automatic couplers, but was so connected with the "bull-nose" coupler that the coupling with other cars was not made automatically by impact, but so as to make it necessary for men to go between the ends of the cars to couple and uncouple them, the apparatus did not comply with the act of Congress.

We can see no substantial difference in principle, so far as concerns the question here involved, between the case of a coupler temporarily inoperative by reason of being out of repair and one rendered equally inoperative because of the loading of the car in such way that the act of uncoupling could not be accomplished without the necessity of a man going between the cars. The latter case, which is presented here, is equally within the mischief which the statute is designed to prevent. It is unnecessary to consider the case, suggested by defendant's counsel, of two cars loaded with materials of such length as to rest upon both cars and to extend wholly across the space between; no coupling or uncoupling being intended during transit. The record presents no such case.

We are not impressed by the contention of defendant that the facts stated in the declaration do not make it appear that it was necessary to go between the cars to effect an uncoupling, from the fact that such act could be accomplished by getting on top of the car and removing the lumber from over the lever. So long as the lumber was so loaded "as to project out over the uncoupling lever," and so as to "prevent the operation of the uncoupling lever, * * *thus necessitating a man or men going between the ends of said car * * * and the car adjacent to couple or uncouple them," the automatic apparatus was wholly inoperative, and the situation during the existence of that state of facts was as much fraught with danger to the employé, and as much within the mischief the statute was intended to prevent, as if the car were not equipped with automatic devices.

The judgment of the District Court must accordingly be reversed.

(177 Fed. 804.)

NORTHERN PAC. RY. CO. et al. v. BOYD. (Circuit Court of Appeals, Ninth Circuit.

March 9, 1910.)

No. 1,729.

1. RAILROADS (§ 134*)-CONVERSION BY LESSEE OF ASSETS OF LESSOR-LIABILITY TO CREDITORS OF LESSOR.

The president of a railroad company, who controlled a majority of its stock, contracted to lease its property to another company for 999 years, to sell to the lessee its supplies and material on hand, and to deliver to it 51 per cent. of the stock of the lessor. By the agreement the lessor company was to make an issue of mortgage bonds, a portion of which were to be retained by the trustee to take up a prior issue. The agreement was carried out, and the remaining bonds so issued by the lessor, which constituted the greater part, were delivered to the president of the lessor, and, as appeared from the evidence, were retained by him and his associates in payment for the stock they transferred to the lessee, which was valuable. Held, that such appropriation of the bonds of the lessor which would otherwise have Leen available for the payment of its debts was a

fraudulent diversion of its property as against its creditors and rendered the lessee which received the benefit of such diversion liable for a debt of the lessor which was less than the value of the property converted, from which it was not relieved by the fact that it afterward expended a larger sum in betterments and extensions of the leased road.

[Ed. Note. For other cases, see Railroads, Dec. Dig. § 134.*]

2. RAILROADS (§ 30*)-REORGANIZATION-PARTICIPATION OF STOCKHOLDERSLIABILITY OF NEW COMPANY FOR DEBTS OF OLD COMPANY.

A reorganization of an insolvent railroad company, by which both its mortgage bondholders and its stockholders, in exchange for their bonds and stocks, are given an interest in the new company, which purchases the property of the old company at a foreclosure sale made pursuant to such plan of reorganization and by consent of the old company and its stockholders, is fraudulent in law as to unsecured creditors of the old company whose claims are left unpaid, and renders the new company liable for the claims of such creditors, who are not, under such circumstances, represented in the foreclosure suit by the mortgagor nor precluded by the decree therein from showing in equity the fraud and collusion by which it was obtained, and the property of their debtor placed beyond their reach by legal process.

[Ed. Note. For other cases, see Railroads, Dec. Dig. § 30.*]

3. EQUITY (§ 339*)—ANSWER UNDER OATH-EFFECT AS EVIDENCE.

While a sworn answer in equity, where oath is not waived, becomes evidence of the facts well pleaded therein, allegations which are not of the facts themselves, but rather of the construction placed on such facts by the pleader, do not preclude the court from resorting to such facts and placing its own construction thereon.

