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with it, and charged, as counsel desired, up-ferred, and as to them, we are of the opinion on that particular subject, adding that he that such failure was waived by the course understood that the parties had agreed that of proceeding to which attention has been the respective statements of their positions directed. might go to the jury to save it the labor of making calculations. In this way the parties got before the jury the calculations showing their respective claims. This may have been and probably was the reason for
(250 U. S. 483)
SOUTHERN PAC. CO. v. BOGERT et al.
the failure of counsel to call attention to (Argued April 17 and 21, 1919. Decided June
the omission to answer the particular points requested concerning the effect to be given to the testimony of the defendant's witness, if credited by the jury. Apparently counsel were satisfied when the jury had before it the table showing the basis of their claims in the case. But, whatever the reason, the court, after a careful and painstaking charge, thinking he had answered the "points" of both sides, called upon counsel to suggest omissions as to particular points; then followed the proceedings already recited. We think counsel should have directed attention to the omission which it is evident was inadvertent. The case, in this aspect, is entirely unlike the Jacoby Case, where a spe⚫cific request was made and refused, and a recovery had upon an award of the Commission which the testimony tended to show was made upon a wrong basis.
*This court has repeatedly held that objections to the charge of a trial judge must be specifically made in order that he may be given an opportunity to correct errors and omissions himself before the same are made the basis of error proceedings; this is the only course fair to the court and the parties. McDermott v. Severe, 202 U. S. 600, 610, 26 Sup. Ct. 709, 50 L. Ed. 1162; Norfolk & Western Ry. Co. v. Earnest, 229 U. S. 114, 120, 33 Sup. Ct. 654, 57 L. Ed. 1096, Ann. Cas. 1914C, 172; United States v. Fidelity Co., 236 U. S. 512, 529, 35 Sup. Ct. 298, 59 L. Ed. 696; Jacobs v. Southern Ry., 241 U. S. 229, 236, 36 Sup. Ct. 588, 60 L. Ed. 970; Guerini Stone Co. v. Carlin Co., 248 U. S. 334, 338, 39 Sup. Ct. 102, 63 L. Ed. 275. Parties may not rest content with the procedure of a trial, saving general exceptions to be made the basis of error proceedings, when they might have had all they were entitled to by the action of the trial court had its attention been seasonably called to the matter.
The trial court and the Court of Appeals have refused to disturb the amounts awarded by the jury as compensation for the clear violation of the Interstate Commerce Act, which these records disclose, and which was very much less than the sums awarded by the Commission when the allowance of interest is considered which under the court's instructions entered into the verdicts. think the only serious ground upon which reversal may be asked is found in the failure to give the points, to which we have re
The right of a complainant to maintain an effective suit is not barred by laches because of lapse of time alone, where there has been no prejudice from delay, and where complainant did not acquiesce in the situation, but maintained other suits, though mistaking his remedy; for the essence of "laches" is not mere lapse of time, but is acquiescence or lack of diligence in seeking a remedy.
[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Laches.] 4. EQUITY ~82—LACHES-PENDENCY OF LEGAL PROCEEDINGS BY OTHERS - INTERVENTION.
that a suit to enforce it would be brought on behalf, not only of the plaintiff but of all similarly situated, it is not necessary that each of such persons should intervene in order that he may be deemed thereafter free from the laches which bars those who sleep on their rights.
Where a cause of action is of such a nature
5. JUDGMENT 570(9, 14)-CONCLUSIVENESS -PRIOR LITIGATION-DISMISSAL-WANT OF JURISDICTION-FORM OF REMEDY.
Where other suits begun by complainants or persons in like situation were dismissed for want of jurisdiction, or were decided adversely on appeal on the ground that the remedy which complainants finally invoked was widely at variance from the theory on which the cases were commenced and tried, such judgments are not conclusive adjudications barring complainants' right to recover in a suit where the appropriate remedy was seasonably invoked.
