Lapas attēli
PDF
ePub

sale the Circuit Court was administering the laws of the state and was bound by the same rules which govern the local tribunals. Security Trust Co. v. Black River National Bank, 187 U. S. 211, 227, 23 Sup. Ct. 52, 47 L. Ed. 147. Since the defendant Brun, before the final hearing in the court below, presented to that tribunal a supplemental crossbill for the allowance and payment out of the proceeds of the sale of the property of her expenses of administration and of an allowance to her as a widow, that court should have permitted her to file her bill and should have heard and determined the claims it presents. French v. Gapen, 105 U. S. 509, 525, 526, 26 L. Ed. 951. No decision is now made nor intimation given upon the question of the alleged laches of Brun or upon any other issue of law or of fact which the crossbill does or may present. These questions do not appear to have been considered or decided by the court below, and they are reserved until its opinion upon them shall be heard. The conclusion is that the proceedings taken in the county court after the commencement of this suit without leave of the court below were incompetent and useless to affect any lien upon, or interest in the real estate here in controversy, or in its proceeds, or to adjudicate any issue which conditions any such lien or interest, and that the court below was vested with exclusive jurisdiction and charged with the duty to hear all claims of this nature adverse to those of the complainant.

The decree below must accordingly be reversed, and the case must be remanded to the Circuit Court, with directions to permit the defendant Brun to file a cross-bill

, to allow the complainant to demur or answer to it, and to take further proceedings not inconsistent with the views expressed in this opinion.

MONMOUTH INV. CO. et al. v. MEANS.

December 22. 1906.)

(Circuit Court of Appeals, Eighth Circuit.

No. 2,409.

1. EXECUTORS AND ADMINISTRATORS-ACTIONS-ADMINISTRATORS WITH WILL

ANNEXED-INTERVENTION.

Where, on the filing of a bill by one coexecutor against another, complainant filed a petition to remove his coexecutor, which was met by an answer and a cross-petition for the same relief with reference to complainant, whereupon the probate court removed both and appointed an administrator with the will annexed, the latter was entitled to intervene

and maintain the bill alone for the benefit of the estate. 2. SAME-JURISDICTION,

Where the United States Circuit Court acquired jurisdiction of a suit by an executor against his coexecutor to prevent the latter from injuring the assets of the estate, no subsequent change in the personnel of the executors of the estate and the substitution of an admiúistrator with the

will annexed could oust such jurisdiction. 3. CORPORATIONS-HOLDING COMPANY_EFFECT.

Where a corporation was organized merely to be a holding company for the partnership adventures of decedent and M., and thereafter, by reason of the manipulation and control of M. through the company's subservient directors, it was wholly within his control after decedent's death, the corporation did not in reality represent the interests of the two partners.

[ocr errors][merged small]

4 EXECUTORS-COEXECUTORS-RIGHT TO SUE,

One executor may sue another under circumstances where questions arise between the estate and the derelict executor jeopardizing the rights of persons interested in the estate.

(Ed. Note.-For cases in point, see Cent. Dig. vol. 22, Executors and Ad.

ministrators, $ 1662.) 5. PARTIES-JOINDER.

Where an executor or administrator refuses or cannot properly join in a complaint by a coexecutor for the benefit of the estate, such refusing executor may be made a codefendant.

[Ed. Note.--For cases in point, see Cent. Dig. vol. 37, Parties, $8 54, 55;

vol. 22, Executors and Administrators, 88 1766–1768.) R. COURTS-FEDERAL COURTS-JUBISDICTION-DIVERSITY OF CITIZENSHIR.

Where a nonresident citizen who was a coexecutor of an estate was entitled to şue in the federal courts for the benefit of the estate, the fact that another executor qualified in the state of the situs of the estate did

not preclude the nonresident executor from resorting to the federal courts. 7. EXECUTORS AND ADMINISTRATORS-ACTIONS JURISDICTION-REMOVAL OF Ex

ECUTOR-EFFECT.

