tion against the prosecution of the action at law by the Theresa Company at the hands of a court of equity. The issue in that action is clear and single. It is whether or not veins of ore, whose apexes are within the surface boundaries of the Theresa Company's lode mining claim, pass on their dip through the vertical side line between its claim and the lode mining claims of the Cycle Company, so that the ores in those veins between the vertical side lines of the Cycle Company's mining claims were and are the property of the Theresa Company. This is a simple question of fact. The Theresa Company has the right, under the common law, and under the Constitution of the United States, to its trial by jury in the action it. has commenced, unless there is some reason why, in equity and good conscience, it should not be allowed to exercise its right to such a trial. Const. U. S. Amend. art. 7. The only ground for the inhibition of this trial by the jury, and the decision of the question of fact in issue by a court of equity, which the bill in this case discloses, is that the complainants and the Cycle Company have two alleged equitable defenses, of which they contend they may not avail themselves in the action at law. These defenses are that the Theresa Company is estopped from asserting its claim to the ores in the portions of these veins within the vertical side lines of the Cycle Company's mining claims (1) because Hill and Holman, while they were officers of the Cycle Company, unlawfully devoted their time and energies, and the shafts, levels, cross-cuts, and money of the Cycle Company to work under the lease which Hill had obtained from the Theresa Company, and to the development of the unfounded claim of the Theresa Company to these ores, which is the basis of the action at law, and (2) because Hill, Holman, Milliken, and McGarry conspired with the Theresa Company to use, and did use, the money, shafts, levels, and crosscuts of the Cycle Company to develop the claims of the Theresa Company which are the foundation of the action at law; that these claims are baseless and would never have had even the appearance of claims without the unlawful action of the officers of the Cycle Company; and that the Theresa Company has accepted the benefit of their acts. There are several reasons why these alleged estoppels furnish no tenable ground for the prohibition of the prosecution of the action at law. In the first place they rest on the allegation and the assumption that the claim of the Theresa Company to the ore in the ground of the Cycle Company is baseless. If the Theresa Company was or is the owner of these ores, if these ores were or are in veins whose apexes run longitudinally along the surface of the Theresa Company's claim, there is no foundation for the estoppels, and the question whether or not these ores were or are in such veins is a question of fact, of which the Theresa Company has the right to a trial by jury in the action at law. If, upon such a trial, the jury find that these ores were or are the property of the Theresa Company, the fact that the cfficers of the Cycle Company conspired with the Theresa Company to demonstrate this fact, and used the money or property of the Cycle Company to disclose the truth, cannot estop the Theresa Company from asserting this truth and recovering the property, for it was the duty of both companies alike to ascertain the fact, to make it known, and to respect and protect the rights of each other. If, on the other hand, the jury find that there were or are no ores in the ground of the Cycle Company in veins whose apexes were in the Theresa claim, the Theresa Company will be entitled to no recovery, and the alleged estoppels become immaterial. Again, the bill does not contain averments of the indispensable elements of an equitable estoppel, These are knowledge and misrepresentation of facts by the parties to be estopped, ignorance of the facts, and injurious change. of situation by the victim in reliance upon the misrepresentation. There is no allegation that either the Cycle Company or the complainants were ignorant of the alleged fact that the claim of the Theresa Company was baseless or of any injury, action, or change of position by any of them in the mistaken belief that the representation by any one of the validity of that claim was true. And finally, if the averments of the bill were sufficient to raise the estoppels claimed, they would be no more than estoppels in pais, and would be as available in defense of the action at law as in support of a suit in equity. Dickerson v. Colegrove, 100 U. S. 578, 584, 25 L. Ed. 618; Kirk v. Hamilton, 102 U. S. 68, 78, 26 L. Ed. 79. The bill presents no equitable defense to the action of the Theresa Company which is not available at law to defeat it, and it discloses no other ground for the prohibition of its prosecution. Not only this, but the complainants have joined in this bill, and they seek affirmative relief against L. E. Hill, who is not a party or a privy to the original action at law, and whose claims, if any, accrued prior to its commencement. Persons who are not parties to the original action, but who claim some lien upon, or interest in, the property in the custody of the court, and those who come into privity with the parties to the original action after its commencement, may properly be made parties to a dependent bill, and their claims and rights may be adjudicated thereunder. But a federal court may not lawfully determine the rights of those who do not fall within these classes otherwise than by an original suit, to its jurisdiction of which diversity of citizenship or a federal question is indispensable. There is no property in the custody of the court in the action between the corporations. All the rights and claims of the defendant Hill arose under a lease from the Theresa Company, made more than two years before the action at law was commenced. He was therefore neither a party to that action, nor has he come into privity with it or with any party to it since its commencement. So far as the bill sets forth and seeks the adjudication of his claims, it is therefore an original, and not a dependent, bill, and for that reason it cannot be sustained. In Dunn v. Clarke, 8 Pet. 1, 3, 8 L. Ed. 845, a judgment in ejectment had been rendered in favor of Graham, and Dunn held the land recovered as a trustee under the will of Graham, who had died. A dependent suit against Dunn and others to enjoin the execution of this judgment and for other relief was exhibited. The court said: "If Graham had lived, the Circuit Court might have issued an injunction to his judgment at law, without a personal service of process, except on his counsel; and, as Dunn is his representative, the court may do the same thing as against him. The injunction bill is not considered an original bill between the same parties, as at law; but if other parties are made in the bill, and different interests involved, it must be considered, to that extent at least, an original bill, and the jurisdiction of the circuit court must depend upon the citizenship of the parties. In the present case several persons are made defendants who were not parties or privies to the suit at law, and no jurisdiction as to them can be exercised by this or the Circuit Court." The facts set forth in this bill are insufficient to sustain a dependent suit, because they disclose no equitable ground for the prohibition of the prosecution of the action at law, which is the only alleged basis for such a suit presented by the bill, and because those who are neither parties nor privies to the action at law are joined as parties in the bill, and an adjudication is sought in this suit of rights and interests not involved in the action at law, in the absence of diversity of citizenship, or of a federal question, the indispensable conditions of jurisdiction to determine rights and interests of this character. For these reasons the demurrer was rightly sustained. Since, however, the complainants have not here sought permission to present and prove in the action at law in behalf of the Cycle Company, by counsel of their own choice, any defenses which that company may, in their opinion, have to the claim of the Theresa Company, and as they may yet desire to do so, the decree below is modified so that it shall read: "It is ordered, adjudged, and decreed by the court that the demurrer to the bill of complaint herein be, and the same is hereby, sustained, and that the bill of complaint herein be, and the same hereby is, dismissed out of this court at the costs of the complainants, without prejudice to their right to apply to the court in the action at law, or by a bill in equity, for permission to plead and prove in the action at law, by means of counsel of their choice, any defenses which the Cycle Company may, in their opinion, have to that action." And, as thus modified, the decree below is affirmed, with costs against the appellants. LUHRIG COAL CO. v. JONES & ADAMS CO. (Circuit Court of Appeals, Sixth Circuit. No. 1,423. December 20, 1905.) 1. CONTRACTS-LEGALITY OF PROVISIONS-HOW DETERMINED. The legality of a provision of a contract is to be determined by its terms and character, and not by what the parties did or attempted to do thereunder, and evidence of an attempt to take action thereunder which was fraudulent or illegal is not necessary to support a finding of the illegality of the agreement. 2. SALES-CONTRACT-CONSTRUCTION-SALE OF COAL FOR FUTURE DELIVERY. A coal company owning mines contracted to sell to a customer a large quantity of coal, a specified quantity to be delivered on cars at the mines each month in substantially equal daily amounts. The contract provided that the company should use every effort to secure sufficient cars for the shipment of all the coal required by the contract, and that, “if it fails to secure sufficient cars to do so, it agrees to load and deliver to the party of the first part a part of the cars it may receive in the proportion that the coal called for under this contract each day bears to the total pro duction of coal from mines of the party of the second part for such day." It was known by both parties that the company had no storage, but that coal was loaded from the mines into cars, and that the production was therefore limited by the supply of cars, and there was evidence that it was also understood that the company would have other contracts to fill. Held, that such provision should be construed in the light of such known facts and of the whole contract, and that it required the company, in case there were insufficient cars to enable it to fill all of its contracts, to give the purchaser its proportionate share of the coal produced and shipped, without discrimination in favor of any other customer. 