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Schuler v. Southern Iron & Steel Co.

77 Eq.

one of the parties might appeal to the court to undo such unlawful agreement and prevent its being proceeded with.

In this view of the case, it seems to me that it would not only be proper but necessary to bring in all the parties so that the court could make a binding decree affecting them all.

Another insistment of the demurrant is that this complainant is not in a position to ask for the relief prayed for, even assuming that his bill charges all that it should charge, because what he, in effect, is asking for is rescission, and rescission, under the circumstances, is impossible.

The contention of the demurrant is that the status quo ante cannot possibly be restored; and since the complainant is in a similar situation to all the other parties, and has not been the subject of any fraud nor has any concealment been practiced with respect to him, he cannot now have the contract rescinded as to him without the acquiescence of all the others, because it would be impossible to restore him or the others to any position which a court would deem equitable.

It certainly would be extremely difficult to work out any equitable result under the circumstances. Parties owning $33,000,000 of securities, stock, &c., have joined in this plan, or at least a very large majority have. It contemplated settlements upon agreed bases. It contemplated a sale of the assets and a purchase for the benefit of all, and a revesting of the assets in a new corporation, and an issuance of securities by that corporation in exchange for rights against and securities of the old corporation.

The only remedy in this view of the case would be a completely new agreement, which it seems to me would be practically impossible for the court to make, even if all the parties were before it and the court had jurisdiction to do so. The parties are not before it, since only the reorganization committee and the new company are defendants. If the entire subject matter of the trust is to be dealt with, and everybody's rights in it are to be affected (as they would have to me to meet the complainant's demand), it seems to be clear that the other cestui que trustent are indispensable parties. This latter principle, if it is applicable, is too familiar to require citation of authorities.

7 Buch.

Schuler v. Southern Iron & Steel Co.

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Another insistment is that in reorganizations the courts have held that an overissue does not result if what is done is merely exchanging new securities for old. The following authorities are cited for this: Pomeroy v. New York Smelting and Refining Co. (Vice-Chancellor Emery, 1901), 48 Atl. Rep. 395; Memphis and Little Rock Railroad v. Dow, 120 U. S. 287; Mackintosh v. Flint and P. M. R. Co., 34 Fed. Rep. 582; Sioux City O. and W. Co. v. Manhattan Trust Co., 92 Fed. Rep. 428; Toledo and R. Co. v. Cont. Tr. Co., 95 Fed. Rep. 497; Blum v. Il'hitney, 185 N. Y. 232, 240.

And it is also pointed out that our statutes concerning reorganizations seem to indicate that this is the public policy of our state.

Finally, it is insisted that even if all necessary facts were properly charged, the laches apparent on the part of the complainant would bar him from rclief under the doctrine recently enunciated in the case of Dana v. Tobacco Company (Vice-Chancellor Pitney, 1907), 72 N.J. Eq. (2 Buch.) 44; affirmed, 73 N. J. Eq. (3 Buch.) 736 (Court of Errors and Appeals, 1908). It is pointed out that in that case a certain number of weeks was held to be too long for the complainant to have delayed before acting, and in this case, at least, the same number of weeks must be found to have intervened between the time when the complainant will be charged with knowledge and the time when he actually acted.

This brief reference to the various objections to the bill urged by the demurrant indicates their seriousness and importance. But I do not conceive it proper for me to attempt to formulat the law with respect to these different contentions; because I do not find, as above fully stated, that the facts charged in the bill make a case calling for their consideration.

I will advise a decree in accordance with the above conclusions.

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1. The allowance of a plea to the jurisdiction of the chancery court in a suit against a domestic corporation in which the court has jurisdiction of the subject-matter, praying for dismissal on the ground that the court has no jurisdiction of the suit for want of proper service on defendant, would result in a denial of justice to complainant; such fact only being matter in abatement entitling defendant at most to have the service quashed.

2. At law pleas to the jurisdiction were either in bar or in abatement.

3. While at law the declaration must follow the writ and fell with it, the subpona in equity was a mere notice, and could be quashed without affecting the bill, so that failure properly to serve the subpæna was merely ground in abatement, and would not support a plea to the jurisdiction.

4. The return of an officer upon the process is conclusive, even as to matters of opinion stated therein by him; the only remedy for a false return being an action against him.

5. In the absence of a statute, the courts of a state have jurisdiction of a transitory suit against a foreign corporation if found and served within the state having jurisdiction of the subject-matter.

6. A plea in abatement to a bill in equity is bad which states matter in bar.

7. Upon finding against defendant, upon issue joined, upon its plea to the jurisdiction, praying dismissal of the bill for want of proper service, if that were the proper manner of making the objection, complainant would be entitled to proceed as upon a decree pro confesso.

