CLAFLIN .,. BENNETT.
701
By the settlement between the parties, Bennett was to pay the amonnt due the Stock Elchange Bank of Kansas as a personal indebtedness of Bennett's; $15,000 has been paid by consent of all parties. out of the fund in court to the; hank, and $3,000 is the balance claimed. This, of course, comes out of Bennett's share of what is left of this fund in court, if any is left. I have not been advised, and the proof does not show, how much of the various amounts which have been, by agreement of parties, drawn out from time to time was in payment of individual indebtedness of Bennett, further than this $15,000to the bank. If, however, there ;is enough money left, upon the basis of the respecth'e interests of ,Bennett and Dunman in the judgment, to pay either of these claims, they should be paid in the following order, after deducting from the undivided money the amount allowed to McCoy, Pope & McCoy, $1,600: If anything is left belonging to Bennett, if he still has any share in the judgment, then the indebtedness of the bank should be paid out of Bennett's share of the judgment. If Bennett's interest in the judgment as fixed by the settlement is exhausted, then it must be deducted from the undivided fund, because it was a partnership debt, as between the bank and the firm. If anything is left after that payment, then the indebtedness to Gregory, Cooley & Co., and, after that, anything that is due to Blair and Garvin, in the order named, as the assignees of Bennett's interests should be paid .in the order of their date. The proportions of the parties should he observed , .as the fund is depleted by these payments, charging to each whatever was his individ1!lal indebtedness. The proof shows that Dunman has received·$38,864.70,-thatis, payments have been made as of his individual indebtedness out of the fund in court to that amount; the items being to Peak, administrator, $28,864.70; and to Harrison, $10,000. From this data, and from what I have said, counsel will be able, I think, without reference to a master, to compute the amount now due Dunman, and the amount which should be paid to him from the fund in court, and the amount, if any, due to Bennett, and which should be paid, in the order ofpriority-Fir8t, to .the bank; aecond, to Gregory, Cooley & Co.; third, to Blair; and, fourth, to Garvin. MEMORANDA.
On reading the foregoing opinion on the 8th of June inst., in the presence of all the counsel in the case a motion was made in behalf of Gregory, Cooley & Co., John A. Blair, the Cherokee Strip Live Stock Association, and Samuel J. Garvin, for leave to amend their respective pleadings 80 as more specifically to state the mistakes on which they relied as their grounds for setting aside the settlement made between MilL. Dunman, on the 16th of December, 1886, ton H .. Bennett and by which the respective interests of Bennett and Dunman in the fund in court were settled and agreed upon. While it is undoubtedly within the discretion of a court of equity to allow amendments of the pleadings at any stage of the case before the entry of a final decree, I am satisfied that this discretion should: not be exercised in this case for the following rea-
702
Bons: iTqe point that the llllegatipns of the settlehlent and. .werel not ',sufficiently,specifiu, was urged between, by thecounsehfor nunman,'.and ij:awiso.nl' ;his assignee;' .and cited in supporitof the of the,'(j8se in April1ast, and leave toamend:was made'atnthattime<>f'after:waYds, uailtiltbeannoUl1cement of illefinnl decision, of the court upon theimerits of· the case;..: .Second·. iI ,was of opinion that the .point of want ofparticnhnity in the allegations,of ,mistakes should have been taken at an earlier stage in the tooEle, and that the objection ofwant of particulars came 1ioolateat the ,hearing, w.heaaUthe testimony hadibeen'taken. Entertaining this view of the obj,eetiolls, I looked fuUy into the proofs in the ,record upon the all!ilgatiol1s of fraud and mistake in the settlement, totha conclusion that nO'isuch fraud or mistake is shownin and the oaseasjtistified tbeeourt in set.ting aside the settllhnentrand orderbig a new accountinghetweenthe parties; the reason for this conclusion heing:given:in the original 'I'hird. To allow amendments at this stage of:thecase, when it is ready for finaldecree,:might make it to allow amendments on ,the part ()f Dunman ,and Harrison, and thus prolong a litigation which has already been expensive and exhausting in itS delays ,t6ieven the ,successful party. ,As I ,have already said, I have no doubt. fiomtbe' fragmentary data now available, perhaps a ,strong prima JacU showhig of eevemlmistakes against Bennett in the settlement-might be made. But it is:eqIJally evident to me that much ()f,the data acted upooby the parties in ,making the settlement is now unav.ailable,.·an:d that to rehash the arguments pta and con would· bea -waste Qf time'for counsehmo court. An order w.ill be entered overrul· ingthe ;motionj to which counsel can save an exception if they wish,and the clerk is, directed to note :such excEiption at the foot. of the order·.
!4tS-:rON
11.' SHARON et at'
(Circuit Court, N. D. OaZV'omia. July 11, 1899.) EQal'l:f-ANOILL4RY JURIsnIOTlON-SETTING AlImE FORMER' ,DECREE )'OBi FRAUD· .In pending ina, United States, clrcuit cou rt a compromise WlioS effected, tn
pursuance ot which defendant paid plailltilJ a certain sum, and aflnal decree was . ,·.entered by'stipulation 'dtsmissingplaiiltift's bill. Defendant subsequen'tLy executed , ,a trust deed of 1.1\1 ,hIS W0l>el'ty to N. and fl. for the u!;e an.dbenefttof hi& heirs, and . 'thereaf.ter died; MWr Which plaintifl1iled Ii bill in the same court again!;t N. and "" S., to have the, stipuIaUoo 'lind decree of dIsmissal set a&ide for fraud. Held that, , ill bill that all the plU'tiesto the 'Yare ,the state, the court had 110 jurlsdiQtion, as defendants not bavmg partIes to tbe former ,"'lluit,and:not being the·peI:'80na.l representatives of the :I'<lrmer defendant,_and the ", ,properW which 8Ilbjeet of.the forlp.rcontest being.al1Y longer SUbject ,1, 'to the of the'coul't, the bill wa", an drigtnaloDe; ilot'depsnd,ent U:pon or aneU. , lary toitha: and a could give flill relief. , ,
In Equity. A'ctionby Lizgie F.Ralstco againstF.W. Sharon and F. G.Newlands, trustees,etc. Judgment f0f defendants.
RALSToN-V. SHARON.
7Q3
fendatib\"
NiJugues Nouguea, for complainant. . . Wiltidm F. Herrin,: (James M. Allen und H. L. Gear, of counsel,) for de',
HAWLEY, District Judge. This is a bill in :equity brought against the defundatits, as trustees of the property of the estate of William Sharon, deceased, in: trust for the benefit of his heirs. The bill covers 983 pages oftype'writtenmatter. The complainant is the widow, and sole legatee and devisee;· or W. C.'Ralston,deceased. The complainant and defendants are alleged to be citizens of the state of California. The defendants demur to the bill upon three distinct grounds: . (1)' That the court has no juriSdiction of the suit; (2) that the facts stated in the bilHio not justify any relief against the defendants; (3) that the plaintiff's demand is barred by her laches. TllefllPts in the. bill, in so far as is pecessaryt6 .!l.p. underst,andingoLthe questions raised by the first groljlnd of .the demurrer, may besumrnarized,in a general way, in a comparatively brief manner. It appe:l.rstJ:lat 'bnthe 27th of August, 1875,W. C.Ralstonmade, exto Wi1liam Sharon a deed of all his prol?erty, in trust to cQlIect and receive the rents, issues, and profits thereof; a.nd to sell,and of the same upon such terms and conditions as he might deem best, and tbat the proceeds arising therefrom sbould be applied to sucbuses and purposes as the said William Sharon might deem to be best for the joint and several interests of said William Sharon andW C. Ralston; that on the same day, after the execution ohhistrust deed, the !laid W.· C. Ralston die4; that thereupon the said William Sharon entered in1;O the possession of all the real estate and' property of W. C. Ralstop., deceased; that the will of W.C. Ralston was regularly probatedithat J. D. Fry and A. J. Ralston were named as executors under the will, and qualified as such; that they allowed William Sbaron toretam control of, and remain in the possession of, all the property, tejl.l and,personal, of the estate of W. C.'Ralston; that during the remainingportion of the year 1875, and a portion of the year 1876. the said William Sharon was engaged in selling and disposiI;lg of, and otherwise dealing with, the property which was conveyed to him by W. C. Ralston, and settling said Ralston's liabilities; that complainant, at divers tillies in the year 1876, without any Consideration, at the request of William Sharon, made, and delivered to him certl,lin deeds oUhe property ofthe estateof her deceased husband; that. in January, 1876, at the request and upon the advice of William Sharon, .she executed and delivered a general power of attorney to A. J;Ralstonand W. to. act for her in all to 'the k¢r husband; that m September, 1876, Wtlham .Sharon represented berthat the liabilities of her husband in excess of the value ,of his property; that it was very doubtful if it would ever increase in value; that he would lose at least $2,000,000 by reason ofbia efforts to pay the debts of her husband; that he presented to her a 'written 'Statement ofall the assets and liabilities of the estate; that he
:I!.L.
