berland, lying in the same slip, near the exit from the basin. The above libel was filed to recover the damages. Upon all the evidence submitted, I am of the opinion that the tugs can hardly be found chargeable with negligence as respects the manner of towing the ship out of the slip after they had once started. There was a strong wind blowing across the wharf and towards the libelant's canal boats and the exit from the basin. There were also other craft anchored not far distant which restricted free maneuvering. No aid in steering the ship could be had from her own helm, because the after-part of the ship was ablaze and no persons could stay there, and for the same reason no other tugs, had there been any, could have gone aft to work on her quarter. The two defendant tugs were the only ones available to save the ship, and they were not really sufficient to manage the ship with perfect control or so as to prevent her sagging across the slip in the high wind. I consider the damage to the libelant's boats, therefore, to have been an inevitable incident of the salvage service rendered by the two tugs under the circumstances of their attempt. This finding, however, does not relieve the defendant boats from responsibility. The damage was not an unavoidable accident as respects the libelant's boats, since the defendant tugs were under no constraint to undertake the salvage service. The service was voluntarily undertaken for their own profit, and for the benefit of the ship in her great extremity. The service was necessary in order to save her; but it was undertaken without the necessary means of handling the ship with safety to other vessels in the basin, and with the evident risk of inflicting damage on the boats moored near the exit. In the sense of having undertaken the service without sufficient means or equipment to do it safely, the tugs are legally chargeable with negligence as respects the boats damaged, since this damage might have been foreseen to be likely to occur; and it is no defense as respects the boats damaged, that the tugs undertook, without means adequate for safety to others, a most deserving and meritorious salvage work. From another point of view the injury might be regarded as legally equivalent to damage voluntarily and necessarily inflicted on the libelant's boats in the course of an urgent salvage operation, otherwise meritorious. As respects the Buceros, the vessel salved, the tugs are not chargeable with any negligence, for the reason that there were no other tugs at hand to give assistance, and the urgency of immediate action was extreme. I regard the damage, therefore, as under the circumstances a necessary incident of a salvage service, which having been voluntarily undertaken by the salvors, is a charge which they must bear in the first instance, as they would bear any other loss or sacrifice incurred by them in the course of their salvage work, and for which they must look to the salvage award for compensation. Decree for the libelart with costs. ATHERTON MACH. CO. v. ATWOOD-MORRISON CO. (Circuit Court, D. New Jersey. January 19, 1900.) JURISDICTION OF FEDERAL COURTS-FEDERAL QUESTION-SUIT TO DETERMINE OWNERSHIP OF PATENT. A suit in equity to determine the ownership of a patent claimed by both parties under assignments from the patentee is not one arising under the patent laws of the United States, so as to give a federal court jurisdiction where the parties are citizens of the same state.1 In Equity. On demurrer to bill. KIRKPATRICK, District Judge. The parties to this suit, both complainant and defendant, are corporations organized under the laws of the state of New Jersey, and therefore to be regarded as citizens of that state. The bill sets out that in July, 1896, one Jean Schweiter filed an application in the United States patent office for the grant of letters patent, and that prior to the issuance thereof he assigned his invention and application to one Schrader, who in turn assigned the same to the Schrader Improved Quilling-Machine Company. There is no allegation in the bill that the assignment from Schweiter to Schrader was ever filed with the patent office, though it is set out that the assignment from Schrader to the Schrader Improved Quilling-Machine Company was so filed on May 1, 1897, and that in it there was a recital of the previous assignment. Notwithstanding the filing of such assignment, the patent for Schweiter's invention was on January 4, 1898, issued to him. On August 18, 1898, the Schrader Improved Quilling-Machine Company executed an assignment of said patent to the complainant. The bill charges that the defendant is using the machine described in the patent issued to Schweiter, and, having been by it requested to stop such use, has claimed to be the owner of said patent by virtue of an assignment thereof made by said Schweiter to it. The prayer of the bill is "that the pretended assignment from Schweiter to the defendant may be declared to be of no effect, and to be subject to the rights and title of the complainant." To the bill the defendant demurs. It does not thereby deny the validity of the patent, nor defendant's use of the patented machine. It admits that the complainant has a claim of title to the patent acquired as stated in the bill of complaint, and that the defendant holds a claim of title thereto by an assignment from the patentee, as the bill recites. One of the grounds of demurrer is "that the said bill of complaint, in so far as it relates to the assignment from said Schweiter to the defendant, and the defendant's rights thereunder, is not 'a suit at law or in equity arising under the patent or copyright laws of the United 1 For jurisdiction of federal courts in cases involving federal questions, see note to Bailey v. Mosher, 11 C. C. A. 308, and, supplementary thereto, note to Montana Ore-Purchasing Co. v. Boston & M. Consol. Copper & Silver Min. Co., 35 C. C. A. 7. 99 F.