FIRST NAT. BANK fl. MOORE.
799
failure of the pasture company to pay its liabilities to them, and that they therefore made an assignment of their property to their co-complainant McCampbell, for the use and benefit of their creditors. There was no objection, under these circumstances, to making the partners of Doddridge & Co. co-complainants with the assignee, because it appears from the face of the bill that there may be a surplus after discharging the liabilities of the partnership, which might, in that event, be decreed to the partners themselves.
FIRST
NAT. BANK OF
ALMA, KAN.
fl. MOORE
et ale
(Cirouit Court, 8. D. Ohio, E. D. January 28, J.892.)
1.
EQUJ'I'T l'LBADINO-'l{ULTIlI'ARIOU8NESB.
In Eq·uity. Suit by the First National Bank of Alma, Kan., for the use ofFrank I, Burt, receiver, against David H. Moore and Augustul!' Norton, the First National Bank of Athens. and the Pomeroy Bank; of Pomeroy, Ohio, for the cancellation of certain certificates, and the return of certain 110tes held' as collateral security therefor. Heard on demurrer to the bill. Overruled. The bill sets forth that the First National Bank of Alma was duly organizedunder the national banking act, and for more than two years last past has been doing a general national banking business at Alma,in the state of Kansas,under and by virtue of said organization; that, during the time said bank was engaged in business, John F. Limerick, of Alma,.wasJts president, and had principal charge and control ofits business, and. his wife, Mary Limerick, was assistant cashier; that they two had the entire charge and management of the bank, except as the board of directors might otherwise direct, and that they were also directors; that the .stockholderswere largely residents of other states; that the defendants Moore and Norton are officers in said First National Bank of A.thens and said Pomery National Bank, the said Moore being cashier of the First National Bank of Athens, and vice-president ofthe Pomeroy National Bank, and Norton president of the First National Bank of Athens,. and an officer and director of the Pomeroy National Bank; that said defendants gave their personal and entire attention to the conduct-
800
UDERAL REPO;R'l'ER,
voL 48;
iug, of the affairs and business of said ,banks; that theYl;lre experienced baukers, and that the business transactions with the First NationaJBank of Alma were conducted by said defendant Moore, as were transactions of said banks with said John F. Limerick or said Mary Limerick, the officers of said Athens bank and said. Pomeroy ,bank and their era knowing and ratifying the actions and doings of Moore.. The bill further sets forth that ·ontlle.l0th of November, 1890, the comptroller of the currency, being satisfied tbatthe Alma bank was solvent, placed a duly-authorized bank examiner in possession of its assets; and on the 21st of Frank I. Burt receiver of said bank; and on the 28th of November, 1890, he took possession, and has since remained in possession and control, of the assets, property .business !>f the . .; The bill further avers that the defendants have filed with said receiver claims based upon certificates issued by the Alma bank, as follows: In favor of Norton, Moore, and the Athens hank, $13,591.53 ; and in favor .Pomeroy bank, $2,500; elLGh of said claims with 8 per cet,lt: The complainant sets forth that the entire claims so. filed and asserted are frlludulent,and that !;laid fraudulent dealings()f said Moore for hiniselfanddefendants have largely contrib\lted to the insolvency of the Alma bank. Complainant charges that saidJ\1oore, for himself and his co-defendants, who had fulllmowledge of Moore's proceeaingElin this business';induced saidLimerick,presidentof the Alma bank, and said M.ary Lh:nerick, assista.ntcashier,. to issue, over their .sigpittp;res,. ns.:pfficers of saId bank, certificates of deposit in blank, so far as the name of the depositor was concerned, but for large amounts of money, and at a lirge' rata.: of interest. These certificates were sent or: givem:'to' Moore, andbyl'Hmsold or otherwise disposed of, and the proceeds appropriated to his own, use and the use of the othpr defendants herein, often Without retlirning to the Alma bank any consideration,whatever, and generally 'no money passed fl.t the time wliensaid certificates were, issued,. The bill enters into details of the fraudulent'devices and contrivances whereby Mooreearried iritoeffect his designs; a.nd sets forth that in July, 1890,hewent to Ahila, taking with him an attortreyfrom Kansas City, and having in his possession a large number of time certificates of deposits purporting to have been issl.led by the Alma bank, and also promissory notes which he had obtained from John F. Limerick ; that he then demanded payment of said gertificatesand notes, and that at that time he also examined into the condition of the Alma bank, and that he and his co"defendants then knew that said bank was utterly solvent, and unable to pay its indebtedness; that he then, for himself threatened Limerick, acting as president of the and his bank, that upon his refufOal to issue time certificates, bearing interest, for the amount claimed to be due himself and his co-defendantsonacc.ount of said certificates and promissory notes, with a quantity of the promissory notes belongingto said bank as collateral security, he would at once call for a bank examiner to be sent to said bank, and the result would be ·that it would be closed, and a receiver appointed;: that by
FIRST NAT. BANK v.
