the filing of a have allowed a recovery in such cases, among cross bill. Whatever may be the original the latest of which is the case of Bath Gas character of the liability of the Pullman Com. Light Company v. Claffy, 151 N. Y. 24 [36 pany to return or make compensation for the L. R. A. 664), where Chief *Judge Andrews of[150 property, we are of opinion that under the the court of appeals examines the various facts above set forth it cannot object to the cases, and that court concurred with him in filing of the cross bill, or to the determina permitting a recovery of rent upon a voic tion of the amount of its liability by a court lease where the lessee had enjoyed the benoof equity. It had itself voluntarily appealed fits of the possession of the property of the to the jurisdiction of such a court for the pur- lessor during the time for which the recovery pose of obtaining its aid in decreeing the of rent was sought. terms upon which its obligations to the Cen- But in the case of this lease, now before tral Company might be fulfilled and the lease the court, a recovery of the rent due thereterminated, either under the eighth clause in under was denied the lessor, although the the lease or because of its invalidity as being lessee had enjoyed the possession of the propultra vires. Having thus appealed to equity erty in accordance with the terms of the for its aid and the lease having been conclu- lease. It was said (page 60 of the report in 139 sively -letermined to have been void, we think U. S. [35:69]): "The courts, while refus. it was within the fair discretion of the court ing to maintain any action upon the unlawful to retain jurisdiction of the cause and of the contract, have always striven to do justice original complainant, and to permit the Aling between the parties so far as could be dono of a cross bill in which the cross complainant consistently with adherence to law, by per

might seek affirmative relief, and at the same mitting property or money parted with on 149 time avail *itself of the tenders made by the the faith of the unlawful contract to be reromplainant in its original bill.

covered back or compensation to be made for The facts which were set up in the cross bill it. In such case, however, the action is not e'losely affected one of the theories upon maintained upon the unlawful contract nor which the original bill was filed, viz., the in according to its terms, but on an implied validity of the lease. They were relevant to contract of the defendant to return, or fail. the matters in issue in the original suit, and ing to do that, to make compensation for the in seeking affirmative relief the cross com- property or money which it had no right to plainant is but amplifying and making clearer retain. To maintain such an action was not the foundations for the intervention of equity to affirm, but disaffirm, the unlawful con. which had been appealed to by the Pullman tract." And the opinion of the court ended Company, and the continued intervention of with the statement that, "Whether this which would greatly speed a final termination plaintiff could maintain any action against of all matters for litigation between the par- this defendant, in the nature of a quantum ties The court below did not err in permit- meruit, or otherwise, independently of the ting the cross bill to be filed.

contract, need not be considered, because it This brings us to a discussion of the prin is not presented by this record and has not ciples upon which a recovery in this case been argued. This action, according to tho should be founded. The so-called lease men. declaration and evidence, was brought and tioned in this case has been already pro- prosecutell for the single purpose of recovernounced illegal and void by this court. 139 ing sums which the defendant had agreed to U. 8. 24 (35:55). The contract or lease was pay by the unlawful contract, and which, held to be unlawful and void, because it was for the reasons and upon the authorities beyond the powers conferred upon the Cen- above stated, the defendant was not liablo tral Company by the legislature, and because for.” it involved an abandonment by that company The principle is not new; but, on the conof its duty to the public. It was added that trary, it has been frequently announced, there was strong ground also for holding that conimencing in cases considerably over a hunthe contract between the parties was void Idred years old. It was said by Lord Mang171 U. S. U. S., BOOK 43.


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field in Holman v. Johnson, 1 Cowp. 341, de- or paid for. The former is impossible. The
cided in 1775, that “the objection that a con property has substantially disappeared. It
tract is immoral or illegal as between the has become incorporated with the business
plaintiff and defendant sounds at all times and property of the plaintiff, and cannot be

very ill in the mouth of the defendant. It is separated. Compensation must therefore be [161]not for his sake, however, that the *objection made. What, then, is the measure of com

is ever allowed; but it is founded in general pensation? Clearly, we think, the value of
principles of policy, which the defendant the property when received, together with
has the advantage of, contrary to the real its earnings since, less the amount paid as
justice, as between him and the plaintiff, by rent. In ascertaining the value the annual
accident, if I may so say. The principle of rental may be considered, but it does not af-
public policy is this: Ex dolo malo non ori. ford a conclusive nor an entirely safe measure
tur actio. No court will lend its aid to a of value because the unlawful consideration
man who founds his cause of action upon an (that the Central Company would abstain
immoral or an illegal act.”

