6
FEDER!L BEPORTBR.
;,iff, are oitizens of New York, where the main office of the corpora.tion is also located. The suit was removed to this court upon the petition of- the defendant Fisk, a citizen of New Jersey, under seotion 2 of theaot of 1875, on the ground that the suit contains a oontroversy whilJh is wholly between himself and the plaintiff, who are oitizens of different states. A demurrer to the complaint was served by the dell'isk, on May 22, 1883, before the oause was at issue as to the other defendants; and at the June term, which was the first term of the superior court at which the issue of law npon the demurrer as to the defendant Fisk could possibly have beeniried, the cause was removed to this court. It was, therefore, removed in due time, and the first ground for remanding cannot be sustained. Johnson v. Johnlion, 13 FED. REP. 193; Cramer v. Mack, 12 FED. REP. 803; Knowlton v. Congress, etc., 13 Blatchf. 170: Forrest v. Keeler. 17 Blatchf. 522; [So C. 1 FED. REP. 459.] 2. The only other ground for the motion to remand 18 that the cause was not 'removable at all, because, as it is claimed, it does not contain any controversy which can be separately determined between Fisk and the plaintiff; and this involves an examinathe tion of the nature of the action. The complaint is in equity. In substance it alleges that. the defendants, shortly after the organization of the company, and acting as its trustees, agreed with one Henry S. Sanders to issue to him as full-paid stock the whole of the capital stock of the corporation, in consideration of the conveyance to the corporation by San<;lers of certain mining claims and property in Arizona, which were of no value for mining purposes, and of the actual market value of less than $100,000, as the defendants knew; that shortly afterwards all of said stock was by Sanders turned over to the five individual defendants, or some of them, or to them and their associates and nominees, upon payment of the sum of $46,666.67, as near as the plaintiff can ascertain, but at any rate not over $100,000, and that this was done in pursuance of an agreement between the defendants and Sanders prior to the conveyance of the mining property; that the defendants thereafter, assuming to act in behalf of.the ,corporation, by certificates of stock issued and circulated by them, represented to the public, including the plaintiff, that the stock was full-paid; that the plaintiff purchased his stock in the market as full-paid stock, relying on such representations; that after the issue of said stock as aforesaid the corporation had no means of developing and improving the property purchased, and, failing to work it, it had become forfeited and passed beyond the control of the corporation; that upon the purchase of plaintiff's stoek a new certificate was issued to him for 100 shares as full-paid stock, upon his surrender of the former certificates. . The complaint then charges "that the individual defendants have individually sold the stock, or a portion thereof, so turned over to them, as aforesaid, and that said individual defendants have indi-
LANGDON V. FOGG.
,
\'iduany received large sums of money,-gams and profits from the sales of the stock of the defendant corporation, or from, the portion thereof sold; that plaintiff is unable to state definitely the amount received by said individual defendants, and each of them, from the sales of such stock, or the amount of profits realized from such sales; that the defendants have not accounted for Qr' paid ,over to the cor· poration the difference between the $10,000,000, represented by the capital stock, and the actual cost or real value of the property copveyed to it by Sanders, nor for their gains on the stock sold by them; that the defendants, or a majority of them; are still the trustees of the corporation, which is in no' condition to prosec.uteQ,ny action for the relief sought by this action, and neglects to do so; for which reason the plaintiff brings this suit. " , , The relief prayed for is that the defendants ma.y be tees of the $10,000,000 represented by the capital stock; and that they may, collectively and severally,be decreed to account of and concerning such sum; and also account for the gains and profits received by each from the sale of the capitalsoock; that value of the property conveyed, by be .determined by the court, if it had any value, and credited on such accounting" and the amounts 80' fonnd due be brought into cou,n and paid to a special roceiver for the benefit of all the stockholders.who may join in this suit or come in under the decree." , If I understand the complaint rightly, it demands (1) that the:individual defendants shall "accouJ}t" to the corporation, or stockholders, for $10,000,000, less such sum as the court may find the property conveyed by Sanders to have been worth; (2) that they "severally account for the profits received, by each from the sales. of the capital stock." In ascertaining whether the cause was removable under section 2 of the act of 1875, it is not necessary to determine what else the complaint may contain, how many causes of action, or whether consistent or inconsistent, provided it does appear that there is anyone severable controversy contained in it which is wholly between citizens of different states, and may be completely determined without the presence of the other defendants. If there be such a separable controversy in the suit, then the whole suit is removable under the act of 1875. Barney v. Latham, 103 U. S. 205; Hyde v. Ruble, 104 U. S. 407,409; People v. Ill. Oent. B. 00. 16 FED. REp. 881. If there is no such separable controversy as between the defendaut Fisk exclusively and the plaintiff, then it is not removable. ld.; Folsom v. Oontinental Bank, 14 FED. REP. 497. The two objects apparently sought by the complaint-namely, one, an account to the corporation for $10,000,000, and the other, an account for profits on the stock sold-are entirely independent,and, as it would seem, incompatible with each other. It is difficult to understand upon what theory the defendants ,can be
s
PEPERAL REPORTEB.