MOORE.
801
these he induced said JohnF. and Mary Limerick to issue to him a large number and amount of time certificates of said AlUla bank bearing interest, and substitute them for other certificates previously issued. The bill avers that the claim made by said Moore and the defendants against the Alma bank is based upon certificates so obtained. The amount of the notes of the bank procured by Moore as <''Ollateral is, as set forthih the bill, which gives a list, with the name of the maker of each note and its amount, abotit$23,244.57. The defendants refuse to return said notes to the Alma bank or to its receiver, and have placed them in the hands of their attorney at Kansas City, with directions to bring suit for their collection, and suits have already heen brought upon some of said notes ill Kansas. The said notes constituted nearly all the available ptomissory notes belonging to said Alma bank upon which said receiver could depend for money to ·pay its indebtedness. The real estate of said bank amounts to about $5,000 in value; and the claims of creditors, other than the defendants herein, to about $22,000. The assets ofsaid bank, outside of said promissory notes so taken and claimed by said Moore for himself a:nd co-defendants, are not sufficient to pay more than 50 per cent. of the indebtedness of the bank. The prayer of the bill is that the certificates aforesaid, upon which defendants base their claims, be declared void, and that they be delivered up and Canceled; that said several promissory notes be declared to be assets of said Alma bank, and defendants be ordered to at once deliver them up, together with any proceeds realized therefrom; that, if any judgments have been obtained by defendants upon any of said notes, the saIPe be declared to be for the use and benefit of said Alma bank j and that by the decree of this court the entire dealings and business between said bank and said defendants may be fully settled and determined; and an injunction issue restraining the defendants from selling or disposing'of any ofsaid promissory notes, or from collecting or bringing suit upon the same. The defendants demur for multifariousness, fol'insufficiency, and for .:.; . 'want ofeql,lity. Van Zile& Robson, for complainant. Tom George and L. M.'Jewett, forrespondeD;ts. SAGE, J '.' (after stating the fact8.) Although it appears from the bill that the Athens National Bank and the Pomeroy National Bank entirely distinct and independent of each other as national banks, it also appears that the defendlmt Moore is cashier Of the Athens bank,and of the Pomeroy bank, and the defendant Norton president of the Athens bank, and an officer and diredor of the Pomeroy bank j and that they acted in concert in the prosecution of the fraudulent scheme set forth in the bill.· It is true that the proceeds of the fraud were' divided among the defendantf,'!. The claims filed with the receiver in favor of Norton, Moore, and the Athens bank aggregate $13,591.53, with interest, and the cla.im in favor of thePom'eroy bank is $2,500, with The rule stated by Sir JOHN LEACH in Salvidge,v. Hyde, v.48F.no.10-'-51
802;
appli6$,j""tthatthe test is .not whetblilr;elloo is connected wilhevery branch of the case, but wheth,er the bill seeks relief in respect of in their nature separate and distinct. "I(theOl)ject of the suit be sillgle",but it happens that different persons questions whicb ,arise out of that sinhave separate gle object, it necessa,rily follows that such different persons must be brought before the court, in Qr4er that the suit may conclude the whole, objeot.» The relief sought is. the cancellation and delivery of all the fraudulent and the surrender of the securities obtained.Tpe to the ,fraud set forth in the bill will bear alike upon the claims of. eschof the defendants, ami the circumstaQce tbAt;if the decision in ,favor, of the cqmplainant, it may be necessary: to so shape the to require the surrender by the defendants 01 the. certifiQAtes or. ;s6Qurities held by them respectively, is not mtl,terial; las affecting-the q,uestion of In Turner v. Robinso1J;, l,:Sim. & S.. 313, tqebill was filed agaiqst the personal reP'" two depeQ,ents, :and'l\ demurrer for multifariousness was ,i Yice-Chancellor:LE,A,(lB said that, as title to their shares of the two estates was· derived under the SI-llne instrument, they were entitled to unite the of both estates in the same suit; an,d that, the bill "aE! not multi/arious. In Grant v. 8wl'anceCo.,121 U. S. 1Q5, 7 Sup. ,Ct. Rep. 841, a cestui que trust under to secure 26trust.deedS of land, eJtecuted to,5 different se41 of tbe payment of money, filed a :bill for the sale of the land. Some of the deeds covered only a part of the land, and but one of them covered the wholE!, ,The bill alleged that the trusteell named in 22 of the deeds declined to eJtecute thE! trusts. The hQlders of judgments and mechanics' liens and, pJ1rchasE!rs, of portions of the land were made defendants. Some of thE! trust-deeds did not specify Ill'lY length of notice of the time and place of saleby.,l;tdvertisement. It Was held that the bill was not multifarious. Coullsel for the defendants urge that the test one defenseQan be: tq, ,the entire.