vided pro rata among such of the floating debt creditors as should provide the cash required to pay the floating indebtedness and reorganization expenses and charges; but no floating debt creditor took advantage of this provision, and all were thus wiped out in the reorganization.

í

outstanding hereunder," and that there had been a heavy depreciation in such other securities since the time of their deposit. The alleged hardship involved in requiring a delivery to plaintiffs of new Houston Company stock in specie was made by the interlocutory decree a subject of investigation by the special master; and his report that the requirement would not impose undue hardship appears to have been carefully considered before entry of the final decree; but neither of the lower courts set forth the reasons which led to the rejection of the Southern Pacific's contention. The final decree was entered in the District Court on October 5, 1916. Since then the World War and the participation in it of the United States have greatly affected financial conditions and security values, especially those involving transportation properties. It may be that the clause in the collateral agreement requiring reappraisal of all securities upon the withdrawal of any might now prove very burdensome. The pledge was made in 1911; and, as the Southern Pacific contends, it was justified then in depositing this stock as collateral, because up to that time the minority stockholders had not made any claim to stock in specie. For reasons hereinafter stated, the case must be remanded to the District Court for further proceedings with a view to modifying the terms of the decree in other respects. It seems to us proper that the Southern Pacific should also have liberty to present to that court reasons, if any, for believing that the decree as framed will under then existing conditions impose undue hardship upon it.

The Circuit Court of Appeals recognized that there was great force in this contention of the Southern Pacific, but overruled it because it "was never raised in the case by [13, 14] Ninth. The Southern Pacific ob- pleading or otherwise until an exception was jects to the terms of the decree also on the taken to the report of the special master" ground that, if the minority stockholders and because "there is nothing in the record *are held entitled to a pro rata share of the to show what, if anything, the Southern Panew company stock, it should be upon pay- cific Company did give up." The memoranment, not merely of the $26 per share re- dum filed by the district judge on settlement quired to meet reorganization expenses and of the interlocutory decree indicates that charges, but also of the additional sum re- some such contention was made then. At all quired to discharge the floating indebtedness. events it was clearly made before entry of At the time of the reorganization there was the final decree; and it does not appear that outstanding a large floating indebtedness for the minority stockholders were in any way which on May 17, 1889, judgments were re- prejudiced by the failure to make the exact covered: by the Lackawanna Iron & Coal contention earlier. There is no reason to beCompany in the sum of $555,914.25; by Mor-lieve that the parties cannot determine now, gan's Louisiana & Texas Railroad & Steam- as easily as they might have done a few ship Company in the sum of $1,795,570.81; years ago, to what extent the floating inand by the Southern Development Company debtedness due the Morgan Company reprein the sum of $858,133.15. The last two com- sents money in effect expended by the Southpanies held as collateral for their claims ern Pacific for the benefit of the old Hous$880,000 of bonds of the old Houston Com- ton Company and to what extent the wiping pany, for which they later received in ex- out of any indebtedness and any expenditure change bonds of a new company to be ap- made by the Southern Pacific in connection plied at their par value toward payment of therewith will inure to the benefit of such of the debts for which judgment had been re- the minority stockholders of the old company covered. The reorganization agreement pro- as receive stock in the new. Some adjustvided in substance that the whole $10,000,000 ment should obviously be made so as to comof stock of the new company, if not taken by pensate the Southern Pacific for any contrithe old company's stockholders, should be di-bution made at its expense to the value of

The Southern Pacific asserts that the Morgan Company was and still is its subsidiary; that it owned and now owns a large part of the stock of that corporation; and that through such stock ownership it is, in effect, a large floating debt creditor of the old Houston Company. It suggests also that it has paid out moneys to protect the property of the new company from other floating indebtedness. If the Southern Pacific had been allowed to retain all the stock in the new Houston Company, it would obviously lose nothing by the wiping out of its interest in the floating indebtedness of the old company; and any *money expended by it in protecting* the property of the new company would be fully reflected in the increased value of the stock therein, if it owned all. But, if part of the new company stock is taken from it and distributed among the minority stockholders, the Southern Pacific will lose and the minority stockholders will gain the pro rata increase in value of the new company stock, due to wiping out of the Southern Pacific's share in the floating debt and to its expenditures made for wiping out other indebtedness.