704
J'ED:l!:RAL REPORTER,
vol. 51·
.represented that he was without any ready money, hut that he would be willing to ,give her his notes for 850,000 Hshe wonld, exectiteand deliver to him a full release and discharge of all claims, legal and equitable, and an approval of his action in relation to the property received by him from her husQa,nd's estatej that he would take the property for the debts the estate Qwed himj that, unless she accepted this offer, she would and attorneys never realizellnything from theestatej that her in fact advised her to accept the offerj that they represented to her that they bad examined the statement prepared by William Sharon, and also examined his books and papers, and that Sharon had .lost large sums of money in the settlement of her husband's liabiEtiesj that,relying upon the truth oiaU these representations, she, on the 26th day ,of October, 1876, executed an instrument of release and appl,'oval, which reads as follows: "Whereas, WilIi.am Sharon received from the late WilHam C. Ralston, de· ceased, in his lifetime, aild on the 27th day of August, one thousand eight hundred and seventy-five, an instrument in writing ·bearing'date that day, wherein the said William C. Ralston gave, granted, convey'3d, and transferred unto the said William Sharon, his heirs and assig,ns,all and singular his property, real and personal. and wheresoever situated, in trust to collect and receive the rents. increase. and profits thereof. and every part thereof, and to apply ,the same and the proceeds of all said property to such uses and purposes assllid Sharon might deem best for their joint and several interests; and whereas, said William C. Ralston, deceased, left a last will and' testament, which was duly admitted to probate in the probate court of the city and county of S"n FranciEjco, state of California, on the, 23d day of November, one thousand eight hundred and and on, the same day let.ters testamentary were. issued to J. D. Fry and A. J. Ralston; and whereas, Lizzie F. Ralston, the Widow of said William C. Ralston, deceased, is the sole lflgatee named in said last will and testament; and whereas, pUl'suant'to the consent and acquiescence of said Lizzie F · Ralston, and, said J. D. Fry and A. J. Ralston, executors of said last will and by and under her request and direction, the said William Sharon has, proceeded to exeoute, the powers conferred upon bim .in and by said instrument first hereinabove mentioned, and has paid and compromised the debts a,nd liabilities of'said deceased and of said estate, and has disposed of most of the said property so conveyed to him,and his :doings, dealings, and trans8ctionsin respect to the same have been all and singular known to, and approved, ratified, and .confirmed by, the said Lizzie F. Ralston personally, as well as by her attorneys in fact, A. J. RalstonandW. H. L. Barnes; and whereas, said William Sharon iswiUing and has offered "to take, the property and assets of said eS,tate remaining unsold or undisposed of by him in satisfaction of his claims and demands against said Ralston in his lifetime, or against his estate since his death, and, further, is willing and has offered to pay the said LizzieF. RalatOn, his widow and sole legatee under the said last will and testament.·the sum of fifty thousandjloIlarl\, in gold coin, in consideration of her ratification and approval, as aforesaid, of his doings, transactions in the lIlatter of said and with the property referred to therein, all ofwliich is accepted and agreed to by the said Lizzie f. Ralston, and hersaid attorneys in fact,. after 'full and complete knOWledge and opportunity of knOWledge concerning the facts in the case: that the said LizzieF. Ralston, "Now, this ally and by her attorneys in fact, A. J. Ralston and W. H. L. Barnes, in
RALSTON
V.
SHARON.
705
consideration of the sum of fifty thousand dollars ($50.000) gold coin of the United States. secured to be paid her by the promissory note or notes of said Sbaronof even date herewith. and bearing interest until paid at the rate of seven (7) per cent. per annum. payable monthly. receipt whereof is hereby acknowledged. does hereby ratify. confirm. and approve all that William Sharon has done, or caused to be done. under said· conveyance and assigngrant. and convey ment first hereinabove mentioned, and does hereby to the said William Sharon all her right. title. and interest. be the same more or less. and however arising. in and to the estate and property conveyed to said Sharon by said conveyance and assignment first hereinabove mentioned, or which but for said conveyance and assignment. or in any event. might have been the property of her deceased husband's estate, and devised and bequeathed to her by his will. and subject to administration by his executors aforesaid. It being the intent of this instrument to ratify and confirm. on the part of said Lizzie F. Ralston, the said conveyance and assignment of her husband to said Sharon. to approve and accept all that has been done or caused to be done by said Sharon under it, and to release and convey to said Sharon all her interest in the estate of her deceased husband, of whatever name or nature the same may be. and wheresoever situated. to th.e end that said matters may be finally closed and settled; and this shall be a full release and discharge of said Sharon from any and every claim of her, the said Lizzie F. Ralston. legal or equitable. arising out of or connected with the matters hereinabove referred to or intended so to be. In witness whereof, the said Lizzie F. Ralston. personally, and the said A. J. Ralston and William H. L. Barnes. her attorneys in fact. have hereunto set their hands and seals this day of October,A. D. one thousand eight hundred and seventy.six. "LIZZIE F. RALSTON. [Seal.] "LIZZIE F. RALSTON, "By W. H. L. BARNES. her Attorney in Fact. [Seal.] "LIZZIE F. RALSTON, "By A. J. RALSTON. her Attorney in Fact. [Seal.] "Signed. sealed, and delivered in the presence of J. MASON. "[Duly acknowledged.] .. . On the 7th day of October, 1880, this complainant commenced an action in the superior court of the city and county of San Francisco, state of California, against William Sharon for an accounting of the estate of her husband, to set aside the written instrument ratifying and approving the acts of said Sharon, and releasing her interests in her husband's estate, etc.; that A. D. Sharon was made a party defendant in said action, upon the ground that he had, or claimed to have, an interest in certain real estate involved in said suit. The bill in that action, after setting forth in detail all the facts herein briefly referred to, alleged the subsequent discovery by complainant of the absolute falsity of all of said William Sharon's representations; alleged that her husband's estate was of a much greater value; that his liabilities were much less than the value of his property; that the statement of Sharon was false and fraudulent in every particular; that it did not include all the property belonging to the Ralston estate; that it magnified Ralston's debts, and charged him with liabilities that did not exist; that, instead of Ralston's estate being insolvent, it was worth several millions of dollars after the payment of all his just debts and liabilities. The bill set forth in detail, and at great length, all the property which Ralston, at the time of his v.51E.no.1l-45
706:
/;RElfORTEB,
Yo1. 51.
death; was :interested;in.and which afterwards came into the hands of the said Wi:llia:m deeds and instruments heretofore particularity Of detail 'all the' facts un,a falsity or' tberepr,esentations made, ,Said upon" William Sharon. ;on the, th. of ,Novemb.er ,1880,remo,ved to" this ,co1.lrt upon the ground that' defendant William. Sharon was a citizen and resident of the'state of Neyada, waS a citizen and resident of th,e state of January, 1882, WillIam Sharon I\n' to bille', exceptibhs thereto, and;;'pendii:lg.',the exceptlons, tq.e following' stipulation wes.rfiled in :the causer
'of
it, is hel:eby filed by of .thede,fenilant be. and the i!3: brrtlby., tijat.,. the ff ,hereby declining to I,Dake replication:. tQtpeans wer of ,the ,def!llldant William Sharon. or to the ans weI' of: tbe .D. '$h\\Wn;, defepl'IlIJ1 t William Sharon may taken,pro confesso. for want of ei,ther hearing UIll,>n i tb,is proo(.as he may be advised. Alexan4er D. Sharop. QlIlX: for jUdgment 11 pon the p,¥:en p,t',a, con!6$sa, for ,want of, or proce.ea to a, bearing UpO!l ne lpay be, advis,ed. rendered In this action shj:\11 be ¥nal.,'tll,.e:plaint:ifr.hefllbY waiVing all right of rtlviewing or appealing from Mly ,Any jUdgments in favor of the defendants to the plaintiff." , ,', bewit40utcosts , ' "LIZZIE F; RALSTON. Plaintiff. , '" . ' , ' " " . ",' "JOSEPH,M. NOUGUES. Atty. for Pl't'ff. "Witness to signatureofLizziel!\ 'J. D. The stipulation was the result of II compromise py which complainfl'ornWiUiap:l Thereafter, on the 12th 9f October, 1882, a., Ul)o.l, decree, in:,pursuanceof thi13stipulation, was entered.,4ismissing, the wHhqQ,t,costs to complainant. The bill in the present action wa13,tiled in court October 11, 1887. It prays that the stipulation decree, and thtl decree of dismil$sal beset aside and decla,red fraudnlent ani;l.ypiQ;. thlltanaccount may be taken of all the real and peIjsQnal estatll, Q( W. Ralston under the deed of trust of date 1875; all the copartnership W. G. Ralston be taken, etc. 'fhe bill alleges that William SparQIl;,qie4, Noverj.1ber 15, 1885, leaving ofwhichcqmplainaQt coul<i satisfy, her claim , and alleges no estate that, prior to his death, to wit, onthe;4th of 1885, the said William Sharon execnted and deliyered totbe defendants"in this action, 1l'. G.Ne)'Vlands and !F. W. Sharon, Q. in tfij:st of "all the property, whetherreal, persopal,.pr mixed. of wl1atsoever nature,in i:.Pe states QfCl\lifornil!-, Nevl1da, Ohio. IllinQis, the District of Colul11 bia, and whertlso!=1ver else sitnatej now owned by the said William Sharon, or to which he maybe entitled." in trustforthe use and benefit Qf the ofsaid William SharoA. of trust is set out at length
"',>,,
"
'
,
RALSTON'/). SlrARO:«.'
