Court Opinion

ID: 8631641
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:38:38.458714+00
Date Added: 2024-06-11T16:55:47.218114
License: Public Domain

CLIFFORD, Circuit Justice.
Demurrers are either general or special, depending upon the natuie and form of the pleading. They are called “general demurrers” when no particular cause is shown except the usual formula that there is no equity in the bill of complaint. When the particular defects or objections to the pleading are pointed out, the demurrer is called a “special demurrer.” Where the objection is to the substance of the allegation, the former will be sufficient; but the latter is indispensable where the objection is to the defects of the bill in point of form. Whether general or special, a demurrer is not a good defence to a bill in equity, unless the objections are apparent on the face of the bill itself, either from matter inserted or omitted therein, or from defects in the frame or form of the pleading. Matters of fact which are relevant and well pleaded are necessarily admitted by a demurrer: but a demurrer, whether general or special, does not admit conclusions of law drawn from the facts set forth, even though such conclusions of law are also alleged in the bill of complaint.
Courts of equity unquestionably have jurisdiction of fraud, misrepresentation, and fraudulent suppression of material facts in matters of contract; but where the cause of action is a purely legal demand, and nothing appears to show that the defence at law may not be as perfect and complete as in equity, a suit in equity will not be sustained, as it is clear that the case, under such circumstances, is controlled by § 1G of the judiciary act. Insurance Co. v. Bailey, 13 Wall. [80 U. S.] 623; Hipp v. Babin, 19 How. [60 U. S.] 271. Flagrant breach of trust is charged in'the bill, and that the respondents conspired and confederated together for the purpose of injuring the corporation, and that they, for illegal and improper purposes, divided among themselves $100,000 of the money of the corporation, which it was the duty of the directors to expend and pay out for the construction and equipment of the railroad; and the complainants pray for an account, and that the respondents may be decreed to pay over to them, as such assignees, what may be found to be due to them as such assignees. Much discussion of the first defence is unnecessary, as it is plain that a suit at law would not be as perfect and complete as a suit in equity, which is the true criterion to be applied in determining the force and effect of such a de-fence. Hill v. Lane, L. R. 11 Eq. Cas. 220. That the action is brought in the wrong court. That the' plaintiffs should have commenced their action in the district court, as the proper auxiliary court to collect the assets of a bankrupt due' from persons residing in another district. Doubtless the district court would have had jurisdiction of the case under the bankrupt act, but that admission does not show that the circuit courts are devested of jurisdiction in any such ease where the suit is between a citizen of the state where the suit is brought and a citizen of another state. Sewing Machine Co. v. Sewing Machine Cos., 18 Wall. [85 U. S.] 573. Jurisdiction of the district court in such a case is derived from the bankrupt act, and it is true that the bankrupt act does not confer jurisdiction in such a case upon the circuit courts. Sherman v. Bingham [Case No. 12,762], Hence it is safe to conclude that the circuit courts have no jurisdiction in such a case, unless the suit is between citizens of the state where the suit is brought and a citizen or citizens of another state. But the bankrupt act provides that the assignee shall have the like remedy, to recover ail said estate debts and effects in his own name, as the debtor might have had if the decree in bankruptcy had not been rendered and no assignment had been made. 14 Stat. 524. Viewed in the light of that provision, it is certain that the assignee is the proper party to institute such a suit, and, inasmuch as the suit is between citizens of different states, in exact conformity to section 11 of the judiciary act. We are of the opinion that the second objection must also be overruled. 1 Stat. 7S; Stevens v. Savings Bank, 101 Mass. 109; Cook v. Whipple, 55 N. Y. 150; Fletcher v. Morey [Case No. 4,864]. That the respondents might do what it is alleged they did do, as there is no allegation of fraud, or that any persons have been misled or injured by their acts, and that the complainants do not show any ground for equitable relief. Enough has already been remarked to show that the first branch of the proposition is repugnant to the allegations of the bill of complaint. and that it must be overruled upon that ground. Equity will afford relief in such a *436case, if tlie facts alleged are fully proved, as appears from the following authorities: t Daniel, Ch. (3d Am. Ed.) 576; Gould v. Gould [Case No. 5,637]. Matters of fact are certainly alleged in the bill, which, if fully proved, would entitle the complainants to relief, and in such a case a demurrer is not a good de-fence; but, in view of all the circumstances, the court will allow the respondents leave to file an answer to the merits. Decree for the complainants in conformity to the opinion.