498

(39 Sup.Ct.)

the stock in the new company of which the by the Corn Exchange Bank, alleging that minority stock*holders may get the benefit. they were respectively owners of stock in the The purpose of this proceeding is not to pun-old Houston Company and praying leave to ish the Southern Pacific, but to declare and intervene, and that they be permitted to enforce its obligation as trustee. The minor- share in the benefits of the decree, or, in the ity stockholders who seek equity should do alternative, that they be permitted to make equity; and a court of chancery has power in such application to the District Court. Acgranting relief to prevent unjust enrichment tion on these petitions was postponed to the of the minority stockholders at the expense hearing of the case on the merits. As the of the Southern Pacific. To determine the case must be remanded to the District Court amount of such contribution by the Southern for further proceedings as above stated, we Pacific and of such benefit to the minority deny these several petitions without expressstockholders further investigation by the ing any opinion on their merits and without trial court will be necessary; and the judg-prejudice to the right to apply to the District ments on the floating indebtedness entered in Court for leave to intervene and to share in 1889 against the old company should not be the benefits of the decree. held a bar to any inquiry into relevant facts. Whether this compensation shall be made by way of addition to the assessment of $26 per share provided for in the decree, or whether it can and should be made by requiring the minority stockholders to consent to the creation in favor of the Southern Pacific of some charge against or interest in the new company which would have priority over the 100,000 shares of stock outstanding, as, for instance, an income bond or preferred stock, or whether the compensation should be made in some other manner, should also be determined in the first instance by the District Court where all the relevant facts can be ascertained. The final decree must be set aside and the interlocutory decree be modified so as to provide for the necessary inquiry; and, when all the relevant facts shall have been ascertained, a final decree should be entered which will embody such terms as shall be found to be appropriate to afford to the Southern Pacific appropriate compensation for its contribution.

[15] Tenth. The Southern Pacific objects to the orders permitting Gernsheim and the estate of Minzesheimer to intervene after the entry of the interlocutory decree, and objects also to the final decree in so far as it declares these interveners entitled to the relief granted other *minority stockholders. The suit was brought on behalf of all stockholders of the old Houston Company, situated similarly to the plaintiffs. The court found on competent evidence that these parties were such. If they could not have tervened as of right, it was at least within the discretion of the court to permit them to do so; and no reason is shown for questioning the exercise of its discretion. It is also urged that the earlier litigation by Gernsheim bars his claim to relief on the grounds of estoppel or of inconsistency of remedy; but that contention has already been shown to be unfounded.

Decree modified, and cause remanded to the District Court for further proceedings in conformity with this opinion; the costs in this court to be equally divided between the parties.

[16] Eleventh. The certiorari and return were filed May 3, 1918. On October 8, 1918, separate petitions were filed in this court by Henry J. Chase, by Fergus Reid, by Albert M. Polack, by Francis P. O'Reilly, and

The CHIEF JUSTICE took no part in the consideration or the decision of this case. *Mr. Justice McREYNOLDS dissenting. It seems to me quite clear that the judgment below is wholly wrong. Respondents' complaint should be dismissed.

This suit was brought in 1913, some 25 years after those who complain came into possession of all material facts. During that period they were parties or privies to suit after suit-the first begun in 1889 and all unsuccessful—which sought to upset what petitioner had done because of its actual

fraud.