70',-
.The bill furthei'a11egesthat the'defetiO!lnts, F. W. and F,'. G. Newlapds,llcceptedanilhold the office oftr,ustees of the estate William$haron; that under and by virtue pf said trust deed of "said William Sharon transferred to and said defendants receivedpossession of all the estate' of ,said William C. Ralston, rea,l, personal, or mixed," of whatever nature and wherever sitnate, "which was transferred to said William Sharon by said W. C. Ralston, and which said William Sharon received aEl trustee of the estate of William C. Ealston, underthe cleeq oOrust on the 27th day of August, 1875;" that" the sum of money and the value of the property involved in this action is of the value of five millions of dollars and over." Upon the facts stated in the bill, has this court any jurisdiction? Is the suit an original independent bill in equity, or is it dependent upon, or ancillary to, the original suit brought by Mrs. Ra1ston against liam Sharon? A bill in equity constitutes an original and independent proceeding when it calls for the investigation of a new case, arising upon new facts, although it may have relation to the validity of an existing judgment or decree, and of the complainant's rights to claim any benefit by reason thereof, or to be relieved therefrom, as the case may be. In such cases it is now well settled that courts of equity have the unquestioned power to give, relief against jUdgme.nts or decrees which were obtained by fraud, notwithstanding the fact that the suit, as instituted,hasrelationto frauds alleged to have been committed in a former suit in courts of another jurisdiction, state or national. Dobson v. Pearce, 12 N. Y. 165; Pearce v. Olney, 20. Conn. 544; Doughty v. Doughty, 27 N. J. Eq. 318; Dringer v. Railway, 42 N. J. Eq. 573, 8 Atl. Rep. 811; Yeatman v. Bradford, 44 Fed. Rep. 537; Daniels v. Benedict, 50 Fed. Rep. 353; SaJdgard v. Kennedy, 1 McCrary, 293, 2 Fed. Rep. 295; Gaine.s v. Fuentes, 92 U. S. 10; Barrow v. Hunton, 99 U. S. 80; Johnson v. Waters, 111 U. S. 667.4 Sup. Ct. Rep. 619; Arrowsmith v. Gleason, 129 U. S. 99, 9 Sup. Ct. Rep. 237; MarahaU v. Holmes, 141 U. 8. 597, 12 Sup. Ct. Rep. 62. A state court of equity, having jurisdiction of the parties and of the subject-matter of the SUit, could make any decree in the premises that the facts would warrant, and that equity would sanction, and could just as much relief as this court could; and such actions, having relation to former judgments and decrees in a state court, can be maintained in the circuit courts of the United States if the parties to the action are citizens of different states. In such cases, as was said by the supreme court in Johnson v. Waters, 111 U. 8.667,4 Sup. Ct. Rep. 619: "The court does not act as a court of review, nor does it inquire into any irregnlarities or errors of proct'eding in another court, but it will scrutinize the conduct of the parties, and. if it finds that they have been guilty of fraud in obtaining a judgment or decree, it will deprive them of the benefit of it, and of any inequitable advantage which they have derived under it." In Arrowsmith v. Gleason, 129 U. S. 98-101, 9 Sup. Ct. 237, this question of jurisdiction is elaborately discussed and very clearly smted. The court, among other things, said:
708
FEDERAL UPORTER,
vol. .51.
"Whilet)lel'll are general some cases apparently asserting a contrary doctrine, the later decisions of this court show that the proper circuit court of, the United States may. without controlling, supervising, or annulling the proceedings of state courts, give such relief, in a case like ,the one before us, asts consistent with the principles of equity. As said in Ban'ow v. Hunton, 99U. S. 80, 85, the character of the case · is alwaysopeu to examinati\>,Il" tor the purpose of determining whether, ratione matel'ire, the courts of States are incompetent to take jurisdiction thereof. State rules oIi the subject cannot deprivethelll of it. ' This whole subject was fully consIdei'edinJohnson v. Waters, 111 U. 8.640.667,4 Snp. Ct. Rep. 6]9. That was aD: original suit ill thedrcuit court of t.he United States for the district of Louisiana. It was brought by a citizen of KentlIckyagainst citizens of Louisiana. Its main object was to set aside, as fraudulent and void, certaj[Lsales made l;Iya testamentary executor under the orders of a prohate ,Conrt in, the latter state. It was contended that the plaintiff was coneluded by the proseedings iathe probate court, which was alleged to have exclusive jnl'isdietioD of the subject-matter, and that its decision was conclusive against the world,especially against the plaintiff, a party to the proceed. ings. Thiseaurt, while conceding that the administration of the estate there in question properly belonged to ,the, probate court, and that, in a gpneral sense. the dll,eisioDs of that court wel"e conclusive and binding, especially upon partil's,slloid:.,· But this is not universally true. The most !!olemn transactions, ana judgments may, at the instance of the parties, be set aside or rendered inoperative for fraud. The fact of being a party does not estop a person from obtaining iilacourt of ;equity relief against fraUd. It is generally parties that are the :victims of fraud. The court of chancery is always open to hear complaintl!l ;agail)8t it, whether committed in pais or In or by,means of judicial proceedings.' It After a further from Johnson v. Water8 and other cases, and citing numerous authorities, the court said: "TheseprinCiplas oontroI.the present case, which,although involving rights adsinguQderjudicial pl"oceedinKs in another jurisdiction, is an original, inde, pendent suit for equitable relief between the parties; such relief being grounded upon a new state of facts, dIsclosing not only imposition upon a court of justice in procuring from it authority to sell an infant's lands when there was no necessity therefor, but actual fraud in the exercise, frOm time to time, of authority SO obtained,., As this case is within the, equity jurisdiction of the circuit cOllrt,as defined by the constitution and laws, of the United States, that court may, by its decree, lay hold of the parties! and compel them to do what, according to the principles of equity, they ought to'do, thereby securing and establishing the rights of which the plaintiff is alleged to have been deprived by fraud and collusion." In Mar8hall v. 141 U. S. 590, 12 Sup. Ct. Rep. 02, which was a case where the plaintiff in error, Mrs. Marshall, a citizen of the state of York, filed 'a petition for injunction in the state district court of Louisiana, representing thap David Mayer, one of the 4efendants in error, had obtained, in that cour,t judgments against her on false testimony and forged documents, and that equity and good conscience required that they be annulled and avoided for reaSons set forth in her petition, the questipn of jurisdiction was presE'lntedupon a petition for the ref40val oithe the circuit court upon the ground of the diverse citizenship of the parties. The court, after reviewing former cases, said;
RALSTON ". SHARON.
709
"These authorities would seem to place upon question the jurisdiction of the circuit court to take cognizance of the present suit, which is none the less an original, independent suit because it relates to judgments obtained in the court of another jurisdiction. While it cannot require the state court itself to set aside or vacate the jUdgmenttl in question, it may, as between the parties before it, if the facts justify such relief, adjudge that Mayer shall not en· joy the inequitable advantage obtained by his jUdgments. A decree to that effect would operate directly upon him, and would not contravene that provision of the statute. prohibiting a court of the United States from granting a writ of injunction to stay proceedings in a state court. It would simply take from him the benefit of jUdgments obtained by fraud." , '
Applying these principles to this case, doel! it not necessarily follow that, if the bill is to be treated as an original independent bill, this court has no more power or authority over the decree in the former suit than any other court of equity would have? As the state courts could grant all the relief which this court could with reference to the parties to this bill, without any conflict as to the authority of this court over the original suit between other parties, is it not apparent that this court has no jurisdiction? If the jurisdiction of this court upon the bill can be maintained at all, it must be upon the ground that it is dependent upon or ancillary to the original bill in the former suit. The question as to what facts are necessary to constitute ancillary jurisdiction in the national courts has been frequently discussed. Dunn v. Clarke, 8 Pet. 1; Clarke v. Mathew80n, 12 Pet. 164; Freeman v. Howe, 24 How. 450; Minnesota Co. v. St. Paul Co., 2 Wall. 633; Railroad C08. v. Ohamberlain, 6 Wall. 748; Jones v. Andrew8, 10 Wall. 327; Chri8tmas v. Rus8eU, 14 Wall. 81; Barrow v. Hunton, 99 U. S. 8,2; Krippendorj v. Hyde, S. 284,4 Sup. Ct. Rep. 27; Pacific R. R. v. M"Ulsouri Pac. 111 U. 8.521,4 Sup. Ct. Rep. 583; O'Brien Co. v. Brown, 1 DilL 588; Dnnlap v. Stetson, 4 Mason, 360; Conwell v. Valley Canal Co.,4 Biss. 200; Barth v. Makeever, rd. 212; Osborn v. Railroad Co., 2 Flip. 506; Bowen v. Ohristian, 16 Fed. Rep. 730; Wagon Co. v. Snavely, 34 Fed. Rep. 823; Yeatman v. Bradford, 44 Fed. Rep. 536. From the principles announced in these authorities, the ancillary jurisdiction of the court can only be maintained where the parties to a mersuit are before the court, or the facts are such as to make the case a continuation of the former suit, or where the court is called upon to enforce or vacate its judgment or decree, or set aside its process, or to give relief with reference to property in its possession or under its control, or to bring in outside parties having an interest in the litigation, or where the property involved is in the custody of the court or its officers, and the rights of parties thereto could not be determined in any other court without a conflict of jurisdiction 'between the courts. The form of the proceeding must, in every case, be determined by the particular facts alleged in the bill. In Minnesota 00. v. St. Paul Co., 2 WalL 633, the court said: '.'T,he question is not the proceeding is supplemental and ancillary, or is llldependent and 0r:iginal, m the sense of the rules of equity pleading, but whetber it is supplemental and ancillary, or is to be considered entirely new
710
FEDERAr/ R1l:PORTER,
volo 51.
