Vol. III.] SANFORD v. Huxford. [No. 1. consideration, although upon the present declaration without amendment it is doubtful whether it is very important. But the questions are before us and cannot be regarded as foreign to the case. It has been held that a party who gets an agreement in his favor by a relinquishment or an agreement to relinquish a right, must have some right or some show of right to relinquish. This was held in Edwards v. Baugh, 11 M. & W. 641, in regard to a declaration or an agreement to abstain from prosecuting, which did not aver any debt actual or supposed. This case, however, contains an express assertion that if suit had been commenced before the compromise, no such showing would be needed, and the saving of litigation and its attendant expenses would be a sufficient consideration in itself. In Cook v. Wright, 1 B. & S. 559, the court intimates that the declaration in Edwards v. Baugh was sufficient, and that the decision was questionable. In Kaye v. Dutton, 7 M. & G. 807, the consideration was confined to the transfer of an interest, and held bad because there was none. In Jones v. Ashburnham, 4 East, 455, it was held an agreement to forbear suit was nugatory unless it was in favor of some person named or otherwise designated, and in that instance there was no person liable to suit indicated or existing. In Barber v. Fox, 2 Wm. Saund. 136, an heir's promise based on a bond in which there were no words binding heirs was held invalid, as in Fooley v. Windham, Cro. El. 206, was a promise to compensate a personal tort of an ancestor, on which there was no surviving cause of action. In Seaman v. Seaman, 12 Wend. 381; Busby v. Conway, 8 Md. 55; Praler v. Miller, 25 Ala. 320, it was held an agreement not to oppose a will formed no consideration for a compromise unless the party would be in some way interested in its defeat. See also Jeress v. Sutton, 3 Ind. 289. And in Rood v. Jones, 1 Doug. 188, it was held an agreement not to attach property, where there was nothing to attach, was no consideration for a promise. But in the latter case, as in the best considered cases generally, it is also held that when parties have acted without fraud, the burden is on the defendant to defeat the agreement which will be presumed good until facts are alleged against it to invalidate it. Paris v. Dexter, 15 Vt. 379; Wade v. Simeon, 2 C. B. 565; Gould v. Armstrong, 2 Hall S. C. 267. And if parties act in good faith, even when they know all the facts, and there is a promise without legal liability to base it on, the courts hesitate to disturb the agreements of parties, or any assumption that an advantage which they have obtained, and conceive to be worth paying for, is not to be considered valuable. The decisions in this state have gone far to sustain such bargains. Weed v. Terry, 2 Doug. 344; Vandyke v. Davis, 2 Mich. 148; Moore v. Detroit Locomotive Works, 14 Mich. 266; Hull v. Swartout, 29 Mich. 249; Gates v. Shutts, 7 Mich. 127. In Vandyke v. Davis, the party had no title whatever. In Moore v. Locomotive Works, the defendant had become liable for not delivering machinery, and it was regarded as an advantage gained to the plaintiff to get the property instead of a lawsuit for damages, so as to uphold a waiver of delay. "In Gates v. Shutts the claim was supposed to be barred by the statute of limitations. The decisions generally hold that an agreement to settle an existing suit is sustainable without reference to the merits of the controversy, un Vol. III.] SANFORD V. HUXFORD. [No. 1. less under very peculiar circumstances. It is so held on the ground that an alteration in the position of the parties may of itself be an advantage; and may, in the absence of fraud or other controlling reason, be a sufficient consideration. In Cook v. Wright, 1 B. & S. 559 the court held that there could be no doubt whatever that the compromise of a suit was a sufficient consideration; but that the reason was not the saving of costs, but the change of position, and that in all cases where parties had so changed their position, the same rule would apply. There a person not personally liable for a rate, had compromised it with commissioners and agreed to pay the reduced sum, both knowing the facts but differing as to the law; and he was held liable. In Barlow v. Ocean Ins. Co. 4 Met. 270, it was held a settlement with an insurance company could not be disturbed by the subsequent discovery of facts which would have prevented it, if known. In Wade v. Simeon, 2 C. B. 565, it was said that the fact that a plaintiff knew he had no cause of action would not necessarily defeat a compromise unless he knew he could not under any circumstances have got a verdict. In Gould v. Armstrong, supra, the test was likewise stated to be whether there "could be" any recovery. In Union Bank v. Geary, 5 Pet. 113, the parties were not ignorant of the facts but the law was doubted. So in Longridge v. Dorville, 5 B. & Ald. 117, it was held a compromise would not fail unless it was clear there could be no possible liability. The The cases refer among other things to the contingencies of losing testimony as not to be disregarded. And in Cooper v. Parker, 15 C. B. 822, the doctrine is very broadly laid down. A defendant had pleaded infancy, which was not true in fact. The suit was compromised for a smaller sum, and that plea was by the same agreement withdrawn. court held the plaintiff bound. Parke, B., uses this language: "I cannot see why this is not a good plea. The value of the defendant's giving up the question in the action in the county court cannot be ascertained. In dealing with a plea of this sort, the court does not enter into a consideration of the value of the satisfaction if the plaintiff agrees to accept it. The advantage to the plaintiff of the defendants giving up the plea of infancy in the county court, though an untrue one, might be great." Martin, B., very briefly concurs by saying still more broadly that