The original bill of complaint in the present cause alleges:

*499

"As soon as the terms of the said reorganiz[18881, S. W. Carey, Cornelius MacArdell, Walation agreement were announced and published ter B. Lawrence, plaintiffs' testator, and other stockholders of the railway company protested against the terms of the said agreement, claiming that it practically gave the railway company to the Southern Pacific Company in fraud of the individual stockholders." "Immediately after the entry of the said consent decree of May 4, 1888, the said Carey, MacArdell, Lawrence, and other stockholders of the said railway company formed a committee of stockholders to protect themselves from the frauds comin-mitted and proposed to be committed by the Southern Pacific Company under the said reorganization agreement and consent decree, and said committee of stockholders employed as counsel Frederick R. Coudert, Edward M. Shepard, and A. J. Dittenhoefer, of New York er on H. Snowden Marshall, Russell H. LanCity, Jefferson Chandler, of St. Louis, and latdale, and David Gerber, and from the commencement of their first suit [December, 1889] hereinafter mentioned, to the present day, the firm of Dittenhoefer, Gerber & James has been their attorneys of record."

Having long emphatically condemned, attacked, and sought without success to annul

1919.)

No. 275.

petitioner's action, re*spondents finally come before a court of equity saying in effect: Although represented by counsel of great eminence, we have not heretofore known the (Submitted March 21, 1919. Decided June 9, law; notwithstanding all solemnly declared to the contrary, we now maintain that petitioner was really acting for us, our trustee indeed; and we wish to share in the plan 1. COURTS 334- PRACTICE-CONFORMITY which it has carried to success against our persistent opposition. Such a claim exhales a very bad odor; and I think the parties presenting it should be dismissed, burdened with an appropriate bill of costs, for two very simple reasons:

Аст.

First. They are barred by laches. Rational men are presumed to know the law; knowledge of consequent rights and appropriate means of asserting them is necessarily implied from full acquaintance with the facts. Respondents' attempt to rely upon an alleged belated discovery of a well-known remedy after years of litigation conducted in full view of all the circumstances affronts both established principles and common experience. And this is emphasized by the names of distinguished counsel who have continuously represented the minority stockholders since 1888.

"Nothing can call a court of equity into activity but conscience, good faith, and reasonable diligence; and when a party with full knowledge of the facts, acquiesces in a transaction, and sleeps upon his rights, equity will not aid him." Hayward v. Eliot National Bank, 96 U. S. 611, 24 L. Ed. 855.

Due diligence in asserting a constructive trust is incompatible with persistent denial of such relationship after full knowledge of all the circumstances and a furious chase for 25 years in the opposite direction by the soi-uisant beneficiary.

Second. Certainly the petitioner never consciously undertook to act as respondents' trustee for years nobody seems to have thought any such relation existed. When the latter obtained full information of the real facts (1888), at most, their option was promptly to treat petitioner as their constructive trustee, or to reject that view. And I had supposed in such circumstances, under an elementary rule, failure affirmatively to ratify, approve, or adopt the alleged fiduciary's action within a reasonable time amounted to disapproval. A potential cestui que trust may not indefinitely speculate on the outcome. In the present case respondents not only failed promptly to approve the action whose benefits they now seek; they deliberately engaged in a long series of actions inconsistent with their present claim; and while they did so petitioner, supposing its title absolute and unquestioned, dealt with the stock accordingly and as it probably would not have done if the present claim had been asserted.

(250 U. S. 473)

BARRETT v. VIRGINIAN RY. CO.

Conformity Act June 1, 1872, § 5 (Comp. St. § 1537), was intended to bring about uniformity in the law of procedure in the state had supplanted the common-law procedure by and federal courts after many of the states the Code practice.

2. TRIAL 139(1)-DIRECTION OF VERDICT PROPRIETY.

In the federal courts, whenever in the trial of a civil case it is clear that the state of the evidence is such as not to warrant a verdict

for a party, and that if such a verdict were rendered the other party would be entitled to a new trial, it is the right and duty of the judge to direct the jury to find according to the views of the court.

3. COURTS

CONFORMITY TO STATE 352 PRACTICE-DIRECTION OF VERDICT-PROPRI

ETY.

The rule as to the direction of verdicts in federal courts is not subject to modification by state statutes or Constitutions.

