Department 2. Appeal from Superior Court, Los Angeles County; Chas. Wellborn, Judge. Action by J. L. Rector against Wellington J. Lewis and another, who cross-complained. From a judgmet for defendants and an order denying new trial, plaintiff appeals. Affirmed. Smith, Miller & Phelps and M. M. Meyers, all of Los Angeles, for appellant. Geo. L. Sanders, of Los Angeles, for respondents. MELVIN, J. Plaintiff sued for specific performance of an alleged contract for the exchange of real property. Defendants answered, pleading a rescission of the contract after breach thereof by the plaintiff, and by cross-complaint averred that plaintiff was wrongfully withholding their property from them. They prayed for restitution of the premises, for an award by way of damages, and for rent. The defendants were successful both in their defense and in their action upon the cross-complaint. Plaintiff appeals from the judgment and from an order denying his motion for a new trial. The important findings requiring discussion on this appeal were to the effect that plaintiff had not surrendered to defendants or to either of them the property which was to be exchanged for the realty which is the subject of this suit; that by means of misrepresentation plaintiff had obtained entrance upon the property of defendants in Los Angeles county on February 15, 1912, and that, on the 17th day of the same month, by threats and intimidation, he had compelled them to yreid possession of the premises to him, a possession still retained by him at the time of the action; that after frequent vain demands upon plaintiff for performance of the contract defendants rescinded it on the 11th day of June, 1912; that plaintiff during his occupancy had made certain improvements on the land which were equal to the value of the use thereof exclusive of the crops grown thereon; and that up to the time of the receipt by him of the notice of recission of the contract plaintiff had not attempted in good faith to carry out the terms of the agreement with defendants. An interlocutory decree was given following these findings and ordering an accounting between the parties with reference to the personal property. The contract was evidenced by two certain writings. By the first of these W. J. Lewis agreed to transfer the land in question, located in Los Angeles county, together with all the personal property thereon (except certain named chattels) for $15,000, the consideration being certain lands in Nebraska, subject to an existing lease continuing from March 1, 1912. The land in Nebraska was to be subject to two mortgages of $1,000 each, and the property in California to a mortgage of $3,000. The closing paragraph of this written instrument was as follows: "Time being the essence of this agreement, it is hereby agreed by both parties hereto that said Lewis is to look at the Nebraska land within 30 days, and upon his approval within that period of time all papers appertaining to both parties' lands are to be placed in escrow 325 So. Hill St., Los Angeles, Cal., which comwith Los Angeles Abstract & Trust Company, pany will deliver to each party the certificates of title and complete the deal for all concerned. "W. J. Lewis. "Beulah V. Lewis. "J. L. Rector." This agreement was dated January 11, 1912. The court found that on January 23, 1912, the defendants placed in escrow all of the documents so required to be deposited by them according to the agreement. On April 10, 1912, the plaintiff and defendant, W. J. Lewis, signed the following writing: "It is agreed that the adjustment of all matters pertaining to personal property which should have been left on place sold by Mr. W. J. Lewis to Mr. J. L. Rector leaves a balance due of $10.00 from Mr. Lewis to Mr. Rector. Mr. Rector agrees to procure for Mr. Lewis a written lease of a certain 240 acres in Nebraska be duly executed by M. S. Johnson, G. I. Johnson, and turn same over to Mr. Lewis, said lease to and Charles Johnson, lease running from March 1, 1912, to March 1, 1913, Mr. Lewis to be entitled to interests of Mr. Rector in and to all in the transaction as of the date of Jan. 23/12.” crops on any of the Nebraska land included defendants offered to complete the transacOn June 5, 1912, by a formal letter the tion by delivering to Rector a proper grant deed to the property belonging to them, together with a certificate of title and all other papers to be by them delivered. The closing paragraph of this letter was as follows: "And we hereby demand that you carry out your part of said escrow agreement immediately and without any further delay upon your part." The letter of rescission signed by both defendants and dated June 11, 1912, was based upon the failure of plaintiff to carry out the terms and conditions of the escrow agreement. Appellant's first contention