Where a bill Aled by an executor against bis coexecutor sought to enJoin the latter from consummating and carrying out a wrongful scheme to despoil the estate and to get control of its interests represented by an outside corporation, the probate court had no jurisdiction in equity to enjoin defendant from consummating such act, and hence the fact that the probate court intervened by displacing the defendant executor with an administrator with the will annexed did not require a dismissal of the

bill. & EQUITY-ADEQUATE REMEDY AT LAW.

The adequate remedy at law which will deprive a federal court of equity jurisdiction must be one as certain, complete, prompt, and efficient to attain the ends of justice as that in equity.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 19, Equity, $8 151, 152.1 9. INJUNCTION-INADEQUACY OF REMEDY AT LAW-RESTRAINING NEGOTIATION

OF NOTE--CORPORATIONS--ACTION BY STOCKHOLDER.

A corporation was formed as a mere holding company for the partnership adventures of .decedent and M. Decedent was indebted to the corporation which held bis stock to secure notes given therefor, and after his death it was discovered that he bad appointed complainant, R., and M. his executors. Both qualified, but M. refused to permit R.'s election as a director, electing in his stead M.'s son, who was a young man without business experience, and secretly caused the directors of the corporation to vote himself $15,000 for back salary without either authority or consideration, for which M. caused the corporation to execute its note to him. M. refused to permit R. to examine the books until R. had consented to turn over $15,000 of the assets of the estate to the corporation, when the vote of back salary was discovered. Held, that the estate had no ade quate remedy at law to protect its interest in the corporation as against such salary note, and was therefore entitled to an injunction to restrain

M. from negotiating it. 10. CORPORATIONS-OFFICERS-SALARIES.

In the absence of some direct authorization or employment by the gov. erning board of a corporation creating the obligation, the presumption is that the services of the officers of the corporation are performed without salary, so that the voting of back salary to the president of a corporation was without consideration, and void.

[Ed. Note. For cases in point, see Cent. Dig. vol. 12, Corporations, 86

1334-1337.) 11. SAME-STOCKHOLDERS-RIGHT TO SUE.

Equity rule 94, providing that a stockholder shall not maintain an ac tlou against the corporation for its benefit without a previous demand on

the managing directors to take action, has no application where the directors are shown by the bill to be in league with the president who, through • them, was using the corporation to defraud the complainant as executor

out of the estate's interest in the corporation. Appeal from the Circuit Court of the United States for the District of Colorado.

This is an appeal from an order of the United States Circuit Court for the District of Colorado granting a temporary injunction. The bill of complaint was filed on the 29th day of Deceniber, 1905, by Harry F. Ross-Lewin, as executor of the estate of George E. Ross-Lewin, against the Monmouth Investment Company, the State Investment Company, Henry A. McIntyre, Frederick A. Williams, and Newell W. McIntyre; the said Harry F. Ross-Lewin being a citizen of the state of Illinois and the defendants citizens of the state of Colorado.

The controversy, as shown by the bill of complaint and the affidavits, grows out of substantially the following state of facts: George E. Ross-Lewin, the brother of the complainant, and the defendant Henry A. McIntyre, both of Denver, Colo., were associated together in large real estate dealings and enterprises, in equal interests. In July, 1903, they had organized the Monmouth Investment Company, a Colorado corporation, as a holding corporation of their respective interests. The stock of this company was divided into 1,000 shares of the par value of $100 each. At the time of the organization of the company the interest of said McIntyre, except one share, stood in the name of the State Investment Company, one of the defendants alleged to have been in reality owned and controlled by said McIntyre, although in that company only one share of its stock stood in his name, the balance standing in the names of members of his family; and at the time of the death of said George E. RossLewin, hereinafter stated, the stock of said Monmouth Investment Company stood one share in the name of Henry A. McIntyre, who was treasurer and manager thereof, one share in the name of aid George E. Ross-Lewin, who was president thereof, one share in the name of Frederick A. Williams, one of the defendants herein, who was vice president thereof, 499 shares in the name of the State Investment Company, and 495 shares, being the shares of said George E. Ross-Lewin, stood in the name of said Henry A. McIntyre as trustee, claiming that they so stood as a method of pledging them for certain obligations of said George E. Ross-Lewin to the Monmouth Investment Company, and one share appearing to be unissued.

