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47 Mich. 456, 11 N. W. 271; Rowe v. Rowe, | as valid and still existing. In Hawaii v. 28 Mich. 353; Pittsburg, Ft. W. 4 C. R. Co. | Malcichi, 190 U. S. 197, 47 L. ed. 1016, 23 v. Hurd, 17 Ohio St. 144, 146; State ex rel. Sup. Ct. Rep. 787, a similar provision in Ballew v. Woodson, 161 Mo. 444, 61 S. W. the resolution of annexation was held not 252. We are also referred to McKnight v. to abrogate a system of trials by informa

v James, 155 U. S. 685, 39 L. ed. 310, 15 Sup. tion and convictions by a non-unanimous Ct. Rep. 248, in which we held that a writ jury, as applied to cases prior to the organic of error could not go to an order of a judge act of April 30, 1900. of a circuit court, made at chambers.

But we do not think it necessary to go But, conceding the correctness of these further than § 81 itself to find authority for decisions under the constitutions of the sev- a recognition of the laws previously existeral states, and also conceding that the ing in Hawaii concerning the constitution of organic act stands in the place of a consti- its courts and their method of procedure. tution for the territory of Hawaii, to which Whether a petition to a circuit court acting its laws must conform, does it follow that as a court of probate shall be addressed to the laws respecting proceedings at chambers and passed upon by the judge while sitting are in excess of the powers conferred under in court at chambers is, after all, much the organic act ?

more a matter of form than of substance. Bearing in mind that g 81 of the organic Com. v. McLaughlin, 122 Mass. 449. The act is but one of a hundred sections, all of petition for the removal of the guardian which are entitled to equal respect, it is in this case is entitled: “In the Circuit evident that to obtain a comprehensive view Court of the First Judicial Circuit, Terriof the intention of Congress we are bound tory of Hawaii. In Probate. At Chamto consider the whole act so far as it relates bers.” It appears to have been heard by the to the disposition of judicial power. To circuit judge without a jury, his decision segregate § 81 from all the other provisions being entitled "Before a Judge of the Cir. of the act must necessarily result in giving cuit Court, of the First Circuit, Territory it undue prominence.

of Hawaii." It must doubtless be treated By § 6 "the laws of Hawaii not incon- as a proceeding at chambers, but, for reasistent with the Constitution or laws of the sons already given, we think the power to United States, or the provisions of this act, act at chambers was saved by § 81 continushall continue in force, subject to repeal or ing in force the previous laws of Hawaii amendment by the legislature of Hawaii, or concerning the courts and their procedure. the Congress of the United States." By It would be too narrow a construction to § 7 the Constitution of the Republic of hold that this did not include the procedure Hawaii and a large number of its laws, before judges of those courts sitting at specially enumerated, are repealed; but the chambers. statutes giving probate and equity jurisdic

The decree dismissing the writ is affirmed. tion to the circuit courts are not mentioned. By $ 10 all actions at law, suits in equity,

(197 U. S. 244) and other proceedings then pending in the courts of the Republic of Hawaii shall be EDWARD H. HARRIMAN, Winslow S.

Pierce, Oregon Short Line Railroad Comcarried on to final judgment and execution

pany, and the Equitable Trust Company in the corresponding courts of the territory

of New York, Petitioners, of Hawaii. As petitioner, Carter, was appointed guardian of the minor's estate in

NORTHERN SECURITIES COMPANY. 1899 by the then judge of the first circuit, and was still proceeding to wind up the estate, we think the petition for his removal Certiorari finality of decree below


disposition by direction to lower courtwas filed in a pending proceeding within the meaning of this section.

judgments questions not determined by

stare decisis evidence Now, as it appears that the powers of

sufficiency to establish trust or bailment contracts

. judges at chambers had been fixed since

rescission for illegality 1892, eight years before the organic act was

in pari

delicto - laches and acquiescence. passed, that by § 6 and the final clause of $ 81 the laws of Hawaii theretofore in force 1. The lack of finality in a decree reversing concerning the several courts and their ju

an order of a circuit court granting a prerisdiction and procedure were continued in liminary injunction will not prevent a review force, except as therein otherwise provided, in the Supreme Court of the United States it would seem that these provisions were

by writ of certiorari issued to a circuit court

of appeais, where the record presented the especially intended to apply to cases like

whole case to that court so that it might the present, where a system of procedure

properly have been finally disposed of in which had previously existed was recognized terms by its decree.