-8 States,' and therefore this court has no jurisdiction of the case." In my opinion, this objection must prevail. To determine whether the complainant is entitled to the relief it seeks does not involve the consideration of any law of the United States. The title to the patent rests solely in contract, to the interpretation of which the general principles of equity and common law are applicable, and which are in no way changed because the contract relates to a patent granted by the United States. The question presented here came before the circuit court of the United States for the Northern district of Illinois, where, in a well-considered opinion, Judge Blodgett held the court to be without jurisdiction, because "the controversy was not as to the construction, validity, or infringement of a patent, but was a controversy as to its title or ownership." Reference was made by the learned judge to the cases of Wilson v. Sandford, 10 How. 99, 13 L. Ed. 344; Hartell v. Tilghman, 99 U. S. 547, 25 L. Ed. 357; Albright v. Teas, 106 U. S. 613, 1 Sup. Ct. 550, 27 L. Ed. 295. To the same effect are the cases of Trading Co. v. Glaenzer (C. C.) 30 Fed. 387, and Manufacturing Co. v. Hyatt, 125 U. S. 46, 8 Sup. Ct. 756, 31 L. Ed. 683. The parties to this action being residents of the same state, and the suit not being one arising under the patent laws of the United States, this court is without jurisdiction. Judgment should be for the defendant on the demurrer. Let a decree be prepared dismissing the bill. LAKE ST. EL. R. CO. v. ZIEGLER et al. ZIEGLER et al. v. LAKE ST. EL. R. CO. (Circuit Court of Appeals, Seventh Circuit. January 17, 1900.) Nos. 536, 552. 1. REMOVAL OF CAUSES-DIVERSITY OF CITIZENSHIP-JOINDER OF FORMAL PAR TIES. A corporation brought a suit in equity in a state court against persons alleged to be the holders of certain of its stock and bonds, who were all citizens and residents of other states, to obtain an accounting, and the surrender of such stock and bonds, on the ground that they had been obtained by one of the defendants, who was a director of complainant, in fraud of its rights. The bill also alleged that defendants had made a demand on the trustees in the trust deed securing the bonds in suit, with others, for the foreclosure of such trust deed, and made the trustees, one of whom was a citizen of the same state as complainant, parties defendant for the purpose of obtaining an injunction restraining such foreclosure. Held, that the trustees were not indispensable, but merely formal, parties, having no interest in the controversy, and that their joinder did not deprive a federal court of jurisdiction of the suit, which was removable by the individual defendants. 2. EQUITY-HEARING-RIGHT OF PARTIES TO DECISION ON THE MERITS. Where both parties to a controversy are before the court, and a full hearing has been had upon their respective claims, the suit should be determined on the merits, and it is error to dismiss it without prejudice against the wishes of both parties. 3. RAILROAD CORPORATIONS-STATE REGULATION-ISSUANCE OF STOCK. The provision of Const. Ill. art. 11, § 13, that no railroad corporation shall issue any stock or bonds except for money, labor, or property ac tually received and applied to the purposes for which such corporation was organized, and that all stock dividends and other fictitious increase of the capital stock of any such corporation shall be void, does not render invalid stock issued by a railroad company, directly or indirectly, in payment for the construction of its road; nor can a court hold it invalid on a determination that the consideration so received was not equal to the par value of the stock. 4. SAME. The issuance of stock by a railroad corporation in violation of such provision is ultra vires, and the stock void in the hands of all holders, and the corporation cannot maintain a suit against the person to whom it was issued to require an accounting for its proceeds. 5. SAME RIGHTS OF MINORITY BONDHOLDERS. A court of equity will not, at the suit of a corporation, compel its minority bondholders to assent to a reorganization scheme by which they are required to scale their bonds, accepting in lieu thereof new bonds for a smaller amount, without additional security; the benefits of the scheme, if any, inuring solely to the stockholders. Appeal and Cross Appeal from the Circuit Court of the United States for the Northern Division of the Northern District of Illinois. On December 31, 1895, the Lake Street Elevated Railroad Company, a corporation of the state of Illinois, the appellant in the first and the appellee in the second of these causes, filed its bill, and on the 16th day of January, 1896, filed its amended bill, in the circuit court of Cook county, Ill., against the appellants, William Ziegler and 12 other individual defendants, each being a citizen of a state other than the state of Illinois, the Farmers' Loan & Trust Company, a corporation of the state of New York, and the American Trust & Savings Bank, a corporation of the state of Illinois, the two last-named corporations being trustees in the trust deed executed by the appellant. This bill sought to charge William Ziegler, one of the defendants, and who was a director of the Lake Street Elevated Railroad Company, with certain bonds and stock received by him from the contractors who constructed the road, upon the ground that he, being a director, was interested in the contract which the company, with his participation, had made with the contractors, and which was improvident; and that he was interested with the contractors in the profits to be made. These charges having been, at the hearing, abandoned by the complainant below, it is not necessary to state them in detail. The other individual defendants were charged to have received bonds from Ziegler with notice of the facts charged in the bill, or to hold them in secret trust for him. The amended bill charged that Ziegler and the other individual defendants had demanded of the trustees that, by reasor of default in payment of interest upon the bonds held by them, respectively, they should take possession under the trust deed, or proceed to foreclose it, which the complainant feared