· bill, ,citing Attorney General v. St. John'8 CoUege, 7 Sim. 241; and insist that none of the certificates mentioned in thEl bill of complaint are owned by the, defendants bill is not multijointly. Applying their own test thus farious. There is but one defense, and that goes to the entire case. It is to the charges of fraud, ma\ie bytbe complainant. If they are not sustained, thecomplaipant has no equity, llndJhe decree will be i,n favor ofiAedefendants. , If, therefore, the defendants 'rill apply those. charges, they will have no octhemselves to;meeting casion for any .other or further or defense. The objection that the bill is multifarious is not well taken. The demu;rer f9rinsufficie{\cy,and for want 9(equity mustalso be Tbebill clear and flagrapt ,case of fraud, which may be also!Cl."iminal \lIld,er t\le provisions of section 5209, Rev. St. U. S. The principles upon wllich,the jurisdiction in equity in such a case is maintained are elementary. Equity alone, c;an afford adequate and complete relief by a decree for the cancellation apd delivery of the
, HAZLEHURST COMPRESS&: MANUP'G CO. t1. BOOMER
at B. COMPRESS CO.
803
fraudulent certificates and surrender of the securities fraudulentlyobtained. These propositions are so plain and familiar as to need no verification by the citation. ofauthorities.' It is true that there is a remedy at law, as there is in every case of-fraud; but, the jurisdiction in equity and at law in relation to fraud being concurrent, a defendant has no right to complain if the complainant selects that tribunal where he can obtain the most ample and satisfactory The demurrer will be overruled, and the defendants allowed 20 days within whicbtopl'eparp answEn'S, them to the court, with . application for leave to tile.
I!AZLP:HURST COlU'UIlS
&
MAluJF'a PRESS
CO.'
Co.
v. BoOMER
BOSCHERT
CoM:-
(Otrcutt Oourt of .AppeaZs, 1!Vth Oircuit. December 7, 189L) 1. SALE-WARRANTY-EvIDENCE OP BREAOlL
A cotton-press was sold with certain warranties, with the proviso that. "when it has performed its work in a successful manner,half cash is to be paid." The press was set up in November, 1887, and over 700 bales were pressed that season; and in the following January the cash'payment was made, the purchasergiving a certificate recommending the press all a "practical maclline in every respect. " In November, lti88, the purohaser wrote that two nuts On the screw had broken, and that until that break the press had been doing good work, and asked an extension of time on the deferred payments, because of the small business done that y.ear. Subsequently the request was repeated On the same ground, and an extensionwas granted. Over 1;100 bales were pressed in 1887-8ti, and over 4,OUU in 1888-89. A further pf\yment was made in 1889. No complaint of breach of war.. ranty was made until January.. lti90. HeZd, that this was .almost conclusive aiaiust a olaim of suoh breach as a derense to a suit for the balance of the purchase money, and its efrect was not overOome by the testimony of unskilled workmen and unsoientifio persODS that the preas would not work to the guarantied pressure of 800 tons, such testimony being based malnlv on thl't fact that the bands ofton broke .from the expansion of the bales; especially'as it appl'are<1 that the bands were tied by unskilled workmen, and that the press had been strained by careless management. Evidence that two other presses of the same pattern faUed to work satisfactorily was competent, but the weight thereof was muoh impaired by the fact that one of them was the first made of that pattern, and was inferior to the one in question, and that the weight of the bales compressed by the other was above the average weight of cotton bales. A warranty that a cotton-press will prells "at the rate of 60 bales per hour," til not a warranty that it will press at that rate for a day of 10 hours, but only for a limited time.
S.
BUIE.
8.
SAHE-eoN8TRUCTION OF WARRANTY.
Appeal from the Circuit Court of the United States for the Southern District of Mississippi. Suit by the Boomer & Boschert Compress Company against the Hazlehurst Compress & Manufacturing Company to foreclose a mortgage to secure the balance of the purchase price of a cotton-press. Decree for complainant. Defen,dantappeals. Affirmed. R. N. Miller and J. S.Sexron, for appellant. S. S. 0alJuxm, for appellee. Before P ABDEE, Circuit Judge, and LOCKE and BRUCE, District Judges.