---
· BRUSH ELECTRIC
FEDERAL REPORTER,
voL 49. Co. OF
CO.
t1. BRUSH-SWAN ELECTRIC LIGHT ENGLAND.
NEW
(Oircuit Ooun, S. D. New Yorko January 16,1892.) PBmOIPAf, AND. AGENT-CANOELLATION OJ!' CONTRAOT.
, ,., .The Brush Eleotrio Company constituted a certain corporation its agent for a period of yeara for the sale of its machines In New Enll:land and other eastern states. Disagreements arose between them, and at length the Brush Company refused to furnish more machines under the contract. On suit by the New England Com. pany the contract was upheld, but, pending further procaedings, the Brush CompanY cross-bill to oancel the contract, alleginll: that since the former decision the New England Company had come under the control of hostile influences, namely, those of the Westinghouse Company, which was engaged in manufacturing maollinesoompeting with those of the BrushCompany.. This allegation was based mainly on the ground that an 'attOrney having a merely formal relation with the New Englanll Company, and who was the legal adviser of, and personallY' interested in, severalCQr{l0rations in whloh Mr. Westinghouse was interested, had written a letter containmg' the unauthorized statement that the New England Company was "contl'olled by the WestinA'house interests," It appeared at the trial that West· inghouse and Jackson, stockholders in the Westinghouse Company, had bought a controlling interest in a oertaln illuminating compan;v. But no acts of hostility were,sllown. It further appeared that thfl illuminatmg company also had a contraot of agenoy with the Brush Company, and that since it came un4er the alleged hostile influenoes it had sold more Brush maohines than ever before. HeW, that no cause wall shown for canceling the contract.
In EqiIity. Final on cross.bill, answer, and proofs. The13rusp Electric Company, owning certain patents, and engaged in ,m!lnufaetriring electricalm.achines thereunder, had a contract with the Brush-Swan Electric Company of New England, whereby the latter was constituted.; its exclusive agent for the sale of said machines in New Englanl,l ap.dother eastern states. The contract provided, among other things, that the New England Company was to receive as compensation a certain on the selling price, and that the Brush Company ",ould notJtself sell any machines in the specified territory. Various disagreements arose between the two companies, mainly growing out of the alleged inability of the ;New En,gland Company to meet its payments provided by the contract. At length the latr to-the ter refused to furnish more machines, aud began selling them in that territory itself. On suit by the New England Company, the contract was upheld l and the complainant declared to be entitled to an injunction and'accounting. 41 Fed. Rep. 163. A rehearing was applied for arid denied. 43 Fed. Rep. 225. Afterwards leave was' given to file the which the present hearing is had. Id. 701. . Albert Stickney, and Gilbert H. Ora,wford, for crosscomplainant,cited the following authorities: ,In the ,Clase of aD the mere fact of,divided duty constitutes a breach of the employment agreement. Pearce v. Foster, 17 Q. B. Div. 536; Dieringer v. Meller, 42 Wis. 311; Da'Ooue v. Fanning, 2 Johns. Ch. 252; Michoud v. (ilirod, 4 How. 554. It would be a dflfeuse in a snit for past compensation. Murray v. Beard, 102 N. Y. at page 508,7 N. E. Rep. 553. And it might entitle the principal to damages up to the value to him of the agreement. Panama, etc., Co. v. India R'ubbel', etc., Co., L. R. 10 Ch. App.515-
H. Choate and Will'iam G. Wilson, for cross-defendant.
BRUSH ELECTRIC CO. V. BRUSH-SWAN ELECTRIC LIGHT CO.