For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
6. ELECTION OF REMEDIES 12—ACTS CON- in carrying out a reorganization scheme, deSTITUTING ELECTION prived the minority shareholders of any particREMEDIES. ipation in the shares of the reorganized company, and before they had asserted any claim to the stock in specie deposited such shares as collateral for a bond issue, held that, where financial conditions had greatly changed because of the World War, after entry of decree directing defendant to deliver to the minority shareholders certain shares, defendant should upon remand of the cause on other grounds be given an opportunity to show whether such decree would work an undue hardship.
A fruitless attempt to recover by an unavailing remedy does not constitute an election which will deprive one of his rights properly recoverable by a different and appropriate remedy.
Defendant, which through a subsidiary corporation controlled a third corporation in which complainants were minority shareholders, held
not to have acted as underwriter or banker in reorganization scheme which, as carried out, deprived complainants of any participation in the proceeds of the sale; the entire stock of the reorganized corporation being obtained by
Where in a suit by minority stockholders to compel the delivery in specie of the proportionate number of the shares of a reorganized
corporation which they should have received, had not defendant secured the whole issue by
8. CORPORATIONS 190-LIABILITY FOR ACTS virtue of its control of a majority of the shares OF CONTROLLED CORPORATION. of the original corporation, held, that the contention that the minority stockholders should be compelled to bear their proportionate share of the floating indebtedness which was either paid by defendants, or was due to corporations subsidiary to it, was raised in time, and should be disposed of.
A corporation which through its control of another which held a majority of the stock of a third corporation caused the third to take action detrimental to the interests of its minority stockholders is liable therefor to the same extent as though it had been itself the holder of the controlling stock.
575 — REORGANIZATION -RIGHTS OF MAJORITY STOCKHOLDERS-INDEBTEDNESS.
Where defendant, which controlled a major
9. CORPORATIONS 575-REORGANIZATIONMAJORITY SHAREHOLDERS LIABILITY TO MINORITY SHAREHOLDERS. Where defendant, which controlled the ma-ity of the stock of a railroad corporation, acjority of the stock of a corporation, by means quired all of the stock upon reorganization and of a reorganization scheme prevented minority discharged floating indebtedness, some of which shareholders from participating in the distribuwas due its subsidiary, held, that the minority tion of the stock of the reorganized corpora- stockholders, as a condition to compelling detion, and obtained the whole for itself, relief fendant to issue them in specie their proporcannot be denied on the ground that defendant tionate number of shares, should be required was not guilty of fraud or mismanagement; the to bear their proportionate expense of the relief being based on breach of a fiduciary re- floating indebtedness. lation.
10. CORPORATIONS 190 SHAREHOLDERS-PARTIES.
To a suit by minority stockholders against the majority stockholder, based on the alleged misuse of its power as such, for its own benefit, and to the detriment of the minority stockholders, and in which no corporate right is asserted, the corporation is neither an indispensable nor necessary party.
11. CORPORATIONS 575 - REORGANIZATION RIGHTS OF MINORITY STOCKHOLDERS PROVISION FOR FLOATING INDEBTEDNESS.
RIGHT TO STOCK-INDEBTEDNESS.
Where, pursuant to a reorganization scheme, the holder of the majority of the shares of a railroad corporation obtained all of the stock of the reorganized corporation, depriving the minority shareholders of participation in such stock, the fact that no provision was made for the floating indebtedness of the original corporation held no bar to relief in favor of the minority sought on the ground of breach of a fiduciary relation.
15. EQUITY 114-INTERVENTION DISCRETION OF COURT.
It was within the discretion of the trial court to allow other minority shareholders and representatives of a deceased minority stockholder to intervene in a suit by minority stockholders to compel defendant, which by its control of a majority of the shares acquired all of the stock of the corporation on reorganization, to deliver in specie the proportionate number of shares to which they were entitled.
