United States v. Bitter Root Dev. Co. - 200 U.S. 451 (1906)
U.S. Supreme Court
United States v. Bitter Root Dev. Co., 200 U.S. 451 (1906)
United States v. Bitter Root Development Company
Argued January 8, 9, 1906
Decided February 19, 1906
200 U.S. 451
Notwithstanding averments in the bill of fraud, conspiracy, and violation of trust, if the action is really one of trespass or trover to recover damages for wrongful cutting and conversion of timber from complainant's lands, and there is no question of defendant's financial responsibility, and the recovery of a money judgment and not of specific property is sought, complainant's remedy at law is adequate, and equity has no jurisdiction; nor can equity take jurisdiction merely because of the difficulty of proving the case on account of various devices alleged to have been used by defendants, or because the principal defendant is an executor of a party, whose estate is solvent, alleged to have been the chief wrongdoer.
Complainant, in an action at law of this nature, is entitled to the same inspection of books and papers that he could have in a suit in equity.
The holder of permits to cut timber from certain specified government lands, who willfully and fraudulently cuts from other lands, is not a trustee ex maleficio as to timber wrongfully cut, but a mere trespasser, and liable for damages in action at law, and equity has no jurisdiction either on the ground of trusteeship or accounting.
This Court cannot take judicial notice of the contents of permits to cut timber which are issued in different forms and subject to the discretion of the department giving them.
Prevention of multiplicity of suits is not a ground for equity jurisdiction if all persons must be made parties, whether the suit be at law or in equity, and where a class does not exist of which a few can be made defendants as representatives thereof.
The appellant filed this bill of complaint in the Circuit Court of the United States for the District of Montana, on the equity side of the court, for the purpose of recovering from the defendants the value of certain timber, alleged to have been wrongfully cut and taken by the defendants and converted to their own use from the public lands belonging to the complainant in the State of Montana. The defendants, those of them who appeared, demurred to the bill on the ground, among others, that a court of equity had no jurisdiction over the
cause of action set up in the bill for the reason that complainant had a plain, full, and adequate remedy at law therefor. The circuit court sustained the demurrer and granted leave to the complainant to amend, but the complainant elected to stand by the bill, and the same was thereupon finally dismissed. The case was taken to the United States Circuit Court of Appeals for the Ninth Circuit, where the judgment of the circuit court was affirmed, 133 F. 274, and the complainant was appealed here.
It appears from the return of the marshal that, after diligent search, no service of process could be made on the defendants Bitter Root Development Company, Anaconda Mining Company, and Anaconda Copper Company [corporations], as they could not be found.
The bill alleged that, on the first day of April, 1888, the complainant was, and at the time of the filing of the bill continued to be, the owner in fee and in the possession of certain lands in the State of Montana described in the bill. Description of the lands from which the timber was cut and carried off was given at great length, and a large number of sections of land were included therein:
"2. Your orator further shows that, on the day and year last aforesaid, on these vast tracts of land, there were then growing and standing great forests of pine, fir, and other kinds of trees of various dimensions, fit to manufacture into lumber for mining, commercial, and all other purposes for which lumber is used; that said forests were of great value, to-wit, of the value of two million dollars ($2,000,000) and upwards, the exact value thereof being to your orator unknown; that these forests and the land upon which they were growing and standing were the absolute property of the complainant, the United States of America, and was a portion of its public domain."
"3. Your orator further shows that, on this, the day of filing its bill of complaint in this court, the lands above described have, for the most part, been stripped of the pine and other trees and timber that were standing and growing upon them as aforesaid, and, except very small portions thereof, were so denuded without license, authority, or permission of the United States
or anyone authorized to represent the complainant, and this was done in violation of its laws, both civil and criminal, and thereby and in consequence of said spoliation the complainant has lost millions of dollars' worth of its property under circumstances named in the succeeding paragraphs of this bill of complaint."
