payment of costs; but certainly it cannot be said that the rule is without exception. The exception, stated in general terms, is that it is within the discretion of the court to refuse him permission to do so if the dismissal would work a prejudice to the other parties; and I gather from the cases, compared with each other, that it is not regarded as such prejudice to a defendant that the complainant, dismissing his own bill, may at his pleasure harass him by filing another bill for the same matter. But whenever, in the progress of a cause, a defendant entitles himself to a decree, either against the complainant or against a codefendant, and the dismissal would put him to the expense and trouble of bringing a new suit and making his proofs, anew, such dismissal will not be permitted"-citing Bank v. Rose (S. C.) 1 Rich. Eq. 294.

And it is said that if a case does not come within the exception the court is without discretion to deny the motion to dismiss the bill.

The purpose of a cross-bill is either (1) to obtain a discovery in aid of a defense to the original bill, or (2) to obtain full relief to all the parties touching the matters of the original bill. Story's Eq. Pl. par. 389. And it must be made to appear that a settlement of the controversy presented by the cross-bill is fairly necessary in order to enable the court to fully dispose of the matter of the original bill. It is auxiliary to the original suit, and a dependency upon it, and should not introduce any new or distinct matter not embraced in the original bill. Neither may it introduce new controversies between the codefendants to the original bill, the decision of which is in no way necessary to a complete determination of the controversy between the complainant and the defendants over the subject-matter of the original bill. If it does, it is not a cross-bill, but an original bill, and should be dismissed. Cross v. De Valle, 1 Wall. 5, 17 L. Ed. 515; Rubber Co. v. Goodyear, 9 Wall. 807, 19 L. Ed. 587; Stuart v. Hayden, 72 Fed. 402, 18 C. C. A. 618.

Tested by these rules, what is the nature of the pleading filed by the defendant Bort as a cross-bill? In so far as it denies knowledge of the fraud alleged in the original bill in procuring the bond which the complainants seek to have canceled, and avers (by implication at least) the validity of that bond, it is purely defensive to the matters charged in the original bill, and every fact alleged may be shown in defense of that bill. In so far as it asks for judgment against the complainants upon their bond for the amount deposited with McCutcheon & Co., it is purely a legal demand, and entirely within the competence of a court of law. Story's Eq. Pl. (8th Ed.) par. 398. In so far as it seeks to obtain relief from his own bond to the Modern Woodmen of America, in the event that complainants should escape liability upon their bond (conceding, without deciding, that this is of equitable cognizance), it introduces new matter in no way germane to the matters alleged in the original bill, and wholly unnecessary to enable the court to fully determine the controversy between the complainants and the defendants to the original bill; and the complainants are not necessary, or even proper, parties to such controversy between the cross-complainant and the Modern Woodmen of America, have no interest therein, and it is not properly a cross-bill, but an original bill.

As before stated, no evidence has been taken and no proceedings had which would in any manner affect or prejudice the rights of either the defendants or the cross-complainant, if the original bill should be

dismissed, save that they might be subject to future litigation in regard to the same matter. Whenever the complainant has been denied leave to dismiss his bill, it appears that the suit has progressed so far that the defendant, upon answer or cross-bill, is either entitled to a decree, or the injury or prejudice to him because of the dismissal is of a character that deprives him of some substantial rights concerning the matter of the original bill which would not be available to him in a second suit; and it is uniformly held that mere liability to or the inconvenience of future litigation against him regarding the subjectmatter of the suit is not of that character. Pullman Palace Car Co. v. Central Transportation Co., 171 U. S. 138, 18 Sup. Ct. 808, 43 L. Ed. 108; Stevens v. Railroad (C. C.) 4 Fed. 97. Electrical Co. v. Brush Co. (C. C.) 44 Fed. 602; Detroit v. Detroit City Ry. Co. (C. C.) 55 Fed. 579.

The general rule is that the dismissal of the original bill before the final hearing carries with it the cross-bill, in so far as that bill alleges matters that are defensive to the original bill. Railway Co. v. Rolling Mill Co., 109 U. S. 702, 3 Sup. Ct. 594, 27 L. Ed. 1081; Lowenstein v. Gildewell, 5 Dill. 325, Fed. Cas. No. 8,575; 1 Bates Fed. Eq. par. 386; 2 Daniell, Ch. Pr. (5th Ed.) p. 1553, note 3. As the possible future controversy between the cross-complainant and the Modern Woodmen of America cannot properly be introduced into this suit by a cross-bill, that should be dismissed for this reason alone. Cross v. De Valle, 1 Wall. 5, 17 L. Ed. 515; Rubber Co. v. Goodyear, 9 Wall. 807, 19 L. Ed. 587; Dows v. City of Chicago, 11 Wall. 108, 112, 20 L. Ed. 65; Stuart v. Hayden, 72 Fed. 402, 18 C. C. A. 618.