is that, as no time was specified in the second writing within which he was to secure a tenant and execute the transfer of the property in Nebraska, he was entitled to a reasonable time for doing those things, and that the time allowed was, under the circumstances, most unreasonable. He calls attention to the fact that on July 8, 1912, he tendered to defendants warranty deeds to the Nebraska property from himself and wife, abstracts of title, insurance policies, and two leases, one between himself and one Sheffield, dated February 15, 1912, and another signed by himself and G. I., M. S., and C. C. Johnson, dated June 1, 1912, for a portion of the land in Nebraska. It appears that one of the leases-that signed by Sheffield-was not contemplated in the agreement of April 10, 1912. Therefore, under appellant's own theory, the belated offer does not fill the exact measure of the two agreements. [1] But upon broader principles we cannot cross-complaint should be ignored. We have examined it, and agree with the learned judge of the superior court who overruled plaintiff's demurrer to the cross-complaint. Under the circumstances we do not feel called upon to give in detail our reasons for such agreement. The judgment and order are affirmed. say that the chancellor erred in determining | cient facts are not alleged. They do not that the delay from April 10, 1912 (the date give their reasons for their belief that the of the supplemental agreement), to June 11th of the same year (the date of the rescission) was unreasonable and that such delay, coupled with the other facts and circumstances, supported a finding that Mr. Rector had not, prior to June 11, 1912, attempted in good faith to carry out the terms of the contract. It was in evidence that appellant, without giving anything in return had, on February 17, 1912, by threats and intimidation, compelled defendants to yield possession of their property to him. The court found that the testimony on this point was true. It was also | GINTY et al. v. OCEAN SHORE R. CO. et al. in evidence that respondents wrote numerous letters to Mr. Rector requesting compliance on his part with the contract, but that no results were obtained. These circumstances might well have justified the court in the finding of lack of good faith. We concur: HENSHAW, J.; LORIGAN, J. (S. F. 7080.) (Supreme Court of California. Feb. 3, 1916. PLAN. Defendant, a railroad company, had issued bonds secured by deed of trust. Default having been made in the payment of interest on the terest due, as was provided for in the deed of bonds, the trustee declared both principal and intrust, and instituted foreclosure proceedings. Under a provision in the trust deed that the foreclosure, the bondholders appointed a combonds might be used to buy in the property on mittee with whom the bonds were deposited under an agreement whereby the committee, in its pass-sale and reorganize the railway on any plan discretion, could purchase the property at the deemed practicable "and to do anything they may deem to be for the best interests of the bondholders." The property having been so purfor the organization of a new corporation with chased, the committee announced a definite plan a capital stock of $9,000,000, with provisions for bond issues to meet all outstanding obligations and to be issued to the previous bondholders in discharge of the original bonds. The scheme having proved impracticable, and the property being in immediate danger of resale by new lienholders, the committee adopted and put tion was organized, with a capital stock equaling in execution a new plan whereby a new corporathe amount of the original bond issue; the committee conveying all the property of the old company to the new corporation for the latter's agreement to issue its stock to those whom the committee might name, and causing the issuance of the stock to the old bondholders in amounts identical with the face value of their holdings. This action was brought by several original bondholders to enforce the committee's first plan as a trust and to have the second reorganization declared void on the ground that the committee's first plan became a fixed and irrevocable trust upon its declaration. that, upon the failure of the first plan, the second reorganization was valid under the committee's authority to do anything it might deem to be for the best interests of the bondholders. [2-4] The judgment of restitution was fully in accord with the pleading and proof of the cross-complaint. Having invoked the jurisdiction of a court of equity, and that court having determined that he is not entitled to specific performance of the contract of exchange, the appellant may not well complain that his dispossession of the land was unwarranted. He reminds us that there were other things to be done besides