the parties should be allowed to have their agreements carried out as they make. them. The decision was unanimous. It is also held that the presumption will always be raised that pleadings are not put in for sham purposes or in bad faith, and that they cannot be attacked except upon averments to the contrary. Bidwell v. Catton, Hobart, 216; Smith v. Monteith, 13 M. &. W. 426; Wilson v. City Bank, 17 Wall. 473. There is no reason for presuming unfairness when parties are merely relying on their legal rights, and no reason why they should be debarred from demanding compensation for giving them up. If there have been unfairness in bringing about a settlement, the want of any honest cause of action or probable defence may be a fact to be considered among the rest. In the present case Crowell does not appear on the pleadings as the moving party, and there is nothing to indicate fraud. He gave up Vol. III.] SANFORD v. HUXFORD. [No. 1. valuable privileges, and the creditors got valuable benefits thereby, on which they put their own estimate. The bargain cannot be presumed to have been fraudulent, and the consideration is valid, unless the whole transaction was unlawful. Upon the general question, see farther, Morey v. Newfane, 8 Barb. 653; Stoddard v. Mix, 14 Conn. 12; Farmers' B. K. v. Blair, 44 Barb. 652; Atlee v. Backhouse, 3 M. &. W. 633. So far as any question arises concerning fraud against Crowell's partners, we do not perceive how it can be presented on this record. If defendants could set up any fraud against them to avoid the contract, upon which we need not pass here, such fraud is not to be presumed. And under the second count which avers their consent, it must be likewise presumed to have been fairly obtained. Neither do we think there is any ground for holding such an agreement to be in fraud of the bankrupt law. It has been held that secret agreements by favored creditors to withdraw opposition to the discharge of debtors or to abstain from examining them are void, because by their position in the case, other creditors are at liberty to rely on their prosecuting all necessary inquiries and developing all important facts, which such agreements tend to smother. It is held such arrangements have a direct tendency to favor fraudulent dealings with assets, and to conceal the truth upon the merits. Hall v. Dyson, 10 L. & Eq. 424; Dexter v. Snow, 12 Cush. 594; Taxbury v. Miller, 19 J. R. 311; Bell v. Leggett, 3 Seld. 176; Nerot v. Wallace, 3 T. R. 17. And on similar principles a secret promise to pay a creditor, who signs a compromise with others, and so induces them to regard him as acting without such an inducement, is held fraudulent. Case v. Gerrish, 15 Pick. 49. But a debtor who devotes all his property to be used ratably for all his creditors does what the law highly favors and approves. This is the very aim and purpose of the bankrupt law, and the only end for which the petition in bankruptcy was filed. No act can be in fraud of a law which it is intended and calculated to carry out. Crowell merely bargained to submit to the purposes of this law, when he had before resisted the attempt to bring him within it. If it had been a bargain to conceal or withdraw his assets from distribution, or to procure a collusive discontinuance of the suit after other creditors had appeared, there might have been some reason for doubting its validity. But an agreement to submit to a bankruptcy decree and to have the estate disposed of in due course of law is entirely proper and valid. The judgment should be reversed, and the demurrer overruled, with costs, and the cause remanded to the court below, that the defendants may plead over. Vol. III.] WILMER V. THE ATLANTA AND RICHMOND AIR LINE RAILWAY. [No. 1. CIRCUIT COURT OF THE UNITED STATES. [OCTOBER, 1875.] NORTHERN DIS WILMER v. THE ATLANTA AND RICHMOND AIR LINE RAILWAY. (1.) A railroad company having its residence and principal office at Atlanta, Georgia, conveyed to trustees by one deed, all its line of road extending from Atlanta through South Carolina to Charlotte, North Carolina, and other property to secure the payment of the principal and interest of 4,248 bonds of $1,000 each, issued by the railroad company. The railroad was an indivisible and inseparable piece of property, which could not be divided, without injury to its value. The trust deed conferred authority on the trustees, and made it their duty, in case the railroad company failed, to pay either the interest, or principal of the bonds, to take possession of the property conveyed by the trust deed, and advertise and sell the same or such part as might be necessary at Atlanta, to pay the sum in default. Held: : (a.) That on default made in the payment of interest and a demand upon the trustees by the bondholders that they should take possession of the trust property and a failure of the trustees to do so, the court on a bill filed by the bondholders to require them to execute the trust would compel them to take possession of the trust property or appoint a receiver for that purpose. (b.) Such appointment would be made even though there was no probable deficiency of the trust property to pay the debts, secured by the trust deed. (c.) When it was represented that the trust property had fallen into the hands of two different receivers, accountable to three different courts, to the manifest detriment of the trust estate, that fact of itself was considered a sufficient reason for the appointment of a receiver for the whole property, if the court had jurisdiction to make such appointment. (d.) The circuit court of the United States for the Northern District of Georgia has jurisdiction to appoint a receiver for the entire line of said company's road, and other property included in the deed of trust whether within or without the state. (2.) Two states may by concurrent legislation unite in creating the same corporate body. (3.) Where a bill was filed the prayer of which was that this