company, and were in complete control of its organization, a large majority of the directors being interested with Bigelow in the transactions and receiving some share in the profits, and the remaining directors taking no active part in the management and being ignorant of the facts; and allege that no disclosure was at any time made of the promoters' profit. The bills allege further that the organization of the new company was determined upon as early as March, 1895, when the promoters began to acquire the stock of the Baltimore Company, it being a part of their plan that they should sell the property of that company to the new company at a large advance in price, to the injury of future stockholders therein, and that they should thereby secure for themselves as promoters and organizers a large secret profit, and that all the subsequent transactions were in pursuance of this plan; that the two promoters took for themselves the entire 30,000 shares issued for the outside properties, and that, of the 100,000 shares issued for the property standing in the name of the Baltimore Company, they divided among the members of the syndicate only 80,000 shares, par $2,000,000, and took for themselves the remaining 20,000 shares, par $500,000, ostensibly in payment for their expenses and services; that no disclosure was made to the members of the syndicate, other than themselves, of the profit acquired by Bigelow and Lewisohn; and that the company had no knowledge of any of the promoters' profits until the year 1902, shortly before the actions were brought.

Mr. Justice Sheldon's findings are substantially in accord with these contentions. He finds that Bigelow and Lewisohn were promoters of the new company and in full control of it during all the transactions in question, and dictated whatever was done by the company or in its behalf; that this control continued until April, 1902; that the company had no directors, representatives, or advisers other than the two promoters and their agents, and that they did not disclose to the company any of the pertinent facts; that they did not disclose to it that they had paid only $1,000,000 for the stock representing all the mining property of the Baltimore Company, or that they procured the "outside properties" without any other consideration. Nor did they see that the new company had any independent advice before accepting the offers made to it, which were really made by themselves. On the contrary, they organized and promoted the new company for the purpose of having it accept, and they exercised their control over it to cause it to accept, said offers, and really through their own action and that of their employés themselves accepted said offers in the name of the company.

Justice Sheldon also finds that Bigelow did not act towards the members of his syndi

was formed it was the plan and avowed intention of the two promoters to form a new corporation with a capital stock of $2,500,000, which should take the property of the Baltimore Company and the "outside properties" for $2,000,000, and raise $500,000 of working capital with the rest of its stock; this would give to Bigelow stock for the money raised and applied by him at the rate of just $2 for $1, and he expected and stated to the various members of the syndicate that he expected to give to each subscriber thereto cash to the full amount of his subscription and stock at par to the same amount the cash to be raised by selling the surplus stock, which would produce just that amount; the promoters proceeded, however, to organize the new company under the laws of New Jersey with a capital stock of $3,750,000, being 150,000 shares of the par value of $25 each; that the result of his and Lewisohn's transactions with the new company was that for the $1,000,000 of their own and their associates' money which they invested, they received, subject to the payment of legitimate expenses not exceeding $20,000, stock to the par value of $3,250,000; that Bigelow gave to the members of his syndicate only $2 for $1, either wholly in stock, or half in cash and half in stock, as they elected, and that with a few individual exceptions he did not disclose the facts to them; that the great majority of the members of his syndicate did not become aware of the details of what was done by Bigelow and Lewisohn, but accepted the allotment of $2 for $1 in cash or in stock for the several investments that they had made, and contented themselves, in their ignorance, with the fact that they had doubled their money; that the residue of the gain received by Bigelow he dealt with as he chose. He distinctly finds that it was not the fact, as alleged by Bigelow in his answers, that it was the understanding among the associates in the syndicate that Bigelow and Lewisohn should deal with the shares as to them should seem best, and that the associates should receive so much only of the profit realized in the enterprise as Bigelow should deem it fair and proper to distribute among them, and that the remaining profit should be retained by Bigelow to his own

use.

The learned justice further distinctly negatives the contention of Mr. Bigelow that it was the intention that he and Lewisohn should supply the new company with $500,000 for working capital, that this was actually done, that Bigelow and Lewisohn themselves took the 20,000 shares which were to be used for raising the working capital, and that the parties who afterwards subscribed for and received these shares really took them from Bigelow and Lewisohn, and not from the new company; and that at the time of the transactions in question Bigelow and Lewisohn became and were the real

the new company. The justice says: "There was some evidence in support of this contention, but I find that the real facts are as already stated."

The bill herein avers that the transactions concerning the purchase of the property in question by the company and the issuance of stock therefor were ratified by the stockholders at three different meetings held in the years 1899 and 1901, when neither Bigelow nor Lewisohn controlled the company or the action of its stockholders.

The company, in the Massachusetts actlons, denied all knowledge on the part of the company until after April 4, 1902, until which time Bigelow and Lewisohn were in complete control. Justice Sheldon so finds, and further finds specifically the facts and circumstances respecting the so-called ratification by the stockholders' meetings, from which the inference is that the supposed ratifications were of no effect as against the company.