the ing of deeds between him and Mr. and Mrs. Lewis and instances the circumstance that the agreement of modification recites the obligation on the part of the respondents to pay $10 due on "the adjustment of all matters pertaining to personal property." Respondents were not obligated to pay the $10 as a prerequisite to rescission of the contract or to the maintaining of their suit by cross-complaint. This money was to be paid as part of the consummation of the transfer of the property. It was not an independent debt or a partial payment on the contract which Mr. and Mrs. Lewis were bound to restore before they could seek equity. It was in evidence that Mr. Rector had given the respondents absolutely nothing in return for the use of the land prior to the rescission of the contract. Therefore the item of $10 must have been merely an estimated charge which would accrue upon the final consummation of the agreement to exchange the two parcels of land. In any view of the matter appellant will not be harmed because there is to be an accounting between the parties to this suit. Appellant attacks the cross-complaint as insufficient because in itself it did not present facts sufficient to constitute a cause of action against the plaintiff. It is conceded by respondents that such facts must be pleaded in a cross-complaint, but appellant's counsel do not point out the particulars in which the pleading is vulnerable. They content themselves with the general statement that suffi Held [Ed. Note.-For other cases, see Railroads, Cent. Dig. §§ 656-658, 660; Dec. Dig. 195.j 2. RAILROADS 195-BONDHOLDERS' SUITCOMPLAINT AMENDMENT. Where a party plaintiff to such action had not deposited any bonds with the committee had bought her bonds at a pledgee's sale, the or signed the agreement, it appearing that she bonds having been pledged by the committee under a special agreement with a bank, from amend, so as to set up her purchase of the which she bought, her motion for leave to bonds, was properly denied, where such amend ment did not allege that the bonds had ever | 000,000 under a deed of trust executed to been deposited by the pledgeè bank or by her the Mercantile Trust Company of San Franwith the committee. [Ed. Note.-For other cases, see Railroads, Cent. Dig. §§ 650-658, 660; Dec. Dig. 195.] 3. RAILROADS 195 REORGANIZING RAILROAD-BONDHOLDERS' SUIT-PARTIES PLAINTIFF "PARTY SIMILARLY SITUATED." In a bondholders' suit to enforce a railway reorganization agreement and to prevent the reorganization committee from changing the plan of reorganization, a bondholder, who had not signed the agreement or deposited her bonds with the committee in conformity therewith, but who had purchased her bonds at a pledgee's sale of bonds which the committee had pledged to a bank, was not a proper party plaintiff to such action, since she was not "a party similarly situated" with the other plaintiffs within Code Civ. Proc. § 382, providing for joinder of par ties. [Ed. Note.-For other cases, see Railroads, Cent. Dig. §§ 650-658, 660; Dec. Dig. 195.] In Bank. Appeal from Superior Court, City and County of San Francisco; James M. Seawell, Judge. Action by John Ginty and others against the Ocean Shore Railroad Company and others. Judgment for defendants, and plaintiffs appeal. Affirmed. Morrison, Dunne & Brobeck, Edward Lynch, and Stratton, Kaufman & Torchiana, all of San Francisco, for appellants. W. W. Kaufman, of San Francisco, specially appearing for appellant Folger. J. Howard Smith, in pro per. Edward J. McCutchen and A. Crawford Greene, both of San Francisco (McCutchen, Olney & Willard, of San Francisco, of counsel), for respondents. cisco. These bonds had been sold to and were owned by many persons. In November, 1909, the company defaulted in the payment of interest upon its bond coupons, and cantile Trust Company, pursuant to the proagain defaulted on May 1, 1910. The Mervisions of the deed of trust, then declared the principal and interest of the bonds to be due, and on June 7, 1910, gave notice of sale in accordance with the provisions of the trust deed empowering it so to do. Prior to this date (in December, 1909), a creditors' bill was filed by the Baldwin Locomotive Works in the federal Circuit Court against the railway company. Answer thereto was filed and a receiver was appointed by the court. He took charge of the railroad property on that date. Following the notice of sale so given by the Mercantile Trust Company, the stockholders and creditors of the company (other than the bondholders) caused the Mercantile Trust Company to be made a party to the action in the federal court. It obtained from that court authority to proceed with its sale under terms and conditions expressed in the court's order. At this time the financial and physical condition of the railway company and of