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2. The Supreme Court of the United States holders in the new corporation until nearly a

will, by its direction to the circuit court, year after the Supreme Court of the United finally dispose of a cause brought before it States had adjudged the combination to be on writ of certiorari to a circuit court of ap- illegal, and until the directors of the new peals, where the record presented the whole corporation resolved upon a ratable distri. case to that court so that it might properly bution of its corporate assets, during which have been finally disposed of by its decree, time stock in the new corporation had passed although it did nothing more than to re- into many hands. verse the decree of the circuit court grant- 8. Parties to a transaction adjudged to vioing a preliminary injunction.

late the anti-trust act of July 2, 1890 (26 8. The question whether a corporation organ- Stat. at L. 209, chap, 647, U. S. Comp. Stat.

ized pursuant to a combination of stock- 1901, p. 3200), are not exempt from the holders in two competing interstate railway doctrine in pari delicto on the theory that companies to acquire a controlling interest they acted in good faith and without intent in their capital stock holds the same as ab- to violate the law, where, with knowledge solute owner, or as trustee or bailee, was not of the facts and of the statute, they acted determined by a decree adjudging the combi- under the mistaken supposition that the nation to be illegal, enjoining the new cor- statute would not be held applicable to the poration from acquiring any further stock, facts. from voting such stock as it then held or might subsequently acquire, and from ex

[No. 512.] ercising any control over the railway companies by virtue of its holdings, and restrain. Argued March 1, 2, 1905. Decided March ing the railway companies from permitting or

6, 1905. suffering any such action on the part of the new corporation, and from paying any divi

N WRIT of certiorari to the United and providing that nothing therein shall be States Circuit Court of Appeals for the construed as prohibiting the new corporation Third Circuit to review a judgment which from returning the railway shares to the reversed an order of the Circuit Court for original stockholders, or to the holders and the District of New York enjoining the for these shares.

Northern Securities Company from making 4. General expressions in an opinion which are the ratable distribution of its corporate

not essential to the disposition of the case assets resolved upon by its directors. cannot control the judgment in subsequent Affirmed, and the cause remanded to the suits.

Circuit Court with directions to dismiss the 5. A clear preponderance of proof is essential bill. to establish that the parties to a transac

See same case below, 134 Fed. 331, tion by which a corporation, formed for the purpose, acquired, in exchange for its own capital stock, a controlling interest in the Statement by Mr. Chief Justice Fuller: capital stock of two competing interstate rail- Edward H. Harriman, Winslow S. Pierce, way companies, pursuant to a combination Oregon Short Line Railroad Company, and of ihe stockholders in those companies, agreed the Equitable Trust Company of New York that the new corporation should hold such stock as trustee or bailee for the railway exhibited their bill against the Northern stockholders, where the transaction on its Securities Company in the circuit court of face was one of purchase and sale.

the United States for the district of New 6. The rule that property delivered under an Jersey April 20, 1904, on which, with ac

Illegal contract cannot be recovered back by companying affidavits and exhibits, a parties in pari delicto prevents the original straining order was issued, pending an stockholders in two competing interstate railway companies from reclaiming the specific application for an injunction as prayed in shares of stock which they delivered to a the bill. April 26 an amended bill was stockholding corporation in exchange for its filed, and the application for a preliminary capital stock, pursuant to a combination sub- injunction was heard May 20, 21, and 23 by sequently adjudged illegal, under which the Bradford, J., holding the circuit court. corporation was to acquire a controlling in

On the 4th day of June a second amended terest in the capital stock of each of such railway companies ; and they must be con- bill was filed, and on July 15, 1904, Judge tent with the ratable distribution of the Bradford delivered an opinion sustaining corporate assets resolved upon by the stock the application. 132 Fed. 464. holding corporation.