In Dows v. City of Chicago, above, it is said, at page 112, 11 Wall., 20 L. Ed. 65:

"The cross-bill filed by the bank presents different features. That institution insists that if it paid the tax levied upon the shares of all its numerous stockholders out of the dividends upon their shares in its hands, which it is required to do by the law of the state, or if the shares were sold, it would be subjected to a multiplicity of suits by the shareholders; and were it an original bill the jurisdiction of the court might be sustained on that ground, but as a cross-bill it must follow the fate of the original bill."

It seems plain that the injury or prejudice to a defendant or crosscomplainant that will deny to the complainant his right to a dismissal of the bill cannot be predicated of the present suit. In fact, the alleged cause of action in favor of the cross-complainant, Bort, against the Modern Woodmen of America, will not accrue until complainants have been adjudged not liable upon their bond, because of the alleged fraudulent or wrongful conduct of the Modern Woodmen of America in procuring the same. Should the bill be dismissed, complainants stand prima facie liable upon their bond. If the Modern Woodmen of America should attempt to enforce it by legal proceedings, and are defeated because of its wrongful act in procuring it, then, and only then, would the alleged cause of action of the cross-complainant against the Modern Woodmen of America have accrued; and he could then defend an action or suit, if one were brought against him by the Modern Woodmen of America, upon his own bond to it, or bring an action at law or suit in equity against that association, according as his rights against it might be of legal or equitable cognizance; and in no way can the dis

missal of this suit prejudice him in the defense of such an action or in the prosecution of such a suit. The case does not, therefore, seem to be within any of the exceptions to the general rule that will warrant the court in denying to complainants the right to dismiss their bill.

The motion of complainants for leave to dismiss their bill is therefore granted, and the bill and cross-bill will both be dismissed, without prejudice, upon payment of costs by complainants.

It is so ordered.

AMERICAN ALKALI CO. v. KURTZ.

(Circuit Court. E. D. Pennsylvania. January 20, 1905.)

No. 49.

1. CORPORATIONS-STOCKHOLDERS-LIABILITY.

The real owner of corporate stock standing by his procurement in the name of a dummy, and never having been in his own name on the books of the company, is liable to be charged as a shareholder with either the statutory liability for debts or for unpaid assessments on the stock.

[Ed. Note.-Stockholders' liability to creditors in equity, see notes to Rickerson Roller-Mill Co. v. Farrell Foundry & Machine Co., 23 C. C. A. 315; Scott v. Latimer, 33 C. C. A. 23.]

2. SAME AGENTS-UNDISCLOSED PRINCIPAL-LIABILITY.

The rule that an agent of an undisclosed principal is equally liable with the principal has no application where there is no contract relation induced and entered into between the plaintiff and the agent.

3. SAME BROKERS LIABILITY-EVIDence.

A stock subscription contract provided that after payment of 20 per cent. of the par value of the stock the subscribers should no longer be liable for any balance on their subscriptions, except on such shares as stand of record on the books of the company in their names at the time any subsequent assessments were made, but that the holders of such shares of record at that time should only be liable therefor. The corporation's charter also provided that after payment of $10 per share on the preferred stock, the subscribers should not be liable for any balance of their subscription, except on the shares standing of record on the company's books in their names, etc., at the time subsequent assessments were made. Held, that where, after the issuance of certain shares of preferred stock on which the initial payment of 10 per cent. had been made, the shares were transferred by defendant, a broker, who purchased the stock for others, to one M., who was the corporation's transfer clerk, as a mere dummy, and defendant was not requested to inform the corporation as to the identity of the real owners of the stock, he was not liable for subsequent assessments levied thereon.

Judgment on a Case Stated.

Burr, Brown & Lloyd, for plaintiff.
Rudolph M. Schick, for defendant.

HOLLAND, District Judge. This is a suit by Arthur K. Brown, surviving receiver of the American Alkali Company, against the defendant, for an assessment of $2.50 a share on 3,700 shares of preferred stock of the American Alkali Company standing in the name of H. C. Magee on the books of the company now and at the time the assessment was made. The facts in the case are agreed upon in a case stated, which are as follows:

The American Alkali Company is a corporation organized under the laws of the state of New Jersey April 20, 1899, with a capital stock of $30,000,000, of which $6,000,000 is preferred, of a par value of $50 per share. This preferred stock was all subscribed for and issued to subscribers who paid the first 20 per cent. installment, which was then issued and sold to the public subject to assessments of 10 per cent. each for the balance due upon 30 days' notice. On September 12, 1901, a call of $10 per share on the holders of the preferred stock of the plaintiff company of record on September 16, 1901, was made according to law, the first installment of $2.50 per share of which was made payable November 11, 1901. Subsequently, on September 9, 1902, Henry I. Budd, Jr., and Arthur K. Brown were appointed receivers of said company, and duly qualified. The receivers, on November 14, 1902, were authorized by the District. Court of New Jersey to proceed against the preferred stockholders to collect the first installment, in consequence of which this suit was brought by the surviving receiver against the defendant.