those interested in it was, roughly stated, as follows: At the time when the sale was effectuated there was chargeable against the property the comparatively small sum of $135,000, representing the expenditures of the receiver. The stockholders had paid in about $2,250,000 upon their subscriptions of $5,000,000 capital stock. There was owing to the bondholders $5,000,000, and there was owing to other creditors about $2,250,000, approximately $500,000 of which was unsecured. The distance between San Francisco and Santa Cruz by way of the railroad is 83 miles. Part of the road outward from the two termini had been constructed, but there was an uncompleted gap of 26 miles. The road was unprofitable, in the sense that its earnings could not make a fair, or indeed any, return upon the money invested in it. HENSHAW, J. This action was brought to enforce a trust, and in enforcing it to have declared void the reorganization of the Ocean Shore Railway Company into the Ocean Shore Railroad Company, defendant. Added as defendants to the corporation are the members of the reorganization committee, the trustees who effectuated that reorganization. John Ginty, plaintiff, is or was a bondholder of the Ocean Shore Railway Company. After the commencement of this action he was joined by other bondholders in seeking the relief indicated. The court in equity found Under the terms of the trust deed, the against all of the contentions of the plain- bondholders were empowered to use their tiffs and gave its decree for defendants. bonds on the sale of the properties in payFrom that decree this appeal has been taken ment of the purchase price. The usual proand all of the evidence is presented for con- cedure in such cases followed. The bondsideration. This brief indication of the na- holders were called together to enable them ture and result of the action it is necessary in combination to use the purchasing power to follow with a detailed statement of fact. of their bonds effectively and to take steps The Ocean Shore Railway Company was looking to the reorganization of the road, in organized as a railroad corporation under the the event that the organized bondholders laws of the state of California. It purposed should become the purchasers. On July 22, to construct, build, and operate a railroad ex- 1910, at a meeting of the bondholders a comtending along the Ocean Shore from San mittee of five was selected to represent the Francisco to Santa Cruz. It was capitalized body. The members of that committee are for $5,000,000, and all of its capital stock was the defendants in this case, saving that upon subscribed; the stock owners having paid on the original committee was A. C. Kains, their holdings approximately $2,250,000. It whose place was later taken by Walter S. had also issued its bonds in the sum of $5,- | Martin. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes On July 29, 1910, the committee approved many bonds as possible, as every bond dethe form of an agreement under which the posited decreased proportionately the amount bondholders of the railway company should which would have to be paid in money to the be called upon to deposit their bonds with non-depositing bondholders. (This narrative the committee. On August 1st following, this must here be interrupted to direct attention agreement was sent by the committee to to the fact that November 3, 1910, becomes a every bondholder of the Ocean Shore Rail- date of consequence in this consideration beway Company, with an explanatory letter. cause upon that date the committee adopted This agreement of July 29th, as it was call- a plan of reorganization, which appellants ed and may for convenience be called, is contend absolutely concluded and bound them one of the important documents in the con- in all their future proceedings, and which troversy, and therefore requires further ex- plan of organization admittedly is not the position. Its importance arises from the plan which the committee finally put into effacts that it was the first and only docu- fect.) The problems confronting the commitment signed by the depositing bondholders tee were: First, to secure money sufficient and (standing alone) defines in full the for the cash payment to be made on the sale; powers and trusts upon which the commit- and, second, to secure the deposit of as many tee acted for the bondholders. It declares bonds as possible. Without the money they its purpose to be the purchase of the prop-could do nothing, and to the securing of this erties of the railway company by and on be- the committee first bent its efforts. They half of the bondholders. Under it the de- estimated that, besides the $166,000 payable positing bondholders were to place their under the court's order, about $50,000 more bonds with the Union Trust Company, "there would