q8,

be

FEDERAr.

,Yell. 51.

", All resi;4euts, or those found within itswho cannot be so reached beseryed by publicA-tiou; both methods being regard,

consider tQa,t:the other PO'lltAqsis,ted upon, that defend.. Rllt,1Il,I;1Qt tPi appe,ar by the law oU88i) , would be of anyefl'ect its, ,or that such provision would be bindcourt after ,pl:0cess served, /loy more than was the fact ,that act qf;1828 Qewas only allowed to appear and answer. This rnJrY the .service of and not the establishment rul!¥! Qf practic8"apd no court, would be bound to so consider it. i$ be a correct ,view in regard to the time of endecree pro It will neqessarily follow that the demurrer thef,iefefiAant be held to answer.

J',

_

:,

'

,;,q

parte

MITCHELL et

ale

July 2. 1892.)

(OirCtt¥;¢ourt, D. South OQ,rolina.

LREcEIVERs-J-lLJABJLITJES.:-:;boUNSEL FEES.

, TA(J a employed, who,after protracted !Ducli, ,rMuclld the clainls of a certain lienholder. Afterwards the property was sold'subjectllo tbat lien; and the receiver was discharged. The purchasing oompany recognized: the attorIl<\'lll1' ,c1!1lm for fees,lll\d made a payment on account.After:wards W/.lB another,recelversbip in foreclosure proceedings brought by one 'claiming under a lien creawd by the new Company.. Held, that the attorneys had no claim as against the new receiver or the funds In his hands, as the servloes keeping the TOad, a going concern j and the recognition of had, not4ing ,to do ,the claim by-the new OOinpany amounted !to'no more than a simple contract. which was not "titled to pdority: to the vested liens created \)y that cO!Dpany.
.' ,, : "

2.

The fact that the attorneys' services, by reducing the claim of a prior lienholder, incijienttl.1ly benefited all subsequent lienholders. constituted no ground of priority, " in the absenCEl of any of employment !:Iy them.

"

SAME.

InEquity" Suit by Frederick W.B,onnd against the South Carolina Railwl\r for the foreclosure of, a mortgage. Heard on the petmo,q,pf Mit<;hell& Smith for an allowfl,nce of counsel fees to be paid by the ,Petitiondenied. for petitioners. ' Saml. h,;d, opposed. SIMO:NTON,,1)istrict Judge. This is apetition to be allowed counsel fees. The, qqll/ltiori up on the,report of the specialmaster. One T.C)oghlan first lien on the propett)" of the SQuth Carolina property. A bill for the foreclosure ofa mortgage lien of Coghlan had been filed in this court, and John H. Fisher hfl,d,been appointed Pending that suit,

BOUND

v.

SOUTli CAROLINA RY. CO.

59

'Coghlan instituted proceedings in the sta:te court seeking the foreclosure of his lien. Upon proper application by Fisher, receiver, this cause was reinoved into this court,\vherein atl the s.ubsequent litigation was had. This litigation was protracted and 'vigorously conducted. Coghlan claimed the principal of his bonds, which, before maturity, bore 5 per cent. interest, and he demanded interest after maturity at the rate of 7 per cent. per annum. He also insisted' on the current rate of exchange as provided in for the pound sterling, instead of the rate of $4.44 the subsequent mortgage. These, in all, amounted to many thousand dollars. The cause was twice in the supreme court, (122 U. S. 649; 12 Sup. Ct. Rep. 150,) and its result was the defeat of all Coghlan'S demands for increased interest and exchange, confining him to the principal of his bonds, with interest at 5 per cent.; and the pound sterlhlg was estimated at $4.44 4·9. This result reduced the claim of the oldest lien on the property, and to that extent benefited every subsequent lien. receiver, had employed the petitioners. When hit! receivership terminated with the sale of the property and ita conveyance to the South Carolina Railway Company this engagement of the petitioners was recognized by Mr. Talmadge, president of the railway company, and he paid them a part of their fee on account. When Coghlan began his suit the South Carolina Railroad Company held property covered by several liens, the one by which his bonds were secured, a first mortgage and a second mortgage, beside judgment creditors. When the railroad property was sold, it \Vas sold subject to the lien under which Coghlan cla:med and to the lien of the first mortgage. The South Carolina Railway Corilpany became the purchaser of this property, and, in addition to the liens then existing upon it, created a lien .of the first and then of the second mortgage, and a third lien for income bonds. Finally the suit of Bound was instituted for the toreclosure of the second mortgage last mentioned, and in it Hon. D. H. Chamberlain was made receiver. To the suit against the Carolina Railroad Company. in which Fisher was the receiver, and to the Coghlan suit, the trustees of the first mortgage by that railroad company were parties. To the Bound suit Coghlan Was a party, as well as the same trustees of the old first mortgage, the trustees of the first mortgage by South Carolina Railway Company, of the seeond mortgage, and of the income bond mortgage. The petition and report thereon stated the services of the petitioners, the great advantage derived therefrom by all classes of liens subordinate to Coghlan's claim, arising from its reduction and adjustment. and the petition asks, and the report recommends, that they be paid out of the funds in this case. Apart from, and without passing upon, the amount recommended, the question which meets us on the threshold is, can the charge be considered in this case? Coghlan's bill was filed August, 1880, and then the petitioners were engaged by Fisher, receiver. That case came to a final hearing in November, 1887, five years after Fisher's discharge, and after the conveyance to the South Carolina Railway Company. It then went into the supreme court, and was confirmed 7th December, 1891. 12 Sup. Ct. Rep. 150. The bill of Bound was filed 7th October, 1889,

REPORrER,

yoL 51.

