AMERICAN PRESERVERS' CO. fl. NORRIS.
'111
the said Elizabeth was not competent to make the same." But the plaintiffs do not allege that they applied for information on that subject to either of the subscribing witnesses· or to the justice bf the peace, nor do they assert that Contner in any manner misled them. Therefore, are they without reasonable excuse for their long delay in bringing suit. Badgerv. Badger, 2WalI. 87,95. Tbelapseofl5yearschanged the whole defendants. Dr. Worrall, who situation to the great prejndice would have been an invaluable witness,: survived Elizabeth Kenney three and a half years, and Mr. Contner lived eleven years sti11longer, but death bad sealed the lips of both before, the plaintiffs sll.w fit to move in the assertion of their .claim. In the case of Jenkin8v. Pye, 12 Pet. 241, which was a suit to set aside a derd by which a daughter, 23 years old, had conveyed all her remainder in real estate, which had belonged to her mother, to her .fa':' ther fora nominal consideration, it was said by Mr. Justice THOMPSON tbat"lapse of time, and the death of the parties to the deed, have always been considered in a court of chancery entitled to greatW'eight, and almost controlling circumstances, in cases of this kind;" and in Godden ,v. Kim.. mell, 99 ,U.S. 201, 210, this principle was reaffirmed, and was applied to a case where 14 years had elapsed from the date of the deed to the filing of the ,bill. In any view, then, that can be taken of this der the proofs, the plaintiffs are not entitled to any relief. Let,a decree be drawn dismissing the bill of complaint, with costs.
AMERICAN PRE'lERVERS'
Co· .".
NORRIS
et al·
. (Circuit Oourt, E. D. M.iS8ouri, E. D. September 1, 1890.)
1.
CO;RPoRATf'6NS-'CONTRAOTS.
A manufacturing oorporation sold its business to its principal stockholders,wbo thereupon sold it to a third ,person, with an agreement not to enter into ,the BaIne business, directly or indirectly. This agreement was not signed by the corporation. Held, that the corporation was not bound by the agreement. An agreement not to enter into,. a certain business will not be enforced by preliminary injunction, at suit of the assignee of the covenantee, where the defendants are ab{!ndantly solvent, alld there is doul;lt whether the agreement, being gene,ra,l, is valid, whether it is supported by an adequate consideration, and whether is assignable. , WHEN ISSUEp. ' ,
S.
In Equity. On motion for injunction. lJhW.er H. Krum; Frank K. Ryan, A. Leo Weil, andM. F. Elliott, for complainant. Jud$on &; Reyburn, for defendants. 'rHAYER,J. The material'facts on which the decision of the presElnt motion depends are substantially as follows: .· 'faylor ManufactulingCompapy . ll, corporation duly orgl1nized l,1,nder the laws of Miss,ouri, and for /leYEll'al yearl3 has been engaged 'in
712
FEDERAL REPORTER,
vol. 43.
ma:1Ufacturing and selling flavoring extracts, baking-powders, shelfglllQds, and grocers' sundries, and until the 15th of June, 1888, WRIll also engaged in manufacturing preserves, jellies, fruit-butters, etc. The other defendants, that is to say.,L:.E. Taylor, James N. and Eo R. Norris, are its principal stockholders,and for some )'ears have been officers and directors of the company t and have had full control· of its business and have directed its On the 22d of March, 1888, all of the defendants, including the Taylor Manufacturing Company, signed an agreement, the purpose of which was to forman association styled the "American Preservers'Trust," corriposed of a large number of firms imd corporations then engaged in the fruit-preserving business in various parts of the country. The object of forming such a trust, as state,d in the bill, was "to consolidate the property and business, and to identi:fytheinterests of the respectivememhers of the association, to the end that, they might secure an economioal, profitable, and satisfactory conductof the fruit-preserving business." . After the trust hud been duly organized and put in operation, the Taylor Manufacturing Company con· veyed to defendants Taylor and E. R.and Jnmes N. Norris all of its machinery and tools fof: dw manufacture of preserves, jellies, fruit-butters; 'etc. f .as well as nIl of its trade-marks and brands in use in that departmentof its business, at an agreed valuation of $17,850, which sum was charged against the' purchasers on the books of the company. and thenceforth the company ceased to manUfacture preserves, jellies, fruit· butters, etc.' Thereafter, on June 15, 1888, Taylor and E. R. and James N. Norris transferred the same property to the St. Louis Preservorganized, whose ing Company, a Missouri corporation, then . stock was all owned by the trustees of the American Preservers' Trust. For the conveyance ,thus made to the St. Louis Company, Taylor and the Norrises received 1,145 trust certificates of the American Preservers' 'Trust, each· dfthe' par value 'of $100. The trustees of the trust agreed at the time to find a purchaser for these at the price 0[$17,850, whenever Taylor and the Norrises desired to sell