and oriM'!l'Is1j ii n' tbesense whicb this court has sanction ed with referen ce to the line which ,divides .the jurisdictiott of the federal uourts from that of the state i coutU,':"'No one. for instance, would' hesitate to say that. aecoloding to the English chancery practice,s bill to enjoin a judgment I\t law is an original bill. in lbechan:cery ;sPIlse of; ,tIle' word. Yet this court has decided many times that, iwhenwbill is filed in the circuit court to enjoin a jUdgment of that court, it is not to be considered as an original blll, but as a continuation of theprooeeding at law; so much lio that the court will proct-'ed in the injunctionsuitwithout'actuaJ service" of sUbpoona on. the defendant. and though he be a bitizenof another state. if he were a party tothe judgment at law. The case bt:'fore liS is analogous. An unjust allvantage has been obtained by one party over another uya perversion and auusp of the orders of the court, and 'the party injured comes now to the,same court to have this abuse corrected, and to carry into effect the rElal intention and decree of the court. and t,hj\t while the property which is the subject of contest is still within thecontrQI of the court alld subject to its order." That case, in its facts which supported the ancillary jurisdiction of the court, is quite different from this case. (1) The parties defendant here were not' parties to the former suit; (2) the property which is the of contest is not still within the control of the court, and subject to its order. The question whether 8. suit is in its nature separate and independent, or whether it is a supplemElntary proceeding so far connected with the original suit as to bean inC'ident to it or a continuation of it, was discussed, and the distinction stated, in Bartow v. Hunton, 99
U. S. 82:
"If the proceeding is merely tantamonnt to the common-law practice of moving to set aside a jUdgmerit forirregularity or to a writ of error, or to a bill of reView or an appt'al, it woultl:belong to the latter category, and the United States' cOllrt could not properly entertain juristlictiun of the case. Otherwise the circuit courts of the United States would become invested with power to control.the proceedings In the l.'tate courts, or would have appellate jUrisdiction over them in all cases where the parli,'s are citizens of different states. a re$ult would be totally inadmissible. On the other hand, if the plooceedinj{s are tantamount to a bill in equity to set aside a decrt'e for fraud in the obtaining thereof, then they constitute an original and independent proceeding; and, accurding to the doct:rine laid down in (iaines \". Fuentes, 92 u. 8. 10, the case might LJe within the cognizance of the federal courts. The distinctionbt:'tween the two classes of cases may bE' somewhat nice, but it may be affirmed to exist. In the one class there Would be a mere revision of errors and Irregularities. 01' of the legality and correctness of the jUdg. ments and dt'crees of the state courts; and in the other class the investigation of new case, arising upon new facts. although having relation to the validity of an actual jUdgUlent or decree. or of the party's right to claim any benefit by reason thereof."
The distinction between the cases where the jurisdiction of the court can be maintained and where it 'cannot is pointed out in Dunn v. Clarke, 8upra. In that case the complainants tiled a bill for an injunction to and enjoin a judgment recovered against them in an action of for a decree fora conveyance of theland in controversy. The parties to the bill were all citizens of the state of Ohio. The judgment in the ejectment suit was obtained by one Graham, a citizen of the state of Virginia, who died after the rendition of the judgment; and Dunn, the
RALSTON tI. SHARON.
711
defendant in the equity suit, held the land recovered in the former suit in trust, under the will of Graham. Upon these facts the court said: "No doubt is entertained by the court that jurisdiction of the case may be sustained, so far as to stay execution On the judgment 'at 'law against Dunn. He is the representative of Graham; and, although he is a citizen of Ohio, yet this fact, under the circumstances, will not deprive this court of an equitable control over the jUdgment. But beyond this the decree of this court cannot extend. Of the action at law, the circuit court 11M jurisdiction; hnd no change in the residence or condition of the parties can take away a jurisdiction which has once attached. 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 against him. The injunction bill is considerl"d 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 clll1sidered. to that extent at least, an original bill, and the jurisdiction of the circuit court must depend upon the citizenship of the parties;"
With reference to third parties the ancillary jurisdiction may be maintained"Ina cause over which a national court has acquired jurisdiction solely by reason of the citizenship of the parties. if the rights and intt'rests of third persons should become complicated with the litigation, either as to the original judgment, or any property in the custO(ly of the court, or any abuse or misapplication of its process; and if no state court has power to guard and determine those rights and interests without a conflict of authority with the national court, the latter court will, from the necessity of the case. and to prevent a failure of justice, give such third persons a hearing, irrespective of their citizenship. so far as to protect their rights and interests relating to such jUdgment or property, and as to correct any abuse or misapplication of its process, and no further." Conwell v. Valley Canal Co., supra.
In Osborn v. Railroad Co., supra, it is held that a party having an interest, though not a party to the suit, may intervene to assert his rights, without reference to the citizenship of 1he parties. In Freeman v. Howe, Krippend01f v. II.'ljde, and Pacific R. R. v. Missouri Pac. By. Co., it is held that hills filed on the equity side of the court to restrain or regulate judgments or suits at law in the same court, to prevent injustice or, an inequitable advantage under mesne or final process, may be maintained, as ancillary and dependent, supplementary merely to the original suit out of which it arises, without reference to the citizenship of the parties; as, for instance, in cases when property in the possession of a third person claiming title thereto is seized and levied upon by the United States marshal on mesne process issued out of the circuit court of the United States as the property of the defendant in the snit, because such third person would have no remedy against the \ officer, and hence he could seek redress in the court having custody of the property, by ancillary proceedings. The facts alleged in complainant's bill do not, in my judgment, bring this case. within any of the grounds stated in the foregoing authorities, authorizing the ancillary jurisdiction, unless it be that this court can, in this proceeding, set aside the former· decree.
7:1:2
FEDERAL REPORTli1R,
vol. 51.
Is this suit of such a character as will authorize and empower this ., court, if the facts are proven as alleged in the bill, to vacate and set l!o$ide .the judgment, order, ,and decree in the former suit? In the former suitthiscourt entered a judgment in personam in favor of William Sharon, under and in pursuanoe of a stipulation between the parties to that suit. William Sharon is dead. The former suit has not been revived. William Sharon is not.before the court. Complainant seeks to set aside the decree upon the ground thll,t William Sharon left no estate, and that the property which he held in trust for her benefit has been conveyed to the defendants in trust for the heirs of said William Sharon. But this propertyctlnnot be acquired by complainant, nor can there be any accounting i[1 reBard thereto, unless the decree of this court in the former suit is first set aside and annulled. If there is no personal representative of the estate of William Sharon, it is difficult to see how the court has any power in this action over the former decree. The ancillary jurisdiction of this court in this respect must certainly depend upon its power and authority over the decree in the former suit. There was no appeal from the judgment; no motion to set it aside or to modify it du,'ing the lifetime of William Sharon. There was no attempt to have the suit revived after his death. The present action is not brought against his estate. There is no personal representative of William Sharon before the court. How then can this court, in this suit against the parties defendants, who were not parties in the former suit and are not charged with any fraud in procuring the compromise or the stipulation upon which the judgment was entered, make an order setting aside that judgment or decree? It is contrary to every principle of equity jurisprudence for this or any other court to set aside a judgment or decree upon the ground of fraud, or any other cause, without having all the parties to such judgment or decree before the court. In the vast multitude of authorities cited by complainant's counsel, no such case has been brought to the attention of the court, and it is safe to say that no such ca!le can be found in the books. In Harwoodv. Railroa·d Co., 17 Wall. 80, there had been a foreclosure and sale of a railroad in a suit brought by George Carlisle, as trustee of a second mortgage, and the complainant, Harwood, brought an action before the court to vacate the decree in the former suit upon the ground that it was fraudulently obtained. Carlisle was not made a party to the suit. The court said: , "Mr. Carlisle, the plaintiff' in the snit in which the decree is sought to be vacated, is not a party to this proceeding. In the former suit all the forms of law, at least, were complied with. The parties haVing interests which it was sought to foreclose were made parties, a decree was taken in the ordinary form, that they be foreclosed, and that the property be sold. A sale was had, 'lnder which the present defendants claim title. This was done upon the prayer of Mr. Carlisle, by his authority, and upon his procurement. Third parties now into court and aslUhat all these proceedings. completed according to the forms of law, and sanctioned by the decree of the court, taken at the request of Mr. Carlisle andfot which he is responsible, be vacated and declared fraudnlent and void. This 1s sought to be done without his knowl-
RALSTON V. SHARON.
