REED, V. C.

Action by Edwin A. McAlpin and others against the Universal Tobacco Company and others on motion to dismiss. Motion denied.

Robert H. McCarter, Atty. Gen., and Wheeler H. Peckham, for the motion.

E. A. S. Lewis and James B. Vredenberg, opposed.

REED, V. C. On July 13, 1903, a bill was filed by Edwin A. McAlpin, Joseph Tiernan, Jackson W. Rhoades, Edward C. Babcock, Charles M. Allaire, and William D. Judkins, stockholders of the Universal Tobacco Company, against the Universal Tobacco Company, William H. Butler, Edwin V. D. Paul, Daniel J. Campbell, Henry B. Wesselman, Richard W. Menzies, Alfred C. Farrell, Richard F. Tully, George P. Butler, and the Union Trust Company. The bill was filed by the named complainants, notonly for themselves, but for all other stockholders of the Universal Tobacco Company who should come in and contribute to the expenses of the suit The prayer of the bill is that a certain voting trust set out in the bill may be declared void; that the issue and negotiation of certain bonds may be restrained, and the mortgage securing them be canceled, and the bonds already issued may be surrendered; and that a receiver might be appointed pendente lite for the Universal Tobacco Company. On July 13, 1903, a rule upon the defendants to show cause on August 3d why receiver should not be appointed was signed by the chancellor. The taking of affidavits, and the argument upon the rule to show cause, were not completed until August 17th, and on September 10th an order was made permitting the complainants to inspect the books of the Universal Tobacco Company. From that order an appeal was taken. During the pendency of this appeal the cause was referred for final hearing, and, for several days in December, testimony was taken before a vice chancellor. In the meanwhile, several stockholders of the Universal Tobacco Company other than the original complainants had been admitted as parties complainant Camille Weidenfelt, Thomas W. Lawson, and William J. Brown had filed their petition setting out their respective holdings of stock, and praying that they might be admitted as parties complainant, and on August 11th they were, by order of this court, so admitted. On February 9th the counsel for the defendants moved in the present matter. The motion was opposed by the counsel of Weidenfelt, Lawson, and Brown on the ground that no settlement of the matters in controversy had been made with them. They also asked that an order might be made giving them the control of the suit.

It is quite certain that the defendants are not entitled to a decree dismissing the bill. While the consent of all but one of the original complainants to such a course is apparent and it also appears that the consent of that one is inferable from the agreement of settlement set out in the affidavit, it also appears that the consent of the applying creditors is wanting. It is undoubtedly true that a complainant or a number of complainants can dismiss, or consent to the dismissal of, his or their bill at any time before decree. And this power resides in the complainants although they sue as some of a class, and expressly state that the suit is not only for the benefit of themselves, but also for the benefit of such others of the class as may choose to come in and share the expenses of the suit But this exclusive power of control over the litigation ceases when a decree is signed, and in this state it also ends when one of the class—not an original complainant —is, by order of the court, admitted as a party complainant After such a Judicial recognition, this new party must be reckoned with in any final disposition of the cause. This was ruled by Chancellor Runyon in the case of Mutual Life Insurance Company v. Goddard, 33 N. J. Eq. 482, and is the law of this court The motion to dismiss the bill, therefore, must be refused.

In respect to the three parties who petition to have the control of the suit turned over to them, they seem, upon the authority of the case just mentioned, to be entitled to such an order. The original complainants having abandoned all intention of further prosecuting it, the right to pursue the suit passes to some or all of the parties admitted as complainants pendente lite. As the three parties mentioned alone make the application, they only are at present entitled to the order. The order will be made upon terms that the applicants indemnify the original complainants against any further expense which may be incurred in the progress of the suit, and pay their pro rata portion of the expense of the suit so far as it has progressed.

The question, however, of most importance to the defendants arises from the fact that there exists an order, made at the time when the original rule to show cause was signed, which restrains the defendants from negotiating any bonds purporting to be secured by a certain mortgage, or from doing anything touching the issuing, negotiating, or delivery of the said bonds. The petition of Mr. Hess, or his affidavit which stands for a petition, prays that this restraining order may be vacated. The affidavits in support of this motion state that on January 25, 1904, an agreement was entered into between Mr. McAlpin and other stockholders on the one part, and William H. and George Butler of the other part, respecting the settlement of the differences between the Messrs. Butler and the complaining stockholders. By its terms, the agreement was not to be delivered unless at a meeting of stockholders of the Universal Tobacco Company called to be held on January 25, 1904, or at any adjourned meeting not later than January 30th, the holders of two-thirds or more of the stock present at such meeting should vote in favor of a resolution ratifying the execution of a certain mortgage or deed of trust bearing date July 1, 1903, and should vote also in favor of a resolution ratifying the action of the directors in delivering to the Butlers, as collateral, bonds of the par value of $35,900. The agreement also provided that, upon the vacation of the injunction restraining the negotiation and delivery of said mortgage, the same should be delivered to the Commonwealth Tobacco Company. The affidavit then states that a special meeting of the stockholders of the Universal Tobacco Company was held January 25, 1904, upon 10 days' notice to all holders of the preferred stock and of the common stock certificates and to the members of the voting trust; thatat that meeting a resolution was adopted ratifying the execution of a mortgage of July 1, 1903, and the acts of the directors in Issuing bonds secured by it; that a resolution was also adopted ratifying the acts of the directors in pledging certain of said bonds to the Butlers as collateral, and in delivering certain other bonds to creditors in payment of corporate debts. It states that there were no votes cast against the delivery of the bonds, and that only 1,370 of the preferred stock and 1, 180 of common stock were cast against ratifying the mortgage and bond, while, on the other hand, 11,091 of preferred stock, and 43,322 of common stock, voting trust certificate holders, were in favor of the resolution. The purport of the affidavit, it is perceived, is to exhibit a change of conditions occurring since the filing of the answer and the joining of issue in the suit; such a change as to destroy, as it is alleged, the ground upon which the stay restraining the delivery of the bonds was granted. I am constrained to the conclusion that the matters exhibited in the affidavit, as they are now presented, cannot be the foundation for any judicial action.

The rule of equity pleading respecting a defense arising after answer filed and issue joined is that it must be presented by a cross-bill, which served in equity the same purpose as a plea puis darrein continuance. Story, Eq. P1. § 393; Midford, Eq. P1. 82; Fletcher, Eq. P1. & Pr. § 889. In Miller v. Fenton, 11 Paige, 18, there was an application to dismiss a bill on affidavit setting out that, since the case was at issue, the defendant had been discharged by the terms of an agreement made by the complainant. Chancellor Walworth remarked: "The counsel * * * was wrong in supposing that relief could be obtained in tills way, even if there had been a technical release which was a bar to the suit. * * * A cross-bill in the nature of a plea puis darrein continuance is the proper mode of setting up such a defense, which arises after the defendant has put in and perfected his answer."

Under our practice the new matter may be set up in a supplemental answer in the nature of a cross-bill. Leave will be granted to file such an answer upon the affidavits submitted. Upon filing this answer, I will adopt the following coarse: The conditions being exceptional, the final hearing being arrested, new parties and new counsel intervening, I will, if desired by the defendants, advise an order that the complainants show cause why the injunction heretofore granted should not be dissolved; the rule to be heard upon testimony taken before a master by either party, upon notice before the return day of the rule; such testimony to be confined to the existence and validity of the agreement set up in the affidavits, and the existence and validity of the acts set up in the affidavits, respecting the ratification of the mortgage and bond already mentioned.