16. CERTIORARI 37-PARTIES — INTERVEN
Where on certiorari to the Supreme Court a decree in favor of minority stockholders against defendant, which, by virtue of its control of the majority of the stock of a corporation, acquired the whole of the stock on reorganization, was modified, and the cause remanded, held, that petitions for leave to intervene and to share in the benefits of the decree, filed in the Supreme Court by other minority stockholders, should be dismissed without prejudice to the right of such petitioners to apply to the lower court for leave to inter
12. APPEAL AND ERROR 1108 - PROCEEDINGS AFTER REMAND CHANGE OF CONDITIONS-DECREE INVOLVING HARDSHIP.
Where defendant, which controlled a majority of the shares of a railroad corporation,
Mr. Justice McReynolds, dissenting.
For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
(39 Sup.Ct.) On Writ of Certiorari to the United States Company, directed that it should deliver to Circuit Court of Appeals for the Second Cir- them these shares and also in cash the sum cuit. of $702,336.61 (being the aggregate of all dividends paid thereon) and interest thereon from the times the several dividends were shares in the old Houston Company and also received, upon receiving from them 18,816 with each share of old stock delivered $261 in cash and interest thereon from February 10, 1891. This decree was affirmed by the Pac. Co., 244 Fed. 61, 156 C. C. A. 489); and Circuit Court of Appeals (Bogert v. Southern the case comes here on certiorari (245 U. S. 668, 38 Sup. Ct. 190, 62 L. Ed. 539).
ed against the decree, it is important to bear  In considering the many objections urgconstantly in mind the exact nature of the equity invoked by the bill and recognized by the lower courts. The minority stockholders do not complain of a wrong done the corporation or of any wrong done by it to them. They complain of the wrong done them directly by the Southern Pacific and by it alone. The wrong consists in its failure to share with them, the minority, the proceeds of the common property of which it,
Mr. Justice BRANDEIS delivered the opin- through majority stockholdings, had rightfulion of the Court. ly taken control. In other words, the minority assert the right to a pro rata share of the common property; and equity enforces the right by declaring the trust on which the Southern Pacific holds it and ordering distribution or compensation. The rule of cor
In 1888, and for some years prior thereto, the Southern Pacific Company dominated the Houston & Texas Central Railway Company, electing directors and officers through one of its subsidiaries, which owned a majority of the Houston Company stock. In 1888, pur-poration law and of equity invoked is well suant to a reorganization agreement, mort- settled and has been often applied. The magages upon the Houston Company proper- jority has the right to control; but when it ties were foreclosed, and these were acquired does so, it *occupies a fiduciary relation toby the Houston & Texas Central Railroad ward the minority, as much so as the corpoCompany; the old company's outstanding ration itself or its officers and directors. If bonds were exchanged for bonds of the new; through that control a sale of the corporate all the new company's stock was delivered property is made and the property acquired to the Southern Pacific; its lines of railroad by the majority, the minority may not be were incorporated in the transcontinental excluded from a fair participation in the system of that corporation; and the minority fruits of the sale.2 stockholders of the old Houston Company received nothing. In 1913 the appellees, suing on behalf of themselves and other minority stockholders, brought this suit in the Supreme Court of New York to have the Southern Pacific declared trustee for them of stock in the new Houston Company and for an accounting. The plaintiffs below being citizens and residents of New York, and the Southern Pacific, a Kentucky corporation, it removed the case to the District Court of the United States for the *Eastern District of New York; and that court, after a hearing on the evidence, entered a decree for the plaintiffs. Bogert v. Southern Pacific Co., 226 Fed. 500. See, also, Bogert v. Southern Pac. Co. (D. C.) 215 Fed. 218, and Id. (D. C.) 211 Fed. 776. There had been issued by the old Houston Company 77,269 shares of stock, and by the new 100,000 shares. The decree declared that the Southern Pacific held for plaintiffs and other stockholders who intervened 24,347.9 shares in the new Houston
Suit by Henry L. Bogert and others, as executors under the last will and testament
of Walter B. Lawrence, deceased, and others, against the Southern Pacific Company. A decree for complainants (226 Fed. 500) was affirmed by the Circuit Court of Appeals (244 Fed. 61, 15 C. C. A. 489), and defendant brings certiorari. Henry J. Chase and others filed separate petitions in the Supreme Court praying leave to intervene.
fied, and cause remanded for further pro-
See, also, 250 U. S. 63 L. Ed. ―.