713
edge, and no opportunity is given to him to sustain his decree or to rebut the fraud, and no reason or excuse is given why he is not made a party. This is against authority and principle. No case is cited to justify it, and it is believed that none can be found. The jUdgments of courts of record would be scarcely worth obtaining if they could be thus lightly thrown aside. The absence of the plaintiff in the original suit is a fatal defect." In tha} case no excuse was given why the party to the former decree was not made a party to the action brought to set it aside. Therein it differs from the present case. Here a reason is given. Complainant's counsel, in discussing the facts, say that complainant is not asking any relief from the estate of William Sharon. She only claims that William Sharon had certain property of the estate of W. C. Ralston in trust; that he. failed to account for it to complainant as the sole devisee of said estate, lind by a deed of trust he conveyed the property to the per. sons.who are made the defendants in this suit; that William Sharon, when he died, left no estate; and numerous authorities have been cited by complainant to show that the estate of William Sharon has no interest in this suit, lind that the defendants are the only parties having any interest whatever in this litigation. If this contention is true, then what becomes of the qUfstion of jurisdiction, it being alleged that all the parti to the suit are citizens of this state? If this theory is cors rect, the suit must certainly be dismissed, as the state courts, in that event, could give all the relief to which complainant is entitled. ' In Wickliffe v. Eve, 17 How. 470, the bill was filed to set aside a decree alleged to have been obtained by fraud, without making the defendant in the decree sought to be set aside a party to the action. The court said: "The complainant asks that. the decree releasing Eve and others may be set aside as fraudulent, and the balance due on Eve's debt may be decreed to him, as administrator of Luke Tiernan; and in this capacity he seeks to retain for himself, and subject the property of the firm to pay the debts of an individual partner. Charles Tiernlln is no party to this proceeding; and. as he was not brought before the court, there could be no jurisdiction taken of the subject-matter, he being legal owner of the chose in action claimed. If the claim had any existence. The bill was dismissed in the circuit court, because the complainant and the defendants were citizens of Kentucky, and therefore the court declared it had no jurisdiction, for want of proper parties. 'ro obviate this objection, it is insisted here, on the part of the appellant, that this is a bill of review of the proceeding in the cause of John G. Eve and others against Charles Tiernan. The appellant haVing been refused the privilege to file a bill of review. he then filed this original bill. impeaching the decree for fraud, and to this bill none but ciLizens uf Kentucky were parties. It is manifestly an original bill, within the description given by Mr. Justice Story's Equity Pleading, § 404, and, being so, the circuit court had no jurisdiction of the p!lrties. It is ordered that the decree. dismissing the bill. be affirmed." In Friley v. Hendrick8, 27 Miss. 412, there was a bill of review filed to set aside a decree rendered in favor of one Dinkins. The bill stated that Dinkins had died, and that his estate had been administered upon and his administrator discharged before the bill of review was filec.l.
714
FEDERAL REPORTER,
being the purchaser of the Hendricks' was the only "pll:rty defendant, property involved in The court said: :"a preUminary objection'tothe bill of review is raised hete under the'deniurrer, which is decisive <:If the case; this is, that the bill does not make the cotriplaiiti&nt in the decree sought to be reversed, or his representatives, par· ties to the proceeding. The legal object and effect of a bill of review being to have .the decree examined and reversed, it was formerly held to lie only against thOse who were' parties to the original bill, (2 Barb. Ch. Pro 94; 'Lube; Eq. Pl. 129,) inaiJalogytoaproceeding in error. It was afterwards extended so as to embrace other parties in interest. Still, it is held to be ind.ispensable that aU the parties. to the original decree should be inBank, v. White., ,8 Pet. 268; Story, Eq. PI. § 420. And, it they are deacl1 tlleir representatives must be made parties, as in other proceedings in error·.. The reason of this is manifest, the proceeding being in its nature one to reverse the original decree, it would be inequitable to ent(>rtain such casewlthciut. giVing the party in whose favor the decree was rendered an oppOl1iunilly to justify it. ,This,being a technical bill of review, must by the application of this principle. Nor is the objection obviated by taking the ground that the qill does pot seek to disturb the rights of the complainant decree; fpr that position deprives' it of its essential character,and,leaves it no ground to stand on. * * * It changAs its character fr0t:n a bill of review, which its whole structure and object assume it to be, to that of an· original bill for reli!.'f against Hendricks, the purchaser of the propel'tysold under the decree. Viewed in the latter aspect, the mere reversal.ofthedecree fol' the.errors alleged in the bill would not divest the rights of the purchaser, who was neither a party nor priVy to tbe decree, and against elluity no just charge is made." The argument made 'by complainant's counsel, that the defendants F. W. Sharon and F ·. G. Newlunds are the legal representatives of William Sharon, cannot be sustained. It is true that· heirs, trustees, and grantees of assignees of contracts or patents, or receivers or assignees may, in certain cases, be considered as the legal representatives of the property involved. But there is a clear distinction between such cases and the one under consideration. The defendants F. W/SharoIi and F. G. Newlands are not the "le/1:al "representatives"of William Sharon, deceased, within the meanin/!: of those words as to proceedings institut,ed to set aside' the judgment in the former suit. The general rule is t1)at no persqn can revive a suit abated by the death of .aparty,unless he is in· by with the deceased. But itis'not sufficient that he may, in.a legal sense, be a privy in estate; he must be a privy in representation. Lord Coke, in 1 Inst. 271, says: "There are four sorts of privies, viz.: . Privies in estate, as donor and donee, lessor and lessee; privies in blood, as heir and ancestor; privies in as executors and administrators j and privies in tenure, as lord and tenant; which are all reducible to two heads, privies in law and privies in ,deed. Now, the right to revh'e is not applicable to all these different sorts of privies, but by the authorities is exp,reS$ly.oonfined to persons who are in privity by representation, sU.ch ll8!heirs in r{jlation to the rea! estate, andexeoutors and administrators :W-felation to the personalty." Slack v. Walcott, 3 Mason, 508. .
STEEL V. PHENIX INS. CO.
715
The question as to the various definitions that may be given to the term "legal representative" is not involved in this suit. Without attempting to review the authorities cited by complainant as to the meaning of the words,-which alway's depends upon the facts of each case,it is deemed enough to say that, in a case like the present, when the decree is wholly in personam, there must be a personal representative to represent the person of the deceased before the decree can be set aside. The words" legal representative," when used with reference to a case of this kind, mean an executor or administrator, or devisee in a will, who has the power and authority under the law to legally represent the estate of a deceased person. In all of the numerous cases cited by the complainant, where the question is referred to, this distinction is clearly recognized. .Johnson v. Van Epps, 110 Ill. 559; Cox v. Curwen, 118 Mass. 198; Cochran v. Cochran, 127 Pa. St. 490, 17 Atl. Rep. 081; Railroad. etc., Co. v. Bryan, 8 Smedes & M. 234j Warnecke v. Lembca, 71 91; Bowman v. Inng, 89 m. 19. case of People v. Mullctn, 65 Cal. 396, 4 Pac. Rep. 348, is not in opposition to the viewl'l here expressed. There a motion was made by a corporation to Bet aside a judgment against Mullan which had been obtained without any legal service upon him. A. deed to certain lands affected by the judgment had been transferred by Mullan to the corporation after the judgment was rendered. The court held that the corporationstood in the shoes of Mullan, and, inasmuch as the corporation coulrl have moved to set aside the judgment in Mullan's name, it would be sacrificing form to substance to hold otherwise. From the views expressed, it necessarily follows that this court has no jurisdiction in this case. It is therefore unnecessary to consider the other grounds of the demurrer. The demurrer is sustained, and the bill dismisaed.
STEEL f7. PHENIX INS.
Co.
OF BROOKJ,YN.
(O£rcuit Oourt of J!ppeat8, Ninth. Oirouit. JUly 18, 1892.)
1.
INSURANOE-REFORMATION OF CONTRAOT-REOEIVERS. A policj of insurance issued to" E. S. Kearney, receiver for Holladay v. Holladay, * * on their one· half interest in the four-story frame building," eto·· sutllciently shows the intent to insure the receiver as thereprescntativeof suoh interest, and no reformation of the policy is required to enable his successor in the receivership to sue thereon. 2. SAME-WAIVER OF CONDITIONS-TIMS FOR BRINGING SUIT. A delay in suing on an insurance policy for more than the 12 months allowed by the is no bar to an action, if the delay was caused by the promises of the company s agent that the loss would be paid. 47 Fed. Rep. l!6S, reversed. S. SAME-PERIOD OF LIMITATION-CONSTRUCTION OF CONDITIONS. A condition in an insurance policy that no suit can be maintained unless brought within months "after the date of the fire," should be so construed as to give 12 full months during which the insured 'has a right to sue; and when, by another clause, the policy does not become payable until 60 days from. the proofs of 10S8, suit may be brought Within 12 months from the expiration of the 60 day.. 140KENN.l., J. t dissenting. 47 Fed. Rep. 863, reversed. ' FIRB
716
FEDERAL REPORTER, vol. 51.
Appeal from the Circuit Court of the United States for the District of Oregon. Reversed. Williams Wood, for appellant. Cox, Teal Minor and JV. S. Goodfellow, for appellee. Before MCKENNA and GILBERT, Circuit Judges, and HAWLEY, District Judge. HAWLEY, Dii:ltrict Judge. On the 21st day of April, 1884, the PheI;lix Insurance Company of Brooklyn, in consideration of $300, subject to the terms and conditions expreesed in the policy of insurance, insured"E. S. Kearney, receiver for Holladay v. Holladay, against loss or damages by tire, to the amount of five thousand dallal's, as follows: $4,000 on their 0'le",!;Ialf inteliest in the four-story frame buih.ling, occupied as an hotel, and kn.ownas the · Chlrendon llotel, , * * * Portland, Oregon; $1,000 on theil- orie-half'interest in the hotel furniture while contained therein; * * * to make good unto the said assured, their executors, administrators, and assigns,:aUsilch immediate loss or damage, not exceeding in amount the sum or lIuma i,Dsured, * * * :as shall happen by fire to the property so speci. fied, ,fl'om the,27th day of April, 1884, at 12 o'clock at noon, to the 27th day of April, 1885, at 12 at noon; the amount of loss or * * * to bep8id ,llixty days after the proofs of the same required by the company shaH' have been made by the assured, and received at the office in Chicago." contained 13 specific COilditions, besides several notes The tenth provided for the selection of arbitrators is the: the amount of the loss could not be determined by mutual The thirteenth reads as follows: , "03) It is, furthermore hereby E>xpressly provided and mutually agreed that, Dp action againat this company, for the recovery of ,any claim by vitt'ueof tliis policy, shall be'sllstainable in any court of law or chancery until after an award shall have been obtained fixing the amount of such claim in the manner above provided, nor unless su<:h suit 01' action shall be com· menced within twelve months next after the dale of the fire from which such loss shall occur; and, should any suit or action be commenced against this companyafter the expiration of the aforesaid twelve months, the lapse of time of such shall be taken and deemed as c.onclusive eVidencp,against the' claim, any statute of limitation to the contrary notwithstanding." At the time of the execution and delivery of this policy the insurance company well knew that the title to said property was in disin the suit of Holladay v. Holladay, and that said Kearney was in p()s$ession of the property Il\erely as the receiver in said, suit, and had UP. interest therein of any nature, except as such receiver; On May 14, 1884, an order was made in said suit accepting the resignation of said as receiver, and appointing D.P. Thompson as receiver in his stead. On the 19th day of May, 1884,thesaid Thompson duly qualified as such receiver; and thereafter,on the night of the same day, the said insured property, without any fault, failure, neglect, or omission on the said Kear I1 ey, 'rhompsQn, or of any other person, was totally deby fire" and a loss was sustained in a sum greater than the amounts specified in the policy. '
717
This suit was commenced on the 10th day of July, 1885,-13 months and 21 days after the fire,-by Thompson, as the successor of Kearney in the receivership, to reform the policy so as to be made payable to the receiver and his successors in office, for the benefit of whom it might concern, and for a decree to recover the amount due upon said policy. A demurrer to the original bill was sustained on the ground that the plaintiff's right of action was barred because the suit was not commenced "within 12 months next after the date of the fire from which the loss occurred;" Tlwmpson v. Insurance Co., 25 Fed. Rep. 296. An amended bill was thereafter filed, alleging conduct on the part of the insurance company which, it was claimed, amounted to a waiver of the limitation of time for the commencement of the suit. A demurrer to this bill was also sustained, and the suit dismissed. From that decree an appeal was taken to the supreme court of the United States, and the decree was reversed upon the ground that the allegations of the amended bi1lshowed a waiver of the limitation as to the time of bringing the suit. Thompson v. Insurance Co., 136 U. S. 299, 10 Sup. Ot. Rep. 1019. On July 12,1886, Thompson was removed from the receivership; and G. W . Weidler and Joseph Holladay were appointed in his place. Thereafter the suit of Holladay v. Holladay was decided in favor of Ben Holladay, and the receivers were discharged. On July 8, 1887, Ben Holladay died, and on June 3, 1889, James Steel, his administrator, was made plaintiff in this suit. Thereafter this suit was again tried, and thecou1't held that the allegations of the amended bill were not sustained by the evidence, and dismissed the suit. Steel v. Insurance Co., 47 Fed. Rep. 863. From this decree the present appeal is taken. 1. Can the policy be reformed? The right of plaintiff to have the policy reformed, if the action can be maintained,after it is reformed, so as to be made payable, to the receiver or his successor in office, and thereby conform to the intention of the parties,-if any reformation in that respect is necessary ,-is, by the admissions in the answer and proofs upon the trial,rendered too clear for any discussion upon the subject. It is, however, proper to state, in this connection,that we are of opinion that the intent of the parties appears upon the face of t4e policy itself, and that no reformation is required in order to enable plaintiff to maintain the suit as a representative of the interest of HoUadayinsaid property. 2. Are .the allegations of the amended bill as to the conductofthe insurance company in delaying the commencement of the suit sustained by the evidence? These allegations are, in substance, that the insurancecompany, by its duly-authorized agents, assured the plaintiff about 30 days after the fire, and after the acceptance of the proofs of loss, that no question was made as to the loss or its payment, except that the companywas considering thefact of the change in the receivership, and that .itwouldundoubtedly'pay the loss claimed; that as late as June 27, premium of $300 was paid to the company, which by its againa.ssured the .plail.}titr that the loss would be paid as.soon as could betaken; that after 60 days had elapsed from the delivery
718 of the proofs,.Qf loss,.!t:he &1 :its the same assurances; and that,by reason: of such promise8AUld ltSSut'ances, plaintifi'negleoted," for sQmetime after 60 days from. of the proofs of loss, to bring suit for the recovery of the IH8s sustained." The testinwny in support of.these allegations iE! very brief; , ,It is admitted that the payment of the premium of $300 was made on tbe27th of June, 1884, ss alleged in the bill. Thompson testified that the agent of the company stated to him '''that the premium had notcbeen paid; that it would Jlwilitatesettlement;" that he paid it; that he threatened to bring suit against the company: if the loss was not paip; that the agent offered to settle by paying one ;half of the amount specified in the policy rather thRn have any suit about it; that he refused to accept this offer; that the agent the-ll told him" that he thought that the: company would pay tbeamount; he thought they would. hut he was not authorized toeay; he thought they would pay it, and advised me not to bring a suit; it would complicate ma:tters somewhat, and he thought I had' better not do it; urgedrtle not to do it;" that this was very soon after the 60 days expired; "I cannot give the: date or time; I have no data, and it has been It good many years that he was first. informed that the companywould not pay the 10SB after the 60 days had expired in which to make the proofs; that after this the of the com pany promised to reo fer the matter to the home office, and they were some time, as a matter of course, getting their answer from them; that he could not give the exact time when he gave up any hope, of negotiating with the company tor a, voluntary, settlement; that ,it may have been one month, it may have been, two, or it might hllvebeen three months from the expiration of, the:60 days. The answerofthe .compilnyalleges that notice ",as given to TholTlpsononthe 31st dayofAugust, 1881, "that the defendant denied any liability upon said policy, and did refuse,and would at all times refuse,' to pay said loss." Theinsurance cornpany.. 1lely upon an answer given by Thompson to a question propounded to him to show that there was no delay in bringingthe suit which wascallsed by any conduct upon the part of the company. "Question. Did you delay bringing a suit in consequence of those statemtmts made toycu by the agent? Answer. Icannotslly now. l'do not remember." This answer of the witness must be taken with reference to the other portions of his testimony, which stated the Jucte showing beyond any controversy tbllt the bringing of the suit was delayed foJ' oue, two, or three time after the expiration of the 60 days. 'iJ,Thesupreme court, in fleciding that the in the amended bill were sufficient, said: JlS amendeq .11m imply,; :(Ij\ihtre of th8 plaintiff 1;O,8ue within the ,time Jlrescriuedu,ythepolioy, ophellr':l. (0 the, C,OllduCt.. Of. . itcallIW.t av"i1itself 'limitation oftWe1ve months. Curtis v. Insurancf3 Co., 1 Biss. 4i:lfi.487; IdtJ'v.lu8Ul"anCe (,'0.'. ;2' Biss. (h'alit"'/i lnsltrance Ou., '5 'Ind. 23, 25; J:tickey:v"Insu,l'anc'e OOJ,'3&IoWll, In the case'lnst cited it was
· STEEL '11. PKENlX INS. CO. '
719
properly said that it W'ouldbe contrary tqjustice cOt;npa;l)y to hold out the hope of an amicable adju!!.tment of theloss,and thus delay the action of the insured. and then be permitted to plead this very delay, caused by its course of conduct,·aS a defense to the action when brought:" The following authorities are to the same effect:· Ames v. Insurance 00., 14 N.):. 264; Killipsv. ITli$urance 00., 28 Wis. 483; Insurance 00. v.BrQdie, 52 Ark. 11, 11S. W. Rep. 1016; Insurance 00. v. McGregor, 63 'fex. 404. In the Texas case the court said: "If the course of conduct pursued by the appl'llantwas such as to induce the appellee to believe that the loss would be adjusted and paid without SUit, aqdfor this reas·on suit WliS not brought within the time prescl'ibed, then, under principles applicable .to such CaBf'S, this actiun may be maintained on the policy, even after the expiration of tue time therein pre-scribed." . .The views expressed by the supreme court of the United States are as applicable to the evidence in this case as to the nlleptions of the bilL The .most that was claimed in the bill wa81 that by the conduct of the insurance company the plaintiff was delayed in bringing the suit for some time after 60 days from the delivery of the proofs of loss, and this is shown. by· the eyidence. 3. The contention of the insurance company is that its conduct, in any event, only prevented thissu,i,t from being brought for five months after the .fire, and that this only amounted to a waiver of so much of the limitation, apd that. as there still remained seven months-a reasonable time7"withinwhich to bring the suit, the action is barred, because not brought "within twelve months next after the date of the fire." Is this contention sound? Is it supported by any substantial reason? When does the 12-m.oDths limitation commence to run? Is it from the date of the fire, or from the expiration. of 60 days after the proofs of loss were fUrnished? Numerous and rf'spectable authorities can be found in support of either view, and, inasmuch as they are in direct conflict, it becomes.the duty of this court, upon the first presentation of the question, lrmine which view if,; sustained by the weight of reason, and ought to det in justioe to be followed. In several of the authorities, where these questions have been discussed, the policies of insurance provided that no suit could be sustained unless brought within six or twelvemonths "after,the loss shall have occurred.," instead of "after the fire," and some of the cases intimated that the language should be construed differently. We are, however, of opinion that there is no real or substantial difference in principle between" the meaning of the words "loss" or "fire" as used in the policies. The loss occurs at the time of the fire. If the provision in the policy is to be construed solely with reference to the the clause in which the limitation is expressed, independent of any other fact or condition expressed in other clauses of the t'0licy, then, of course, the suit cannot be maintained unless brought" within twelve months next after the date of the fire from which suCh loss shall occur." It il) the duty:ofcourts, however, to arrive at the intention· of
720
FEDERAL REPORTER.
·
tbe p9.1'tiesby an e::taminatibn and considilrationof the entire instrument, itsvarions clauses and cO:nditions, and the objects and purposes which 'the patties had in a,t the time of the acceptance, and delivery of the p(ilicy. in determining the intention of the parties, it is our 'dut)y to examine the whole instrument in order to ascertain, if pos,sible, the true meanhig of clauses which, in a certain light, might be and to gather, from the various clauses, the real object and purpose which the parties intended by the instrument as a whole. When this is ascertained,then the language of the clause in controversy must be SO! as to give full force and effect to ,the true intention of the instrument as a whole. general to the construction of all written 'ibstl'Qments,-whetherit be Ii deed,contract, or policy of insurance,WeI Shall proceed to an' examination and review of certain other conditions in"the policy. After the fire the insured is required to give notice of -auy loss, a.nd to make the necessary and satiSfactory proofs thereof, and the company is allowed 60 daysarter such proofs have been ceivedat the home office, in: Chicago, to pay the amount of 108S or damage sustained. ' Under this clause, no suit could' be commenced until after 60 days, at least,·fl'om the time of the fire. This would leave orily 10 months instead of 12 months, within which time suit could be com;' menced. ' , In the thirteenth condition, theonewberein suit is allowed to be bronght"within twelve months next after the fire," is an express proviso that no suit against the company shall be maintained in any court" until after au award shaH have been obtained, fixing the amount of such claim." "As:there has been!no award in this case, it follt>ws that, if the award clauseis to be considered of full force and eft'ect,and construed solely with"reference to the lal1guage used in this particular clause, then the remilining 10 months has expired; and by the literal interpretation of independent clauses, which of themselves are plain, dear, and unam'" biguous, it actually happens in this case that the right of action was haired before it 'accrued under other provisions, and this condition of affairs is accomplished without any act, fault, or negligence on the part of the insured. This of itself justifies us in going beyond the mere words·of any. particular ciause in order' to ascertain the meaning of the clause and the intention of the parties. The insurance company, it is true, doesnotrely upon the :award clause, and we refer to it simply to iilllstratethe weakness oNts contention that another clause, upon which -it does rely,should be literally construed, because the ]anguageused therein is clear, plain, and unambiguous. Thecompal1Y might have claimed that, according to the award clause, the suit was brought tOb soon; but Euch a Contention would be manifestly absurd. Why? Beml.lise it is evident that' the parties never inteuded that such a result .should be accomplished, under the facts in this case. This is made per:fEwtly clear by<a reference to the other prOVisions in the policy, to the effect that the amount of the loss or damage might be determined by umttial agreement between the parties, and; in the event of their failure
'STEEL V. PHENIX INS. CO.
721
to agree, then arbitrators might be chosen; and it appearing that the company, after five months of occasional promises to pay. finally decided that it would not pay the loss, this conduct was, of course, a waiver of the right to rely upon the award clause. Upon like reasoning, why should not their conduct in causing a delay of time in the brinRing of the suit, when suit was threatened, be a waiver of the time in the limitation clause? A policy of insurance which contains conditions reducing the statutory time for the commencement of any suit thereon ought, in justice and equity, to be so construed-if reasonable under all its terms-a8 to give the full period of time mentioned in the policy, freed from the provisions of all other clauses of the policy, or from the conduct of 'the insurance company, limiting, or attempting to limit, the time actually given in the limitation clause. This, it appears to us, is the consistent and logical view that ought to be taken of such policies of ,insurance. It is fair to the insurance company, and just to the insured. It would prevent either party from taking any undue or improper advantage of the other. The unwary could not be led into a trap, and caught by any misrepresentation or delusive promise. The condition in this policy which provides that no suit can be maintained for. the 10$s incurred, unless "commenced within twelve months next afterJhe of the tire," should therefore be construed-in the light of all the other clauses and conditions-to mean 12 full months, not 10 months nor 7 months nor 1 month nor 1 day, in which to bring the suit, exclusive of the time when suit could not be brought, either by other clauses or by any conduct of the company preventing the insured from bringing suit. In this case the right to bring suit being postponed in one clause of the policy for 60 days after the proofs of loss were furnished, th!3 12-months limitation contained in another clause does not commence:to run until after the expiration of the 60 days. This suit was therefore brought in time. The construction we have given to this policy is in accord with common sense, whiCh is said to be the soul and spirit of the law. It is in unison with sound legal and universally recognized interpretations of written instruments, as well as with the justice and equity of the case. It is correct in principle; and is supported by the great weight of the authorities. Friezen v. Insurance Co., 00 Fed. Rep. 352; Vette v. lrururance Co., Id. 668; Spare ·v. Insurance Co., 17 Fed. Rep. 568; Chandler v. Insurance 0:>., 21 Minn. 85; Mayor v. Insurance 39 N. Y. 45 ; Steen v. Insurance 0:>., 89 N. Y. 31.5; EUw v. Insurance 0:>., 64 Iowa, 507, 20 N. W. Rep. 782; MiUer v. Insurance Co., 70 Iowa, 704,29 N. W. Rep. 411 ; Barber v. In8'Ura,nce Co;, 16 W. Va. 658; Murdock v. Insurance Co., 33 W. Va. 407, 10 S. E. Rep. 777; Case v. Insurance 0:>., 83 Cal. 473, 23 Pac. Rep. 534; Owen v. Insurance Co., 87 Ky.574, 10 S. W. Rep. 119. In FrWzenv. Insurance Co. the fire occurred .June.23, 1885. Proof of loss was mQde July 31, 1885. The loss was not payable "until sixty 'days after, proofof loss." Suit was commenced February 24,1886, 7 :months and 1 day after the fire, but within 5 months and 24' daysaftel v.51F.no.11-46
722
vol 51.
tIie 60 days Qftllr::the proofM 10sB. Th'e polict provided:,that'no"suit should be su,stainableun1ess C!commenced ,mouths after the fire had occurred.", :BUNN, J;, held tha.t the 8uitwas commenced,in timej"that what the parties contemplated was that, after the loss became due and :paya.hle, the:assured should have six months, within any part ofwhich 'time he might bring his suit." , :InVette v. 00., Where the provision in the policy was the same as' in' Jilriezen'8 ClUe, except the word "loss" is, USE'd instead of the word "firel"TH:AYER, J" in delivering an oral opinion, hit the nail sEluarely the headhy, saying that he could not see any "good reason for construing the special statute of limitations imported into this contract in such ,way as'to make it operative during a period when, by virtue of other stipulations of the contract, the:right of action was suspended." In Chandler v. .]n8uraneeCo; the' court said: "It is natural' that the parties shOuld hava intended to 'refer the commencementoftbe periQdof limitation to thedl\le:whell the cause of action accrued, and that tbetime during whioh the RBs,ured could not sue should not be counted as part oftbe year within wpich they to sue." .
on
1tl Skenv;Inmrance G'o; the court saId: tpe theinBured a fuil period of twelv6plonthsi' within any ,art of which helllight commence his action, and having, by:p!>stponemen't 0 the time of payment, secured from it tlidnotlintl!tid'to embrace that: period Within the term after the expiration of whicb'it couldnot.:be sued. In othea:" words. the parties cannot be ,presumed tG.,have lluspende4 the remedy; ,andprQvi<!eq runniDgof tb,e period of during the sarq,e time. Indeed, ,the actual case is strol)ger. Not on)1 was tile. remedy postponed, but the even; did exist at the time of the fire, nOl' until it 'was fixed M'd ascertained according to the proviSi'onofthe policy; HaVing thus made the dol'ng of certalnthlngsj and a fixed lapse of time thereafter, :eonditions preoedentto the bringing of all action, the parties mnst be deeml'd to have conlra,·tedin reference to a time when the e,Xcept.for, that, contract, might be in condition ,to bring an action, lJI1.der any other construction, the two conditions are inconsistent with each other," " ,The .language; used in, the' various conditions of the .policy is that of the insurance .company· Admitting, then, for the sake of the al'gument, that it could befairly claimed tbat.twodifferent constructions luight be placed upon the languagE! !Used in tbepolicy, it 'is nevertheless a wise and well-settled' rnle, sanctioned and all the authorities, that the construction should be. adopted which is most favorable to the insured; and in cases ofaoy doubt ,or uncertainty as to the lueaning of ·words, or of inconsistent orcontradict()ry provisions in the policy, as in,saned by the oompany;they are to be construedmoststrol1g1y against the, company. Alr the insurance company prepareS the contract"and embodies in it such conditions as it deems proper, it is in duty bound ·to Wle language in the ,v:B:rious provisions 'of the policy insucba lllanner that the insured cannot be mistaken: or misled as to the duties and burdens thereby imposed upon him. The (Wurts' have imiformly held that the various conditions of a policy ofiusurance must be strictly construed
,STEEL V.PHENIX INS. CO.
723
against the company. in favor of theinsllred. This pdnciple is applied to all claases of insurance policies. whether fire, lile, accidental, or other kinds. Nationa,l Bank v. hururance Co., 95 U. S. 673; Moulor v. Inrrurance Co., 111 U. S. 335,4 Sup. Ct·. Rep. 466; Wallace v. insurance Co., 41 Fed. Rep. 742; Cotten v. Fidelity, etc., Co., Id. 506; De Graff v· .liulUrance, Co., ,38 Minn. 501, 38 N. W. Rep. 696; Kratzenstein v.Assurance Co., 116 N. Y. 59,22 N. E. Rep. 221; Burkhardv. Insurance Co., 102 Pa. St. 262; Philadelphia Tool Co. v. British-American Assurance Co., 132 Pa. St. 241, 19 Atl.Rep. 77; Rogers v. Insurance Co., 121 Ind. 577, 23 N. E. Rep. 498; lUi,nois Ins. Co. v. Hoff'man, 132 Ill. 523, 24 N. E. Rep. 413; Meyer v. Iusumnce Co., 41 La. Ann. 1000, 6 South. Rep. 899. In Wallace v. Insurance Co., MCORARY, J., in construing the award clause in the ,policy, said: "If the words employed. of themselves. or in connection with other language uspd in the instrument, or in reference to th<! subject-matter to which they relate, are susceptible of the intprpreLation p:iven them by the assured. althongh in fact intentled otherwise by the iusurer, the pulicy willIJe cuul:lLrued in favor of the insured." In Kratzenstein v. AssuranoeCo. the court said: "Where al1 insurance contract is so drawn as to be manifestly ambiguous, so that reasonable and intelligllllt men on reading it would hunestly differ as to its mE'aninll,the douut shOUld be resolved against the company, ue("ause it prt'pared and execntedthe agrt'ement, and is respomllble for the language used and the uncertailltythel'eby created," In National Bank v. Insurance 00. there was a provision in the policy that if the insured in his application makes any erroneous representation, or omits to make known any fact material to the risk, then the "policy shall be void." 'fhe insured made an overestimate as to the . value of his property without any fraudulent intent. The insurance company contended that, under any proper construction of the contract, the assured warranted absolutely. and without limitation, the truth of the statement as to the value of his property. The court held that this contention could not be sustained, and based its conclusion"Upon the broac1 when a policy of insurance I'ont..ins contradictory prOVisions, 01' has been so framed as to leave room for construction, rendering it doulMul whether the parties intended the exact truth of the applicant's lltatE'ments to be a couc.litlon precedent to any b'nc.lill!.\' contract, the court should lean against that constrllction which imposE'S upon the insured the oLJHgations of a Warranty.. The company cannot cllmpI.lin of such a rule. Its attornE'ys.oflict'rs, or agents prepared the policy for the purr,ose, we shall assume, hoth of protecting tbecompany against fraud, and of securing the just rights of the a,ssured under II valid contract of insuranre, It i:l its language which the court is inVited to interprt't, anti it is botb rE'a!lonahle and just that its own words should be construed most strongly against itself." The judgment of the circuit court is reversed, and the cause remanded, with directioo' to the court to;render a judgment infavor of complainant as prayed ,for in..the amended. bill.
'124
DDERAL REPORTER,
Mc:K;EmfA,'Circuit'Judge, (diSsenting.) I am una'Jle to agreewHh my a.ssoeiafes)n their construction of the policy of insurance, and therefore think. that this suit was not brought in time. . The provision of the poli9ils as follows: "It expressly provided and mutually agreed that no suit or action · · · iJhallbe sustainable * · * unless such suitor action shall be commenced'witllin 12 months next after the date of the fire from which such loss shall occur. * * *" This provision would seem to need no interpret.ation in. other words than its own. It is so clear and direct as to baffle attempts to make it more so. I know of nO way to express concrete time, except by commencing at a 'certain date or event, (and the latter because jUndicates a date,) and running a certain duration· ailer or to a date 01' event after. The duration or the interval marks the period, not only as to length, but especially 8Ilt-o time before, and timeatter,-distinguishing-it, therefore, and establishing it,-,.theperiod commencing at the initial date or event, and immovahle from it. This is important. The provision of the policy, therefore, is not 12 months to bring a suit only, but 12 months within which to bring a suit and to do other things,-not 12 months to sue after all conditions precedent have been removed ,or performed, but precedent 12 months within which to ,remove or per,f9tm all and to bripg ,a. suit; substantially differeii;t things,"",,";"as different l;tS a period coD;1mencing at one date is different .from a period commencing at another date; as different as the year 1891 is from-the year 1892. I do not think the rights of either party to the policy are subserved by confounding these difference!!. Limitations oftime of bringing suit on policies are, sustained by authority, .but with the,qualificl,ltion that they must be reasonable. If 'the conditions of the policy, therefore, cannot be performed within the period stated, and al>roper time be left for bringing suit, the limitations would be unreasonable.. If they should be used to delay or mislead, they would be held to, be suspended, or waived,' as was announced by the supreme court in' this case on a forU. 8. 299, 10 811P' Ct. Rep. If the parties did mer appeal. and mvtually agree" to' limit the right of suit interid to within a particular period', commencIng at the fire,-an unambiguous and impressive incident,..:..;.howelse could theys!> aptly 'and adequately press the intention than they did? Ho';v otherwise could they have so bounded and .identified the, period, if they meant a. fixed period, not a movahle period? "TweJve months next after the fire" is unambiguous. This is conceded by my associates., but its certainty is made to yield to other provisionl;lof the policy, not more certain, and which are entirely for the benefitof:the defendant company. If the policy is to be construed most strbnglyagainst the insurer, why-not put it the other way, and make tfie other provisions yield to the pro\'tision for suit, and, as the company has stipulated that the insured shall have" 12 months next after the fire" to bring sl,lit, say that he shall have the whole of them, audaH prov:iRions suspending odessening them; shall be void? This way is as g;ood as the other. and both bad, beca.use neitherao-
as
NEWCOMB V. IMPERIAL LIFE INS.' CO.
725
commodates the full purpose of the parties, asI conceive it, which is that the insurer shall have time to investigate a it may be,-and the insurer shall have a reasonable time to sne. Any policy that does not secure the latter would, as we have seen, be declared. unreasonable. Once secured, it cannot be embarrassed by the acts of the insurer. This, we have also seen, was declared by the supreme court in this case. Did the defendant company waive the provision requiring suit to be brought 12 months next after the fire? I do not think the allegations of the complaint that the plaintiff failed to sue by reason of the wl1duct of the company is sustained by the evidence.
NEWCOMB
v.
IMPERIAL LIFE INS.
(Circuit Court, E. D. Mi88ouri, E. D.September 9, 1892.)
L
INSURANCE AGENT-WRONGFUL TERMINATION OF AGENCy-CONTRACT.
Plaintiff was appointed general agent of a life insurance company, to solicit Insurance on the "natural premium plan, "as distinguished frOm "tbe level premium plan." He was to receive as compensation a certain commission on ail first and renewal premiums collected on policies i!;lsued under the contract. Thecompany agreed, in case of a discontinuance of the agency for any cause except dishonesty, after plaintiff had secured a certain amount of insurance in force, to collect the premiums possible, and pay to pla.ntiff a certain per cent. of the renewal commissions collectedfor a period of five years. The contract provided that the company could terminate the contract" upon the neglect or refuil8l of the agent to account for all moneys belonging to the company, or for dishonesty, " or for noncompliance with certain rules and instructions. The company abandoned tbe "natural premium plan" without plaintiff's consent, and refused to allow him to solicit risks according .to such plan. Hald, this action constituted a wrongful termination of the agency. After thuil terminating the agency, the company endeavored to induce persons whom plaintiff bad insured on the" natural premium plan" to change their policies for "level premium policies." HeW that, even conceding that the agency Was not wrongfully terminated, this action constituted a viola.,on of the company's engagement to collect renewal premiums and pay plaintiff a percentage thereof. When a person agrees to act as agent for a life insurance company, for a s.tated commission to be paid on premiums collected, he cannot abandon the agency at any time, without cause, and sue the company as upon quantum meruit.
2.
SAME-BREACH OF CONTRACT.
8.
SAME-ABANDO:,<MENT OF AGENCY.
4.
PLEADINa---CONTRACT-QUANTUM MERUIT.
a quantum meruit.
In an action by a general insurance agent against his principal for services rendered under an express contract, which was wrongfully terminated by tile principal, wilen all the facts are stated intbe complaint entitling plaintiff to recover damages as for the violation of the express covenant, a general demurrer will not be sustained, even thougb Dlaintiff has asked to have his damages assessed as'upon
At LaW. On demurrer to complaint. Overruled. This was a suit brought by a general agent of a life insurance company against his principal to recover compensation for four years' services, and for certain outlays and expenditures while conducting. the .agency,thewhole claim amounting to $11,466.66. The plaintiff asked judgment for the reasonable value of his services during the period.iu question, althQugh its appeared from the complaint that the. services had