Opinion of the Court. bondholders without any security, the transaction was fraudulent, and the Rapid Company was a party to the fraud. (4) The evidence showed that the Rapid Company knew that the Bankers' Company had no money of its own with which to build the Western lines, and that the money for such construction was being raised by the sale of the Bankers' Company's bonds, and also knew that the purchasers of those bonds had been informed by the Bankers' Company that the bonds had been secured by a deed of trust to the Farmers' Loan and Trust Company on all the lines which the Bankers' Company then had, and on all which it might thereafter build; and the Rapid Company, so knowing, and having kept secret its agreements of August, 1883, was estopped from claiming any part of said lines as its property or as having been built for it. (5) The Western lines, as a matter of fact, never were completed by the contractors for the Bankers' Company, and never were in fact delivered to that company before the appointment of the receivers in the foreclosure suit against it; so that it was never in a position to deliver the lines to any other company, even if the contract for such delivery had been honest and valid. (6) The lines were never delivered by the Bankers' Company and were never received by the Rapid Company; no settlement was had between the companies; the Bankers' Company was never in a position to deliver the lines, never having had possession of them; the lines were put in possession of the receivers appointed in suits commenced by the contractors; afterwards they came into the possession of the receivers appointed in the foreclosure suit; and those receivers were authorized to issue $130,000 in certificates, and secure the same by a deed of trust to the Farmers' Loan and Trust Company. (7) The Bankers' Company having failed to pay the amount due to contractors for construction and material, and receivers' certificates having been issued, the property came into the possession of the receivers of the Bankers' Company, and was never in the possession of the Rapid Company or of its receiver. (8) Afterwards, it being impossible to finish the lines and Opinion of the Court. to keep them in repair from the earnings, the deed of trust made to secure the receivers' certificates was foreclosed; the receiver of the Rapid Company, duly appointed by the Circuit Courts of the United States in Connecticut, New York and Ohio, became a party to said action; and in that action a decree was entered that the property be sold for the payment of the receivers' certificates. (9) The receiver of the Rapid Company, having been a party in the foreclosure suit in Ohio, was bound by the decision in that case; the ownership of the lines now in dispute, from Cleveland to Chicago, was settled in that suit by a court of competent jurisdiction, in a case where all the necessary parties were either plaintiffs or defendants, and such decision was final and binding upon all. (10) The court below was misled, and supposed that the suit in Ohio had been decided upon the merits against the appellants in this case, or had been dismissed. (11) The decree herein should be reversed and the property restored. But we are of opinion that the line from Cleveland to Chicago became the property of the Rapid Company and was subject to the mortgage made by that company. That result was contemplated in the agreement of August 28, 1883, and in the mortgage of September 15, 1883. The $3,000,000 of bonds issued under that mortgage were delivered to the treasurer of the Bankers' Company on March 3, 1884. It was deliberately agreed between the two companies that the new lines in the West were to be built, were to belong to the Rapid Company, and were to be part of the security for the Rapid Company's bonds. The force of that agreement was not impaired by the fact that the Bankers' Company had made the further agreement of August 29, 1883, to exchange those bonds for stock, so far as the stockholders of the Rapid Company might elect to make such an exchange. Those who took the bonds from the Bankers' Company under the circumstances were authorized to expect that the company would perform its agreement, which was to give added security for the bonds, and they had a right to rely on such performance. Opinion of the Court. The line from Cleveland to Chicago was completed in compliance with the agreement, and was intended to be pro tanto a performance thereof. No further delivery of that line was practicable or requisite, than that which was made by connecting it with the system of the Rapid Company and using it as a part of that system. The same officers represented both companies, and both companies had the same general manager. His duty to his two principals, namely, the trust on the one side to deliver and on the other to receive the property, was sufficient to effectuate the necessary delivery from the Bankers' Company to the Rapid Company. There is no ground for assailing the good faith of the agreement of August 28, 1883. It was entered into with perfect good faith on the part of the Rapid Company, and with every appearance of good faith on the part of the Bankers' Company; it violated no principle of law and no rule of good morals; and if it had been fully carried out, it is probable that both parties would have realized from it the benefits which they anticipated. Nor is there any force in the objection that the agreement was ultra vires, on the part of the Bankers' Company. The statutes of New York authorized and justified it. The general power of a corporation to hold property in States other than the one which incorporated it, (in the absence of statutory prohibition in such States,) is firmly established. The Bankers' Company received the benefit of the August agreement, through which alone it acquired control of the Rapid Company, it enjoyed that control, took all the receipts of the Rapid Company's business, profited by the good will which that company had acquired, and thus obtained a benefit from the August agreement, which is beyond its power to restore; and the bondholders of the Bankers' Company, who are simply its creditors, and became such after the August agreement was made, are bound by the agreement made by it within the scope of its corporate powers. It seems quite clear that the equities of the plaintiff and of the bondholders of the Rapid Company are superior to those of the bondholders of the Bankers' Company. The after Opinion of the Court. acquired property of the Rapid Company, described in its mortgage, became subject to such mortgage as fast as it was acquired. Dunham v. Railway Co., 1 Wall. 254; Galveston v. Cowdrey, 11 Wall. 459. The equities of the two appellants are no greater than those of the bondholders of the Bankers' Company. It is well settled that a sale of real estate under judicial proceedings concludes no one who is not a party to those proceedings. Neither the Rapid Company nor the plaintiff was a party to the suit for the foreclosure of the mortgage of the Bankers' Company. Therefore, whatever title either of them had to the property which was attempted to be sold in that foreclosure suit, remained unaffected by the suit. The same fact is true of the attempted sale in the Ohio proceeding, set up in the answer. Neither the Rapid Company nor the plaintiff was a party to that proceeding, and the attempted sale under it did not bar or impair their rights. Moreover, it is quite clear on the proofs that both of the appellants had notice of the title of the Rapid Company and the plaintiff. It is, therefore, unimportant to give special consideration to the Ohio proceeding, or to any claim based by Stokes upon it; and the fact is immaterial whether the sale under that proceeding was set aside, or whether the order setting it aside was subsequently reversed. There was nothing in the Ohio proceeding which could divest or impair the lien of the Rapid Company's mortgage, or the rights of the plaintiff as trustee for the Rapid Company's bondholders. For these reasons, we are of opinion that the Circuit Court did not err in deciding that the Western lines came under the mortgage of the Rapid Company, and ought to pass under the foreclosure of that mortgage. We have considered all the points made by the appellants, and are of opinion that there is nothing substantial in them, and we have remarked upon them as fully as seems to be Decree affirmed. necessary. MR. JUSTICE FIELD and MR. JUSTICE BREWER dissented. Opinion of the Court. HORNER v. UNITED STATES. CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT. No. 1247. Argued January 17, 1893. - Decided January 30, 1893. Certain bonds issued by the Government of Austria, held to represent a 'lottery or similar scheme,” within the meaning of § 3894 of the Revised Statutes, as enacted by the act of September 19, 1890, c. 908, (26 Stat. 465); and a given circular held to be a “circular concerning any lottery, socalled gift, concert or other similar enterprise offering prizes dependent upon lot or chance," within the meaning of said § 3894; and the said circular held to constitute a "list of the drawings at any lottery or similar scheme," within the meaning of said § 3894. What is a lottery, considered. Cases in the United States and England, considered. Although, by the bonds in question, Austria attempted to obtain a loan of money, she also undertook to assist her credit by an appeal to the cupidity of those who had money, and offered to each holder of a bond a chance of obtaining a prize dependent upon lot or chance, the element of certainty going hand in hand with the element of lot or chance, but the former not destroying the existence or effect of the latter. THE case is stated in the opinion. Mr. Herman Aaron, (with whom were Mr. Alfred Taylor and Mr. Frederick S. Parker on the brief,) for plaintiff in error. Mr. Assistant Attorney General Maury for defendant in error. MR. JUSTICE BLATCHFORD delivered the opinion of the court. This is an indictment found May 16, 1892, in the Circuit Court of the United States for the Southern District of New York, founded on § 3894 of the Revised Statutes, as amended by the act of September 19, 1890, c. 908, 26 Stat. 465. The section, as so amended, reads as follows: "No letter, postal card or circular concerning any lottery, so-called gift concert, VOL. CXLVII-29 |