"4. Your orator further shows that one Marcus Daly, who is now dead, but who was, on the date and year aforesaid, a citizen of the State of Montana and a resident thereof, well knowing of the location of these lands, their accessibility, and the great value of the timber then growing thereon, did, on or about the first day of January, 1890, determine that he would convert and appropriate to his own use all of the merchantable and marketable timber growing and standing thereon without buying said timber or obtaining any right or authority, except as hereinafter stated, from your orator, the United States of America. That in order to more effectually carry out these designs and purposes, to conceal his identity, to enrich himself individually, to escape personal liability, and to better deceive the public and the lawful officers and agents of the complainant, he determined that he would organize a corporation under the laws of the State of Montana, and for that purpose the said Daly called to his aid and assistance certain other persons, namely, John R. Toole, William Toole, William W. Dixon, James W. Hamilton, Moses Kirkpatrick, William Scallon, Malcom B. Bromley, Michael Donohue, William L. Hoag, Daniel J. Hennessy, and Joseph v. Long, and by conspiracy and confederation with said parties, and in pursuance of such fraudulent purpose, as aforesaid, they organized, on or about the 12th day of August, 1890, the Bitter Root Development Company, the defendant. In its articles of incorporation, which were duly filed with the Secretary of State of Montana, said John R. Toole, William Toole, and James W. Hamilton were named as incorporators, and James W. Hamilton, William Toole, Daniel J. Hennessy, John R. Toole, and William W. Dixon were named as trustees to manage the affairs of the company
for the first three months of its existence, and the Town of Hamilton, in said state, was named as the principal office of said corporation. The capital stock of said corporation was fixed at the sum of three hundred thousand dollars ($300,000.00), divided into one hundred thousand shares, of the par value of three dollars ($3.00) per share."
"5. Your orator further shows that said incorporators and trustees had but a nominal interest in said incorporation, but certain of them were agents and others attorneys of said Marcus Daly, and, as such, conspired with him as to the manner and means by which his said purpose to denude said lands of your orator could be best carried out. In pursuance of such conspiracy, it was necessary that a certain number should subscribe for stock in said corporation, which was done, but all of said shares were in fact subscribed for the use of and controlled by said Marcus Daly. Your orator charges that not only in the formation of said corporation and other corporations, to be hereinafter named, said John R. Toole, William Toole, William W. Dixon, James W. Hamilton, Moses Kirkpatrick, William Scallon, Malcolm B. Bromley, Michael Donohue, William L. Hoag, Daniel J. Hennessy, and Joseph v. Long aided and assisted said Marcus Daly, but in many other ways up to the time of his death they engaged with him in the work of spoliation, which, in pursuance of such conspiracy, had been planned and was later carried out as hereinafter particularly described, and said parties other than Daly participated in the profits thereof, but just how and to what extent is to your orator unknown, and your orator shows that such of the above as are not made defendants herein are either dead, outside of the jurisdiction of this court, or have no estate."
"6. Your orator further shows that at once on the organization of this corporation, and under the corporate name thereof, said parties heretofore named commenced the work of cutting and carrying away from said lands the trees and timber then growing and standing thereon, using at first in their operations several portable sawmills, but later, on or about the year 1892,
a large lumber and sawmill was erected at the Town of Hamilton, on Bitter Root River, in close proximity to a portion of the lands above described and the timber growing thereon. The work of cutting, hauling, transporting to the river, and driving the timber to said mill, and manufacturing the same into lumber was prosecuted with great and unremitting industry for several years thereafter, to the great profit and advantage of the said conspirators, and to the great loss of your orator."
"7. Your orator further shows that not only at the time of the organization of said corporation, but at all times while it was doing business, its officers, directors, trustees, and stockholders acted for and in behalf of said Marcus Daly, as his agents, and had knowledge of its principal operations, and well knew that the logs that were being brought to its mills and converted into lumber were taken, without right or authority, from the public domain of your orator, and that they had no legal right or title to the same except as to a small fraction thereof, as hereinafter stated."