Messrs. Lewis H. Freedman, Gordon M. Buck, and Arthur H. Van Brunt, all of New York City, for petitioner. *Messrs. Charles E. Hughes and H. Snowden Marshall, both of New York City, for respondents.
 The facts on which the decree is based are carefully set forth in the bill of complaint; and the decree declares in terms that every allegation contained in it is true. No adequate reason is shown for challenging, in any respect material for the purposes of this opinion, the correctness of this concurrent finding of the two lower courts; and it is accepted as correct. Baker v. Schofield, 243 U. S. 114, 118, 37 Sup. Ct. 333, 61 L. Ed. 626. The detailed facts and the evidence upon which they rest are fully recited in the opinions delivered below or in the earlier litigation hereafter referred to; and the facts will be recited here only so far as necessary
1 The exact figure is $26.026.
Menier v. Hooper's Telegraph Works, L. R. 9
Ch. App. 350, 354; Ervin v. Oregon Ry. & Nav. Co.
Sons, 142 Mich. 441, 105 N. W. 881, 10 L. R. A. (N.
to an understanding of the several errors of be brought on behalf, not only of the plainlaw now insisted upon.
[3, 4] First. The Southern Pacific contends that plaintiffs are barred by laches. The reorganization agreement is dated December 20, 1887; the decree of foreclosure and sale was entered May 4, 1888; the sale was held September 8, 1888; and the stock in the new company was delivered to the Southern Pacific on February 10, 1891. This suit was not begun until July 26, 1913; and not until that time was there a proper attempt to assert the specific equity here enforced, namely, that the Southern Pacific received the stock in the new Houston Company as trustee for the stockholders of the old. More than 22 years had thus elapsed since the wrong complained of was committed. But the essence of laches is not merely lapse of time. It is essential that there be also acquiescence in the alleged wrong or lack of diligence in seeking a remedy. Here plaintiffs, or others representing them, protested as soon as the terms of the reorganization agreements were announced; and ever since they have with rare pertinacity and undaunted by failure persisted in the diligent pursuit of a remedy as the schedule of the earlier litigation referred to in the margin demonstrates. Where the cause of action is of such a nature that a suit to enforce it would
The earlier litigation is summarized thus in the opinion of the District Court: Carey v. H.
tiff, but of all persons similarly situated, it is not essential that each such person should intervene in the suit brought in order that he be deemed thereafter free from the laches which bars those who sleep on their rights. Cox v. Stokes, 156 N. Y. 491, 511, 51 N. E. 316. Nor does failure, long continued, to discover the appropriate remedy, though well known, establish laches where there has been due diligence, and, as the lower courts have here found, the defendant was not prejudiced by the delay.