The order for injunction was entered Au7. Laches and acquiescence would themselves gust 18, 1904, and an appeal therefrom was

defeat any right of the original stockholders in two competing interstate railway com- prosecuted to the circuit court of appeals panies to rescind the contract under which for the third circuit, which, on January 3, they had delivered their stock to a corpora- 1905, reversed the order. 134 Fed. 331. tion formed in pursuance of a combination Thereupon complainants applied to this under which such corporation was to accourt for the writ of certiorari, which was. quire a controlling interest in the capital stock of the railway companies in exchange granted January 30, and the matter adfor its own capital stock, where such stock-vanced for hearing, and heard March 1 and holders stood upon their rights as share. '2. The affirmance of the decree of the cir.


cuit court of appeals was announced March (gon Railway & Navigation Company. The 6, it being added that an opinion would be interests in control of the Union Pacific filed afterwards.

system might properly be called the HarriThe Northern Pacific Railway Company man interests. Shortly thereafter, at the was the successor, through reorganization, instance of the Union Pacific Railway Comof the Northern Pacific Railroad Company, pany and with money furnished by that comand by its charter it was provided that its pany, the Oregon Short Line company purcapital stock might be increased from time chased Northern Pacific preferred stock to to time by a vote of a majority of the stock the amount of $41,085,000, and common holders, and that the company might, by a stock to the amount of $37,023,000, aggrelike vote, classify its stock into common and gating $78,100,000 of stock, being a majority preferred, and might "make such preferred of the $155,000,000, total capital stock of stock convertible into common stock upon the Northern Pacific company as then outsuch terms and conditions as may be fixed standing. But the preferred stock was subby the board of directors." On July 1, ject to retirement at par at the option of 1896, by the unanimous vote of its then the company, and the 370,230 shares of comstockholders, the capital stock was increased mon stock was less than a majority of the to $155,000,000, divided into $80,000,000 of total common stock, which majority was common stock and $75,000,000 of preferred held by the Morgan-Hill party. stock, and it was resolved “that such pre- In October, 1901, complainant Harriman ferred stock shall be issued upon the condi. was elected a member of the board of dition that, at its option, the company may rectors of the Northern Pacific Railway retire the same, in whole or in part, at par, Company and James Stillman was from time to time, on any 1st day of Janu- elected. They were also directors of the ary prior to 1917.The plan of reorganiza- Union Pacific Railway Company. They both tion which was adopted provided that, as attended a meeting of the Northern Pacific to the new company, which it was contem- board on November 13, 1901, and Harriman plated should acquire the properties and was chosen a member of the executive comfranchises of the Northern Pacific Railroad mittee. At this meeting resolutions were Company, and the issue of preferred stock adopted providing for and resulting in the by it, “the right will be reserved by the new retirement of the preferred stock on Janucompany to retire this stock, in whole or in ary 1, 1902, by the payment of $100 cash part, at par, from time to time, upon any for each and every share to each and every 1st day of January during the next twenty holder of record on that day. years.

These resolutions declared that the comAll the certificates of stock, whether company thereby determined to exercise its mon or preferred, at that time or subse- right to retire the preferred stock; provided quently issued, contained this clause: “The that, for the purpose of raising the funds company shall have the right, at its option, necessary to do so, the company should issue and in such manner as it shall determine, its negotiable bonds for $75,000,000, conto retire the preferred stock, in whole or in vertible at par into shares of the common part, at par, from time to time, upon any stock of the company at par; authorized Ist day of January prior to 1917.”

the making of a contract for the sale of all TI reorganization had been managed by of such bonds at par and accrued interest, J. P. Morgan & Company, and the directory the contract to contain a provision giving of the Northern Pacific Railway Company to the holder of every share of the common were friendly to that firm. During the same stock the opportunity to receive from the period the president of the Great Northern contract purchaser, at par and interest, such Railway Company was James J. Hill, and bonds to an amount equal to seventy-five its directors were friendly to him.

eightieths of the par amount of said comThe two companies were friendly to each mon stock at such time owned by such other, and in April, 1901, acquired the holder, and arranged for the retirement shares of the Chicago, Burlington, & Quincy from and after December 31, 1901, of the Railroad Company.

$75,000,000 preferred stock, by the payment At this time the Union Pacific Railway to each and every holder of record thereof system included the Union Pacific Railway, on January 1, 1902, of $100 cash for each the railroad of the Oregon Short Line Rail. and every share. road Company, and the railroad of the Ore- On November 15, the executive committee gon Railroad and Navigation Company. of the Northern Pacific company authorized The Union Pacific Company was practically the execution of a contract with the Standthe owner of the entire capital stock of the ard Trust Company of New York for the Oregon Short Line Railroad Company, and sale and delivery of the convertible certifithe latter company was the owner of prac- cates for $75,000,000 provided for in the tically the entire capital stock of the Ore-resolutions.

solved upon.