the same; aM the entered into a covenant with the St. Louis Preserving that, so long as the trust existed, they would not, ei ther c:iirectly, or ,indirectly, engage in the manufacture of preserves, jellies, fruit-butters, within 20ni'iles of the city of St; Louis, and that they would not buy or deal in such articles, unless they had been prepared by persons or corporations concerned in the trust. A year afterwards, that is, on or about May 15,1889, the Messrs. Taylor and Norris elected to sell the 1,145 trust certificates by them acquired, as afore'said; but, before theti'usteesof thetrustwould fulfill their oblig!1tion to find a purchaser for the same, they required the Messrs. Taylor and Norris to sign what is termed an "agreement of co-operation." By the terms of the last-mentioned agreement, the defendants L. E. Taylor, E. R. and N. Norris'agteed with the trustees of the trust, among other thingsf " Thilnor' ... ... II< the perio.d of twenty-fi ve years, the contemplated duration of ,tbe trust, 01' utiti11tsearliel' termination in the manner provided for
AMERICAN PRESERVERS' CO. V. NORRIS.
713
11y the terms of the agreement of association, they [Taylor and the Nofl'ist's]
would not, within the territory of the United States of America, engage, be employed, or become interested, either personally or by representative, pecuniarily or in any manner, except through the mpdium of tbe American Preserv. ers' Trust, in the manufacture or sale of preserves, jellies, fruit-butters, and mince-meat, or in any way obstruct the work of said trust, or in any manner assume a position adv.ersethereto, but at all times, and in every way, ......... would give it cordial "'.'" ... support," etc. The Taylor Manufacturing Company did not sign the first covenant entered into by its stockholders with the St. Louis Preserving Company on or about June 15, 1888, nor the 'subsequent " agreement of tion," as it is termed, for the reason that it was advised by counsel that 4t could not lawfully become concerned in a trust, either directly or The trustees of the American Preservers'Trust have recently signed all their rights under the agreement of co-operation, to the present plaintiff, the American P-reservers' Company, a West Virginia corP()o Although the fact is not averred in the bill, yet from affidavits on file it appears that the present complainant has recently acquired llJl the properties and manufacturing plants heretofore controlled bv thetr(18'tees of the trust, and is, in one sense, at least, the successor o{thettulit! All of its stock appears to be vested at present in those persons who have heretofore acted as trustees of the trust. . Within the past three months; the· Taylor Manufacturing Company has erected a new plant for the ufacture of preserves, jellies, fruit-butters, etc., and has actually begun to manufacture such articles, but does· not make use of any of the trade.;marks, brands, eto., formerly in use in that department of its busi;. ness. The purpose of this suit is to restrain such manufacture, the theory on which the suit is prosecuted being, that the prosecution of such business by the Taylor Manufacturing·Company, is in violation of the agreement of co-operation above mentioned; that snch agreement was and is binding on the Taylor Manufacturing Company, although not signed by it; that the rights acquired hy the trustees of the American Prellervers' Trust under and by virtue of that agreer.nent, as against the Taylor ManUfacturing Company Ilnd its principal stockholders, were and are aSllignable, and may be enforced by an apsignee of the agreement; and that, as such assignee, the present complainant is entitled to an injunction· restraining the defendants from· engaging in the manufacture preserves. The complainant professes itself willing to supply the defendants with all the preserves, jellies, etc., that they, or either of them, may need in the transaction of their business. As the case is now before the court merely 'on a motion for a preliminary injunction, the questions now con.. sidered and decided will, of course, be open for further discussion, if counsel so desire, either on final hearing, or on the hearing of a general demurrer to the bill. It is obvious that an injunction, to be effectual to preserve the complainant's alleged rights· pending the suit, must run against the Taylor Manufacturing Company ,as well as against the other defendants; "and;