"8. Your orator further shows that, in pursuance of such fraudulent conspiracy, for the purpose of carrying out the same, and in order to conceal such action, said Marcus Daly, aided by the other parties, and as aforesaid, under the name of the Bitter Root Development Company, did at certain times during the several years of said depredations, apply to and obtain from the lawful agents of your orator licenses to cut upon certain small portions of the tracts above described, and, under cover of such permits, said conspirators not only cut, carried away, and manufactured the timber growing upon the lands included in such licenses, but, well knowing that such permits gave them no right or authority to enter upon other lands of your orator, they willfully and fraudulently entered upon large tracts of lands adjacent thereto, and cut, carried away, drove, and manufactured the timber growing thereon, and afterwards sold the lumber and timber to persons and corporations to your orator unknown, and known only to Marcus Daly, his agents and the officers of said Bitter Root Development Company, and appropriated
the proceeds of such sales to their own use; but just when such sales were made, just how much the proceeds, to whom beside said Marcus Daly such proceeds were paid, in what proportion, in what way, and at what particular time it is impossible for your orator to say, as all books of account of every kind and character were then and are now in their possession, under their control, or with their assigns."
"9. Your orator further shows that, in pursuance of said conspiracy and in the execution thereof, in order to more effectually conceal the same from your orator, its officers and agents, the said Marcus Daly and the other parties before mentioned engaged the services of a large number of men, falsely representing that they had authority from your orator to cut the growing timber on tracts of land not included in any license, and made contracts with such men by the terms of which the said conspirators were to pay a certain amount for logs delivered at the riverbank by the parties so employed, by reason of which representations and contracts a large number of men were induced to cut down trees and haul them as logs to the riverbank, and transport said logs to the company's mill at Hamilton, and thereby innocently aided the conspirators in their unlawful acts, and enable them to successfully prosecute the same."
"10. Your orator further shows that, in pursuance of said conspiracy and in the execution thereof, the said Daly and his associates, acting through and under the corporate name of the defendant Bitter Root Development Company, entered into other contracts or agreements with other parties, namely, Kendall Brothers, Harper Brothers, G.L. Shook, William Toole, Andrew Kennedy, D. v. Bean, John Ailport, and divers other persons to your orator unknown by the terms of which they were to be paid specified prices per thousand feet board measure for logs delivered at the sawmill at Hamilton, both parties to said agreements well knowing at the time that the timber belonged to your orator, and was to be unlawfully cut and removed. Said contractors, so-called, acting for and in
behalf of said Marcus Daly and his said confederates under the name of the Bitter Root Development Company, during the year 1891 and for several years next thereafter, willfully trespassed upon the hereinbefore-described lands of the complainant, cutting millions of feet of logs, and hauling them to the Bitter Root River, and thence to the mill of the defendant Bitter Root Development Company at Hamilton, where they were converted into lumber and sold to the general public, and the proceeds thereof appropriated in large part by said Marcus Daly, and the balance by his associates in said conspiracy, but just how much, and in what proportion, your orator, for the reasons above stated, is unable to say."
"11. Your orator further shows that the said Marcus Daly and his associates, in further execution of said conspiracy, organized other corporations for the purpose of concealing their illegal acts and complicating and confusing the situation so as to make detection and proof of the same difficult, if not impossible. One of these schemes was as follows: on or about the 14th day of January, 1891, they organized a corporation known as the Anaconda Mining Company, with an organized capital stock of $12,500,000, divided into 500,000 shares of the par value of $25 per share; that within less than one year thereafter, namely, on the 5th day of December, 1891, a stockholders' meeting was held in the City of Butte, Montana, and at said meeting the capital stock of said corporation was increased to twenty-five million dollars ($25,000,000.00) and the shares thereof increased to one million (1,000,000) shares; that at said stockholders' meeting it appeared that no one of the incorporators or the trustees that were named at the time of its incorporation a few months before had any substantial interest therein, and later, namely, on the 31st day of December, another meeting of said stockholders was held at which time it was voted to extend the term of existence of said corporation for forty years from the date of its original incorporation, and at that meeting it appeared that Marcus Daly, either in his own person or as trustee or as a proxy, controlled nearly seven
hundred thousand (700,000) shares of the million shares of the capital stock of said company, and in less than six months thereafter the capital stock was reduced from twenty-five million dollars ($25,000,000.00) to one million dollars ($1,000,000.00), and the shares from one million to forty thousand (40,000)."
"12. Your orator further shows that, in furtherance of the conspiracy aforesaid, the said Marcus Daly, on the 27th day of April, 1894, through his agents, procured to be conveyed unto himself all of the property of said Bitter Root Development Company, receiving a deed from said Bitter Root Development Company, executed by William Toole as its president and Joseph Kerrigan as its secretary, which said deed was duly recorded on page 302 of book 16 in the proper office for the recording of deeds in the County of Ravalli, State of Montana. In said deed appear these words:"
"The Bitter Root Development Company, for and in consideration of one dollar, transfers all of its property of every kind and description, real and personal, timber lands, timber cutting privileges and rights, timber, logs, mills, water rights, and water ditches, flumes, pipelines, and rights of way -- in fact, everything belonging to the Bitter Root Development Company -- to Marcus Daly."
"Your orator further says that, four days after so receiving this deed, namely, on the 1st day of May, 1894, said Marcus Daly deeded this same property to the other of his corporations, the above-named Anaconda Mining Company, for the express consideration of one million, four hundred and forty-two thousand, three hundred and seventy-nine dollars and forty-six cents ($1,442,379.46), which said deed was duly recorded in said book 16, on page 280. Your orator expressly charges that said Marcus Daly did in fact receive the consideration named in said deed, the whole thereof being directly the result of the spoliation of the lands of your orator, as aforesaid, and that the moneys so received by him belonged in fact to your orator; but your orator charges on information that said Marcus Daly did not receive all of the same in cash, but a portion of same
was taken in stock in said Anaconda Mining Company, but just how much he received in cash and how much was carried over and appeared in stock of said company your orator is unable to state."
"13. Your orator further shows that, in furtherance of the conspiracy aforesaid, said defendants, Moses Kirkpatrick, William Scallon, and Malcolm B. Bromley, acting for and in behalf of said Marcus Daly, on the 6th day of June, 1895, pursuant to and in conformity with the statutes of Montana relating to corporations for industrial and productive purposes, organized the Anaconda Copper Company, with an authorized capital stock of thirty million dollars ($30,000,000.00), divided into three hundred thousand (300,000) shares of the par value of one hundred dollars ($100.00) each, with an authorized term of existence of forty years, and the following-named persons were named as trustees for the first three months of its existence -- to-wit, Moses Kirkpatrick, William Scallon, Malcolm B. Bromley, Michael Donohue, William L. Hoag, Daniel J. Hennessey, and Joseph v. Long, with its principal office at Butte, Silverbow County, Montana."
"14. Your orator further shows that, nine days thereafter, the same persons named as incorporators of the corporation last named organized under the same law the defendant corporation the Anaconda Copper Mining Company, with an authorized capital stock of thirty million dollars ($30,000,000.00), divided into one million two hundred thousand shares (1,200,000) of the par value of twenty-five dollars ($25.00) each, with the same seven trustees to manage the affairs of said corporation for the first three months of its existence, with its principal office at Anaconda, in said state."
"15. Your orator shows that, in the execution of said conspiracy and for the purpose of complicating the situation, said Marcus Daly, through his agents, did again, and within one year and twenty-nine days after having transferred his property to the Anaconda Mining Company, convey the identical property that was named in said deeds to the above-named
Anaconda Copper Mining Company for and in consideration of the sum of one dollar, the Anaconda Mining Company executing a deed through and by its president, W. W. Dixon, and its secretary, F. E. Sergeant, and said deed is recorded in the same book of records, on page 441."
"16. Your orator further shows and charges that these several conveyances were made in the main in furtherance of said conspiracy, and in pursuance of a purpose to so complicate the situation as to make detection difficult, if not impossible. That the conveyance by the Bitter Root Development Company to said Marcus Daly, for one dollar, of all of its property, was fraudulent, and that said Marcus Daly did, under the name of the Anaconda Mining Company, carry on the same work of spoliation of your orator's trees, timber, and lands, and that later, and from the time of the conveyance of all its corporate property to the Anaconda Copper Mining Company, he carried on the work under that name until the date of his death. That he continued to use the same means, the same mill at Hamilton, and the officers, directors, and stockholders of each of said corporations knew of the illegal work that had been done, and, so knowing, continued the same. And your orator expressly charges that all of the corporate assets of every kind and character of the Bitter Root Development Company either appeared in the stock of the other corporations or was appropriated by Marcus Daly and his assistants to their own use and benefit; but just how much was carried over in the said corporations, and how much was divided previous to the last deed named herein, and how much of the property of your orator was converted by said last-named company between the date of its organization and the death of said Marcus Daly hereinafter described, and how much thereof was appropriated by said company, and how much by Daly and his associates, it is impossible for your orator, with the means at hand, to state."
"17. Your orator further shows that, by reason of such spoliation, continued and carried on during the period of about
ten years, it has lost property of great value, to-wit, of the value of $2,000,000 and upwards, and that Marcus Daly and the other defendants named herein occasioned this loss by willfully trespassing upon said lands of your orator, and without its consent, or the consent of any of its authorized officers, and in violation of its laws, both civil and criminal, appropriated and converted to their own use the trees and timber growing thereon. That said defendants, or some of them, have had at all times and now have possession of the sawmill at Hamilton, wherein the logs were converted into lumber, and they have received all the proceeds of said sales, and divided the same among them; but by reason of the frauds practiced by said defendants, as aforesaid, and their acts performed for the express purpose of concealing from your orator the facts of the case by means of the formation and the dissolving and the reforming of corporations, and by reason of said defendants having possession of all books of account, it is impossible for your orator to set forth to a greater extent the details of this conspiracy, or to show just when or by whom the particular acts of spoliation were performed, or just when and to whom the logs, when manufactured into lumber, were sold, or just when and by whom the proceeds thereof were obtained, and when the same were divided."
"18. Your orator further shows that, at the time that these trespasses were committed, the territory on which the same took place was but sparsely settled, and was thousands of miles away from the seat of government, and it was impossible, with the means that your orator had at hand, to properly patrol and protect its domain from the willful trespasses of the defendants, and that the government of the United States used such care in the protection thereof as it had the means to do. That the agents employed by your orator were misled by the defendants' assertion of ownership, as aforesaid; that the frauds and trespasses of the defendants, which have resulted in the denuding of these lands of your orator, and in depriving your orator of property of the value of several millions of dollars,
were not discovered in their entirety until a comparatively short time ago."
"19. Your orator further shows that it has commenced several actions at law in this honorable court to recover the value of the timber heretofore taken by the defendants, or some of them, from the lands above particularly described, and that the same are now pending in this court; but that, by reason of the frauds and conspiracies above set forth and the complications which have resulted therefrom, no plain, adequate, and complete remedy can be given your orator by said actions at law, and your orator is only relievable in a court of equity, where matters of this kind are properly cognizable and relievable."
"20. Your orator further shows that Marcus Daly died in the City of New York on the 12th day of November, A.D. 1900; that, at the time of his death, he was a resident of the County of Deerlodge, State and District of Montana, and left an estate worth about $12,000,000, consisting of real and personal property located in said county and state and elsewhere, and your orator expressly charges that a large portion of said estate was the result of the proceeds of his illegal acts in his lifetime in trespassing upon the lands of your orator, as hereinbefore charged, and converting the proceeds of the sale of the timber growing thereon to his own use and benefit; that in his lifetime he made and published his last will and testament, whereby he appointed the defendant Margaret P. Daly executrix thereof; that, on the 14th day of February, A.D. 1901 at the City of Anaconda, said last will and testament was duly proved and duly admitted to probate in the District Court of the County of Deerlodge, District of Montana; that thereupon, on the 15th day of February, A.D. 1901, letters of administration were duly issued thereon to the said defendant Margaret P. Daly by the said court; that the said defendant Margaret P. Daly duly qualified and entered upon the discharge of her duties as executrix, and that the said letters testamentary have not been revoked, and are now in full force and effect. "
"21. Your orator further shows that the said Margaret P. Daly, under and by virtue of the terms of said will, and as the wife of said Marcus Daly, is now the owner of a large portion of his estate."
"In consideration whereof, and forasmuch as your orator is, for the reasons stated, remediless in the premises at and by the strict rule of the common law, and is only relievable in a court of equity, where matters of this kind are properly cognizable and relievable, to the end that your orator may have that relief which it can only obtain in a court of equity, and that each one of the defendants above named may answer the premises, but not upon oath or affirmation, the benefit whereof is expressly waived by your orator, your orator prays the court as follows:"
"First. That the defendant Margaret P. Daly, both in her own person and as executrix of the last will and testament of her husband, Marcus Daly, deceased, and each of the defendants above named, be decreed to hold in trust for the use and benefit of your orator so much of their estate, both real and personal, as shall have come to them, or either of them, directly from the proceeds of the conversion of the timber of your orator, as aforesaid."
"Second. That the complainant have and recover from Margaret P. Daly, both personally and as executrix, and from each of the other defendants above named, the profits, gains, and advantages which the said defendants or either of them have received or made, or which have arisen or accrued to them, or either of them, by reason of the willful trespasses upon the public domain of your orator hereinbefore particularly described, and by reason of the fraudulent conversion of the trees and timber growing thereon, the logs had therefrom, and the lumber manufactured from the same."
"Third. That each of the defendants may make a full and true discovery and disclosure of and concerning the transactions and matters aforesaid, and that an accounting may be taken by and under the direction and decree of this honorable court
of all the dealings and transactions between your orator and the defendants. That on such accounting the defendants and each of them be required to produce all licenses, permits, and all other documents of every kind and character which they, or any of them, may have received from your orator, by which they, or any of them, claim or claimed the right to enter upon any of said lands of your orator, and cut and remove the trees and timber then growing thereon."
"Fourth. That the defendants and each of them account for the number of logs received by them and manufactured into lumber at the sawmill at Hamilton in said district or at any other mill or mills owned or used by them in the manufacture of said logs into lumber, and also the gains, profits, and advantages which the said defendants, or either of them, or the estate of said Marcus Daly, have received or made, or which have arisen or accrued to them, or either of them, from trespassing upon the lands of the complainant above described and set forth and in converting to their own use and benefit the trees and timber growing thereon."
"Fifth. That the said defendants and each of them discover and set forth full, true, and particular accounts of all and every sum or sums of money received by them, or either of them, or by any person or persons by their, or either of their, order, or for their, or either of their, use, for or in respect of the said sale or sales of logs cut from said lands of said complainant, or the lumber obtained from said logs, and when and from whom each and every of such sums were, respectively, received, and how the same, respectively, have been applied or disposed of, and to show when and where the proceeds of said sales were invested by each of said defendants, and in what form of real or personal estate they now exist."
"Sixth. That the defendants, and each of them, may set forth a list or schedule and description of all books of account of every kind and character, and of all deeds, documents, letters, papers, or writings of every kind whatsoever relating to the matters aforesaid, or any of them, wherein or whereupon
there is any note, memorandum, or writing relating in any manner thereto, which are now or ever were in their or either of their possession or power, and more particularly described, which now are in their or either of their possession or power, and may deposit the same with the clerk of this court or with the standing master in chancery thereof for the purposes of inspection and examination by your orator, and for all other legitimate and usual purposes, in order that your orator may ascertain therefrom and thereby the particular facts and circumstances, which is absolutely necessary in order to enable your orator to obtain possession and knowledge of the details of this conspiracy, and that, when such accounting shall be made, and it shall be ascertained that said defendants have received and taken into their possession money or other forms of property directly resulting from their participation in the conspiracy aforesaid, and in the spoliation of the lands of your orator, as aforesaid, that this Court shall decree that they pay the amount thereof, with interest from the date they so received the same, to your orator, with costs of this suit, and that your orator may have such other and further relief in the premises as the nature and the circumstances of this case may require, and as may be agreeable to equity and good conscience."
"May it please the court to grant to your orator a writ of subpoena to be directed to the said Margaret P. Daly, Margaret P. Daly, as executrix of the last will and testament of Marcus Daly, deceased, Bitter Root Development Company, Anaconda Mining Company, Anaconda Copper Company, Anaconda Copper Mining Company, John R. Toole, William W. Dixon, William Scallon, Daniel J. Hennessy, thereby commanding them, and each of them at a certain time, and under a certain penalty to be fixed, personally to appear before this honorable court, and then and there full, true, direct, and perfect answer to make to all and singular the premises, and to stand to, perform, and abide by such order, direction, and decree as may be made against them in the premises, as shall be meet and agreeable to equity, and your orator will ever pray. "