The preferred stock was subsequently | Great Northern, and two members of J. P. taken up in accordance with the plan re- Morgan & Company, were elected directors

of the Northern Securities Company. ComThe Northern Securities Company was in- plainant Harriman took his seat at the corporated under the laws of New Jersey board, and an executive committee of five in November, 1901, its articles of associa- was elected, of which he was one. tion having been filed at Trenton on the November 15 resolutions were passed au13th day of that month, with a capital stock thorizing the purchase of the Northern of $400,000,000, divided into 4,000,000 Pacific stock held by Harriman and Pierce, shares of the par value of $100 each, and its as follows: objects being certified to be:

“The president stated that he now had an “(1.) To acquire by purchase, subscrip- opportunity of acquiring $37,023,000 par tion, or otherwise, and to hold as invest-value of the common stock, and $41,085,000 ment, any bonds or other securities or evi- par value of the preferred stock, of the dences of indebtedness, or any shares of Northern Pacific Railway Company, at an capital stock created or issued by any other aggregate price of $91,407,500, payable, as corporation or corporations, association, or to $82,491,871, in the fully paid-up and nonassociations, of the state of New Jersey, or assessable shares of this company at par, of any other state, territory, or country. and, as to the remaining $8,915,629, in cash. “(2.)

To purchase, hold, sell, assign, "On motion, and by affirmative vote of all transfer, mortgage, pledge, or otherwise dis- the directors present, it was, pose of, any bonds or other securities or evi- Resolved, That the president be, and dences of indebtedness created or issued by hereby he is, authorized, in behalf of this any other corporation or corporations, asso- company, to purchase said stock—namely, ciation or associations, of the state of New $37,023,000 par value of the common stock, Jersey, or of any other state, territory, or and $41,085,000 par value of the preferred country, and, while owner thereof, to exer- stock of the Northern Pacific Railway Comcise all the rights, powers, and privileges pany—at an aggregate price of $91,407,500, of ownership.

payable, as to $82,491,871 thereof, in the “(3.) To purchase, hold, sell, assign, fully paid-up and non-assessable shares of transfer, mortgage, pledge, or otherwise dis- the capital stock of this company at par, pose of, shares of the capital stock of any and, as to $8,915,629, in cash; and that the other corporation or corporations, associa officers of this company be, and hereby they tion or associations, of the state of New are, authorized to issue fully paid-up and Jersey, cr of any other state, territory, or non-assessable shares of stock of this comcountry; and, while owner of such stock, to pany to the amount of $82,491,871, and to exercise all the rights, powers, and priv- pay $8,915,629 in cash, in consideration of ileges of ownership, including the right to such $37,023,000 of the common stock and vote thereon.

$41,085,000 of the preferred stock of the “(4.) To aid in any manner any corpora- Northern Pacific Railway Company. tion or association of which any bonds or “Resolved, That the president be, and other securities or evidences of indebtedness hereby he is, authorized at any time to reor stock are held by the corporation; and to tire at par, for cash, any and all preferred do any acts or things designed to protect, stock of the Northern Pacific Railway Compreserve, improve, or enhance the value of pany that may be acquired by this company, any such bonds or other securities or evi- and in case such retirement shall be effected dences of indebtedness or stock.

prior to January 1, 1902, to allow interest “(5.) To acquire, own, and hold such real up to January 1, 1902, at the rate of 4 per and personal property as may be necessary cent per annum on the sum receivable for or convenient for the transaction of its busi- such preferred stock.

Resolved, That the president be, and “The business or purpose of the corpora- hereby he is, authorized in behalf of this tion is from time to time to do any one or company to purchase at their par value an more of the acts and things herein set forth. amount of the convertible certificates of the

“The corporation shall have power to con- Northern Pacific Railway Company, to be duct its business in other states and in for- issued pursuant to the resolutions of the eign countries, and to have one or more board of directors of the Northern Pacific offices out of this state and to hold, pur- Railway Company, passed November 13, chase, mortgage, and convey real and per- 1901, equal to seventy-five eightieths of the sonal property out of this state.”

par amount of any and all common stock On the 14th day of November, 1901, fifteen of the Northern Pacific Railway Compan gentlemen, including complainant Harri- that shall have been acquired by this comman and two other directors of the Union pany. Pacific, James J. Hill, president of the Resolved, That the president be, andi