On the 14th day of July, 1905, the said George E. Ross-Lewin died at Denver, Colo., leaving a will, naming his brother, the said Harry F. Ross-Lewin, and the defendant Henry A. McIntyre, his executors, which will was duly probated in the county court at Denver, Colo., in the month of September, 1905; the said executors duly qualifying. The bill charges that prior to the funeral of said George E. Ross-Lewin, and prior to the arrival of the complainant at Denver, from his home in Chicago, for the purpose of attending the funeral and to the affairs of his brother's estate, a meeting, as complainant afterwards learned, was held by the surviving directors of said Monmouth Investment Company, to wit, Henry A. McIntyre and said Williams, at which meeting Newell W. McIntyre, one of the defendants, a son of said Henry A. McIntyre, to whom was then issued the unissued share of stock, was elected a director in the place of said George E. Ross-Lewin, and he was also made secretarythe said Newell W. BcIntyre was then attending college in the East. These facts were not known to the complainant until subsequently, when he made inquiry respecting the vacant directorship, and suggested that as an executor of the estate he ought to be made a director. Mr. McIntyre declined to concede this, saying that he controlled the stock and was unwilling to permit the complainant to be upon the board of directors.

The bill further charges that, although the complainant was much dissatisfied with the foregoing refusal of said Henry A. McIntyre, he nevertheless, upon the promise of said Henry A. McIntyre that he would send him monthly statements in the nature of a trial balance showing the status of the company,

151 F.-11

and the further promise that he would not dispose of any important part of the property of the company or involve it in important transactions without informing the complainant so as to afford him an opportunity to interpose any objections he might have, acquiesced in what was done. But after sending such statement, of date August 31, 1903, and giving him some information, he did not keep his promise to send such monthly statements, although often requested thereto. Afterwards, about the 19th day of December, 1905, the complainant went to Denver for the purpose of attending to the affairs of the estate and looking after said company, to become informed of the true situation, and, upon calling on said Henry A. McIntyre, he refused him any access to the books of the company until the afternoon of the 22d of December, and thereupon he discovered what nurported to be minutes of the board of directors, of date September 11, 1905, at which said Henry A. McIntyre, Newell W. McIntyre, and Frederick A. Williams were present, showing the following resolution offered by said Williams and adopted, to wit: "Whereas the board has never fixed the salary of Mr. McIntyre, the manager of this company, who for the past two years has been secretary and treasurer and sole manager, and who is now president and treasurer and sole manager of the business of this company, therefore be it resolved that the salary of Mr. McIntyre be fixed at six thousand dollars per annum, to date froin July 1st, 1903, and until the further pleasure of this board."

The minutes of this meeting showed that said Henry A. McIntyre did not vote for said resolution. The bill charges that this action was wholly unwarranted, wrongful, and a fraud upon the estate; that at said meeting Henry A. McIntyre was authorized, in his discretion, to make any loans for the use of the company which he might deem necessary, and said minutes were signed by the secretary and by all three directors. The bill further charges that said Henry A. McIntyre is paying, from the funds of said Monmouth Investment Company, all the rent and office expenses, including the salaries of tiro employés, of the offices occupied in said city, not only by the said Monmouth Investment Company, but by said Henry A. McIntyre for his own purposes, and by the State Investment Company, who do a large business in said offices, using said employés.

