Metropolitan Bank v. St. Louis Dispatch Co. - 149 U.S. 436 (1893)
U.S. Supreme Court
Metropolitan Bank v. St. Louis Dispatch Co., 149 U.S. 436 (1893)
Metropolitan Bank v. St. Louis Dispatch Company
Argued April 20, 1893
Decided May 10, 1893
149 U.S. 436
Courts of equity, in cases of concurrent jurisdiction, consider themselves bound by the statutes of limitation which govern actions at law.
A suit in equity to enforce a mortgage of the plant and goodwill of a newspaper published in Missouri, and of the accompanying membership in the Western Associated Press, which is commenced eight years after the right of action accrued, during which period the property had changed hands, and the original plant had been used up and new matter put in its place, is barred by the statute of limitations of that state so far as it rests upon the theory of conversion of the properties by the defendant, and, so far as it proceeds upon the theory that the plant, the goodwill, and the membership ought on equitable principles to be held subject to the lien of the mortgage, a court of equity must decline to assist a complainant who sleeps so long upon his rights and shows no excuse for his laches.
The Metropolitan National Bank of New York filed its bill of complaint against the St. Louis Dispatch Company, a corporation
organized under the laws of the State of Missouri, the Dispatch Publishing Company, a corporation likewise organized under the laws of that state, and H. L. Sutton, trustee, a citizen of Missouri, July 1, 1887, and an amended bill April 21, 1888, which averred:
"That on or about the first day of June, A.D. 1877, the said the St. Louis Dispatch Company owned a certain daily evening newspaper in the City of St. Louis, known as the 'St. Louis Dispatch,' and no other property whatsoever unconnected with, and not appurtenant to the publication and operation of said newspaper. That the said the St. Louis Dispatch, a newspaper, had been published continuously and daily for many years, to-wit, since on or about the year 1852, and continued to be published daily, excepting Sundays, up to the date hereinafter mentioned. That the said the St. Louis Dispatch, a newspaper, was on the first day of June, A.D. 1877, a fully equipped journal, having a building under lease; all the machinery, type, presses, cases, forms, paper, furniture, and tools useful or necessary for the printing and publishing of the same; a good circulation and advertising patronage (known as its goodwill), and a share of stock in the Western Associated Press, under which it was entitled to receive telegraphic news and dispatches collected from all parts of the world, as hereinafter more particularly set forth."
That on said first day of June, the St. Louis Dispatch Company, by deed of trust in the nature of a mortgage, duly recorded, conveyed to Henry L. Sutton, as trustee, the following described property: the machinery, type, presses, cases, furniture, paper, forms, and tools, together with the goodwill, of the St. Louis Dispatch Company, and its franchises, of every kind and description, rights, privileges, and property, including its interest in the Western Associated Press, and any and all shares by it owned in the Western Associated Press, as also all accounts and choses in action or other valuable things by it owned, or to it belonging, wherever situated, as "also all other property, of every other nature and character, which the said party of the first part may acquire during the existence of this deed of trust," to secure the payment of a note, dated
that day, to the order of Frank J. Bowman, for the sum of $15,000, payable two years and six months after date, with interest at nine percent per annum, payable one and one-half percent on the first days of August, October, December, February, April, and June of each year until the payment of the principal sum, which note, so secured, was negotiated for value, and complainant became the legal holder thereof, for value, before maturity.
That at the time of the execution of said mortgage, the Western Associated Press was a corporation organized under the laws of the State of Michigan, the sole purpose and object of its existence being
"to procure intelligence for the newspaper press from all parts of the world, by telegraph, express, mail, or otherwise, and membership in said association was and is limited generally and specifically to owners and proprietors of newspapers and publishers of periodicals."
That at that date and prior thereto, the St. Louis Dispatch Company was the legal owner, on the books of the Western Associated Press, of one share of stock, so called, in said association, which was of great value, represented by a certificate of membership, No. 38, which was, upon the execution of the mortgage, placed in the possession of the trustee, with the following endorsement:
"The within certificate of stock is hereby assigned and transferred to Henry L. Sutton, trustee in deed of trust bearing date June first, 1877, for like purposes as other property therein named is transferred, being the certificate of stock in the Western Associated Press therein referred to."
The bill then stated that on February 2, 1878, the St. Louis Dispatch Company made a second mortgage, conveying all of the property described in the first, and other property subsequently acquired, to a trustee in trust to secure another loan made by it, which was duly recorded, and under which a sale of the property took place December 9, 1878, the sale so made being subject to the first mortgage, one Arnold being the purchaser, who on the same day transferred it to Joseph Pulitzer.