[Ed. Note. For other cases, see Equity, Dec. Dig. § 339.*]

4. JUDGMENT (§ 515*)-COLLATERAL ATTACK-GROUNDS-FRAUD AND COLLU

SION.

A judgment which has been procured by the fraudulent contrivance of the debtor or the collusion of both parties is subject to collateral attack by any one a stranger to the judgment who has been injuriously affected thereby.

[Ed. Note. For other cases, see Judgment, Cent. Dig. § 957; Dec. Dig. § 515.*]

5. LIS PENDENS (§ 26*)-PURCHASE OF PROPERTY-RIGHT OF CREDITORS TO IMPEACH JUDGMENT FOR FRAUD OR COLLUSION.

The fact that a creditor of a mortgagor acquired his rights pending a suit to foreclose the mortgage does not preclude him from attacking the validity of the decree in such suit in equity on the ground that it was fraudulent and collusive.

[Ed. Note.

For other cases, see Lis Pendens, Dec. Dig. § 26.*]

6. JUDGMENT (§ 678*)-PERSONS CONCLUDED-PRIVITY-SEVERAL CREDITORS OF DEFENDANT.

There is in general no such privity between several creditors of the same debtor that proceedings taken by one against the fund, the estate, or specific property to which all must look for satisfaction, will raise an estoppel against the others.

[Ed. Note. For other cases, see Judgment, Cent. Dig. § 1197; Dec. Dig. § 678.*]

7. EQUITY (§ 67*)-LACHES-NATURE AND ELEMENTS.

The doctrine of laches rests upon equitable principles which are neither arbitrary nor technical, and what amounts to laches depends largely upon the circumstances of each particular case; the ultimate inquiry be

ing as to on which side would fall the balance of justice in sustaining or denying the defense.

[Ed. Note. For other cases, see Equity, Cent. Dig. §§ 191-196; Dec. Dig. § 67.*]

8. EQUITY (§ 80*)-LACHES-ESTOPPEL TO INVOKE DEFENSE.

Where the party interposing a defense of laches has caused or contributed to the delay, he cannot take advantage of it.

[Ed. Note. For other cases, see Equity, Cent. Dig. § 237; Dec. Dig. § 80.*]

9. EQUITY (§ 82*)-LACHES-FACTS CONSIDERED.

Where the claim upon which the judgment of a complainant in a creditors' suit is based was in almost continuous litigation for many years in various suits and proceedings, during most of which time it was being contested by defendant or its predecessor in interest with which it is in privity, the complainant held not chargeable with laches which would defeat the suit because of the delay which did not in any manner prejudice the defendant.

[Ed. Note. For other cases, see Equity, Cent. Dig. § 236; Dec. Dig. § 82.*]

Appeal from the Circuit Court of the United States for the Eastern Division of the Eastern District of Washington.

Suit in equity by Joseph H. Boyd against the Northern Pacific Railway Company and the Northern Pacific Railroad Company. Decree for complainant (170 Fed. 779), and defendants appeal. Affirmed.

The Coeur d'Alene Railway & Navigation Company was organized under the laws of the territory of Montana in July, 1886, with authority to build and operate railroads in the territories of Montana and Idaho. Before the end of that year it became indebted to William N. Spalding in the sum of $23,675.85 for work done and materials furnished in the construction of its narrow gauge railroad in the territory of Idaho, and on March 27, 1887, Spalding began an action in a court of Idaho against the company to recover that amount. On April 25, 1896, he obtained judgment for $36,584.95. On an appeal to the Supreme Court of the state of Idaho, the judgment was affirmed on November 26, 1897. 5 Idaho, 528, 51 Pac. 408. In December, 1898, the appellee herein, Joseph H. Boyd, brought an action against Spalding in a state court of Idaho alleging that he (Boyd) was the rightful owner of the judgment. The cause was removed by Spalding to the United States Circuit Court for the Northern District of Idaho. On May 21, 1901, the appellee obtained a decree in that court adjudging that he was the rightful owner of the judgment. In September, 1903, to prevent the expiration of the judgment obtained on April 25, 1896, and subsequently affirmed, the appellee caused summons to be issued in an action brought against the Coeur d'Alene Company to revive the same. The Coeur d'Alene Company caused the action to be removed to the United States Circuit Court for the District of Idaho. On October 23, 1905, judgment was rendered in favor of the appellee for $71,278.20, the amount of the original indebtedness with accumulated interest and costs. A writ of error was sued out to review that judgment in the Circuit Court of Appeals for this circuit. It was afterwards dismissed by stipulation. The present suit was brought on September 20, 1906, by the appellee against the appellants to recover judgment against the Northern Pacific Railroad Company for $71,278.20 and to have the judgment declared a lien on the property of the Northern Pacific Railway Company. For convenience, the corporations will be designated as they are in the briefs of counsel. The Coeur d'Alene Railway & Navigation Company will be called the “Cœur d'Alene Company," the Northern Pacific Railroad Company, the "railroad company," and the Northern Pacific Railway Company, the "railway company." By the decree of the court below it was adjudged that the railroad company was indebted to the appellee in the amount sued for, with interest and costs, that the in