It is further shown that the Monmouth Investiment Company's assets consist largely of real estate in the city of Denver, subject to mortgages, and that the action of said Henry A. McIntyre and Frederick A. Williams in selecting said Newell W. McIntyre a director with said Williams, who have no beneficial ownership in the shares held by them, they became mere dummies in the hands of said Henry A. McIntyre, enabling him to take action at any time empowering him to dispose of any and all of the property of said Monmouth Investinent Company in such manner as he pleases, without the knowledge or approval of the complainant or any opportunity to ascertain the real nature of the transactions or to guard the interests of the estate therein. While the Monmouth Investment Company is the owner of much valuable property, much of which is mortgaged, and has not paid any dividends or earned any money other than such as was needed to apply upon the indebtedness of the company, yet, if economically administered in the interest of the estate and stockholders, profitable results would come therefrom, but it will not be so managed by its present directors; and neither the estate nor the beneficiary thereof, who is a minor child of the testator, would derive any benefit therefrom. Unless said Henry A. McIntyre is restrained by the order of the court from paying himself the salary in arrears aforesaid, great detriment and injury to the company and estate will ensue therefrom. The bill alleges the refusal of said Henry A. McIntyre to agree to a dissolution of the corporation and the winding up of its affairs.

The prayer of the bill is for the appointment of a receiver and the dissolution of the company, and that said Henry A. McIntyre, Newell W. McIntyre, and Willianis be enjoined from interfering with the affairs of the Monmouth Investment Company, or from disposing of or incumbering its assets, and that they be enjoined especially from paying the whole or any part of the salary voted or appearing to be voted by the directors of the company to the said Henry A. McIntyre.

[ocr errors]

It is disclosed by the affidavits at the hearing that the executors had collected $13,000 on the life insurance policy of the said George E. Ross-Lewin, which sum Henry A. McIntyre importuned the complainant 10 pay over to the Moninouth Investment Company; there being indebtedness from the estate to said company, which the complainant declined to do unless the estate could be safeguarded in giving this preference to the Monmouth Investment Company. When the complainant came to Denver in December, 1905, to look after matters, Henry A. McIntyre refused to permit him to see the books of the company until he had sigued a petition to the probate court for and they had paid over to the Monmouth Company the $15,000, after which the complainant was permitted to see the books, when he discovered the vote to pay the said salary.

It was further developed on the hearing of the application for a temporary injunction that on the 29th day of December, 1905, the day the biil of com-. plaint was filed, the complainant made petition to the probate court for the removal of said Henry A. McIntyre as coexecutor of the will, to which said McIntyre made answer and a cross-petition asking that the complainant be removed as such executor. Later, after the hearing of the application for a temporary injunction on the bill of complaint herein, the probate court appointed Rice W. Means administrator with the will annexed of the estate of George E. Ross-Lewin, who has since been substituted in the place of said Harry F. Ross-Lewin as appellee.

On the 24th day of January, 1906, the Circuit Court, after hearing, made its order granting a temporary injunction, directing that said Henry A. MCIntyre individually and as president of the Monmouth Inyestment Company, and the said company, be enjoined from paying or negotiating said note of $15.000, or making any payments to the said McIntyre of the salary so voted to him, or any part thereof; and enjoining said McIntyre from receiving or collecting any such salary, or any part thereof, until the further order of the court. It further ordered and decreed that said company and McIntyre as president and individually be enjoined from borrowing on the credit of the company, or as an officer thereof, any sum or sums for any purpose whatever, until the further order of the court.

From this restraining order, the defendants below have appealed to this court.

Tyson S. Dines (E. E. Whitted and O. L. Dines, on the brief), for appellants.

Henry F. May (John S. Macbeth, on the brief), for appellee. Before SANBORN and VAN DEVANTER, Circuit Judges, and PHILIPS, District Judge.

PHILIPS, District Judge, after stating the case as above, delivered the opinion of the court.

The first eriticism made upon the bill is that, its main purpose being to protect the estate of George E. Ross-Lewin from spoliation or loss, any right of action therefor was vested in the joint executors, and this complaint cannot, therefore, be maintained in the name of only one executor. If the law were that a court of equity could not obstruct and restrain acts of a coexecutor which he is threatening to execute for his individual benefit without the complainant joining the wrongdoer in the bill, it would present the anomaly of a party in his official capacity suing himself in his individual capacity, charging himself with fraud or wrongful acts to the injury of the estate committed to his protection. As said in Pearson v. Nesbit, 12 N. C. 315, 17 Am. Dec. 569:

"A suit at law is a contest between two parties in the court of justice; the one seeking and the other withholding the thing in contest. The same in.

« iepriekšējāTurpināt »