that. agreePlent,."wereactCQmpanyas,:!or theml3elves, ** *. and were duly authorized,* *. * by said Qompanytoact in its behalf;" but by none of the recitals or provisions of that agreement, hill, does it,appearthat:theTaylor Man.WIlB."pllrty to .the agreement, Qdhat Messrs. Taylpr"f!.nq.. NQrl1is the cqrporation; nor is there "peN' . that. the ever authorized them to make such an iJdts behalfdL they had' so 'attempted. . The agreement in on itsJaQl3tobe.the individual contrl,l.ct of L. E. TayN., Norris,witp. tb,e' trustees of the Amedcan PreCo.nstl1ued·' as.the cOntract qfthe Taylor M.aqpfMt.Wll . . :·llg . y."witb. aid. of :.pro.Of,'.,.'\'fhiC.h has »Qt 'beeP, if, ;Wvidently, ther&contention MAnufacturing! .QoWpany, ,is bound must. .wholly .QR . the ground Taylor are itslargestis(;ockholders;.that the business oUhe company inQre$,m.ahlJytO :their 'Penetit; and"t.hll.t, by virtue. o( their relation to ,Wrporatiop stockho!ders and officers, :they' hfi,ve power Q.re. to harmonize ,w;ith ,owP ipqivid,us,l QQl,l;traqt&. ! ,But .such relation .OJ), ,their part to ,.Q\'lt tOCll,st on the corporation the bur4eI1 of:diMhs.rging.anyobligatiOl)8 ,that such stockholders in their indi:"¥luaI ·assumed." ,M ,officers llnd,'directorsof the <lPrpora,tiQn,H js"theirquty· to' serv.e,tbe ,interests ofthe cotporlltion,conlegal elltity; "It: i8 familiar law. that a corporation a, Of its own,,; distinctJrj)mi that Ofjtll stockholders; that it JJ:lDot i.:Ilthe most. remote by contracts made by its stockpolders w:itb"third ,own much Ql'1ittleof its capital stock, and, ia .not .bound to disyhl}.rgEl ,any personal obligations assumed by p'U1l?nrJ,n'8 Paiaee.Oar 00. v; Miaaou1'i Pac. Ry. 01., :U5.:V·. Snp.Ct. Rep; 194;. Moor'e HandkyHardwq,re :00. v. T.f1W.(!$i! ll.q.r;r/.mq,re 00" 81 Ala. 206,6SQ1,lth. Rep.: 41,a:lld,13, Amer. StRep. 23, .and citations; Davis, etc., Wheel 00. v. Davis, etc., Wagon 00., . . i, In QfBeaJ,v. (ffha.ae, 81·MiQh.'490,whioh .bears a stronger resem1;>laneetQ the, caseJ\t than any other'cited: by complainant's conns!'1,. ""C<)rppration: from.engaging ina cer.taill,. publishing bueine!Sl!,4t: a which one ,of its, largest.stoekholders, previ,QJHI to engage in. But in that case it appeared that all the stockhblderl:l of the corpor.liJ;ion Qf:the oovenant, iucapacitating the from engaging ,in the bllEUnessjn question, and that in. riew i.n was to.enablehiln in& as
not elttitded to an injuncticm against the manufucturing company, because it did "tfotJISlgn the·llagtleeWent.·()f .it 'is·· termed., and'is not 'J>y Hi:! true 'ivers. that
as,.!\t .prol:!l;)Qt,
is of the opinion thJl,t complainantis
to evade his covenant. The decision in question evidently rests on the the company, and owned all of ground that the persons who its stock up to the time the suit was filed, had enteredinto a conspiracy to aid one of their number, who was the largest shatehdlder, in avoiding a valid covenant, and that, under the circumstances, he not be allowel{ to shelter himself behind the corporate entity, The decision referred to cannot be regarded as impugning', muoh less as overturning, the general doctrine that an incorporated company is not liable on. the oovenants of its stockholders, made in an individual capacity, and not as agents of the company. In the case at bar it is not pretended that the defendants have acted fraudulently. The Taylor Manufacturing Company was a going concern, doing aifextensive business, when the agreement made by certain of its shareholders not to engage in the. business of manufacturing preserves, jellies, etc., was made. The company was not organized after the covenant was entered into, all in the case Real v. Ohase, merely tbehable certain persons to do indirectly what they might not do directly. It declines' to be; bound by what is termed the" agreement of co-operation," because it never executed' the same, arid because, as the affidavits tend to show, it waS not supposed.: at the time the agreement was made by the Messrs. and 'N6rrill, that thecornpany, in its corporate capacity, had any power to enWr into such an engagement. ' ., therefore, from' the considerationgi"ven to this questibtf I alone, thntthe corporation defendalit has the right 'to resume the man::', ufacture of preserves, jellies, etc., because it never agreed to abandon the manufactUre of the same, and that an injunction restraining it from' so doing wonldbeqan it11ptblJer order. " by the Therearesevel'al other important questions motion, notably the qtiestion whether a covenant, such as is contained in' the agreement of eo-operation, not to engage, in l\ given businesS any) where in the United States, is a valid covenant; also the question under the circumstances 'disclosed by the affidavits, that agreement'wa$ supported by a consideration that would render it enforceable in equity, even assuming it to be ihother respects valid j also the question wl;lether' the covenimt sought to be enforced is assignable,'and. under the stances'disolosed by the affida.vits, may be enforced by the present plainantj and, finally, the'question arises whether the trust agreement: itself, in pursuance of the other agreements appear to have been executed, was not in violation of public policy,and!l(or that reason void. With i'eJerence to all o[.,these questions, and without undertaking' to decide either; -it is sufficieht to suy that they are of so much importance, and are involved in so much doubt, thllt it would be manifestly impropetto grant 'an injunction- in>a case where such questions areinvolved,and as ,in this oase, the 'd'efendants are abundantlY' so)vent,priorto a final :hearing. . .' , The Dlotionfor an interlocutory injunction iSaceordingly overruled; , ,.: ' .