[5, 6] Second. The Southern Pacific contends that adverse decisions in the earlier litigation are a bar either as an estoppel or by way of election of remedies; since the prosecution of some, if not all, of the earlier suits also was actively supported by the minority stockholders' committee, and the plaintiffs are bound as privies to the full extent to which the decrees therein constitute res judicata. But in none of these suits was the question here in issue decided. Except in so far as those cases were disposed of on objections to jurisdiction, they decided merely that the foreclosure could not be set aside as fraudulent; that the minority stockholders could not have the reorganization agreement declared fraudulent; and that they could not compel a reduction of the assessment made under it or enjoin distribution of the stock according to its terms. The minority stockholders sought, when presenting the case in the Court of Appeals of New York (MacArdell v. Olcott, 189 N. Y. 368, 372, 373, 82 N. E. 161), to have declared the trust which was later decreed in this suit; but that court refused to consider the contention, for the reason that this claim to relief was based upon a theory "widely at variance" With that upon which that action was commenced and tried. Because of such wide divergence the earlier decrees do not operate as res judicata. And there is no basis for the claim of estoppel by election; nor any reason why the minority, who failed in the, attempt to recover on one theory because un
& T. C. Ry. Co. (C. C.) 45 Fed. 438 (1891), and 52 Fed. 671 (1892), C. C., E. D., Tex.; stockholders held not entitled to decree enjoining carrying out plan of reorganization or to have foreclosure set aside as fraudulent. Carey v. H. & T. C. Ry. Co., 150 U. S. 170, 14 Sup. Ct. 63, 37 L. Ed. 104 (1893); appeal to Supreme Court from decree of Circuit Court dismissed. Carey v. H. & T. C. Ry. Co., 9 C. C. A. 687, 13 U. S. App. 729 (1894); decree of Circuit Court affirmed by Circuit Court of Appeals for the Fifth Circuit. Carey v. H. & T. C. Ry. Co., 161 U. S. 115, 16 Sup. Ct. 537, 40 L. Ed. 638 (1896); Appeal to Supreme Court from decree of Circuit Court of Appeals dismissed. Gernsheim v. Olcott (Sup.) 7 N. Y. Supp. 872 (1889), and 56 Hun, 644, 10 N. Y. Supp. 438 (1890), and Gernsheim v. Central Trust Co., 16 N. Y. Supp. 127, 61 Hun, 625 (1891); stockholders held not entitled to reduction of assessment or to injunction against distribution of stock of new company under reorganization. MacArdell v. Ol-supported by the facts, should not be percott, 104 App. Div. 263, 93 N. Y. Supp. 799 (1905), and 189 N. Y. 368, 82 N. E. 161 (1907); action by stockholders to set aside foreclosure sale and annul reorganization agreement on ground of fraud dismissed. MacArdell v. Olcott, 62 App. Div. 127, 70 N. Y. Supp. 930 (1901); application of stockholder for leave to intervene denied for laches. Lawrence v. Southern Pacific Co. (C. C.) 165 Fed. 241 (1908), 177 Fed. 547 (1910), and 180 Fed. 822 (1910), C. C., E. D., N. Y.; action by stockholder for accounting and other relief; motions to remand denied and suit dismissed. Bogart v. Southern Pacific Co., 228 U. S. 137, 33 Sup. Ct. 497, 57 L. Ed. 768 (1913); appeal to Supreme Court from decree of Circuit Court in Lawrence v. Southern Pacific Co., supra, dismissed. MacArdell v. Olcott, N. Y. Court of Appeals, October 29, 1907, 189 N. Y. 368, 82 N. E. 161, affirming 104 App. Div., supra, with statements of limitations in the complaint. In the last-named case the court (two judges dissenting) did not attempt to consider that the present form of action was not presented by that complaint.
the merits of this transaction, but expressly stated
mitted to recover on another for which the facts afford ample basis. Wm. W. Bierce, Ltd., v. Hutchins, 205 U. S. 340, 347, 27 Sup. Ct. 524, 51 L. Ed. 828; Barnsdall v. Waltemeyer, 142 Fed. 415, 420, 73 C. C. A. 515; Standard Oil Co. v. Hawkins, 74 Fed. 395, 20 C. C. A. 468, 33 L. R. A. 739; Henry v. Herrington, 193 N. Y. 218, 86 N. E. 29, 20 L. R. A. (N. S.) 249.
 Third. The Southern Pacific challenges the claim for relief on the ground that it took the new Houston Company stock, not as majority stockholder, but as underwriter or banker under the reorganization agreement. The essential facts are these: While dominating the old company through control of a majority of its stock, the Southern Pacific entered into its reorganization, un
der an agreement by which the minority tiffs individually of the property which it has stockholders of the old company could ob- received, the old Houston Company is in no tain stock in the new only upon payment way interested and would not be even a propin cash of a prohibitive assessment of $71.40 er party. per share (said to be required to satisfy the floating debt and reorganization expenses and charges), while the Southern Pacific was enabled to acquire all the stock in the new company upon paying an assessment of $26 per share (said to be the amount required to satisfy reorganization expenses and charges). The Southern Pacific asserts that, unlike the minority stockholders, it assumed an underwriter's obligation to take the new company's stock not subscribed for by the minority, and also guaranteed part of the principal and all the interest on the new company's bonds, which were given in exchange for those of the old company. But the purpose of the Southern Pacific in assuming these obligations was in no sense to perform the function of banker. It was to secure the incorporation of the Houston Railroad into its own transcontinental system. And it was never called upon to pay anything under its guaranty.