8. Upon finding that defendant was not properly served, upon joinder of issue upon a plea to the jurisdiction praying dismissal for want of service, the court may, in order to avoid error in presenting the matter as a plea to the jurisdiction instead of in abatement, permit complainant to withdraw the replication to the plea upon just terms to defendant, preserving to him the benefit of the evidence taken on the question.

9. While a plea to the jurisdiction of a chancery court is proper where it has no jurisdiction of the subject-matter, where it has such jurisdiction and jurisdiction of the person as in case of a domestic coi poration, the objection of want of service upon it should be made by motion to abate the suit until defendant is properly served, and not by plea to the jurisdiction.

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10. Where the want of service upon defendant was improperly presented by plea to the jurisdiction and issue joined therein, upon permitting complainant to withdraw his replication to the plea, the court may strike the plea and permit defendant to properly restate the matter in abatement.

11. Chancery rule 209a provides that the validity of a plea is not admitted by joinder of issue thereon, and if the facts pleaded be determined in defendant's favor, they shall avail him only so far as in law and equity they should do so. Defendant filed a plea to the jurisdiction praying dismissal of the bill for want of service upon it, and issue was joined therein, and found for defendant as to want of service.Held, that defendant was only equitably entitled to have the improperly served process set aside, and was not entitled to have the bill dismissed, and the suit barred.

In this case a bill was filed by the complainant against three defendants, an individual and two corporations. The subjectmatter of the suit is conceded to be within the jurisdiction of a court of equity.

The two corporations defendant are each corporations of the State of New Jersey.

One of such defendants filed a plea as follows:

"The defendant, St. Peter and Paul Russian Greek Catholic Church of Jersey City, appearing for the sole purpose of objecting to the jurisdiction of this honorable court over this defendant in this suit, and for no other purpose and by protestation not confessing or acknowledging the matters and things in and by the said bill of complaint of the said George Ewald, set forth in such manner and form as the same are thereby and therein set forth and alleged for plea to the jurisdiction of this honorable court in the premises says: "That jurisdiction has been sought to be obtained over the St. Peter and Paul Russian Greek Catholic . Church of Jersey City, in this case by the issuance of a writ of subpæna ad respondendum, out of and under the seal of this honorable court, bearing date the sixth day of April, nineteen hundred and eight, directed to St. Peter and Paul Russian Greek Catholic Church of Jersey City,' together with other defendants, and the service of the same by the sheriff of the county of Hudson upon Sam Barna as appears by a return thereof by said sheriff as follows: 'Served within subpæna April 16, 1908

on the defendants St. Peter and Paul Russian Greek Catholic Church of Jersey City by leaving true copies thereof with Sam Barna, President and Agent of said defendant church. John C. Kaiser, Sheriff, by Eugene Thomas, S. D. S.' That at the time of said service said Sam Barna was not the president, agent or other representative or officer of the said St. Peter and Paul Russian Greek Catholic Church of Jersey City, in the State of New Jersey or elsewhere and had no connection whatever, as officer or director or otherwise with the St. Peter and Paul Russian Greek Catholic Church of Jersey City, and

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that no decree can be entered in this suit which is enforceable against this defendant under the laws of the State of New Jersey.

“By reason thereof this defendant humbly submits that this honorable court has not now and never had and cannot bave jurisdiction over it. All of which matters and things this defendant avers to be true and pleads the same in bar to the said complainant's bill, and to the jurisdiction of this honorable court in the premises, and prays the judgment of this honorable court whether it should be compelled to make any further or other answer to said bill, and prays to be hence dismissed with its costs and charges in this behalf sustained."

Within the time required the defendant set this case down for hearing on bill and plea, and it was upon the list for hearing at the October term, 1908, of this court.

The complainant, having filed a replication to the said plea before the opening day of said October term, no hearing was had upon the bill and plea, but in due course a trial day was set for the hearing upon the bill, plea and replication.

Upon the trial, the testimony of the witnesses convinced the court that at the time of the service of process upon Barna he was not the president or agent of the defendant corporation. If the determination of this fact should lead the court to make an order in accordance with the prayer of the plea, such order would deny the jurisdiction of the court, bar the complainant's suit as to the pleading defendant, or dismiss it therefrom. Since such an order would be in effect a denial of justice to the complainant, the court perceived the difficulty created by the course of pleading and called the same to the attention of counsel (adopting much the same course as that suggested in Schoettle v. Hengen (Vice-Chancellor Leaming, 1907), 66 Atl. Rep. 922). Thereupon the solicitor for the complainant moved for leave to withdraw the replication to the plea, and for leave to move to strike out the said plea, and, if these motions were granted, for leave to move to set aside the service of the process which he had caused to be served upon the pleading defendant. Due notice of these motions having been given to the solicitor of the pleading defendant, arguments and briefs were submitted upon each side.

Mr. Herbert C. Gilson, for the complainant.

Mr. Adolf L. Engelke, for the pleading defendant.

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