be immediately required for the care to remain for a period of nine months from and preservation of the railway properties. this date unless sooner withdrawn and used No bank or other financial institution would in accordance with the terms of this agree- advance any money upon the security of the ment." When bonds to the face value of deposited bonds, and as a last expedient the $2,500,000 or upwards had been deposited, members of the committee secured an agreethen such deposited bonds could be used by ment, called the "Underwriter's Agreement," the committee in its discretion "for the pur- whereby their friends pledged their personal pose of applying the same upon the purchase credit in stated amounts aggregating $500,price of the property of said Ocean Shore 000, agreeing to pay the committee their reRailway Company so to be sold." Furthermore, it expressly authorized the committee spective proportions of this amount to enable it to meet the expenses necessarily incurred "to proceed with a reorganization of the said in the purchase and reorganization of the Ocean Shore Railway on any plan deemed road. The five members of the committee practicable and to do anything they may deem to be for the best interests of" the personally pledged themselves in this agree bondholders. Expenses incurred or disburse- ment to the sum of $130,000. This Underments made by the committee "shall be rewriter's Agreement was assigned by the compaid to them ratably," the committee, how-mittee to the Union Trust Company of San ever, serving without compensation. finally it was provided that: And "There shall be no personal liability or sponsibility attached to the signers of this instrument, that is to say there shall be nothing hereby implied or obligated by signature other than the power of the disposition of the bonds alone, said bonds only being held for any expenditures and not the owners thereof." Francisco, and upon its security that institution advanced to the committee amounts agre-gregating $250,000, agreeing that if necessary it would make further advancements up to $400,000. Additionally the committee was called upon to pledge and did pledge as security for this loan all of the bonds which had been deposited, and finally a deed of trust to all the properties which it purchased at the sale. Thus by these efforts the committee overcame its immediate financial difficulties. Touching its second problem, that of securing the bonds, prior to November 3d bonds to the amount of $2,695,000 had been deposited. By January 17, 1911, the date of the sale, a total of $4,785,000 worth of bonds out of the entire $5,000,000 issue had been deposited, all of the depositors signing, and signing only the agreement of July 29th. The sale sanctioned and ordered by the federal court fixed the minimum selling price at $1,035,000, but required the payment upon the fall of the hammer of $166,000 cash in payment of preferred liens under the receiver's certificates. It was incumbent upon the committee, therefore, to be prepared to pay on the sale that amount of cash. Moreover, under the terms of the deed of trust, the bondholders who did not deposit would be entitled to be paid in cash on their bonds an amount equal to the amount credited upon the deposited bonds which were used in the purchase of the properties, and it was distinctly declared in the agreement of July 29th that only the bonds of the depositing bondholders should be liable for all necessary expenditures. It was important to the Besides the exigency of these matters to which we have adverted and which were vital to the accomplishment of the committee's design of purchasing and reorganizing, the equities of others were from time to time pressed upon the attention of the com cipal stockholders of the railway company | first mortgage bonds, and should this sum of appeared before the committee and suggest- $500,000 not be sufficient for the purpose the ed that "some recognition be given to stock-old bondholders were to accept common stock holders and unsecured creditors." Again, on at par in payment of the deficiency. Still September 14th, the stockholders appearing further, $500,000 preferred stock was to be before the committee expressed the hope that issued and used to pay the claims of unse"some agreement could be made by which cured creditors, estimated at that time to be the claims of stockholders and unsecured $425,000. Finally, the $8,500,000 worth of creditors as well as those of the bondholders common stock was to be issued and was to be might be recognized." At a meeting of Sep- disposed of as follows: $425,000 of it was to tember 21st the firm of Lilly & Heins, claim- be given as a bonus to those persons providing to be preferred creditors, appeared and ing the money enabling the committee to requested that the