debtedness was a lien upon the property of the railway company, and that, on the failure of that company to pay it within 30 days, the appellee might apply to the court for the appointment of a receiver. From that decree the present appeal is taken.

In March, 1887, when Spalding began his action against the Coeur d'Alene Company, that company's property consisted of a narrow gauge railway 33 miles long, together with a steamboat line in the then territory of Idaho, A mortgage, called in the record herein the "first mortgage," had, in the year 1886, been placed upon the property to secure bonds to the amount of $360,000, which had been issued and sold to the public. D. C. Corbin, the president of the Coeur d'Alene Company, owned or controlled the majority of its capital stock of $500,000. On August 1, 1888, Corbin entered into a contract with the railroad company, by the terms of which the property of the Cour d'Alene Company was to be leased to the railroad company for a period of 999 years. The railroad company was to pay as rental, under the lease, the interest on bonds to be issued by the Cœur d'Alene Company, to the amount of $25,000 per mile of the road as it was then constructed, and as it was thereafter to be constructed, making a total issue of $825,000 on account of the 33 miles of road then built. $360,000 of these bonds were to be retained by the trustee, to retire, at their maturity, the bonds of that amount already outstanding under the first mortgage. The railroad company was to pay the Cœur d'Alene Company $20,500 on account of expenses incurred in making surveys, etc., and was to purchase from the Coeur d'Alene Company all construction and operating materials and supplies on hand at the cash value thereof. Corbin agreed to cause to be transferred to the railroad company at least 51 per cent. of the capital stock of the Coeur d'Alene Company, "full paid and nonassessable." The railroad company was to further covenant in the lease to provide a sinking fund for the redemption of the whole of the new issue of the bonds at maturity; the payments into that fund to begin 10 years from the date of the lease. Pursuant to that agreement, the Cœur d'Alene Company on September 1, 1888, executed its general first mortgage to secure the issue of bonds as provided for therein. The bonds were guaranteed by the railroad company in accordance with the agreement. $360,000 of them were reserved by the trustee and $465,000 of them were delivered to the president of the Cœur d'Alene Company as provided in the mortgage.

On September 14, 1888, the Cœur d'Alene Company executed to the railroad company the lease of its property. Four days later, there were transferred to the railroad company by Corbin and other holders thereof 5,100 of the shares of the capital stock of the Coeur d'Alene Company, and on October 1, 1888. the railroad company went into possession under the lease. By the terms of the lease, the net earnings of the leased property, after the payment of operating expenses, taxes, interest, and sinking fund charges, was to be paid as part of the rental by the railroad company directly to the stockholders of the Cœur d'Alene Company. On December 17, 1889, the railroad company acquired from Corbin 4,400 additional shares of stock of the Cour d'Alene Company, for which it paid $220.000, and a week later it acquired the remaining 500 shares from another stockholder, paying therefor $30,000. It thus became the sole stockholder of the Coeur d'Alene Company. From October 1, 1888, to August 15, 1893, the railroad company operated the Cour d'Alene Company's property under the lease. By June 30, 1889, its net earnings were $130,269.01. The next year they were $46,000.59. The year following there was a deficit of $36,381.19. The next year the deficit was $116,704.43, and the year ending June, 1893, it was $84,049.65. During the years 1889 and 1891, the road was rebuilt upon a standard gauge, and an extension of 161⁄2 miles in length was made by the railroad company. By the terms of the general first mortgage, the railroad company was permitted to issue bonds to the extent of $25,000 per mile for each additional mile constructed. $413,000 of the general first mortgage bonds of the Coeur d'Alene Company were accordingly issued, and were delivered by the trustee to the railroad company to pay for the new construction. For these bonds the railroad company received in cash $411,507.50. Its expense in constructing the new road was $720,572.18, and in changing the narrow gauge road already built to a standard gauge, $151,696.90, for surveys $11,768.04, and for equipment, $23,459.61,