That at the time of the sale, John A. Dillon was the owner
and publisher of a certain newspaper known as the "Evening Post" and was printing and publishing the same in the City of St. Louis. That the Post was the rival and competing newspaper with the Dispatch, and did not, nor did Dillon, own a membership in the Western Associated Press, nor any right to the telegraphic news and dispatches thereof. That neither the Post nor Dillon, in the business of carrying on and publishing the Post had any presses, type, or paraphernalia for the printing or publication of a newspaper. That the Post had been established but a few months before the said sale of the Dispatch newspaper, and had nothing of value, nor had the said Dillon, in connection with said publication, excepting a small circulation and advertising patronage, and the name of the "Post."
That on December 10, 1878, the said Dillon and the said Pulitzer consolidated the Post and the Dispatch, and on that day published a consolidated paper under the name of the "Post-Dispatch," and that Dillon acquired whatever interest in the Dispatch property came to him with full notice of the lien of the first mortgage, and subject thereto.
It was further averred that on December 11, 1878, the Dispatch Publishing Company was organized as a corporation under the laws of Missouri, the object of which was the publication of a newspaper to be known and called the "Post and Dispatch." That on that day, Pulitzer and Dillon, having consolidated the two papers, transferred the same to the Dispatch Publishing Company, which took the same subject to the mortgage on all the property of the St. Louis Dispatch Company, and with full knowledge thereof. That thereupon, on the same day, the defendant the Dispatch Publishing Company entered into the possession of the building theretofore occupied by the St. Louis Dispatch Company in the publication of the St. Louis Dispatch, and of the goodwill of that newspaper, with the presses, type, etc., and all the rights, property, and franchises thereof, including the membership in the Western Associated Press represented then by certificate No. 38. That the Dispatch Publishing Company has ever since had the goodwill of the Dispatch Company, and the name
"Dispatch," and used the same building formerly occupied by the St. Louis Dispatch Company. The bill further alleges that the Dispatch Publishing Company paid the interest on the Bowman note on the first days of February, April, June, and October, 1879, but the remaining installment, payable on December 1, 1879, being the date on which the principal became due, they refused to pay, as also the principal. That upon such refusal the trustee, Sutton, demanded of the Dispatch Publishing Company the property of the St. Louis Dispatch Company, including its goodwill, and all the property recited in the first mortgage, which the Dispatch Publishing Company wholly refused to surrender. That at that time the Dispatch Publishing Company had alienated, destroyed, or gradually used up all the machinery, type, presses, and property of a perishable nature, of the St. Louis Dispatch Company.
The bill also averred that the goodwill of the St. Louis Dispatch newspaper was its chief element of value. That the goodwill so acquired by the Dispatch Publishing Company of the St. Louis Dispatch Company has been in the constant use and control of the first-named company, and has never been alienated. That the name of a newspaper is valuable and salable, and that the Dispatch Publishing Company acquired its name under the second mortgage, subject to the lien existing upon it, and still retains the name "Dispatch" in the publication of its newspaper.
That the machinery, presses, etc., acquired by the purchase under the second mortgage by the Dispatch Publishing Company, it continued to use for a long time, but substituted new paraphernalia for publication from time to time, and that on the date of the maturity of the note the Dispatch Publishing Company had none of the original paraphernalia described in the first deed of mortgage. That the effect of the acquisition of the two properties known as the "Evening Post" and the "St. Louis Dispatch" was that the lien of the first mortgage attached to all the property of the Dispatch Publishing Company, and that the latter recognized the validity of the mortgage lien by paying the interest on the mortgage
debt, and the assessment on the membership in the Western Associated Press. That the complainant and the trustee were induced by its conduct to believe that the Dispatch Publishing Company would pay the debt or surrender the property in case of a failure of compliance with the conditions of the trust deed. That the Dispatch Company continued to recognize the mortgage as a lien on said property, including the membership, up to the maturity of the note, when it refused to pay the same, or surrender the property. That for the reason that the goodwill and other property of the mortgagors was confused and intermingled with the property of the Dispatch Publishing Company, so as to be incapable of separation or distinction therefrom, the property and goodwill of the latter ought, in equity, to be charged with the lien of the mortgage debt, and that at the time of the acquisition of said mortgaged goodwill, etc., the Dispatch Publishing Company agreed and assumed to pay said debt.
The bill further averred
"that a membership in the Western Associated Press is always represented by a certificate of a share of stock therein, and that, under the bylaws and Constitution of said Western Associated Press, said membership is tenable and vendible only in connection with the publication of a newspaper or periodical, and in the manner laid down in the said Constitution and bylaws, which are herewith filed, and made a part of this complaint, and marked Exhibits F & G."