committee agree to put in finance the cash bid secured by the Undera protective bid for the property of at least writer's Agreement; $2,875,000 was to go as $3,000,000. The minutes show that the cred- a bonus to aid in selling the first mortgage itors "were told that, while there was a mor- bonds; $1,375,000 was to pay coupons upon al equity in their claims, no plan of reorgani- the second mortgage bonds; and the final $3,zation had yet been adopted and the com- 825,000 of this common stock was to be proImittee was not in a position to make any rated amongst the stockholders of the old promises." Plans of reorganization were pro- company. Finally the plan provided: posed and considered. On September 3d such a proposed plan was prepared by Mr. Bradley of the committee. On September 23d another such plan was tendered by Mr. Martin, who subsequently succeeded Mr. Kains on the committee. On September 30th a plan similar to that proposed by Mr. Martin was adopted by the committee. On this date Mr. Bradley of the committee stated: "That in view of the approaching date of sale he considered it proper to formally present a plan that had been informally discussed by the committee, and that he would recommend to the approval of the committee the following plan of reorganization, in the event of the bondholders purchasing the road." | "It is understood that the committee reserves to itself and shall have the right to change any conditions as they arise, and the committee shall of the provisions of this proposed plan to meet be the sole judge of the necessity and propriety thereof within the meaning of this clause." A sale was so had upon January 17, 1911. The properties were purchased by the committee for the amount fixed in the court's order, the committee being the only bidder at the sale. On February 1, 1911, the sale was confirmed. On February 9, 1911, the committee executed a declaration of trust which set forth in full the agreement of July 29th, and declared that the committee held the properties purchased under that agreement. From this time forth the committee busied itself actively in the matter of reorganization. But the undisputed testimony is that all the We After discussion the committee "resolved the foregoing proposed plan for reorganization of the Ocean Shore Railway Company be adopted as the plan of this committee." | overtures of the members of the committee Finally, on November 3d, the committee in like manner adopted another plan, which the appellants in the court below and here contend defined and circumscribed the committee's powers and limited its activities to the effectuation of the adopted plan, with such modifications and with such modifications only as might be necessary to accomplish the main purposes, but not permitting any radical departure from those expressed purposes. The minutes show that this plan, like the plan of September 30th, was adopted. It in terms provided for the organization of a corporation with a capital stock of $9,000,000 and a bonded indebtedness of $9,000,000. Of this bonded indebtedness of $9,000,000, there was to be $3,500,000 of first mortgage bonds; $3,300,000 of these bonds were to be used to complete and equip the road. The remaining $200,000 of these bonds were to be deposited in the United States Circuit Court to secure and pay the preferred claims of creditors. A second mortgage bond issue of $5,500,000 was to be made, $5,000,000 of this being used to take up by way of exchange the outstanding $5,000,000 of first mortgage bonds, and the remaining $500,000 of these bonds were to be used to pay delinquent interest on the looking to reorganization upon or along the lines of the plan of November 3d were utterly rejected by the financiers to whom they were submitted. They said: "Ridiculous! cannot consider it at all." No outside capital could be allured into the enterprise. And if confirmation be needed to the abundance of direct testimony establishing this, it is found in the fact that, when the reorganization was effected by creating a corporation capitalized for $5,000,000, the bondholders receiving stock in proportion to their bond holdings, an effort was made by this committee to place $700,000 bonds of this corporation-a corporation owning all of the property of the road, free from debt-and the committee with its best efforts was able to secure subscriptions for only about one-quarter of the proposed issue. Having earnestly and unsuccessfully attempted to effect the reorganization in accordance with the plan of November 3d, the committee then endeav ored to sell the property. But all efforts to this end were equally unsuccessful. These efforts continued through the spring and summer of 1911. By September, 1911, the committee had become convinced that no inducements which they could offer would secure |