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hereby he is, authorized, in case of the pur- From the organization of the Securities chase by this company of any of the con- company until the affirmance of the decree vertible certificates of the Northern Pacific in the government suit, hereafter mentioned, Railway Company, to convert the same into complainants continued to exercise the right common stock of the Northern Pacific Rail- of holders of 824,000 shares of stock in the way Company whenever such conversion Securities company; received their share of may be effected.

dividends, and gave their proxy to vote at Resolved, That the president be, and the annual meetings of 1902 and 1903. hereby he is, authorized to borrow, on such July 17, 1902, Harriman and Pierce and terms as he may arrange, any moneys re- the Oregon Short Line Company pledged the quired for the purpose of carrying out the 824,000 shares of Northern Securities Comforegoing resolutions, and to make all finan- pany stock to the Equitable Trust Company, cial arrangements, and to do all acts and the Short Line Company executing a trust things, which he may deem needful in the indenture, which contained

contained this clause: premises.”

“The deposit and pledge hereunder of said Complainant Harriman and his codirect- shares of stock, or of any other securities ors of the Union Pacific were not present at which shall become subject to this indenthis meeting, but were present at the next ture, shall not prevent the consolidation, meeting of the board on November 19, at union, or merger with any other corporawhich the minutes of the meeting of Novem- tion of the Securities company, or of any ber 15 were read and on motion were ap- other corporation by which said securities proved.

shall have been issued, or the sale of its At a subsequent meeting of the executive property or the distribution of its assets. committee, in which Mr. Harriman partici. In any such case the trustee shall receive pated, the form of the company's permanent such amounts of stock, bonds, or other secustock certificate, being the usual form, was rities, or money, or of either or all of them, unanimously approved.

as the holders of the pledged shares of stock In the meantime, and on November 18, of the Securities company, or other pledged Harriman and Pierce had delivered their securities, as the case may be, shall be enNorthern Pacific stock to the Northern titled to receive, and, upon receipt thereof, Securities Company, and that company had shall surrender the deposited stock certifidelivered to them the 824,000 shares of its cates or other securities," stock and $8,915,629 in cash.

March 10, 1902, a bill was exhibited in The Northern Pacific stock certificates re- the circuit court of the United States for ceived from Harriman and Pierce were sur- the district of Minnesota by the United rendered by the Securities company to the States against the Northern Securities ComNorthern Pacific Railway Company. The pany, the Northern Pacific Railway Comcertificates for the 370,230 shares of company, the Great Northern Railway Common stock were exchanged for 370,230 pany, James J. Hill, William P. Clough, shares of common stock issued in the name D. Willis James, John S. Kennedy, J. Pierof the Northern Securities Company. The pont Morgan, Robert Bacon, George F. certificates for the 410,580 shares of pre- Baker, and Daniel S. Lamont, to restrain ferred stock were surrendered to the North- the violation of the act of Congress of July ern Pacific Railway Company for retire-2, 1890, 26 Stat. at L. 209, chap. 647 (U. S. ment, and paid for and retired as provided, Comp. Stat. 1901, p. 3200), entitled "An the transaction resulting in the receipt by Act to Protect Trade and Commerce against the Northern Securities Company of cer- Unlawful Restraints and Monopolies," which tificates for 347,090 shares of new common resulted April 9, 1903, in a decision in favor stock. This made 717,320 shares, and the of complainants (120 Fed. 721), and a deSecurities company also acquired 820,270 cree as follows: shares, from a large number of separate

"That the defendants above named have individual owners. And from a large num- heretofore entered into a combination or ber of stockholders of the Great Northern conspiracy in restraint of trade and com1,181,242 shares of the stock of the latter merce among the several states, such as an company.

act of Congress, approved July 2, 1890, enAt a meeting of the board of directors titled 'An Act to Protect Trade and Comof the Northern Securities Company on Jan. merce against Unlawful Restraints and uary 22, 1903, at which complainant Harri- Monopolies,' denounces as illegal; that all man was present, the sale by the company of the stock of the Northern Pacific Railof 75,000 shares of its own stock for cash way Company and all the stock of the Great was approved. The second amended bill Northern Railway Company, now claimed to says $7,522,000 “was issued for cash used be held and owned by the defendant, the for the purchase of other property, and for Northern Securities Company, was acquired corporate purposes."

and is now held by it in virtue of such com25 S. C. 32.

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