One of the terms of the subscription agreement was as follows: "Upon payment of the first installment of 20% the full paid certificates of common stock and partially paid certificates of preferred stock, setting forth that 20% has been paid thereon, shall be delivered to the subscribers hereto and as subsequent installments are paid they shall be endorsed on the latter.

"Provided, however, that after the payment of the 20% provided for above amounting to a total of $10 per share, the subscribers hereto shall no longer be liable for any balance on their subscription excepting upon such shares as shall stand of record on the books of the Company in their names, at the time any subsequent assessments or calls are made, but the holders of such shares of record on the books of the Company at that time, and they only shall be liable for the same."

The charter or certificate of incorporation contained the following clause:

"After payment of $10 per share on the preferred stock, the subscribers thereto shall not be liable for any balance of their subscription excepting upon such shares as shall stand of record on the books of the Company in their names at the time when any subsequent assessments or calls are made, but the holders of such shares of record on the books of the Company at that time and they only shall be liable for the same."

The defendant is a banker and broker, doing business in the city of Philadelphia, and on November 17, 1900, was in possession of 37 certificates, representing 100 shares each, of the preferred stock of the plaintiff corporation, registered on the books of the company in the names of various persons other than the defendant, each certificate accompanied with a power of attorney to transfer the same, duly executed by these various persons in whose names they were registered, but in blank as to the name of the attorney who was to execute the transfer. The stock, or any part of it, represented by these certificates, was not the property of the defendant, but all belonged to various other persons, and the defendant was in possession of the certificates as agent for various persons who were the owners thereof. On this date the defendant, acting therein as an agent for and on behalf of the various persons who owned the stock, delivered to the officers of the defendant company the certificates

for 3,700 shares, together with the power of attorney to transfer the same, and requested that they be transferred, and new certificates. therefor be issued to H. C. Magee, which was accordingly done, and the said shares stood of record on the books of the company in his name, and so continued from the 17th day of November, 1900, to the 16th day of September, 1901. At the time the shares were transferred by the defendant he did not inform the American Alkali Company of the names of the various persons to whom the stock belonged, or for whom the defendant acted on requesting the transfer thereof to H. C. Magee, and he (the said defendant) was not asked to so inform the company. Magee, in becoming the holder of record of the said shares of stock, acted at the request of the defendant, and had no ownership, interest, or property in the shares, and at this time was the clerk of the said American Alkali Company for the transfer of stock. Demand was made to pay this assessment, and payment was refused by defendant.

Upon these facts, if the court be of the opinion that the defendant is liable to pay the said assessment, then judgment be entered for the plaintiff for the sum of $9,250, with interest from December 11, 1901; but, if not, then judgment be entered for defendant. The costs to follow the judgment, and either party reserves the right to sue out a writ of error or appeal therein.

Upon this statement of facts the question is whether or not the agent of an undisclosed principal, who places stock certificates in the name of a dummy, is liable for assessments thereon. Magee was selected as the record owner by the defendant for an undisclosed principal. The defendant has never been requested by the plaintiffs to disclose the real owner, and it does not appear that he has ever refused. There is no doubt about the fact that in law both Magee and the real owner are liable for the assessments sought to be recovered against the defendant in this suit. The cases are uniform in holding that the real owner of stock, standing by his procurement in the name of a dummy, and never having been in his own name on the books of the company, is liable to be charged as a shareholder with either the statutory liability for debts or for unpaid assessments upon the capital stock. Pauley v. State Loan & Trust Co., 165 U. S. 606, 17 Sup. Ct. 465, 41 L. Ed. 844; Dunn v. Howe, 107 Fed. 849, 47 C. C. A. 13; Houghton v. Hubbell, 91 Fed. 453, 33 C. C. A. 574; Davis v. Stevens, 7 Fed. Cas. 177; Case v. Small (C. C.) 10 Fed. 722. There are decisions too numerous to mention in the state courts to the same effect, but my attention has not been directed to a case, and I have not been able to find a case, which decides that, where stock is placed in the name of either an agent, trustee, or dummy, by an agent of an undisclosed principal who is the real owner, there is any liability for unpaid assessments on the stock on the part of the agent of the undisclosed owner in so registering the stock.

It is contended by the plaintiffs that the defendant is estopped from denying liability because he acted as agent in procuring the issuance of the stock in the name of Magee, upon the principle that the agent of an undisclosed principal is equally liable with the prin