and others v.
(Circuit Oourt, 8. D. New Y01'k.
EQUITY PRACTICE-FILING CRoss-Bn,L SET'l'JNG ·DELAY.
DISCHARGE IN BANKBUPTCY
Leave granted defendants to file a cross-bill, setting up their dischnrg-eR in hankruptcy, nnless complainants elect to amend the prayer of their hill so as to waive any recovery against defendant.s for a debt whicll was not ereated by fraud, or while they were acting in a fiduciary character.
WALLACE, J. The defendants Duncan & Sherman move for leave to file supplemental answers to the bill, setting up their discharges in bankruptcy, which have been obtained since the cause was at issue. · A very long delay has taken place since the discharges were obtained, and, notwithstanding the extenuating circumstances which are offered in explanation, the delay is so unprecedented that, if the complainants had been to any extent prejudiced by it, the application could not be considered with any degree of favor. The transactions assailed by the bill are complicated, and numerous defendants are impleaded. Relief is prayed against all of them, assuming that they have participated in a fraudulent scheme by which the complainants were induced to invest in certain mortgage bonds; but relief is also prayed against some of them as trustees of a fund which came to their hands and was diverted in breach of their duty; and against others upon the theory that complainants can follow the trust funds into their hands. It may well be, under the allegations, that some of the defendants will be adjudged to account who were not guilty of any fraud personally, or who were not acting in a fiduciary relation towards c()mplainunts. No relief is prayed against either of the defendants Duncan or Sherman, exclusively, or as to transactions in which other defendants are not joined. 'rhe prMfs that have been taken would have been necessarily taken if these defendants were not parties to the bill. It is alleged in the moving affidavits that "no witness has been examined solely to establish the pretended claims of the complainants against the said defendants Duncan & Sherman, or either of them·; and that, had the discharges in bankruptcy of these defendants been pleaded immediately upon the granting of such discharges, the complainants would not have omitted to examine a single witness whom they have since examined; and that the course of procedure in the suit would in no respect have been different from what it has been had such discharge been so pleaded." The truth of this statement is not challenged, nor is its effect in anywise impaired by the opposing affidavits. Under such circnmstances, as the complainants have not been prejudiced, there is no just reason for denying the defendants the relief they ask. It would be premature upon this application to determine to what extent the discharges in bankruptcy will avail the as a
EX PARTE KOEHLER.
protection against the cletims made by the bill. It is sufficient for present purposes that the discharges may be available in part to protect them against the relief sought. The application has been presented as though the discharges may be set up by way of supplemental answer. The correct practice requires this to be done by means of a cross-bill. Miller v. Fenton, 11 Paige, 18; 1 Daniell, Ch. Pl'. 607; Story, Eq. PI. § 393; Taylor v. Titu8, 2 Edw. 135. Leave is granted defendants to file a cross-bill setting up their discharges, unless complainants elect to amend the prayer of their bill so as to waive any recovery against the defendants for a debt which was not created by fraud, or while they were acting in a fiduciary character.
----Ex parle KOEHLER, Receiver, etc.
rOhCttit COUlt, D. 01'egon. June 26,1885.)
MUTUAL AND DEPP;NDEN'f COVENANTS,
The covenants in the agreement of Oecemller 14, 1882, made between the Northern Pacific Terminal Company, of the first part, and the Northern Pacific, the Oregon Hailway& Naviga:i"n, and the Oregon & California Hailway Companies, of the second part" whereby the former undertook to furnish the latter terminal facilities at Portland, for which they agreed to pay, in certain proportions. the in.erest on the terminal company's bonds and the expense of maintaining such facilities, and i,eeping up it'! organization, as rent for the use of such facilities, are mutual and dependent, and therefore the terminal company, having failed to furnish said facilities, is not entitled to the payment of said interest and expenses. and the receiver of the Oregon & California Railway is inst.ructed to act accordingly.
In Equity. DEADY, J. On December 14, 1882, an agreement was entered into between the Northern Pacific Terminal Company, of the first part, and the Northern Pacific Railway Company, the Oregon Railway & Naviga. tion Company, and the Oregon & California Railway Company, of the second part, by which the terminal company undertook to construct, furnish, and maintain adequate terminal facilities, for the use of the parties of the second part,at and near Portland, including a railway bridge across the Wallamet, for the term of 50 years; in consideration of which said parties did "jointly and severally covenant, promise, and agree to and with the party of the first part, and for the benefit of each and every person who shall, or may at any time hereafter become a holder of said bonds, (meaning the bonds, not to exceed five millions of dollars in value, to be issued by the terminal company for the purpose of furnishing said terminal facilities,) or of any coupons therennto belonging, to pay to the party of the first part, as rental therefor, the following snms :
John W. Whalley, for the reCeIver.