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Q. Col. Miller said they were excessive? A. Yes sir.

Q. What were you trying to prove to Co]. Miller? A. We made a certain contract with the Government which was on a lesser basis than total bills rendered by Morse were. I went to Col. Miller and said, ‘Here are bills which are more than what we agreed to do the work for, and we will be out a certain amount of money if these bills are not paid.’ And he said, ‘I dont want to see you people lose money on the contract, because -I asked you to use your expert supervision in fitting up these boats.’

Q. What were you trying to convince him about the bills, that they were right or wrong? A. I was trying to convince him they were right.”

In rebuttal Mr. Morse testified as follows:

“By Mr. Brown. Q. At any time from the time this negotiation began down to date, have you ever heard of any agreement in regard to the payment of compensation to the Munson Steamship Line for supervising the work you did? A. Not until lately. At that time I had not, no.

Q. When did you hear of any such agreement? A. I think about a month ago. Capt. Nye mentioned it.

Q. That was after this thing was all over? A. After this thing was all over, yes.

Q. Up to that time you never heard about their being paid for supervision? A. No.

Q. Was any suggestion ever made to you as to that effect? A. No.

Q. Mr. Bromell testified to a conversation with you just after the bills were paid, in which he said he told you the bills were excessive and ought to be recast, taken back and refigured. Do you remember that testimony? A. Yes.

Q. Is that true? A. (No answer)

By Mr. Cortis. Q. Do you state that you remember the testimony? A. Yes.

Q. Did anything like that happen? Didn’t he ask you to reduce the bills? A. No sir.

Q. Didn’t Mr. Bromell ever ask you to reduce the bills? A. No sir. I think I stated that the only conversation regarding our bills was the ten per cent, eventually reduced to five per cent. When I refused the ten per cent, he wanted five per cent. That is the only discussion we had relative to the bills, that is, to the amounts.

Q. Mr. Bromell never said to you those bills were too high? A. No sir.”

The testimony indicates the facts to be that the respondent made a contract with the Government for the chartering of certain steamers, which required some repairs and alterations, and the libellant was employed by the respondent to make them within a limited time allowed by the Government. The repairs were made to the satisfaction of the Government and the bills therefor rendered by the libellant to the respondent, and some changes in form made by the libellant at the request of the respondent, which adopted them as correct and presented them to the Government for payment. Some objection was made by the Government to the charges, particularly for carpenter labor, and the respondent then suggested to the libellant the writing of an explanatory letter, which it did and it was presented to the Government officers, who had charge of the matter, with some verbal explanations. The Government officers were eventually satisfied by an examination with the correctness of the bills and paid the respondent the full amount of the claims, after deducting a small amount, said to have been $1498.75, which they considered as being for the benefit of the charterer and not for that of the Government. The total amount of the work done by the libellant was $75,978.40 and the respondent paid thereon about $35,000, leaving due some $40,978.40, which the respondent was apparently willing to pay if the libellant would reduce 1t by ten per cent on the full claim for the respondent’s benefit. It does not appear that the respondent was entitled to any reduction from the amount of the claim, which was presented by it to the Government as correct in items and amounts. There was some understanding between the respondent and the Government that the respondent should obtain its compensation for superintending the work from the amount of the bills paid by the Government but the libellant had no part in such understanding and it was not in any way bound by it.

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There is no doubt in my mind that the libellant is entitled to recover from the respondent and the only remaining question in the case is, whether the form of action of an account stated, puts the matter in such shape as to enable the court to allow a decree.

It has been said by Mr. justice Story in his work on Equity jurisprudence (v. 1, p. 544) as follows:

“526. What shall constitute in the sense of a Court of Equity a stated account, is in some measure dependent upon the particular circumstances of the case. An account in writing examined and signed by the parties will be deemed a stated account, notwithstanding it contains the ordinary preliminary clause that errors are excepted. But in order to make an account a stated account, it is not necessary that it should be signed by the parties. It is sufiicient if it has been examined and accepted by both parties. And this acceptance need not be express, but it may be implied from circumstances. Between merchants at home, an account which has been presented and no objection made thereto after the lapse of several posts is treated under ordinary circumstances as being by acquiescence a stated account. Between merchants in different countries, a rule founded in similar considerations prevails. If an account has been transmitted from the one to the other, and no objection is made after several opportunities of writing have occurred, it is treated as an acquiescence in the correctness of the account transmitted, and therefore it is deemed a stated account. In truth in each case the rule admits or rather requires the same general exposition. It is, that an account rendered shall be deemed an account stated from the presumed approbation or acquiescence Of the parties, unless an objection is made thereto within a reasonable time. That reasonable time is to be judged of in ordinary cases by the habits of business at home and abroad; and the usual course is required to be followed, unless there are special circumstances to vary it or to excuse a departure from it.”