H. Chamberlain was appointed·7thOctober, 1889. The recognitipnby th!} railway company in all probability makes this claim good againllt thlit;company. '1'0 make it .a good claim against thl> pr,esent receiver it must come within the category of claims for which the courts haveprovide.d precedence over vested mortgage liens. Now, claims of confin.ed to instimces .in which the services, supplies, this and material were necessary to keep the railroad a going concern. This is not the Plse here. But it may be said that these services were in and about lied antecedent.to Bound's lien, and there is no question of displacing that of Bound, or of the mortgage just prior to Bound. There is no autboi'iW which gjves to the services rendered alienor the lien of the lienee: 'The claim for these services is, under the contract, express or implied, with Fisher, receiver. No provision was made in the order for sale in 1,lis case for the protection of contracts made with him, nor fortheir,asllumption by tl;1e purchaser. And if the South Carolina RailCompany recognized and assumed the contract, it was a simple <fontracton the sa.me with all other contracts of that company, and Can have no priority over or equality with the mortgage liens represented by the receiver' in this case. No claim whatever against the present receiver of thefunds in his hands can be recognized. Nor will it avail the petitiopers that their services were greatly to the benefit of all the lienholders in this case,reducingmrgely the first lien, and thus improving theirs·. The law ont11is subject is thus laid down in Hand v. Railroad Co., 21 S. C. 162:

a

01 lifo one Cfln legally claim compensation for voluntary services to another, however they may be. nor for benefits and advantages to one, follo'willg to him on account of servIces rendered to another. by whom he may have been employild. Befdre a legal charge call be sustained, there must be a contract of employment, either expressly made or superinduced by the law on the facts." This is a clear exposition of the law, and is followed. It may be a question as to the right of the petitioners to ask payment in this case

from the amount to be awarded to the old first mortgage, known as the "Walker mortgage." The trustees of that mortgage were parties in the Coghlan Case and in the'case in whioh Fisher was appointed reoeiver. lIow far Fisher may have represented them in his contracts as receiver may be a question. If the petitioners desire to discuss it, they have leave to do so, after proper notice to the trustees of that mortgage or their attorneys;

RANGER

V.

CHAMPION COTTON-PRESS

CO.

61

RANGER v. CHAMPlON COTTON-PRESS CO. et al.
(OfJrcuf,t Oourt, D. South OaroLina. July 5,1892.)

L

CO!tPOR.lTIONS-RIGHTS 011 SHAREHOLDERS-INSPECTION 011 BOOKS.

III the Uni.ted States, a shareholder in a corporation has the right, under proper safeguards, to inspect the books of the concern, ullless the charter or by-laws otherwise provide.

S.

SAME-ll:QUITY JURISDICTION-ORDER 1I0R INSPECTION.

A court of equity may. in its discretion, order the officers of a corporation to permit a'shareholder to inspect its books at any stage of the proceedings, but it will not do so upot;l' the mere filing of the bill, or after service and before answer, except upon the most pressing necessity; since defendants may deny that plaintiff is a shareholder, or may set up that the charter or by-laws modify his right to Buch inspection.

InEquity. Bill by Louis Ranger against the Champion Cotton-Press Company ,and others. Heard on a motion for leave to inspect the books of the defendant company. Denied. Mitchell &; Smith, for complainant. Lord, NathanB &; B'rJjan, for defendants. SIMONTON, District Judge. Motion for leave to inspect books of the defendant company. This bill was filed on 24th June ult. It is by one claiming to be a corporator in the Champion Cotton-Press Company against the corporation, B. F. McCabe, Mrs. Elizabeth Dowie, and her husband, Margaret B. Mure, William Mure, and William Fatman. It alleges that the capital of the company is $84,000, divided into 120 shares of 8700 each, of which the company has 19, Mrs. Dowie 15, Miss Mure 15, William Mure 10, E. D. Mure 6, William Fatman 20, and B.F. McCabe 15, and these, with the 20 shares held by complainant, constitute all the capital stock; that McCabe is president and superintendent and William Mure vice president and secretary and treasurer; that no exhibit of the affairs of the company was made; no annual meeting held in 1891, as required by the by-laws; that at the annual meeting held in 1892, complainant requested and demanded a full exhibit of the business of the company, and leave to examine its books for the purpose of ascertaining the condition of its business, and that these were peremptorily refused by the president and other officers. It charges mismanagement by Mr. McCabe as president, and misuse of the funds of the company, especially of a fund of $25,640.95; that this sum should be divided among the stockholders; and that Mr. McCabe and the other officers refused so to do. Charges that the funds of the company have been deposited in the name of B. F. McCabe, and are drawn on his check, whereas the by-laws require them to be deposited in the company's name, and drawn out by the check of the treasurer, countersigned by the president; that the president makes use of his position, ,'aided by the treasurer, in evading any accounting by the former; that complainant is entitled to an examination and inspection of the books of the company by" himself, or by his attorneys and experts, and that this is wholly denied to him by the president aud other