3. SAME DELIVERY TO CARRIER. Cars of coal which were loaded by the company at the mines and billed to the purchaser in its shipping orders to the railroad company in compliance with the contract, but which the railroad company refused to ship and appropriated to its own use under plea of necessity, are to be considered, as between the parties to the contract, as having been delivered to the purchaser in fulfillment of the contract. In Error to the Circuit Court of the United States for the Southern District of Ohio. The Jones & Adams Company, defendant in error, a dealer in coal at Chicago, brought this suit against the Luhrig Coal Company, the plaintiff in error, a proprietor of coal mines at Luhrig, Ohio, to recover damages for the breach by the latter of the contract following: "This agreement made this 31st day of May, A. D. 1902, by and between the Jones & Adams Company, a corporation of the state of Illinois, party of the first part, and the Lubrig Coal Company, a corporation of the state of Ohio, party of the second part, witnesseth, that: "(1) The party of the second part agrees to sell and furnish to the party of the first part, seventy-five thousand (75,000) tons of lump coal from its mines and on cars at its mines at Luhrig, O., during the period from June 1st, 1902, to March 31, A. D. 1903, and the party of the first part agrees to buy and receive such coal. "(2) Shipments of said coal shall be made at times and quantities as follows: "2,500 tons during the month of June, 1902. "Said deliveries for each month shall be made in substantially equal daily amounts. "(3) The party of the first part agrees to pay on the 15th of each month for all coal shipped under this contract during the calendar month preceding at the following prices: "For coal shipped in June, July and August, $1.15. "For coal shipped in September, October and November, $1.25. "For coal shipped in December, January, February and March, $1.35. "All per net ton of 2,000 lbs., f. o. b. cars at the mine. "(4) It is mutually agreed that the screen used in preparation of this coal shall be of regular dimensions stipulated in the Miners and Operators' Agreement of Ohio, screen to be of not less than 14 inch diamond bar, and should the party of the second part desire to use a larger screen at any time it shall have the privilege of so doing. "(5) The quality, preparation and appearance of the coal furnished here under by the party of the second part shall be equal in every way to standard Hocking Lump Coal furnished for the Chicago market by the Sunday Creek Coal Company, and the party of the first part shall have the right to rescind and annul the unexecuted portion of this contract if the quality and preparation of the coal is at any time not such that it can be sold in the Chicago market as Standard Hocking Coal. "(6) The party of the second part shall use every reasonable effort to secure sufficient cars for the shipment to the party of the first part of all the coal called for by this contract, and if it fails to secure sufficient cars to do so, it agrees to load and deliver to the party of the first part a part of the cars it may receive in the proportion that the coal called for under this contract each day bears to the total production of coal from mines of the party of the second part for such day. "(7) It is understood by both parties that this contract is subject to strikes, contingencies of transportation and other causes beyond the control of either party. "(8) During the continuance of this contract, the party of the second part shall sell coal from mines for the Chicago market and for the northwestern territory supplied with said coal through Chicago and Peoria, only to the party of the first part, intending hereby to give the party of the first part exclusive right to sell in said Chicago and northwestern market, coal mined from mines of the party of the second part. "(9) It is further agreed that if the party of the first part fails during any month to take the coal called for in this contract during such month, the party of the second part shall be excused from furnishing such deficit of coal thereafter, unless it desires to do so. "Witness the signatures of the parties hereto this 31st day of May, A. D. 1902. The Jones & Adams Company, "By H. C. Adams, Its Vice President. "The Lubrig Coal Company, "By A. Cunninghame, Its President." The breach of the contract alleged consisted in the failure of the coal company to furnish the coal contracted for in this agreement; the plaintiff averring that only 14,126 tons thereof was in fact furnished by the defendant during the whole period prescribed for delivery. The plaintiff further alleged that the market value of such coal increased during that period to such an extent that the damages suffered by the plaintiff were as much as $120,144.15. By leave of the court an amended petition was subsequently filed, wherein the plaintiff, instead of setting forth the contract in hæc verba, alleged the substance of it as interpreted by the pleader. The answer of defendant admitted its failure to deliver all the coal contracted for, but denied that the failure ensued from any fault on its part, and proceeded to state several defenses, which for the present purpose may be summarized under two heads: First, that by reason of strikes among its miners, and by reason of smallpox at its mines, its inability to obtain cars, the refusal and delays of railroad lines in handling the coal, and other contingencies of transportation, accidents at its mines, and other causes beyond its control, it was prevented from delivering to the plaintiff more coal than it did deliver; second, that the said contract was illegal and void, in that by one of the stipulations thereof (the fifth clause being the one referred to) the plaintiff contracted for the means whereby it would be able to sell in the Chicago market the Luhrig Company's product as and for "Standard Hocking Coal" from the mines of the Sunday Creek Coal Company, whereas, in fact, it was not such, but of a lower grade, and thereby deceive the public, who would be induced to purchase the coal upon the faith that it was standard Hocking coal from the mines of the Sunday Creek Coal Company. Upon the trial evidence was given directed to both of these defenses. The jury rendered a verdict for the plaintiff in the sum of $63,108. Upon this writ of error the defendant below complains of certain rulings of the court on the trial relating to the construction of the contract and the defenses above specified. |