The bill then sets up that on October 7, 1902, the present defendant commenced two separate actions in equity against Mr. Bigelow in the Supreme Judicial Court of Suffolk county, in Massachusetts, one relating to the transaction in which 30,000 shares of stock were acquired by Bigelow and Lewisohn in exchange for the "outside properties," as to which rescission and return of the stock were prayed, and in the alternative that the damages sustained by the company should be ascertained and Bigelow required to pay them, and for other and general relief; and the other suit relating to the transaction in which 100,000 shares were issued in exchange for the properties standing in the name of the Baltimore Company, as to which the prayer was that Bigelow should be required to account for so many of these shares as were received by Bigelow and Lewisohn, or by any other person, as profit in connection with the promotion and organization of the company, or that the damages suffered by the company should be ascertained and Bigelow required to pay them, and for other and general relief.

The bill avers that Bigelow filed a demurrer in the 30,000-share suit, and answered in the 100,000-share suit. That the demur

rer

was overruled (Old Dominion Copper Min. & Smelting Co. v. Bigelow, 188 Mass. 315, 74 N. E. 653, 108 Am. St. Rep. 479), and Bigelow then answered in this suit. That the causes proceeded to trial, being heard together before Justice Sheldon of the Supreme Judicial Court; that he decided them in favor of the company and against Bigelow, rendering judgment in the 100,000-share suit for about $800,000, principal and interest, and in the 30,000-share suit for about $1,200,000. That decrees were accordingly entered, from which appeals were taken by both parties.

As already mentioned, copies of the bills and answers in the Massachusetts suits, and

thereof, including the findings, are annexed 'to the present bill as part thereof, and are referred to in the bill as thus annexed.

The bill sets up that, after the commencement of the Massachusetts suits against Bigelow, the defendant company began two suits in equity in the Circuit Court of the United States for the Southern district of New York against the executors of Leonard Lewisohn, who was then deceased. That the bills in these two suits were identical with those filed in Massachusetts, and were founded upon the same state of facts. That the executors demurred in one case, and answered in the other. That the demurrer to the bill in the 30,000-share suit was sustained by Judge Lacombe (Old Dominion Copper Min. & Smelting Co. v. Lewisohn [C. C.] 136 Fed. 915), and a final decree was entered dismissing the bill. From this decree the company appealed to the United States Circuit Court of Appeals, and that court affirmed the decree of the court below in sustaining the demurrer (148 Fed. 1020, 79 C. O. A. 534). That thereupon the company applied to the Supreme Court of the United States for a writ of certiorari to review this decision, and that such writ was allowed. So far as appears, the other Lewisohn suit is pending undetermined.

The bill contains certain further averments intended to show grounds for the intervention of this court in the Massachusetts litigation. Mention of these may be reserved until they are reached in their order for discussion.

To complete the recital, it should be shown at this point upon what basis Justice Sheldon made up the amounts for which he ordered decrees to be entered against Bigelow. He found that the stock which the promoters took as their profit "was then of fully its par value, due mainly to the skillful conduct and manipulation of Bigelow and Lewisohn, and continued to be so for some time, and until Bigelow had sold out substantially all the stock that he took for his own use." Having ascertained that out of the 100,000 shares (par $2,500,000) that were issued in payment for the property standing in the name of the Baltimore Company, the promoters took for themselves 20,000 shares (par $500,000), without disclosure either to the company or even to the syndicate associates, and that the market value of these shares was equivalent to par in the market created by the manipulations of the promoters, and having found also that in truth the property of the Baltimore Company was worth not more than $2,000,000 (or 80,000 shares at par), which happens to be the exact price at which the associates in the syndicate understood that it was to be valued, Mr. Justice Sheldon charges the promoters, in one of the actions, with $500,000 secret profit, less $20,000 allowed for legitimate expenses of promotion, and for the difference,

moters received the stock, a decree was entered.

In the other action, wherein the company prayed primarily for rescission of the transaction that resulted in the issuance of 30,000 shares to Bigelow and Lewisohn for the "outside properties," Justice Sheldon held, in favor of Bigelow, that the situation of the parties had so far changed that rescission should not be granted, because, while the properties themselves were in the same condition as when conveyed to the company, Bigelow had disposed of his stock before the suit was brought, had not the 30,000 shares to surrender, and apparently could not procure them in the open market, and because, also, the company had, since the transaction in question, increased its capital stock and bought new and additional mines, whose value and profitableness was not shown. He therefore charged the promoters with $750,000 the market value of the 30,000 shares at the time they received them and for some time thereafter, against which was credited $50,000, the utmost value of the "outside properties," leaving $700,000 and interest as the amount of this decree.