4. DISMISSAL AND NONSUIT 5-RIGHT TO NONSUIT-COMMON-LAW PRACTICE.

At common law, as generally understood and applied, a nonsuit could be taken freely at any time before verdict, if not, indeed, before judgment.

5. COURTS

352-RIGHT TO NONSUIT-COMMON-LAW PRACTICE.

The right to take a nonsuit is substantial, and when and how it may be asserted are questions relating directly to practice and mode of proceeding, within the intendment of the Conformity Act.

6. COURTS 352-CONFORMITY ACT-RIGHT TO DISMISSAL.

While the federal courts may in proper cases direct a verdict, it was improper, in view of Code Va. 1904, § 3387, etc., relating to nonsuits and demurrers to evidence, which are made applicable by the Conformity Act (Comp. St. § 1537), for a federal District Court for Virginia to deny an application for leave to take a nonsuit after the court had announced that it would direct a verdict for defendant, but before verdict had been actually directed; there having been no demurrer to the evidence or joinder therein.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Fourth Circuit.

Action by S. D. Barrett against the Virginian Railway Company. A judgment for defendant on a directed verdict was affirmed by the Circuit Court of Appeals (244 Fed. 397, 157 C. C. A. 23), and plaintiff brings certioFor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

rari. Reversed and remanded, with direc-[ the law of procedure in the federal and state tions. courts of the same locality. It had its origin in the Code enactments of many of the states. Mr. W. L. Welborn, of Roanoke, Va., for While in the federal tribunals the common-law petitioner. pleadings, forms, and practice were adhered Messrs. G. A. Wingfield and H. T. Hall, to, in the state courts of the same district both of Roanoke, Va., for respondent. the simpler forms of the local Code prevailed. This involved the necessity on the part of the

Mr. Justice McREYNOLDS delivered the bar of studying two distinct systems of remedial law, and of practicing according to the opinion of the Court. wholly dissimilar requirements of both. The inconvenience of such a state of things is ob vious. The evil was a serious one. It was the aim of the provision in question to remove it. This was done by bringing about the conformity in the courts of the United States which it prescribes. The remedy was complete. The personal administration by the judge of his duties while sitting upon the bench was not and administration of the judge in the discharge complained of. *** The personal conduct of his separate functions is, in our judgment, *neither practice, pleading, nor a form nor mode of proceeding within the meaning of those terms as found in the context."

(39 Sup.Ct.)

Claiming under the federal Employers' Liability Act (Act April 22, 1908, c. 149, 35 Stat. 65 [Comp. St. §§ 8657-8665]), petitioner sued the Virginian Railway Company in the United States District Court, Western Distriet of Virginia, for damages on account of personal injuries suffered by him July 27,

1915.

At conclusion of the testimony the railway company moved for a directed verdict; after consideration the trial judge read to counsel an opinion giving reasons and announced his purpose to grant the motion.

"And thereupon the plaintiff, by counsel, moved the court to be permitted to take a voluntary nonsuit, which motion was opposed by counsel for defendant. And as the court is of opinion that the motion comes too late, it is overruled, and to this action of the court the plaintiff, by counsel, excepted. And thereupon the court directed the jury to find a verdict for the defendant, and to this action of the court the plaintiff, by counsel, excepted. And thereupon the jury rendered and returned the following verdict: 'We, the jury, by direction of the court, find for the defendant.'"

Judgment thereon was affirmed by the Circuit Court of Appeals. 244 Fed. 397, 157 C. C. A. 23. Petitioner there urged that the trial court erred (1) in directing a verdict for the defendant, and (2) in denying the plaintiff's request to take a voluntary nonsuit. Both claims were denied and are renewed here.

*We think refusal to permit the requested nonsuit was error and for that reason the judgment below must be reversed. This makes it unnecessary to consider the other point.

