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still receive all that is due her. That she ought to do so upon principles of justice and equity, to say nothing of the binding force of the statute, is entirely clear. Interest is a sum paid for the use of money. It presupposes that the party paying the interest has the use of the principal. If the state is not bound to invest the $3,000,000, and account for the profits of the investment, it follows that the state has the principal sum and pays no interest, while the complainants pay interest for 10 years upon $3,000,000, the use of which is enjoyed by the state. To this it has been answered by counsel for the state: First, that the statute imposes merely a duty upon the state auditor as between that officer and the state; and, second, that the $3,000,000 was not paid with any agreement or understanding that it should be invested in accordance with the act of March last.
In substance it is claimed that in so far as the rights of complainants are concerned the state officers were at liberty to disregard the act. In this view I do not concur. Even if the terms of the statute were permissive only, and meant no more than the words generally employed in statutes importing a grant of authority or power to a public officer to do a certain act, still it is well settled that all such acts are to be construed as mandatory, whenever the public interests or individual rights call for the exercise of the power conferred. Sup'rs v. U. S. 4 Wall. 435; Galena v. Amy, 5 Wall. 705; McDougall v. Peterson, 11 C. B. 755; 15 Op. Atty. Gen. U. S. 621. Bat the terms of the act are clearly mandatory. The auditor is "authorized and required” to transfer the money to the credit of the sinking fund, and it is declared that upon such transfer "the fund commissioners shall immediately call in for payment a like amount of the option bonds of the state known as : 5-20 bonds.'”
My conclusions upon the law of this case are: First, that the payment by complainants into the treasury of the state of the sum of $3,000,000 on the twentieth of June, 1881, did not satisfy the claim of the state in full, nor entitle complainants to an assignment of the state's statutory mortgage; second, that the state was bound to invest the principal sum of $3,000,000 so paid by complainants, without unnecessary delay, in the securities named in the act of March 26, 1881, or some of them, and so as to save to the state as large a bum as possible, which sum so saved would have constituted, as between the state and complainants, a credit pro tanto upon the unmatured conpons now in controversy; third, that the rights and equities of the parties are to be determined upon the foregoing principles,
and the state must stand charged with what would have been realized if the act of March, 1881, had been complied with.
It only remains to consider what the rights of the parties are upon the principles here stated. In order to save the state from loss on account of the default of the railroad company, a further sum must be paid. In order tò determine what that further sum is an accounting must be had. The question to be settled by the accounting is, how much would the state have lost if the provisions of the act of March, 1881, had been complied with. That act provided for the investment of the $3,000,000 paid in by the complainants on the twentieth of June, 1881. First, in the “5-20 bonds” of the state, as rapidly as they were subject to call; second, any portion of said fund that could not be invested in the 5-20 option bonds because none were subject to call, was to be invested in bonds either of the state or of the United States. I think a perfectly fair basis of settlement would be to hold the state liable for whatever could have been saved by the prompt execution of said act by taking up such 5-20 option bonds of the state as were subject to call when the money was paid to the state, and investing the remainder of the fund in the bonds of the United States at the market rates. Upon this basis a calculation can be made and the exact sum still to be paid by the complainants, in order to fully indemnify and protect the state, can be ascertained. For the purpose of stating an account upon this basis, and of determining the sum to be paid by the complainants to the state, the cause will be referred to John K. Cravens, one of the masters of this court. The said master will examine and consider the proofs on file, and, if necessary, will take further testimony upon the subject of this reference, and will report to the next term of the court. In determining the time when the investment should have been made under the act of March, 1881, the master will allow a reasonable period from the time of the receipt of said sum of $3,000,000 by the treasurer of the state—that is to say, such time as would have been required for that purpose had the officers charged with the duty of making said investment used reasonable diligence in its discharge.
The Hannibal & St. Joseph Railroad is advertised for sale for the amount of the installment of interest due January 1, 1882, which installment amounts to less than the sum which the company must pay in order to discharge its liability to the state, upon the theory of this opinion.
The order will therefore be that an injunction be granted to enjoin the sale of the road upon the payment of the said installment of interest due January 1, 1882, and, if such payment is made, the master will take it into account in making the computation above mentioned.
LEA and another v. DEAKIN.
(Circuit Court, N. D. Illinois. 1882.)
Where an injunction has been dissolved, the better practice is for the court which issued the injunction to assess the damages caused by its issuance, and not compel the party injured to resort to an independent action at law to procure indemnitication, if he can thus be indemnified.
Appleton & Collier, for plaintiffs.
DRUMMOND, C. J. During the progress of this cause an injunction was issued against the defendant, and afterwards, on application of the defendant, the injunction was continued, upon condition that a bond with proper sureties should be given. There were thus three bonds given in this case. After the case had been decided on the merits in this court in favor of the defendant, and had gone to the supreme court of the Uuited States, and been returned to this court on a stipulation of the parties reversing the decree entered in this court, the plaintiffs voluntarily dismissed their bill at their own cost, and the injunction which was issued in the case was dissolved. Thereupon the defendant moved the court to assess the damages which he had sustained in consequence of the issuing and continuance of the injunction.