Upon the findings Bigelow would have been liable for only about 28/42 of the award, had he been charged with only his share of the profit according to the division made between him and Lewisohn. But Justice Sheldon found that in the formation and execution of the scheme the two promoters were acting together and in concert, each doing his part to carry out a joint scheme for the advantage of both; that the control exercised by them over the company was a joint control, exercised by each for the benefit of both; that a proper disclosure of the real facts by either would have frustrated the schemes of both; and that the equitable tort complained of was the act of both, for which they must be held responsible both jointly and severally. He therefore held Bigelow liable in solido.

Appeals have been taken by both parties to the full bench of the Supreme Judicial Court of Massachusetts, the court of last resort in the commonwealth, which appeals, according to the averments of the bill, have the effect of not merely suspending but of vacating the decrees; but the findings of Justice Sheldon upon the facts will not be overruled by the full bench unless they are without support in the evidence or are clearly contrary to the weight of the evidence. The full bench has original as well as appellate jurisdiction, and may order a new trial or further proceedings at the bar of the court. The evidence that was before Justice Sheldon is not made a part of the present bill.

Enough has been said of this somewhat complicated transaction to introduce the discussion that follows. Other allegations and findings may be referred to as occasion re

I have not the least doubt or difficulty about the power of a court of equity in one state to restrain its own citizens, or other persons within the control of its process, from the prosecution of suits in other states or in foreign countries. The power proceeds from the undoubted authority that a court of equity possesses over persons within its jurisdiction to restrain them from doing anything that is contrary to equity and good conscience, to the wrong and injury of others, whether the threatened inequitable conduct consists in the prosecution of an action or whatever it may happen to be. The court of equity thus appealed to acts in personam, and it is immaterial whether the threatened inequitable conduct is to be carried on within or without the limits of the jurisdiction. 1 High on Injunc. § 103; Story's Eq. Jur. (12th Ed.) §§ 899, 900; Margarum v. Moon, 63 N. J. Eq. 586, 53 Atl. 179, and cases cited. But on general principles, equity will not interfere with the right of any person to bring an action for the redress of grievances-the right preservative of all rights-except for grave reasons; and on grounds of comity the power of one state to interfere with a litigant who is in due course pursuing his rights and remedies in the courts of another state ought to be sparingly exercised. The courts of New Jersey ought not to assume, directly or by indirection, any appellate jurisdiction over the courts of Massachusetts, nor proceed in giving judgment here upon the idea that the courts of the commonwealth are in the least degree incompetent or unwilling to do full and complete justice in all cases that are fairly within their jurisdiction.

It is averred in the bill that the actions now pending before the Supreme Judicial Court of Massachusetts are equitable actions; it is by implication admitted in the bill, and was most fully admitted in argument, that that court has the amplest equity powers; and it is equally clear that the causes there pending are, with respect both to subjectmatter and to parties, within its jurisdiction. They must be very special circumstances that will justify this court in restraining the prosecution of an equitable action already pending in a court of such ample jurisdiction. I speak not of any limitation upon the power of this court, but upon the propriety of its exercise in the particular case. Its exercise is not to be properly based upon any theory that this court knows better how to do justice than the court of last resort of the commonwealth; that it can weigh evidence better, or more justly apply to the facts any general principle of law or of equity; nor upon the ground that this court recognizes different rules of law or of equity from those which obtain in the commonwealth. A condition precedent to an application to this court for relief in all ordinary cases is the absence of a full, adequate, and complete

general rule, essential to the orderly administration of justice, that, as between courts otherwise equally entitled to entertain jurisdiction, that court which first obtains possession of the controversy ought to be allowed to proceed and dispose of it without interference; a rule established, of course, primarily for the benefit of the suitor, rather than for the protection of the dignity of the court. It was applied by Chancellor Runyon in Home Ins. Co. v. Howell, 24 N. J. Eq. 238, 241, where suit having first been commenced in this court for relief against certain, policies of insurance alleged to have been fraudulently obtained from the complainant upon defendant's property in Illinois, and defend,ant having afterwards begun suit upon the policies in a court of that state, which suit had been removed to the federal court, the learned Chancellor allowed an injunction against the prosecution of this action, notwithstanding the insurance company might have had complete relief in the federal court, either at law or by recourse to its equity side. In his opinion he quoted with approval the remark of Grier, J., in Peck v. Jenness, 7 How. 625, 12 L. Ed. 841, to the effect that the rule giving exclusive jurisdiction to the court which first obtains possession of the controversy has its foundation not merely in comity, but in necessity: "For if one may enjoin, the other may retort by injunction, and thus the parties be without remedy; being liable to a process for contempt in one, if they dare to proceed in the other"-a remark reiterated by the Supreme Court of the United States in Central Natl. Bank v. Stevens, 169 U. S. 459, 18 Sup. Ct. 403, 42 L. Ed. 807. In Title Guarantee & Trust Co. v. Trenton Potteries Co., 56 N. J. Eq. 441, 38 Atl. 422, the Potteries Company having commenced an action at law in the New York Supreme Court upon a policy of insurance issued to It by the Title Company, the latter company afterwards filed its bill in this court alleging a mistake in the policy, and praying that it might be reformed, and that the Potteries Company might be restrained from further prosecuting the New York action, on the ground that, if it were permitted to do so before the policy was reformed in such manner as to set out the true agreement of the parties, a judgment would necessarily go against the Title Company. This court allowed a preliminary injunction, whereupon the Potteries Company filed its answer setting up that under New York law the Title Company was entitled to there plead its equitable defense. Upon this answer, and affidavits verifying it, the injunction was dissolved. Upon appeal, the Court of Errors and Appeals affirmed this decision, Mr. Justice Gummere (now Chief Justice) saying: "The respondent, having selected a court of the domicile of the appellant as the forum in which to try the matters in issue between them involved in the suit brought by it, is entitled to have those matters finally deter