[1] The Act of June 1, 1872-the Conformity Act (R. S. § 914, c. 255, § 5, 17 Stat. 197 [Comp. St. § 1537])-provides:

"The practice, pleadings, and forms and modes of proceeding in civil causes, other than equity and admiralty causes, in the Circuit and District Courts, shall conform, as near as may be, to the practice, pleadings, and forms and modes of proceeding existing at the time in

like causes in the courts of record of the state within which such Circuit or District Courts are held, any rule of court to the contrary notwithstanding."

Construing the statute in Nudd et al. v. Burrows, Assignee (1875) 91 U. S. 426, 441, 442 (23 L. Ed. 286), this court said:

"The purpose of the provision is apparent upon its face. No analysis is necessary to reach it. It was to bring about uniformity in

See, also, Indianapolis & St. Louis R. R. Co. v. Horst, 93 U. S. 291, 300, 23 L. Ed. 898.

[2, 3] "It is now a settled rule in the courts of the United States that whenever, in the trial of a civil case, it is clear that the state of the evidence is such as not to warrant a verdict for a party, and that if such a verdict were rendered the other party would be entitled to a new trial, it is the right and duty of the judge to direct the jury to find according to the views of the court. Such is the constant practice, and it is a convenient one. It saves time and expense. It gives scientific certainty to the law in its application to the facts and promotes the ends of justice." Bowditch v. Boston, 101 U. S. 16, 18, 25 L. Ed. 980; Pleasants v. Fant, 22 Wall. 116, 122, 22 L. Ed. 780; Oscanyan v. Arms Co., 103 U. S. 261, 265, 26 L. Ed. 539; Randall v. Baltimore & Ohio R. R. Co., 109 U. S. 47S, 482, 3 Sup. Ct. 322, 27 L. Ed. 1003: District of Columbia v. Moulton, 182 U. S. 576, 582, 21 Sup. Ct. 840, 45 L. Ed. 1237; Hepner v. United States, 213 U. S. 103, 113, 29 Sup. Ct. 474, 53 L. Ed. 720, 27 L. R. A. (N. S.) 739, 16 Ann. Cas. 960. And this rule is not subject to modification by state statutes or Constitutions. Indianapolis & St. Louis R. R. Co. v. Horst, supra; St. Louis, Iron Mt. & Southern Ry. v. Vickers, 122 U. S. 360, 303, 7 Sup. Ct. 1216, 30 L. Ed. 1161; Lincoln v. Power, 151 U. S. 436, 442, 14 Sup. Ct. 387, 38 L. Ed. 224.

[4, 5] At the common law, as generally understood and applied, a nonsuit could be taken freely at any time before verdict if not indeed before judgment. Confiscation Cases, 7 Wall. 454, 457, 19 L. Ed. 196; Derick v. Taylor, 171 Mass. 444, 445, 50 N. E. 1038; Bac. Abr. Nonsuit (D). And see Pleasants v. Fant, supra, 22 Wall. 122, 22 L. Ed. 780. The right is substantial. When and how it may

#478

be asserted we think are questions relating direct verdict for defendant, is not well directly to practice and mode of proceeding founded. within intendment of the Conformity Act.

[6] Section 3387 Virginia Code (1904) provides:

"A party shall not be allowed to suffer a nonsuit, unless he do so before the jury retire from the bar."

Prior to this provision, a plaintiff there had the absolute right to take a *voluntary nonsuit at any time before verdict. Harrison v. Clemens, 112 Va. 371, 373, 71 S. E. 538. Chapter 27, Va. Acts 1912, directs:

"That in no action tried before a jury shall the trial judge give to the jury a peremptory instruction directing what verdict the jury shall render."

Under the Virginia statute, in the absence of a demurrer to the evidence and joinder therein, the plaintiff may take a nonsuit at any time before submission of the case to the jury and their retirement. The conformity statute gives the same right in federal courts. This conclusion accords with opinions by the Circuit Courts of Appeals for the Sixth, Seventh, and Eighth Circuits. Knight v. Illinois Central R. R. Co., 180 Fed. 368, 103 C. C. A. 514; Meyer v. National Biscuit Co., 168 Fed. 906, 91 C. C. A. 335; Chicago, M. & St. P. Ry. Co. v. Metalstaff et al., 101 Fed. 769, 41 C. C. A. 669.