This is no doubt a correct statement of the law and applying it to the case under consideration, I conclude that the action was properly brought in the form adopted. I see no reason to refuse a recovery here of the amount demanded. The only real controversy in the case is that relating to some deduction claimed by the respondent from the amount which it has collected. The original contract here was between the Government and the respondent for the charter of some of the latter’s vessels. The libellant was called in to make some repairs but this gave the respondent no legal or equitable claim to the profit or a portion of it.

There will be a decree for the libellant for $40,978.40, with interest.

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FERRY v. LATROBE STEEL CO. et a].
(Circuit Court, E. D. Pennsylvania. July 29, 1907.)
N0. 31, April Sess. 1906.

CORPORATIONS—VOLUNTARY LIQUIDATION—POWERS AFTER SUSPENSION OF BUSINESS. vWhere a manufacturing corporation has sold its plant, good will, and property, and by the action of its directors and stockholders abandoned its corporate business and entered upon liquidation, proceeding so far as to make distribution of the greater part of its assets among its stockholders, it has no power, over the objection of a stockholder, to invest cash which has been collected, and is merely awaiting distribution, in the stock of another corporation, although it is the intention to distribute such stock in specie among its stockholders.

[Ed. Note—For cases in point, see Cent. Dig. vol. 12, Corporations, §§ 2458—2460.] '

In Equity. On final hearing.

Frank R. Lawrence, Lester B. Johnson, Frank Lawrence and John F. Keator, for complainant.

John G. Johnson, for respondent.

J. B. McPHERSON, District Judge. The complainant, who is a citizen and resident of the state of New York, has filed this bill against the defendants, who are corporations of Pennsylvania and of New Jersey, respectively, for equitable relief under the following facts, none of which is in serious dispute:

The Latrobe Steel Company (hereinafter called the “Steel Company”) was organized on or about August 15, 1895, under the Pennsylvania statute, for the purpose of manufacturing iron and steel and other metals, and articles of commerce from metal or wood, or both. It had and has a capital stock amounting to $1,500,000, divided into 15,000 shares, of the par value of $100 each, and all of this stock was issued to, and is held and owned by, sundry stockholders. At the times hereinafter named the complainant and his wife were, and they still are, the owners and holders of 500 shares, of the aggregate par value of $50,000. In addition to these 500 shares, ever since the organization of the company, until November 17, 1905, the complainant was the owner of 1,100 other shares, of the par value of $110,000. In November, 1905, he transferred the legal title to these 1,100 shares to another person, but regained the title in October, 1906. Soon after its organization the Steel Company began the corporate business for which it was chartered; this business consisting in the manufacture and sale of car couplers, and of tires for the wheels of railroad cars, and carried on the manufacture until on or about January 9, 1906, when it conveyed its property and ceased to manufacture, as will be presently set out more at length. Its plant was situated in the state of Illinois.

The Latrobe Steel & Coupler Company (hereinafter called the “Coupler Company”), a corporation of New Jersey, was organized in 1898 to comply with what was believed to be the requirements of the laws of Illinois, and was chartered to carry on the Steel Company’s business of manufacturing and selling couplers. It had, and has, a capital stock issued and outstanding amounting to $300,000, divided into 300 shares, of the par value of $100 each. All of its stock, ever since its organization, has been owned and held by the Steel Company, having been issued in consideration of the transfer to the Coupler Company of the Steel Company’s coupler business and plant.

155 F.—11

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On and before November 16, 1905, the Steel Company owned an extensive manufacturing plant, consisting of real estate, buildings, other structures of various kinds, tools, machinery, and sundry appliances, situated at Latrobe, in the state of Pennsylvania, where its business was then carried on. On that day it entered into a written agreement with the Railway Steel Spring Company, a New Jersey corporation (hereinafter called the “Spring Company”), which agreement is as follows:

“Agreement made this 16th day of November, 1005, between Latrobe Steel Co., a corporation of Pennsylvania, hereinafter called ‘vendor,’ party of the first part, and Railway Steel Spring 00., a corporation of New Jersey, hereinafter called ‘purchaser,’ party of the second part.

“Said parties, each in consideration of the agreements of the other herein stated, and vendor in consideration of the partial payment made to it by purchaser, and hereinafter stated, mutually agree as follows:

“Vendor agrees to sell, convey, transfer and deliver to purchaser, at the price and upon the terms and conditions hereinafter stated, all vendor’s manu- facturing business and properties, including all vendor’s real estate, plants, furnaces, structures, machinery, tools and appliances (including manufacturing books, accounts and data of costs, but excluding books of account of the business other than those containing accounts thereof, since November 1st, 1905); all materials and supplies and all manufactured product and material in process of manufacture, and all patents, processes, inventions, rights under, and interests in and claims to, patents, processes and inventions (including all the GriflEith and other inventions and patents relating in any way to car wheels), trade marks, trade rights and trade names of every sort and kind to it belonging, and the good will of said business, and'the exclusive right to use the name ‘Latrobe Steel Company’ in carrying on said business, and all leaseholds, contract and other rights, privileges and franchises used or of use in or in connection with, or acquired for, said business, and all gas, power, light and other tributary properties, being substantially all the properties of every kind and wheresoever situate of vendor, excepting cash, shares of stock of the Latrobe Steel & Coupler Co. (which company is to be permitted to continue business under that name), bills and accounts receivable.