 Fourth. The Southern Pacific contends that the doctrine under which majority stockholders exercising control are deemed trustees for the minority should not be applied here, because it did not itself own directly any stock in the old Houston Company; its control being exerted through a subsidiary, Morgan's Louisiana & Texas Railroad & Steamship Company, which was the majority stockholder in the old Houston Company. But the doctrine by which the holders of a majority of the stock of a corporation who dominate its affairs are held to act as trustee for the minority does not rest upon such technical distinctions. It is the fact of control of the common property held and exercised, not the particular means by which or manner in which the control is exercised, that creates the fiduciary obligation.
 Seventh. The Southern Pacific also contends that the decree is erroneous because the effect is to give to the minority their fro rata share in the new Houston Company without their having made any contribution towards satisfying the floating indebtedness of the old; whereas the floating debt creditors had a claim against the property *prior in interest to that of the old company's stockholders. Kansas City Southern Ry. Co. v. Guardian Trust Co., 240 U. S. 166, 36 Sup. Ct. 334, 60 L. Ed. 579; Northern Pacific Ry. Co. v. Boyd, 228 U. S. 482, 33 Sup. Ct. 554, 57 L. Ed. 931. The fact that no provision was made for the floating indebtedness is not a bar to the minority obtaining relief. They did not come into court with unclean hands because there were floating debt creditors unpaid. If any floating debts creditors have been illegally deprived of rights, it was not by the minority's acts. Whether the terms on which relief should be granted the minority should be affected by the fact that the Southern Pacific had, through a subsidiary, a large interest in the unpaid floating debt, presents a more serious question, which will be considered later.
 Eighth. Objection is made by the Southern Pacific to the terms of the decree also on the ground that, in requiring distribution of stock in the old Houston Company to the minority stockholders instead of pro viding merely for an accounting and compensation in damages, the decree imposes upon it a heavy and unnecessary hardship. This, it is said, will result from the fact that all the stock of the new Houston Company (except 17 shares to qualify directors) has been pledged by the Southern Pacific as part collateral for an issue of 35-year 4 per cent. bonds to the amount of 250,000,000 francs, and that by reason of a clause in the collateral agreement by which the Southern Pacific covenants that it is the lawful owner of the securities, and that they "are not subject to any prior pledge, charge, or equity," a decree requiring distribution of stock to the minority stockholders may conceivably entitle the trustee for these bonds to declare them due, that such default might preclude it from withdrawal of the stock and from substituting other collateral, and that, in any event, if substitution of collateral is permissible, additional securities will have to be deposited, because the agreement, provides that in case of withdrawal of any *securities upon request made after Septem
 Fifth. Equally unfounded is the contention that the Southern Pacific cannot be held liable because it was not guilty of fraud or mismanagement. The essential of the liability to account sought to be enforced in this suit lies, not in fraud or mismanagement, but in the fact that, having become a fiduciary through taking control of the old Houston Company, the Southern Pacific has secured fruits which it has not shared with the minority. The wrong lay, not in acquiring the stock, but in refusing to make a pro rata distribution on equal terms among the old Houston Company shareholders.
 Sixth. The Southern Pacific also urges that the suit must fail because the old Hous-ber, 1911, those "offered in substitution and ton Company is an indispensable party and has not been joined. The contention proceeds upon a misconception of the nature of the suit. Since its purpose is merely to hold the Southern Pacific as trustee for the plain
those remaining on deposit (in each instance) shall be equal in value, as appraised or reappraised, at the time of such proposed substitution, to one hundred and twenty per centum (120%) of the amount of bonds then