of
..... ,.
;
., I,'!
716,
1
FEDERAL ItEPORTER,
vol. 43. ale 1890.)
VAN WiOK· 'V. READ et
(Owcuit Court, N.D.FZortda.. 1.
August,
An'8ssignment for the benellt 'of creditors, made by one citizen of New York to and valid under the laws of will pass title to a note and mortgage on Florida. · that an assignor who is <Justly indebted to his wife and children makes them ,pre,ferrell crtlditors will not invalidate the assignment. ,l{':' , . ," . ,
FOR BENEFIT OF CREDITORS-VAJ,IDITy-LEXLocr.
2.SAMIll"""PltEFERENCES-RELATrVEs·
, In Bill to mortgage. J08cph;R. Parrott, for complainant. H, W.,. (Jo(;krell Son, for .: defendaqtll· . ,",'. '; "
.
"
The controversybeforethe court has arisen on the followof facts: Jqhn, II. Boyntpn, a citizen of the state of New in thelum.her business, and made advancements to J. C. district\ !ta,kin,g therefor his note for $4,000, dated June 'pll:yable fl,t the, office. ofJ()hn H ..Boyntonin New York, an,d a,f'ter date. this npte,on the 23d day of June, 1879; Joseph C. Read anq A. Read, his executed their rpqrtg.as:EI upp.n(ll tract oU/loHd.on Amelia island, in the county of Nassau, anc:l,thy;:!>uilqi,ngs as the "Amelia Steam Saw-Mill of ;Florida." The note and mortgage are I of eyen date, and ,wItS r:ecorded}une 27,' 1&79, Thereafter, to-wit, on the . 18th of <August, John H. Boynton, having bel;JQrne insolvent, exin its purpose, but with certain references t9 fll,voreqjcreditc;>rs,to S,aD;l\lel Van Wyck, with instruction and power to, assets; sq. assigned into cash,and to pay, among oth.' erii, preferred debts: '1'0 Louisa B. Boynton, $26,808.051 to Isabel D. Boynton,$1,080i to $5,536. After these and otper preferred creditors ",ere was:tlPpropriated to pay the remainder of the ag.. s.ignor's debts.a.ll,<:lliabp*es., was rel:lorded on.the 28th as appellrs Jroman ex:emplification, the .recordput ill the noteat:ld mortgage beforedf;lsCtlbed passed to. the sllid VanWyck by virtue of said assignment, the note bearing also the followit:lg,:in,dqrsement:;,:',l?ay SamI., VanWyck.8S$ignee, or order," signed BC;>YNTO;N,." Among other 'Qreditorsof John H. BoyntpIl:;\rer.e Hunter,;T. H. Prescott, Lettie Miller, and Wilson:l\nd rffiidents of district, wpo held claimsJor different amounts.. Op. the of August, 1884,tpey had of, issued thereon, servingthe same on Joseph: C. Read and Mirna A. Read, the debtors ,of BoyatpJl-, beforementi0ued., ' as: by, the,n()te Ilnq.,mqrtgllg-ebef()re descrlbed., The.se proceedings went regularly to judgment in"thestate courts, and Joseph C. Read has been left until now in the possession of the mortgaged premises. ing