The litigation between these parties has been one of long standing, and this court has decided, on suits which have been brought upon some of the injunction bonds given during the progress of the suit, that as there was no order of this court assessing the damages of the defendant, suits could not be maintained upon the bonds. Deakin v. Stanton, 3 FED. REP. 435; Deakin v. Lea, 14 Chi. Leg. News, 297. The condition of these bonds was as follows: The first, “to pay all damages and costs that shall be awarded against said plaintiffs, and in favor of said defendant, Frank Deakin, upon the trial or final hearing of the matters referred to in said bill of complaint;" in the second, “to pay all damages and costs that shall be awarded against said Lea & Perrins, complainants, and in favor of said defendant, Frank Deakin, upon the trial or final hearing of the said cause;" and in the third, “to pay all damages and costs that may be awarded against said Lea & Perrins, complainants, and in favor of said Frank Deakin, defendant, upon the trial or final hearing of said cause, or upon the dissolution of said injunction, by reason of the wrongful or improper issuance of said injunction."
The construction put by the court upon these several conditions was that they referred to damages to be assessed by the court in which the suit was pending, and under whose order the injunction bond had been given, following the case of Bien v. Heath, 12 How. 168. What was said in that case as to the right of a court of chancery to assess the damages against a party at whose instance an injunction had been obtained, has been modified by the opinion of the supreme court in the case of Russell v. Farley, decided at the last term, in which the English authorities are fully considered; and it seems to be intimated that a court of chancery has the inherent power to assess the damages under such circumstances. 4 Morr. Trans. 410. We think this view is more in accordance with the principles of equity practice against a party in whose favor the injunction is granted. That court orders the injunction, prescribes the terms upon which it shall be issued, and may require a bond, stipulation, or undertaking as a condition upon which it shall be issued or not, according to its own view of the circumstances of the case. An assessment of damages thus becomes an incident of the principal case, and enables the court' to do entire equity between the parties. If the party against whom the injunction has been issued can thus be indemnified, it would seem to be the duty of the court to proceed in the case, and not compel him to resort to an independent action at law to accomplish that result.
The litigation which has grown out of the controversy in this case, and the suits which have been brought upon some of the bonds, have induced the district judge and myself to fully consider this question in the light of all the authorities which have been presented, and we have come to the conclusion that the sounder and better rule is for the court of chancery, where an injunction has been dissolved, to go on and assess the damages which the party against whom it issued has sustained, and it will accordingly be considered hereafter that practice may be adopted in this court.
HIBERNIA INS. Co. v. St. Louis & NEW ORLEANS TRANSP. Co.
(Circuit Court, E. D. Missouri. September 28, 1882.)
1. CORPORATIONS_FRAUDULENT TRANSFER OF ASSETS.
Equity will not permit the stockholders in one corporation to organize another, and transfer all the corporate property of the former to the latter,
without paying all the corporate debts. 2. SAME-ENFORCEMENT OF OBLIGATIONS.
Where such a transfer is made, the obligations of the old corporation may be enforced against the new to the extent of the assets received by it.
For report of opinion on the demurrer to the bill in this case, see 10 FED. REP. 596.
O. B. Sansum and George H, Shields, for plaintiff.
McCrary, C. J. This case has been considered upon the plea interposed by the defendant to the fifth subdivision of the bill, and the proofs adduced in support of the same. The bill alleges that the complainant is, by subrogation to the rights of certain shippers, a creditor of the Babbage Transportation Company, a corporation of Missouri, and that, after the creation of the indebtedness, said corporation transferred all its property to the St. Louis & New Orleans Transportation Company, another Missouri corporation, without making provision for the payment of complainant's claim. It is alleged that Henry Lourey, being the President of said Babbage Transportation Company, and the principal owner of the stock thereof, organized the said St. Louis & New Orleans Transportation Company, and caused all the property of the former to be sold and transferred to the latter, without paying or securing the debt due the complain. ant. It is averred that the said sale was made witnout the payment of any consideration by said St. Louis & New Orleans Transportation Company. Then follows the following allegations, to which the plea applies :
"Fifth. And your orators charge that said sale and transfer of the property of said Babbage Transportation Company to the said defendant, St. Louis & New Orleans Transportation Company, was fraudulent as against the rights of the complainants, creditors of the said Babbage Transportation Company, and that the said IIenry Lourey and the said St. Louis & New Orleans Transportation Company had notice of said fraud; and so your orators allege and charge that said St. Louis & New Orleans Transportation Company was not a bona fide purchaser of said property for a full and valuable consideration,
*Reported by B. F. Rex, Esq., of the St. Louis bar.