“The sale and transfer of the properties hereinbefore described is to be as of November 1, 1905, and from that date it is understood that the business and properties aforesaid have been and will be operated for account and at the expense of purchaser.

“Deeds, bills of sale and other instruments of transfer of said properties, shall be delivered at the oflice of Harvey Fisk 8.: Sons in the city of New York on the 2d day of January, 1906, or earlier in case transfers and examinations of title and the requisite corporate action shall be ready earlier, and such transfers and the instruments thereof shall be supported by such corporate action, and action of individual stockholders, of vendor as shall be requisite to make such transfers wholly legal and effective, which action vendor shall cause to be taken at the earliest moment.

“At the time of such transfers vendor will cause to be executed and delivered to purchaser an agreement not to engage in the tire, car wheel, or ring manufacturing or selling business or any branch thereof in the United States or Canada (except in connection with purchaser), for the period of ten years, executed by M. O. Smyth, president of vendor, and vendor will use its best efiorts to cause a like agreement to be so executed and delivered by each of the following: C. 0. Warren, G. Aertsen, J. K. Griffith, J. M. Howard.

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“Immediately after the transfer by vendor to purchaser as hereinbefore provided, vendor will proceed with the liquidation of its business and properties and distribution thereof among its stockholders, and will thereupon be dissolved as a corporation, and will notify purchaser forthwith of such dissolution.

“The purchase price hereinbefore referred to is four million three hundred thousand dollars ($4,300,000), and, in addition thereto the book value (but not exceeding the cost paid by purchaser) of materials, supplies, finished products and materials in process of manufacture, which vendor had on hand at the close of business on October 31, 1905, and purchaser shall have access to vendor’s books and works prior to transfer hereunder in order to ascertain or verify the exact amount of such materials, supplies, product and material in process of manufacture. Purchaser shall also have access to the books of account, records and papers retained by vendor after transfer pursuant thereto, for all entries and. other data useful for the conduct of the business by purchaser.

“Said price is payable as follows:

“$500,000 thereof on the execution and delivery of this agreement, and vendor hereby acknowledges receipt thereof from purchaser.

“$500,000 thereof on the delivery of deeds and instruments of transfer as hereinbefore provided.

“The balance of fixed purchase price in equal installments of $825,000 each, one, two, three and four months respectively, after the delivery of deeds and instruments of transfer.

“But purchaser shall have the right to anticipate any and all payments in whole or in part. Such deferred payments shall be secured by the deposit with Drexel & Company of bonds of the issue which purchaser proposes to make and secure, or cause to be made and secured, by first mortgage (which bonds and mortgage shall be in the form usual in such cases) upon the properties so to be transferred to it by vendor, amounting in aggregate principal amount to the same proportion of the whole issue, as the amount of the deferred payments bears to $4,300,000; such deposit to be accompanied by appropriate documents providing for the retention of such bonds as security for such deferred payments (proportional amounts to be released as installments are paid) and for the usual remedies in case of default; but this deposit of bonds, shall not in any way discharge or diminish the absolute liability of purchaser to pay every installment of purchase price at the time herein fixed therefor.

“The price of materials, supplies, product and materials in process shall be paid within thirty days after the determination of the amount thereof, which determination shall be made as rapidly as possible.

“All installments of purchase price (including that for materials supplies and products) shall carry interest at five per cent., from November 1st, 1905, to date of actual payment.

“The properties of vendor so to be transferred to purchaser shall be free and clear of all incumbrance and indebtedness whatsoever, as of November 1, 1905, excepting only the contracts hereinafter agreed to be assumed by purchaser; and the full sum of $238,000 has been, or will be, paid by vendor toward the cost of the additions to plant and new construction now going on. And all mills, machinery tools and appliances of every kind herein agreed to be transferred shall be free and clear of all liability to pay royalty or other liability or incumbrance of any kind to patent owners or licensees. Vendor will also pay all taxes on its properties so to be transferred for the current tax fiscal year.

“Purchaser agrees to buy from vendor the properties hereinbefore described, and to pay therefor the price hereinbefore stated, at the times hereinbefore fixed, and further agrees to assume and perform the outstanding contracts of vendor listed in the schedule hereto annexed marked A, 1, 2 and 3 and all vendor’s obligations under them or any of them. As to any omitted con~ tracts mentioned in page 3 of said Schedule A-3, purchaser will assume any such, provided they are reasonable in character and made in the ordinary course of business.

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