9
COXE, District Judge. , The relief demanded by the cross-bill is that the contracts decided to be valid in the original suit shall be canceled and the original bill dismissed. The theory of the cross-bill is that since the main controversy was tried the cro!'s-defendant (the Brush-Swan Company) has come under influences which are hostile to the crosscomplainant (the Brush Company) and that it would be inequitable to enforce the relations of principal and agent between companies so diametrically opposed in interest. The main facts and circumstances of which hostility is predicated may be briefly stated as follows: George Westinghouse, Jr., and Caleb H. Jackson are stockholders in the Westinghouse Electric Company of Pittsburgh, a competitor, in electrical business, of the Brush Company. In September, 1889, Westinghouse and Jackson purchased a controlling interest in the stock of the Brush Illuminating Company, which has, substantially, the same contract with the Brush Company as the Brush-Swan Company, except that the operations of the Illuminating Company are confined solely to the city of New York. The Brush Illuminating Company controls a majority of the stock of the Brush-Swan Company. In other words, the Brush-Swan Company can be controlled by the Illuminating Company, the Illuminating Company can be controlled by Westinghouse and Jackson and they can be controlled by the Westinghouse Company, ergo, the Brush-Swan Company may be' controlled by "the Westinghouse interests." On the 14th of February, 1890, Paul D. Cravath, a lawyer, addressed a letter to Henry Hine. a general district agent of the Westinghouse Electric Company, in which he refel'S to the Brush-Swan Company as being" controlled by the Westinghouse interests." The firm of which Mr. Cravath was a member was substituted as attorneys for the Brush-Swan Company in this litigation, but their connection with it has been only a formal one. Mr. Cravath is interested as counsel, and otherwise, in !leveral corporations in which Mr. Westinghouse is interested, and has, of late, acted as.ad viser for Mr. Westinghouse in many instances. On the other hand, it appears that the Brush Company has made no attempt to cancel its contract with the Illuminating Company, which though directly controlled by Westinghouse and Jackson is, apparently ,doing a satisfactory and remunerative business. Both Westinghouse and Jackson disclaim any hostilityto the Brush Company and insist that their intention is and always has been to assist the Brush-Swan Company pecuniarily in carrying on its business if the old relations are resumed. It seems to be admitted on all sides, where the rights of the parties are fixed by contracts like those in controversy, that an agent who, in all things, honestly and faithfully performs his duty towards his prin- . cipal, cannot be legally discharged. It is not pretended that the BrushSwan Company, the Illuminating Company, or, indeed, "the Westinghouse interests," have done any act to indicate a hostile intent towards the Brush Company. The case, stated as strongly as the proofs will warrant, shows only that the Westinghouse Company and the Brush Company are rivals in business, and that some individuals connected with the former company have obtained the control of the Illuminating Company,
10
vol. 49.
il).. turn, owns a controlling interest in the Brus1;l-Swan Company. But fiU·this falls far short of establishing hostility on the part of the Brush.SwanCompany towards the Brush Company. Why the direct. ors of the' Brush-Swan Company, assuming them to be rational men, any inclination to engine.er that company into a position of should hostility is not explained an(i1 is not easy to conjecture. Its only availis the contract. with the Brush Compa,ny. Why should it able destroy only source oHncome? If the contract relations are resumed, and thelkush-Swan COQlpany faithfully and diligently performs its obwill,. in all ty,. build up a suoligations ul,lder the cessfulbusipess and putnwney in the purses of its stockholders·. If, on the other hand, it see!J: fit to destroy itself in a vain attempt to aid the Westiqghouse Company,the result will be the immediate cancellation of its contracts, leavil,lg the Brush Company free to enter the field as. an active, pompetitor. That the Brush-Swan Company will pursue a course dietatedalike by honesty, self-h:"te,restand common sense, may, fairly, be. presumed. itneed noli,beleft to presumption·. Its futbeyond dispute. As before stated, the apprehension of. enmity is: not founded upon any overt act of the BrushSwan Compa'1Y' Since its orders were refused it has been in a state of legal coma. It has done, nothing. It is argued, however, that it may become unfriendly because of the alleged hostile interests wh.ich surroup(i1 it. This proposition can be tested in onlyw;J.e .way.To the question, "How will the Brush-Swan Company conduct itself mthe future?"the answer is: "Try it; give it an opportunity to show how it will act." Let the Brush, Oompany resume its contract relation$ with the Brush-Swan Company and it will 'Very sOQnappear whether ,the latter company will in good faith carry Qutits contrl1ct,s.The BfUshCompany is entirely secure in trying this experiment, fo.r. the moment .a hostile act on the part oftha Brush·Swan Company is proyed, that moment the Brush Company is, relieved. The difficulty with .theposition of the Brush Companyis that it depends for 8tlpport upon au .attenuated inferencewhicb is barely discernible. in its grOW$ les8 and less s1,lbstllntialf!,s it progrllsses, and fades away entirely long beforE! it reaches the cross-defendant. The only facts proved tend to show that the contl'Q1 which the Brush Company dreads would be anything butdetrimenta,l to its interests. The Illuminating Company is the agent of the Brush Company for the city of New York. The Ill\1minating Company is much nearer thehostile iuHuence, beca.use a majority of its stock is owned, personally, by Westinghouse and Jackson·. ' And yet no fault is found with the Illu· lIj;inating Company, and no attempt has b.een m.ade .to cancel its contract. The relations between the parties have been friendly, their contract has peen faithfully kept, and the result has peen financially beneficial to Company came unboth. The pl,'oof shows. tpat sipce the. derthe sinister inHuenQe of that somewhat esoteric and intangible apparitionknown as " the Westinghouse interests," it has sold many more Brush lamps than ever before.
BRUSH ELECTRIC CO. V. BRUSH·SWAN ELECTRIC LIGHT CO.