The judgment below must be reversed, and the cause remanded to the District Court, with direction to set aside the judgment in favor of respondent and sustain motion to enter a nonsuit. Knight v. Illinois Central R. R. Co., supra, 180 Fed. 374, 103 C. C. A. 514; Harrison v. Clemens, supra, 112 Va. 374, 375, 71 S. E. 538. Reversed.

And chapter 42, Idem, provides:

"In all suits or motions hereafter, when the evidence is concluded before the court and jury, the party tendering the demurrer to evidence shall state in writing specifically the grounds of demurrer relied on, and the demurree shall not be forced to join in the said demurrer until the specific grounds upon which the demurrant relies are stated in writing; nor shall any grounds of demurrer not thus specifically stated be considered, except that the court may, in T. H. SYMINGTON CO. v. NATIONAL MALits discretion, allow the demurrant to withLEABLE CASTINGS CO. et al. draw the demurrer; may allow the joinder in demurrer to be withdrawn by the demurree, and new evidence admitted, or a nonsuit to be taken until the jury retire from the bar."

(250 U. S. 383)

MINER v. T. H. SYMINGTON CO. (Argued April 19 and 22, 1918. Decided June 9, 1919.)

Nos. 31, 24.

IMPROVEMENT — CON

1. PATENTS 174
STRUCTION-SPECIFICATION.

Citing Parks v. Ross, 11 How. 362, 373, 13 L. Ed. 730, and Richardson v. City of Boston, 19 How. 263, 15 L. Ed. 639 (see also Schuchardt v. Allen, 1 Wall. 359, 370, 17 L. Ed. 642), petitioner maintains that in the Where a patent for an improvement in federal courts the practice of directing ver- draft rigging for railroad cars called for a dicts has superseded the demurrer to evi- pocket or housing to hold the other parts in place, and there was nothing in the claims indence and should be controlled by the same dicating that the pocket was to be integral general principles. Therefore, it is said, the while the specification stated that it might be statutory rule which gives the judge dis- cast in a single piece, the claims are not limited cretion to allow or refuse a nonsuit after to an integral part. joinder in such a demurrer applies when 2. PATENTS

62

PRIOR INVENTION-EVI

there is a motion for directed verdict.

DENCE.

Obviously the laws of Virginia recognize a Oral testimony tending to show prior inmarked distinction between demurrer to evi-vention as against existing letters patent is, in dence and direction of a verdict-the former the absence of models, drawings, or some kinis permitted; the latter is expressly prohibit-dred evidence, open to grave suspicion, particed. And the different nature and effect of the ularly if the testimony be taken after the lapse two things has been pointed out in Oscanyan of years from the time of the alleged invention. v. Arms Co., supra, 103 U. S. 264, 26 L. Ed. 3. PATENTS 16-INVENTION. 539; Central Transportation Co. v. Pullman's Palace Car Co., 139 U. S. 39, 11 Sup. Ct. 478, 35 L. Ed. 55; and Slocum v. New York Life Insurance Co., 228 U. S. 364, 388, 33 Sup. Ct. 523, 57 L. Ed. 879, Ann. Cas. 1914D, 1029. The conclusion announced in Parks v. Southern Ry. Co., 143 *Fed. 276, 277, 74 C. C. A. 414, that, because federal courts may in proper cases direct verdicts, therefore, in the exercise of sound discretion, they may deny an application for leave to take a nonsuit and

A conception of the mind is not an invention until represented in some physical form, and unsuccessful experiments or projects abandoned by the inventor are equally destitute of that character.

4. PATENTS 62-INFRINGEMENT-PREVIOUS

INVENTION-EVIDENCE.

In an infringement suit, oral evidence held insufficient to show prior invention as against existing letters patent, at most disclosing only a mental conception in the process of develop

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes