Messenger v. Anderson, 225 U.S. 436 (1912)

the effect of previous orders on the later action of the court rendering them in the same case, merely expresses the practice of courts p. 437generally to refuse to open what has been decided—not a limit to their power. In a conflict between decisions of the state and Federal courts, this

Independently of statute, the will devised only a p. 439defeasible fee. Thompson v. Hoop, 6 Ohio St. 480; Smith v. Berry, 8 Ohio, 365; other Ohio cases above cited; Schouler on Wills, § 262, p. 549.

The contract of October 4, 1844, was competent evidence. Declarations by one in possession, in disparagement of his title, are admissible against those claiming under him. Dooley v. Baines, 86 Virginia, 648; Dodge v. Freedmen’s S. & T. Co., 93 U. S. 379; Henderson v. Wanamaker, 79 Fed. Rep. 738; Baker v. Humphrey, 101 U. S. p. 441499; 2 Wigmore on Ev., § 1080; 1 Elliott on Ev. (1904 ed.), § 261; 16 Cyc. 986.

This is an action of ejectment for land in Toledo, Ohio, p. 442brought by the respondent, Anderson. The case went three times to the Circuit Court of Appeals, and ended in a judgment for the plaintiff. 146 Fed. Rep. 929; 77 C. C. A. 179. 158 Fed. Rep. 250; 85 C. C. A. 468. 171 Fed. Rep. 785; 96 C. C. A. 445. The facts that need to be stated are these: In 1841 Charles Butler assigned an overdue mortgage of the land to Henry Anderson as security for a note of his own. He made default, Anderson brought a bill to foreclose, (Butler not being served with process), got a decree, bought in, and got the sale confirmed. For the purposes of this decision it may be assumed that Anderson got the land in fee simple, subject to some question as to Butler’s rights. . The plaintiff below, the respondent here, claimed as remainderman under the will of Henry Anderson, who was his grandfather. The petitioner claims under a conveyance from Butler. If the plaintiff’s title is bad that is an end of the case.

In 1846 Henry Anderson, then domiciled in Mississippi, made his will and died, leaving two sons William and James. These sons executed deeds declaring that their father Henry held and intended to hold the land in trust to secure the payment of Butler’s note, and Butler subsequently made such payments on the same that it may be assumed that unless the plaintiff has a title that his father James could not affect by the above-mentioned deed, he has none. Whether he has such a title depends on the terms of Henry’s will. That instrument, after creating a general trust of substantially all the testator’s property, went on thus:“ Item. It is my will that when my son William arrives at the age of twenty-one years the trustees . . . shall deliver to him a settlement of the affairs of the trust, and if my debts are then paid, and as soon as that takes place, they shall put him in possession of one-half of my property reserving thereout two-fifth parts of said moiety, by valuation which my said trustees shall hold in trust and properly invest and pay over to p. 443him at the age of twenty-five years . . . And it is my will that my said trustees hold and invest and pay over the remaining moiety of my estate to my son James at the respective periods of twenty-one and twenty-five years of age being governed as to the amounts to be paid at each of the respective periods by the same rules and directions as are above laid down in the bequest to William,” &c.

The Circuit Court of Appeals when this case first came up held that James took only a fife estate and that the plaintiff got a remainder that his father could not affect. 146 Fed. Rep. 929. But pending the proceedings another case was tried in the state courts between these same parties concerning other parcels of land in Toledo depending on the same title, in which it was decided by the lower court and affirmed on writ of error by the Supreme Court of Ohio that James took a fee subject to be defeated p. 444only by his leaving no lineal descendant. Anderson v. United Realty Co., 79 Ohio St. 23. & C., 222 U. S. 164. The judgment of the lower court was pleaded, but it was held by the Circuit Court of Appeals after the affirmance by the Supreme Court that its own previous decision was the law of the case and that it was not at liberty to reverse the judgment even if the matter was res judicata on the principle laid down in New Orleans v. Citizens’ Bank, 167 U. S. 371, 396. See Parrish v. Ferris, 2 Black, 606. In the absence of statute the phrase, law of the case, as applied to the effect of previous orders on the later action of the court rendering them in the same case, merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power. King v. West Virginia, 216 U. S. 92,100. Remington v. Central Pacific R. R. Co., 198 U. S. 95, 99, 100. Great Western Telegraph Co. v. Burnham, 162 U. S. 339, 343. Of course this court, at least, is free when the case comes here. Panama R. R. R. Co. v. Napier Shipping Co., 166 U. S. 280. United States v. Denver & Rio Grande R. R. Co., 191 U. S. 84. In our opinion even apart from the effect of the state judgment as an adjudication it should have been followed, if for no other reason, because at least as against the decision of the Circuit Court of Appeals it was right.