would be done by the trustees upon such demand by reason of their ignorance of the facts stated in the bill. The prayer of the bill was that an accounting might be had between the complainant and the individual defendants, and that, upon payment by the complainant of the amount paid by Ziegler to the contractors for the bonds and stock now held by him and the other individual defendants, such bonds, stock, and other property, if any, should be surrendered to the complainant, it offering to pay the amounts paid by Ziegler therefor. The bill also prayed for an injunction pendente lite restraining disposition of the bonds and stock held by the individual defendants, and from commencing suit at law or in equity upon the bonds or coupons pertaining thereto, and from collecting the interest due thereon; and that the trustees might be enjoined from taking possession of the road and from foreclosure of the trust deed at the request of the individual defendants. At the commencement of the suit a temporary injunction was allowed as prayed, but process was not served upon the defendant. On the 22d day of January, 1896, the individual defendants filed their petition for the removal of the suit into the circuit court of the United States for the Northern district of Illinois upon the ground that the suit was a controversy wholly between citizens of different states, to wit, a controversy between the complainant, an Illinois corporation, on the one hand, and Ziegler and the other individual defendants, citizens of states other than the state of Illinois, on the other hand, and which could be fully determined as between them. An order was thereupon entered by the state court, removing the cause into the federal court. The individual defendants, other than Ziegler, answered, setting forth their respective holdings and bonds, and asserted themselves to be bona fide holders, for value, and without notice of the facts set forth in the amended bill. The defendant Ziegler also answered fully, denying the equity of the bill, and asserting his holdings and the sources thereof. The facts, so far as they are necessary to be stated to present the questions submitted to the court, are these: The Lake Street Elevated Railroad Company was incorporated in the month of August, 1892, with a capital stock of $5,000,000, for the purpose of constructing and operating an elevated railway some seven miles in length, and within the city of Chicago. Prior to December, 1892, the company had issued $3,500,000 of its stock. It had constructed one mile of its railway. It had issued $812,000 of bonds, the proceeds of which presumably had been used in the construction of the one mile of road. The company was in straitened circumstances, and unable to proceed further with the construction of the railway. The enterprise was moribund. Under these circumstances the directors applied themselves to the task of devising plans for the completion of the road. On December 23, 1892, William Ziegler, a resident of New York, was elected a director of the road, and took his seat as director at a meeting of the board on the 2d day of February, 1893. On September 1, 1892, one Miller, a law clerk, financially irresponsible, subscribed for $1,500,000 of unissued stock. On February 3, 1893. this subscription was approved by the directors, who agreed to receive in payment thereof the notes of Miller, dated September 23, 1892, payable at six months and one year from their date, upon the condition that those who should become contractors for the construction of the road would agree to take these notes of Miller in part payment of the work to be done. This condition was afterwards carried into effect, the notes were delivered to the company and received in payment by the contractors, and the stock was issued to Miller; and presumably this stock passed to the contractors from Miller, the transaction being a device for the issue of stock, and being resorted to, probably, because the subscription of Miller antedated by some months the letting of the contract. Negotiations were entered upon in the fall of 1892 with Underwood and Green for the construction and equipment of the road. At a meeting of the directors of the company held on February 3, 1893, the committee of the board having the matter in charge reported, and proposals were submitted to and considered by the board. On the 4th day of February, 1893, a contract was agreed upon with Underwood and Green as follows: They were to build and equip the road, and were to receive in payment thereof $11,710,000, of which $6,500,000 was to be in the capital stock of the company at par, $5,150,000 in the first mortgage bonds of the company at par, and $60,000 in cash,-an amount received by the company from one Wheeler upon subscription to stock, which was to be considered as a part of the fund provided to be paid for the expenses of the company during the time of construction, but the directors might use any part of it to pay bills for the construction of the road. It was further arranged that an underwriting agreement should be made to aid the contractors in their work. By this agreement bonds and stock were to be deposited in trust and monthly estimates should be had as the work progressed, and a proportionate amount of bonds and stock delivered to the contractors upon such estimate. Underwood and Green were to procure subscribers to this underwriting agreement, by which the subscribers were to take from the contractors the bonds of the company at 90 per cent. of their par value, and also such amount of stock, as, taken at par, would equal the number of bonds so purchased. To enable the company to carry out the contract, the shareholders agreed to an increase of the capital stock so that the capital stock of the company should amount to $10,000,000. Ziegler, prior to his connection with the company, had loaned to Underwood and Green the sum of $30,000 upon their note. After the maturity of the note, and after the contractors had received from the company bonds in payment of the work done in the construction of |