court would construe a trust deed executed by a railroad company, and compel the trustees to execute the trust or appoint a receiver to take possession of, and administer, the trust property, and service of subpoena had been made on the railroad company, which was the principal defendant, and a restraining order had been allowed, and also served on the railroad company, enjoining it from delivering possession of the trust property to any one except a receiver, appointed by this court in the case thus commenced, held, that by these proceedings the court acquired constructive possession of the trust property; and that possession thereof taken, under color of process from another court, in a suit commenced after the proceedings above mentioned, was in contempt of the process and jurisdiction of this court, even though the other court first obtained actual possession of the property. (Per Woods, Circuit Judge.) (4.) Contra. Service of process gives jurisdiction over the person; seizure gives jurisdiction over the property; and until the property is seized, no matter where the suit was commenced, the court does not have jurisdiction over it. Thus, when two suits between different parties, raising different controversies, and having different purposes in view, are commenced in courts of coördinate jurisdiction, and the possession of the property, which is the subject of the suit, is necessary to the relief asked in each case, that court which first seizes the property acquired jurisdiction over it, to the exclusion of the other, no matter when the suits were commenced, or process in personam served. (Per Bradley, Circuit Justice.) (5.) When certain bondholders secured by a deed of trust, filed, in behalf of themselves and all other bondholders secured by the same deed, who chose to come in as complainants, and bear their share of the expenses of the suit, a bill against the trustees named in the deed, to have the trust administered, and the trust property sold, and WILMER V. THE ATLANTA AND RICHMOND AIR LINE RAILWAY. [No. 1. VOL. III.] its proceeds distributed, and the other bondholders were numerous and some of them unknown; held, that it was no valid objection to the making of a decree, in accordance with the prayer of the bill, that all the bondholders were not made parties; they might be allowed to come as complainants, or might propound their claims before the master. (6.) A trust deed executed by a railroad company to secure bondholders construed. 7.) When a railway is conveyed by a trust deed or mortgage to secure bonds, and it cannot be divided and sold in pieces without manifest injury to its value, the whole may be sold, before the principal is due, on default in the payment of interest. (8.) If two railroad corporations created by different states join in making a trust deed conveying their joint property to secure bonds issued by them jointly, and suit is brought to enforce the trust, in the district where one of the corporations resides, and it is served with process, and the other corporation, being a non-resident of the state or district where the suit is brought, enters its appearance and files an answer jointly with the other, both will be bound by the decree of the court. (9.) The Atlanta & Richmond Air Line Railway Company executed the deed of trust, mentioned in the first head note: Held, that the court has jurisdiction to decree that the trustees should sell the entire line of road according to the terms of the trust, notwithstanding, a large part of the road lay beyond the territorial jurisdiction of the court; and that a sale and deed under such decree would convey a good title to the whole. (10.) Penalty of bond for appeal fixed under rule 32 of the supreme court. THIS was a cause in equity which was first heard in chambers at Savannah, on the 5th and 7th of December, 1874, by Woods, C. J., on the motion of complainants, for the appointment of a receiver. Messrs. A. T. Ackermann & L. E. Bleckley, for the motion, and Messrs. P. L. Mynatt & H. H. Marshall, contra. WOODS, Circuit Judge. The complainants, Skipwith Wilmer and August Richard, allege that they are the owners and holders of certain of the bonds known as first mortgage eight per cent. bonds of the Atlanta & Richmond Air Line Railway Company, which are secured by a deed of trust on all the property and franchises of the defendant company, and they file this bill, in behalf of themselves and all other holders of similar bonds, who shall be entitled to avail themselves of the benefit of the suit. The purpose and prayer of the bill is, that the trust deed given to secure said bonds may be construed that the trustees therein named, or their substitutes to be appointed by the court, may be compelled to execute the trusts created by the deed of trust, by taking possession of said railway and appurtenances, and all property granted by the deed of trust, and selling the same at public auction, for the payment of the principal and interest of all the bonds secured by said trust deed, and that pending the suit some suitable person may be appointed receiver to take possession of said railway and all its property conveyed by the trust deed, with power to operate and manage said railway, and receive all its earning and income during the pendency of the suit, and with such other power as to the court shall seem right and proper. The cause now comes on for hearing, upon the motion of the complainant for the appointment of a receiver, as prayed in the bill. It is alleged in the bill that the defendant company is a corporation, created by, and existing under the laws of the State of Georgia, South Carolina, and North Carolina, and having its principal office and place of business in Atlanta, in the State of Georgia. It further appears from the bill that, by an act of the Legislature of Georgia, approved March 5, 1856, a railroad company, to be known as "the Georgia Air Line Railroad Company," was incorporated and author |