The later clauses that we have quoted from the will make a difference, it is true, according to whether the sons leave lineal descendants at their death or not. But the interest thus exhibited in descendants is satisfied by the probability that they would inherit the property or be provided for out of it. It is not shown to be so definite and paramount as to cut down the gifts imported by the previous words except in the single event in which the will does so in terms. On the contrary the still later provision that nothing shall be construed to ‘deprive’ the sons of the power to dispose of ‘their portions’ by will p. 445225 U. S. Syllabus.

Louis Zeckendorf brought this suit in the District Court of Pima County, Territory of Arizona, as a stockholder of the Silver Bell Copper Company, hereinafter called the Silver Bell Company, for and on its behalf, against Albert Steinfeld, J. N. Curtis and R. K. Shelton, as individuals and as officers and directors of the Silver Bell Company, the Silver Bell Company, and a certain company known as the Mammoth Copper Company. He sought to recover $338,710.15 for so much money wrongfully appropriated by and to the use of the defendant Steinfeld, which rightfully belonged to the Silver Bell Company, and to recover, as belonging to the company, 300 shares of stock in the Silver Bell Company. There was also a prayer for an accounting and the return of the money and shares and p. 447for the appointment of a receiver. Steinfeld answered that the money, a portion of which was the proceeds of certain mining properties which had belonged to him and had been sold in conjunction with properties belonging to the Silver Bell Company, and shares of stock belonged to him and for reasons set forth were rightfully in his possession.

Since 1878 Albert Steinfeld and Louis Zeckendorf have been partners under the firm name of Louis Zeckendorf & Company. Zeckendorf lived in the city of New York. Steinfeld resided in the city of Tucson, Arizona, and was the active member of the firm in its mining operations. William and Julia Zeckendorf were the owners of a certain mine known as the Old Boot or Mammoth Mine, which was being operated by one Carl Nielsen, under contract with Steinfeld as trustee of the owners. Nielsen became so indebted to the partnership that, in order to secure such indebtedness, in January, 1899, a company was incorporated under the laws of Arizona known as the Nielsen Mining & Smelting Company, the name being changed on January 14, 1901, to the Silver Bell Mining Company, and all the stock of the company was originally issued to Carl Nielsen, in consideration of the transfer to the company of his rights in the Old Boot mine, and a like transfer of personal property, used in working the mine. The stock was divided as follows: 499 shares to L. Zeckendorf & Company, 30 shares to Albert Steinfeld, trustee of William and Julia Zeckendorf, 170 shares to J. N. Curtis, 300 shares to Carl Nielsen and one share to R. K. Shelton, but being in fact the property of L. Zeckendorf & Company. In January, 1901, the 300 shares in Nielsen’s name were transferred on the books of the company to the name of Albert Steinfeld, trustee. On the sixth of June, 1903, the 499 shares of L. Zeckendorf & Company were p. 449divided, 250 shares to Louis Zeckendorf and 249 shares to Albert Steinfeld, Steinfeld taking the one share standing in the name of Shelton which was in Steinfeld’s possession until December 9, 1903, when it was given to Shelton. At the meetings of the stockholders Steinfeld voted the stock in his name as trustee and the stock of L. Zeckendorf & Company, and Louis Zeckendorf was never at any stockholders’ meeting and did not vote therein by proxy until the stockholders’ meeting of December 26, 1903, at which he was present. Subsequent to January 14, 1901, Albert Steinfeld, J. N. Curtis and R. K. Shelton were the directors of the corporation, all residing in Tucson, Arizona. Shelton was at all times the representative of Steinfeld on the board of directors of the company, and at all times involved in this action voted as ordered, directed and requested by Steinfeld. After June 6, 1903, J. N. Curtis, as director and other officer of the Silver Bell Company, was under the dominion and control of Steinfeld and did as he directed.

The findings of fact sent up to us, and which must alone be the basis of our judgment (Eagle Mining Co. v. Hamilton, 218 U. S. 513, 515), show that Steinfeld, in purchasing the English Group of mines, did not purchase them with the intent that they should thereby become the property of the Silver Bell Company, but that at that time he purposed to give the Silver Bell Company an opportunity to take the mines upon reimbursing him for his outlays and expenditures in that connection, which he expected the Silver Bell Company would do, intending, if it did not, vol . ccxxv—29 p. 450to keep them for his own. In our view, the facts found show that Steinfeld and the company effectually carried out this purpose, and that the subsequent attempt to rescind the action by which the proceeds of the sale of the English Group of mines became the property of the Silver Bell Company and to give the proceeds to Steinfeld must be held for naught.

Steinfeld acquiesced in this position and on July 15, 1901, made a proposition in writing to the Silver Bell Company. The substance of this proposal was that he would hold in trust for the Silver Bell Company all the mining properties controlled by him, the company to p. 451assume all obligations, counsel fees, etc., to pay for the annual assessment work and to reimburse him for his outlays on or before the fifteenth of October, 1901 (and that he would also turn over the Nielsen stock in controversy in the second cause of action upon the assumption of certain obligations). And upon compliance with the terms of the proposition the mining properties were to belong to the Silver Bell Company. Steinfeld stated in this proposal:

The Silver Bell Company was given until October 15, 1901, to accept the proposition; and, in the event it failed to do so and to comply therewith by such date, the option was to be at an end. This proposition was presented to the board of directors on July 15,1901, and it was ordered that a meeting of the stockholders should be called to decide upon it. Another meeting of the directors took place October 1, 1901, at which Steinfeld stated that he would agree, on condition that the company pay for the assessment work done and to be done in 1900, 1901 and 1902, and pay interest for the interval on the amount named in his original proposition, to extend the time for acceptance of his proposal to the fifteenth day of September, 1902. This proposition of extension was accepted by p. 452the board, and it was further resolved that a stockholders’ meeting should be called not later than September 15, 1902, and a stockholders’ meeting was held later on that day, October 1, 1901, but Zeckendorf was not present and no action was taken. And the Silver Bell Company continued to possess, use and work the properties as its own with the full knowledge and consent of Steinfeld and the Mammoth Copper Company.

In this situation of affairs Steinfeld negotiated the sale of all of the properties, and on May 13, 1903, reported to the board of directors that he had, on behalf of himself, the Mammoth Copper Company and the Silver Bell Company, given an option for the sale of the properties for $515,000, as one entire property, and requested that his action be confirmed, which was done, Steinfeld himself voting in favor of such confirmance. At the time the price of $515,000 was fixed Steinfeld intended to renew and permit the corporation to accept the terms of his proposition of July 15, 1901, as extended, and the officers of the Silver Bell Company expected the corporation to avail itself of the offer, so that the whole of the purchase money would be paid to and become the property of the Silver Bell Company. On May 20, 1903, all the properties were conveyed to the Imperial Copper Company for the purchase price of $515,000, $115,000 in cash and the balance in notes payable in four equal quarterly instalments. The cash and notes were turned over to Steinfeld as the treasurer of the Silver Bell Company and were to be held by him under a certain agreement, dated May 20, 1903, which permitted Steinfeld to hold the money and notes as indemnity for the obligations and liabilities to the Imperial Copper Company which he had assumed, the latter company having required Steinfeld to guarantee the titles to the mines sold for one year. It was mutually agreed in the agreement of May 20, 1903, that the purchase price paid and to be paid upon the sale should belong to p. 453225 U. 8. Opinion of the Court.

On the day the contract of May 20, 1903, was executed, the board of directors held a meeting, Steinfeld, Curtis and Shelton being present, at which the president reported the various transactions attending the sale and submitted certain documents. He further reported that Steinfeld, who had conducted the negotiations with the Imperial Copper Company, had again submitted for acceptance his proposition of July 15, 1901, with the modifications that the company forthwith pay him in cash the sum of $18,117, being the sum named in the original proposal with interest, and assume all obligations incurred in past and present negotiations and transactions with respect to such mining properties, and the president stated that it was necessary to adjust with the Mammoth Copper Company the disposition of the purchase money, and submitted the agreement of May 20, 1903. Five several resolutions were thereupon unanimously adopted: (1) Ratifying the sale; (2) accepting Steinfeld’s proposition and directing the payment forthwith of the $18,117 and providing for certain other payments; (3) authorizing the payment of certain commissions on the sale; (4) fully empowering the president and secretary of the company to indemnify Steinfeld against loss or damage for having guaranteed the titles to the properties; and (5) specifically ratifying and approving the agreement of May 20, 1903, p. 454providing for the disposition of the proceeds of the sale and indemnifying Steinfeld. And on the day following, May 21,1903, the $18,117 was paid to Steinfeld. Zeckendorf was not at this meeting or any of the meetings except the stockholders’ meeting on December 26, 1903.

“We are unwilling to admit that we did not have the right to this money. We still assert that this resolution and agreement was honest and valid, and that Mr. Steinfeld, under it, had the right to this money, and had the right to act as he has done. But since you attack it, we are willing to agree to pass a resolution in the language of your prayer in which we will rescind the resolution and p. 4564ÔÔ OCTOBER TERM, 1911.

We will not stop to recite the other parts of the long finding which includes all the proceedings of this meeting. p. 457At the end of the findings of fact in this connection the Supreme Court of Arizona makes this significant statement:

In interpreting the action of the stockholders in passing the resolution, the facts and circumstances surrounding them may legitimately be looked to. Canal Company v. Hill, 15 Wall. 94, 100, 101. In construing written p. 458documents, “this kind of evidence,” said Mr. Justice Bradley, speaking for the court, “is especially pertinent when the inquiry is as to the subject-matter of the agreement” (p. 101). To the same effect, Reed v. Insurance Co., 95 U. S. 23, 30, 31.