I
called to "account to the corporation" for money or property which neither the corporation nor the trustees, as such, are alleged ever to have had. See Robinson v. Smith, 3 Paige, 222: Dodge v. Woolsey, 18 How. 331: Ang. & A. Corp. §312. The complaint does not state that there was ever a dollar paid in as capital of the company, either to the trustees, as such, or into the treasury of the corporation, for the stock that was called full-paid stock and issued to Sanders as such: or that the corporation was not then as worthless as the mining property is alleged to have been; or that it parted with anything of value in taking the conveyance. All that can be gathered from the complaint ,in this respect is that the individual defendants undertook, by an arrangement with Sanders, to issue all the capital stock of $10,000,000 to him in exchange for the land, and then to take back from Sanders the same stock upon payment to him of somewheJe from $46,000 to $100,000, and through this device to represent to the public that the stock was full-paid stock. If this was in fact the substance 'of the transaction, it was, of course, a sham and a cheat, and any person actually misled as to the facts, and induced by such frauds to buy stock, believing that $10,000,000 had been put into the company in cash, or its equivalent in mining property of that actual market cash value, may doubtless have his legal action for damages for false representations.; No such claim, however, is made in this suit, nor are facts stated sufficient to support such an action. The only thing remaining in the defendants' hands as trustees which they have ever had, and for which they could by any possibility aocount, is not the sum of $10,000,000, nor any part of it, but the mining property itself,.(whioh they never disposed of,) and the stock whioh they received from Sanders, or the proceeds arising from the sales of it. No account of the stock is asked, nor any injunction allainst further sales. As to this stock, if the complaint states facts sufficient for an accounting in equity, the prayer of the complaint is against the indio viduals severally who received and sold the stock, "for the gains and profits receIved by each." There is nothing in the complaint from which it can be gathered that any sales of this stock were made by them jointly, or on joint account, or for their joint use. The transfer of the stock to Sanders, being, upon the allegations of the complaint, an evident sham, in law amounts to nothing. In substance and effect, according to the complaint, the defendants, having individually agreed to pay Sanders some ,$46,666 for the mining property, caused it to be conveyed to the corporation as a payment by Sanders into the treasury of the corporation of the whole amount of its capital of $1.0,000,000; whereas, by the statutes of this state, it could not be lawfully accepted on account of capital, or serve as a basis for the issue of stock, beyond its actual value, which, accord· ing to the complaint, was not over $100,000. The defendants themselves, or some of them, then took from Sanders all the stock thus
9
illegally issued, and proceeded to put it on the market as fuU-paid stock, and sold more or less of it, as the complaint states, for their individual profit. The complainant thereupon sues, not for his individual injury, but for and in behalf of the corporation itself, which, as he alleges, is disabled through the defendants being a majority of the board of trustees. For the corporation to sue for the profits onsa,les of stock thus issued would seem to import a ratification by the cor· poration of the issue itself, which, upon the facts stated in the com· plaint, was plainly illegal and incapable of such ratification. Waiving this objection, however, as the stock is not alleged to have been taken or sold for the joint use or profit of the five individual defend· ants, each defendant can only be held liable to account (if such· a transaction is capable of ratification so as to sustain any actioll for such an account) for what stock he caused to be sold, an<!'1 the profit he individually made upon it. No community of interest among the individual defendants is alleged, and no ground is stated upon which either one could be held accountable for any. profits made by the others. Franklinv. Jenkin" 3 Wend. 130; Pom. Rem. §§ 308-310. The claim for such profits as against each separate defen,Iant, whatever it may amount to, can therefore be wholly determined without the presence of the other individual defendants, andtqis branch of the case,.-i. e., this "controversy" as to each defendant is therefore severable, and the case must, therefore, be held properly removed. The corporation defendant, having the same interest as the is classed with the plaintiff as respects removal. Removal Oases, 100 U. S. 457; People v. Ill. Cent. R. Co. 16 FED. REP. 881, 888. If the illegal issue of the stock be viewed as wasting or misapplying possible property or means of the corporation through the joint action of the trustees, it would present the case of a joint and several tort, (Rardon v. Newton, 14 Blatchf. 379; Pom. Rem. § 810; In re Alexander, 21 Ch. Div. 149, 161; Flitcroft's Ca,e, ld. 519; In'l'e Anglo-French, etc., ld. 492; Rule 51 in Equity;) and the decision in Kerling v. Cotzhausen, 16 FED. REP. 705, in which Mr. Justice HARLAN concurred, would be controlling that the first branch of the complaint would also be severable at the option of the non-resident. ,Fisk. The motion to remand is, therefore, denied.
10 PACIFIC COAST STEAM-SHIP
CO.V.
BOARD OF RAILROAD COM'RS.
(Oircuit Court, D. California.
September 17, 1883.)
T¥ state boaI'd of railroad commissioners has no power to regulate or interferewith the transportation of persons or merchandise, by a steam-ship company, between ports within the state, if they be in transit to or from other states, or when in navigltting the ocean the vessel goes beyond a marine league from the shore. This power has been conferred upon congress, and is exclusive.
COMMERCE-POWER OF THE STATE TO REGULATE.
InEquity. Joseph P. Hoge and ,Tohn J. Roche, for plaintiff. N. P. Ohipman, for defendants. Before FIELD, Circuit Justice, and SAWYER, Circuit Judge. FIELD, Justice: The plaintiff is a corporation formed under the laws of California for the transaction of the business of a steam-ship company on the Pacific coast, and'in its bays and harbors, and on the Pacific ocean. It is the owner of a large number, of steam-ships engaged in the coasting trade, reaking voyages from San Francisco, in California, to Astoria and Portland, in Oregon; to ports on Puget sound, in Washington territory, and to ports in British Columbia, and from San Francisco to San Diego, in California, touching at intermediateporiis on the coast. AU'the steam-ships in making their voyages navigate the Pacific ocean more than a marine league from the shore. They carry goods sent from Asia; and states east of the Rocky mountains, upon through bills of lading via San Francisco. Some of the goods are transferred to the vessels in the original packages, and some after the packagesliavebee'n opened. Passengers, with and without through tickets from other states andlrom Europe, are carried on the steam-ships north' andsotith from San Francisco. Passengers and freight are also carried in these vessels from ports in California to in the state.; All the vessels are enrolled and licensed to other carryon the coasting trade undedhe: acts of congress. By the constitution of California, s.dopted in 1879, all railroad, (3(1::1al, and other transportation companies are declared to be common {'arriers and subject to legislative control. Provision is also made for the election of three persons called railroad commissioners, whose duty it is to establish rates of charges for transportation of passengers and freight ty such companies, and publish the same from time to time; to their books, records, and papers; to hear and determine complajnts against them; to punish for contempt of the orders and processes of the commissioners, and enforce their decisions; and to provide a nniform system of accounts to be kept by the companies. "'he complaint in this case is that the defendants, the commis-