making a total of $495,989.23 more than the sum it received from the sale of the bonds, and the total bonded indebtedness of the Coeur d'Alene Company was then $1,238,000 held by the public.

On August 15, 1893, the railroad company became insolvent, and on that date certain of its stockholders filed a creditors' bill in the Circuit Court of the United States for the Eastern District of Wisconsin, and in that suit receivers were appointed, who took possession of the railroad, its franchises, and assets, and the receivership was extended to other suits, brought in other districts, in which the company's property was situated. There were then outstanding upon the company's property six mortgages. In October, 1893, there was default in the interest on certain of these mortgages, and thereupon the trustee, the Farmers' Loan & Trust Company, filed its bill for foreclosure thereon in the United States Circuit Court for the Eastern District of Wisconsin. The receivership was extended to the foreclosure suit, and that and the suit upon the creditors' bill were consolidated. Similar bills for foreclosure were filed by the trustee in other jurisdictions in which the property was situated, and similar orders were taken in those jurisdictions. On September 1, 1893, the receivers, under an order of court paid the semiannual interest on the bonds of the Coeur d'Alene Company. On October 10, 1893, the trustee under the first mortgage and the general first mortgage of the Coeur d'Alene Company, together with II. H. Trowbridge, as co-complainant, commenced a suit to marshal the assets of that company. On the same day receivers were appointed. On August 24, 1895, the trustee commenced a suit in the same court for the foreclosure of the general first mortgage of September 1, 1888, and on May 25, 1898, it commenced suit in the same court for the foreclosure of the first mortgage. The three suits were subsequently consolidated.

The receivers of the railroad company who took charge of its property in 1893 found that the annual fixed charges exceeded the net income of the property. A committee of the holders of the mortgage bonds, which had been formed in 1893, formulated a plan of reorganization. It was proposed to form a syndicate to furnish the cash required to carry out the plan, by the sale of stock in a new company. The syndicate agreed to furnish the amount of money required for the purpose of carrying out the plan, in consideration of the issuance to them of 187,678 shares of the preferred stock, and 775,000 shares of the common stock, and certain mortgage bonds of the new company. It was the expectation that the stock in the new company would be taken by the stockholders of the railroad company. The plan for the reorganization received the assent of the holders of nearly all the general second, general third, and the consolidated mortgage bonds, of more than 75 per cent. of the preferred stock, and a large majority of the common stock of the railroad company. Holders of preferred stock were required to pay $10 on each share deposited by them, for which they were to receive, upon the completion of the organization, $50 in preferred stock trust certificates, and $50 in common stock trust certificates of the new company. The holders of common stock were required to pay $15 upon each share upon which they were to receive $100 of common stock trust certificates of the new company.

The Superior & St. Croix Railroad Company, a corporation of Wisconsin, was acquired, and the name of the corporation was changed to the "Northern Pacific Railway Company," and its capital stock was increased to $155,000,000. This company was the new company contemplated in the plan of reorganization. In April, 1896, the consolidated cause for the administration of the assets of the railroad company and the foreclosure of its mortgages came on to be heard in the Circuit Court of the United States for the Eastern District of Wisconsin, upon bill and answer, and decrees were entered that the railroad lands and properties subject to the lien thereof be sold. Similar decrees were rendered in other courts, in which ancillary bills had been filed. Under these decrees the railroad lands and property of the railroad company covered by the mortgages were sold, by a special master, to the railway company. On July 27, 1896, the sale of the railroad property was confirmed, and on August 8, 1896, the sale of the lands was confirmed. By the terms of the agreement of July 13, 1896, the railway company became entitled to be invested with stock, bonds, and other property representing the system of the