"that under the bylaws and articles of incorporation aforesaid, the legal title to said certificate of membership aforesaid could never have vested fully in any individual, firm, or corporation until and after said individual, firm, or corporation should have become the purchaser of the goodwill and property of said St. Louis Dispatch Company, and as successor in right and liability to said company, and if, after any sale, whether of foreclosure or otherwise, the purchaser of said property did not continue a publication in connection therewith, the said membership would become lifeless and valueless, because a publication in connection with it was and is necessary to the sustenance of its life and value. That the said trustee and complainant herein have no rights in
respect to said membership except under said deed of trust, and can acquire no title thereto until a sale of the goodwill of the St. Louis Dispatch Company, now in possession of the defendant Dispatch Publishing Company, at which time the title intended to be conveyed to the complainant herein by said deed of trust would be effectuated to the purchaser of the goodwill and property of said St. Louis Dispatch Company."
That one year after the Dispatch Publishing Company had been in the use and enjoyment of the membership in the Western Associated Press represented by certificate No. 38, it applied to the association for the issue of a new certificate, and the association issued to the Dispatch Publishing Company a new certificate, and placed the name of that company upon its books as a member in virtue of the right acquired as successor to the St. Louis Dispatch Company, which membership was represented by certificate No. 64, but was the same membership as that represented by certificate No. 38. That the assessments on the membership had always been paid by the Dispatch Publishing Company, and that said company, by using the membership for one year without applying for a new certificate, or to have its name placed on the books of the Western Associated Press as the successor of the St. Louis Dispatch Company, acknowledged the title of the latter.
The prayer was that the Dispatch Publishing Company be decreed to pay the complainant $15,000, with interest at the rate of nine percent per annum since October 1, 1879, and that to make that sum the goodwill of the Dispatch Publishing Company be sold, also the personal property used by it in connection with its business, and certificate No. 64 in the Western Associated Press. To this amended bill a demurrer was filed and sustained, and a final decree of dismissal rendered. Among other exhibits, the bylaws of the Western Associated Press were filed with the bill and made a part thereof, and these provided, among other things, as follows:
"I. -- Membership. Any proprietor of a daily newspaper who has heretofore signed the articles of association and is now an active member of the same, and his lawful assigns,
and any such person or firm or corporation within the Territory of the Western Associated Press who shall hereafter be admitted in accordance with these bylaws, shall be a member of the association, provided that no new member shall be elected except upon the terms prescribed by Article XV."
"II. -- Stock. The evidence of membership shall consist of a certificate of one share of the capital stock of the association, which certificate shall be transferable only on the books of the association as hereinafter provided."
"XII. -- Transfers. Any member selling or transferring his newspaper may transfer his certificate of stock to the purchaser or successor in the ownership of such newspaper, and it shall be the duty of the secretary, upon request, to transfer the same on the books of the association to such purchaser or successor, who shall then sign the articles of association and bylaws, and become a member, with the same rights and privileges as the original member. If any member shall discontinue the publication of a newspaper, or shall sell his newspaper to another member, his membership shall cease and his certificate of stock shall be cancelled on the books of the association, and the treasurer shall refund to him the money paid to the association for the same."
"XIV. -- Assessments. The board of directors shall have power to make assessments upon the members to defray the expenses incurred in collecting and transmitting intelligence, and for other purposes not inconsistent with the charter and bylaws, and the board may discontinue the use of the news so collected to any member failing to pay promptly his assessment. Any member to whom the use of the news has been so discontinued may be readmitted to the use of the same, within six months of the time of such discontinuance, upon his refunding to the other members of the association in the same city or town such increased assessment as they may have paid in consequence of said discontinuance."
"XV. -- Admission of New Members. Applications for membership in this association shall be made in writing to the board of directors, and, if a majority of said board shall vote for the admission of the applicant, he shall sign the
articles of association and bylaws, and pay into the treasury the sum of ten dollars, or an additional amount equal to what would be his pro rata share in the property of the association. It shall then be the duty of the secretary to issue to him a certificate of one share of stock, and to enroll his name in the list of membership, provided that no new members shall be admitted without the unanimous consent of the members in the city or town where his business is carried on."
The opinion of the court, by Judge Thayer, will be found reported in 36 F. 722.
From the decree dismissing the bill an appeal was taken to this Court, and while pending here a stipulation was filed setting forth the dissolution, by decree of court, of the Dispatch Publishing Company and the successorship thereto of the Pulitzer Publishing Company, as the owner and publisher of the newspaper and of the membership in the Western Associated Press, which had issued to said company a certificate April 2, 1892, numbered 93. The appearance of the new corporation, and of two directors of the dissolved company, as parties defendant, was entered.