Beers v. Denver & R. G. W. R.

286 F. 886, 1923 U.S. App. LEXIS 2777
CourtCourt of Appeals for the Eighth Circuit
DecidedFebruary 15, 1923
DocketNo. 5934
StatusPublished
Cited by6 cases

This text of 286 F. 886 (Beers v. Denver & R. G. W. R.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beers v. Denver & R. G. W. R., 286 F. 886, 1923 U.S. App. LEXIS 2777 (8th Cir. 1923).

Opinion

PER CURIAM.

This is a companion case to No. 6002, 286 Fed. 778, and No. 6003, 286 Fed. 883, opinions in which are this day filed.

Appellants, on December 17, 1920, as stockholders of the Denver & Rio Grande Railroad Company filed bill in equity in the District Court of the United States for the District of Colorado against the Equitable Trust Company of New York, as trustee, and the Denver & Rio Grande Railroad Company, Western Pacific Railway Company, Western Pacific Railroad Company, Western Pacific Railroad Corporation, Denver & Rio Grande Western Railroad Company, John F. Bowie, John B. Marsh, and Ralph M. Arkush, asking an accounting as to property and funds of the Denver & Rio Grande Railroad Company (commonly and herein called the Denver Company), which they allege had been taken and misappropriated through connivance of interlocking directorates; also the ascertainment of damages which the stockholders had sustained by reason of said acts, and for general relief.

■ On the 8th of January, 1921, the Denver & Rio Grande Western Railroad Company entered its appearance and filed motion to dismiss plaintiffs’ bill of complaint, setting forth a number of reasons therefor. Before such motion was passed upon by the court, appellants on July 16, 1921, moved for leave to file amended and supplemental complaint which is duly set forth in the record. On July 21, 1921, the court denied the motion for leave to file an amended and supplemental petition in equity and at the same time sustained the motion of the Denver & Rio Grande Western Railroad Company to dismiss plaintiffs’ original bill.

A complete history of the litigation leading up to these cases is found in a decision of this court. Eevy et al. v. Equitable Trust Co. et ah, 271 Fed. 49. It would be useless to again review this complicated series of transactions, and we content ourselves as to the historical situation by reference to said case.

However this case may be designated, it is an attempt to overcome the effect of numerous estoppels and to continue litigation already long drawn out, and that should for the best interests of all parties, be concluded. Whatever the case may be called, in whatever guise the question may appear, the fundamental of it all is an attack on the judgment against the Denver Company rendered in the Southern district of New York on the 14th day of June, 1917, in a suit brought by the Trust Company against the Denver Company, which judgment subsequently was the basis of the suit in the United States District Court of Colorado, where judgment was obtained against the Denver Company for approximately $36,000,000, representing the amount of the New York judgment and interest, less proceeds derived from sales of property under execution.

Counsel for appellants contend that this not an attack on the New York judgment; that appellants are not seeking to set aside said judgment, but are asking an avoidance of acts done or to be performed over which the United States District Court for the District of Colorado has jurisdiction, and contend that it is within the province of the Colorado court to set aside the judgment there rendered, the appoint[888]*888ment of a master, and the sale of the properties of the Denver Company. The Colorado court was required, as a matter of law, to recognize the New York judgment and to grant the necessary process to make it effective. This it did. The argument presented, while not going to the extent of claiming that a court could set a judgment aside where there had been jurisdiction both of the parties and of the subject-matter, does insist that the court should have no hesitancy in avoiding such judgment. We see no difference in the practical working out of the question between avoiding the judgment or setting it aside.

The New York judgment, as we have pointed out in the opinion in No. 6002 (this day filed) was based upon what'is known as contract B, under the terms of which the Denver & Rio Grande Companies had agreed to take care of certain deficiencies of the Western Pacific Railway Company. This judgment is as conclusive against the stockholders as it is against the Denver Company, which represented the stockholders in'the New York suit. The Denver Company, of which appellants are stockholders, is now estopped from making any defense as to the New York judgment that it could have made in that suit when tried, barring the questiop of extraneous or collateral fraud. Hence the stockholders, appellants here, are estopped from maintaining a suit in the Colorado court which practically amounts to a suit for the voidance of the New York judgment, without pleading extraneous or collateral fraud as to the New York case. Levy et al. v. Equitable Trust Co. et al. (C. C. A.) 271 Fed. 49; Equitable Trust Co. v. Denver & Rio Grande R. R. Co. (D. C.) 269 Fed. 987; Farmers’ Loan & Trust Co. v. Kansas City Co. (C. C.) 53 Fed. 182, 186; U. S. v. Throckmorton, 98 U. S. 61, 68, 69, 25 L. Ed. 93; Greenameyer v. Coate, 212 U. S. 434, 444, 445, 29 Sup. Ct. 345, 53 L. Ed. 587; Vance v. Burbank, 101 U. S. 514, 519, 25 L. Ed. 929.

The vital point in this case and the two companion cases is the attack on the New York judgment. It avails nothing to claim otherwise. It is the rock upon which the waves of subsequent action continually break. If there was extraneous fraud as to the New York case, then the judgment could, of course, be attacked; but such fraud is only suggested by innuendo. There is no direct allegation that the New York judgment was secured by fraud. Counsel in oral argument was not willing to so claim, nor is there a direct allegation that contract B was entered into through fraud. If the stockholders believe and can pyove that there was fraud extrinsic or collateral to the New York judgment, and if they are not barred by laches, why do they not in the proper forum attack that judgment, not as a matter of innuendo, or by the pleading of mere conclusions, but by setting forth squarely the facts and circumstances constituting the alle'ged fraud? As long as that judgment stands, it would seem that the stockholders were in these numerous cases incurring needless expense in pursuit of a mere will-o’-the-wisp.

Continual reference is made in brief and argument on the part of appellants to the question of interlocking directorates of the respective railroad companies, the Equitable Trust Company and the Denver & Rio Grande Railroad Company, and the presumptions arising [889]*889therefrom. If these questions were not presented at the time the New York case was tried and judgment secured they could have been presented. It is conceded that counsel representing the Denver Company in that matter were able and that their integrity is beyond question. Speaking of this matter, Judge Hook in Levy et al. v. Equitable Trust Co. et al. (C. C. A.) 271 Fed. 49, 57, said:

“On the contrary, it appears that the case for the Denver in the court in New York and on appeal to the Circuit Court of Appeals was in charge of independent counsel of great ability and reputation, not affected by the influences alleged to have controlled the prior corporate actions of the Denver. The reported opinions of those courts show that almost every conceivable defense to the demand of the Trust Company was urged, other than that now asserted by the petitioners, the proof as to which we have already considered.

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Related

Ballas v. Cladis
447 P.2d 224 (Supreme Court of Colorado, 1968)
Johnston v. Ouachita Nat. Bank of Monroe
40 F.2d 604 (Eighth Circuit, 1930)
Beers v. Equitable Trust Co.
286 F. 878 (Eighth Circuit, 1923)

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Bluebook (online)
286 F. 886, 1923 U.S. App. LEXIS 2777, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beers-v-denver-r-g-w-r-ca8-1923.