11
If the Brush Company can succeed upon the facts of the cross-bill, it can, a fortiori, cancel its contract with the Illuminating Company. No one will seriously argue that this is possible, and yet every reason urged against the Brush-Swan Company applies with greater force to the Illuminating Company. The Cravath letter does not fill the fatal hiatus in the cross-complainant's proof. Giving it the most inimical construction contended for and it is still insufficient. The court would hardly be justified in destroying valuable contract rights upon R hasty and careless declaration made in the circumstances disclosed by Mr. Cravath. It was, he says, a ·thoughtless and statement. It added no new fact to the controversy, it was a mere expression of opinion. If the ill-advised expression relating to "the Westinghouse interests" had been used by the writer to characterize some act which, otherwise, might not indicate a hostile intention, a different construction would, perhaps, be necessary. But, Rfj has been seen, the Brush-Swan Company had done nothing to indicate that it was controlled by "the Westinghouse interests" and "the Westinghouse interests" had done nothing to indicate that they had controlled or would control the Brush-Swan Company. Certainly there was nothing to indicate a control hostile to the Brush Company. So far as facts are concerned Mr. Cravath's letter leaves the case as it was before. The authorities cited on the brief submitted on behalf of the Brush Company all refer to cases of individuals where the agent was guilty of some conduct which was, or might be, injurious to the interests 'Of the principal. No case has been cited, and, from the known diligence and ability of counsel, it may safely be inferred that none can be cited, where a corporation, faithfully performing its duties, has been discharged 8S agent, because individuals, supposed to be hostile to the principal, own a majority interest in a corporation which in turn owns a majority interest in the agent corporation. It is not easy to compare an individual with a corporation in such circumstances, but the court is here asked to sanction a proposition, which, if applied to'an individual, would enable a principal, in violation of his contract, to discharge a faithful agent because a rival in business, by reason of relationship or pecuniary obligations, was supposed to exercise an influence overthe which might be used to the ipjury of the principal. This will never do. Such a proposition cannot he sustained, whether the agent be an individual or a corporation. The cross-bill cannot be maintained without some proof of hostility on the part of the cross-defendant. No such proof has been given. The original decree should not be disturbed.
12 CrnOll'
:FEDERAL REPORTER, voL 49. NEW ORLEANS t1.
PAINE, U. S. Deputy-Surveyor.
(O£rcuit Court, E. D.Lou1.Biana. February II, 1892.) L PUBLIO LAND GRANT8-LoOATION-JURISDICTION.
t. S.um-8URVEY-DECISION
In the case of publio grants of land without definite and ascertained limits, the llOurts cannot protect the alleg-ed rights of the grant-owners until they are located by Ilublio survey, adopted, and approved; and the mere deoision of the seoretary of the interior as to the proper boundaries will not give the oourtsjurisdictlon to collt1'll1 the subsequent oillcial survey directed by such decision. 01> SECRETARY Oil' INTERIOR.
The secretary of the interior fixed the meaning of the words, "as far as Lake Ma!lrepas,l' as contained in the aucient Spanish known as " Dupard's, "to mean as far as a line drawn from the lowest POlDt of the southern shore of the lake at'right angles to a line drawn from the Mississippi river through the oenter , of the grant from front to rear j an,d the surveyor general, directed to make the survey under suoh decision, ascertained and fixed the lowest point on the southern shore of the lake as it was looated in 1769, the date of the grant. The succeeding seoretaryof the interior did not apprpve &Dch survey. and directed.it to be made npon the basis of the boundary pf the lake as it existed in 1888, the date of the former secretary's decillion. that the court was without jurisdiction to Interfllra to restrain sucll. survey on the ground that the rights of the owner of the grant were conclusively fixed by the decision of the secretary of the interior, and would be taken away under the guise of such decision.
InEquity. Bill filed by the city of New Orleans against R. B. Paine, United States deputy-sutveyor, to enjoin a survey. Hearing on bill, demurrer, e:x:hibits, etc. Injunction denied. J.L. J!'l'adford, for complainant. Wm; Grant, for defendant. ,BILLpmlJ, District Judge. This cause was heard upon the bill itself and exhibits, upon an application for an injunction pendente lite, and upon the demurrer. The cause is really to be heard and decided on the bill, of complaint so far as its allegations cover the matters involved, as it is met on the part of the defendant by a general demurrer. The case made by the bill is as follows: The city of New Orleans, as legatee under the McDonough will, had vested in it a complete grant, known as " Dupard's, " made by the Spanish government before the cession of the of Orleans to the United States, the grant bearing date in 1769. This gra.nt had been recognized as a complete grant by Secretary Lamar. 6 Dec. Dep. Int. p. 473. The only question left open by his decision is that of the point from which the northern boundary of the gra\lt..should start as the point of beginning in actual survey. Secretary in 1888, fixed the meaning of the words contained in the grant, "as far as Lake Maurepas," to mean as far as a line drawn froDl the lowest point of the southern shore ofLake Maurepas at right angles to a line drawn from the Mississippi river through the center of the grant from front to rear. The surveyor general was directed to make the survey under this decision, and he made it, ascertaining and fixing the lowest point of the southern shore of the lake,as that body of water was shown to have been located in 1769, the date of the grant. The survey so made was never approved by the department, but, on the application of the commissioner of the general land-office, Acting Secretary Chand.