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 carnings must be ascertained
controversy in this case is as to the extent from a careful examination of the property,
to which the doctrine shoulu be applied to thc business. and its earnings at the time
the facts herein. Many of the cases are re: they passed into plaintiff's hands and subse-
ferred to and commented upon in the opin- quently. It is not their value to the plain-
ion 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 con-
illustrations of the general doctrine as applied sidered.”
to particular facts we refer in the margin to Acting under these directions of the court,
a few of the multitude of cases upon the the master in his opinion said:

“Passing to the consideration of the main
They are substantially unanimous in ex- question raised in the present reference, viz.,
pressing the view that in no way and in no what the Central Transportation Company
channels, directly or indirectly, will the courts lost by the transfer of its property to the
allow an action to be maintained for the re Pullman *Company, the measure of damages(153)
covery of property delivered under an illegal as determined by the court requires the mas-
contract where, in order to maintain such re- ter to ascertain:
covery, it is necessary to have recourse to "(1) What was the value to the Central
that contract. The right of recovery must Transportation Company in 1870 of the prop-
rest upon a disaffirmance of the contract, and erty transferred ?
it is permitted only because of the desire of "(2) What was earned by the Pullman
courts to do justice as far as possible to the Company between January 1, 1870, and Jan-
party who has made payment or delivered uary 1, 1885, from the use of the property
property under a void agreement, and which transferred ?

in justice he ought to recover. But courts “(3) The difference between the amount [162]will not in such endeavor permit *any recov. so received by the Pullman Company and the

ery which will weaken the rule founded upon rental paid by it to the Central Transporia-
the principles of public policy already noticed. tion Company for the above period.
We may now examine the record herein

“(4) The total amount to be paid by the
and learn the grounds for the recovery which Pullman Company, as of January 1, 1885, de-
has been permitted, and determine therefrom duced above, together with interest
whether the judgment in favor of the Cen thereon from January 1, 1885, to date of final
tral Company should be in all things affirmed decree.”,
or if not, then how far the liability of the The master proceeded to determine the
cross defendant extends, and, if possible. what value in 1870 of the property then trans-
should be the amount of the judgment ferred. In ascertaining it he said:
against it.

“The value of the stock on the street is a
In referring the case to the master for positive indication of the estimate placed on
the purpose of taking the account between the property by the public. That it is not
the parties the learned district judge stated entirely a satisfactory measure of value must
the principle upon which the liability of the be conceded, but in the judgment of the
cross defendant rested. He said:

master, supported as it is by the best inde“The property must therefore be returned 'pendent estimate that the evidence atforris, Coppell v. Hall, 7 Wall. 542 (19:244); Con Insurance Company v. Caldwell, 3 Wend. 296; gress & E. Spring Company v. knowlton, 103 Atcheson v. Mallon, 43 N. Y. 147 13 Ain. Rep. U. S. 49 [26:347); Logan County Nat. Bank v. 1 678]; Leonard v. Poole, 114 N. Y. 371 [4 L. R. Townsend, 139 U. 8. 67 (35:107); St. Louis, V. A. 728); Spell v. Dwight, 120 Mass. !); Davis v. & T. H. Railroad Company v. Terre Haute & oid Colouy Rallroad Co. 131 Mass. 238 (41 Am. I. Railroad Company, 115 U. S. 393, at 408, 409 Rep. 221]; Holt v. Green. 73 L'a. 1:18 | 13 Am. [36: 748, 754, 755); Manchester Railroad Rep. 737); Johnson v. Hulir 103 Pa. 498 ( 49 Company v. Concord Railroad Corp. 66 N. H. Am. Rep. 131); Thomson v. Thomson, 7 Ves. 100 9 L. R. A. 689, 3 Inters. Com. Rep. 319); 1 Jr. 470; Sykes v. Beadon, L. R. 11 Ch. Div. 170; Wbite v. Franklin Bank, 22 Pick. 181: Utica Brooks v. Martin, 2 Wall. 70 (17:732).


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