mined in that forum, provided the appellant can in its defense in that suit show the real agreement between the parties as fully as it would be permitted to do in its suit brought here for the reformation of the written contract.".

In Sweeny v. Williams (36 N. J. Eq. 627, 629, Mr. Justice Magie (afterwards Chancellor), speaking for the Court of Errors and Appeals, said: "If there exist a concurrent jurisdiction in courts of law and courts of equity, the latter will decline to entertain jurisdiction after the jurisdiction of the courts of law has attached, unless the relief that the applying party is entitled to ask cannot be fully obtained in the court of law."

See, also, N. J. Zinc Co. v. Franklin Iron Co., 29 N. J. Eq. 422, 430; Minchin v. Second Natl. Bank, 36 N. J. Eq. 436, 443; Shaw v. Frey, 69 N. J. Eq. 321, 323, 59 Atl. 811.

I am referred to Dehon v. Foster, 4 Allen (Mass.) 545; Id., 7 Allen (Mass.) 57; and Cunningham v. Butler, 142 Mass. 47, 6 N. E. 782, 56 Am. Rep. 657; Cole v. Cunningham, 133 U. S. 107, 10 Sup. Ct. 269, 33 L. Ed. 538. These decisions were based upon the ground of a threatened evasion of the essential features of a local insolvent law. They will be further mentioned in their proper order below. But in Carson v. Dunham, 149 Mass. 52, 20 N. E. 312, 3, L. R. A. 202, 14 Am. St. Rep. 397, it was held that their authority did not support an application for an injunction on the ground of conflicting decisions or diversity of law. The latter case was an application for an injunction to restrain the defendant, a citizen of Massachusetts, from prosecuting against another citizen of the same commonwealth a foreclosure suit in a South Carolina court concerning land situate in that state. It appeared that there was a difference of opinion between the Supreme Court of the United States and the Supreme Court of South Carolina upon the merits of the controversy. Chief Justice Morton said: (Carson v. Dunham, 149 Mass. 56, 20 N. E. 314): "We are then brought to the question whether the fact, if it be a fact, that the Supreme Court of South Carolina entertains views of the law which govern the rights of the parties differing from those held by the Supreme Court of the United States, justifies us in restraining Dunham from the further prosecution of the suit in the state court. The law gives the parties a choice of tribunals. Why is not Dunham's right to choose the South Carolina court as great as the right of Mrs. Carson to choose the United States court or the courts of this commonwealth? Reduced to its elements, the argument of the plaintiff is that we should interfere because there is danger that the Supreme Court of South Carolina will not rightly and justly decide the rights of the parties. We cannot yield to such an argument without a violation of every principle of interstate comity. As we have said, the general rule of comity is that the court first

acquiring jurisdiction shall retain it. In our judgment, it would be indefensible for the courts of this commonwealth to restrain the prosecution of a suit pending in the court of a sister state, which has jurisdiction of the subject-matter and of the parties, upon the ground that the decision of that court may differ from our own opinion, or from the decisions of other courts of equal authority. All the facts presented to us can be and are presented in the case pending in South Carolina, and it is presumed that the Supreme Court of that state will decide the case according to the law and the right."

The Court of Appeals of New York has even refused to interfere by injunction to restrain the transfer to a bona fide holder of an obligation held by the courts of that state to be invalid in the hands of such a holder, and this although such transferee might resort to the federal courts, where a different rule of law prevailed, and to which courts the present holder could not resort. Town of Venice v. Woodruff, 62 N. Y. 462, 468, 20 Am. Rep. 495. Rappallo, J., said: "The real purpose of the litigation seems to be to prevent a resort to the courts of the United States for the collection of these bonds; and the question is whether it is the province of a court of equity in a state to interfere for the purpose of preventing a resort to the federal courts for the enforcement of obligations on the ground that they may be held in those courts to be valid, while according to the decisions of the state courts the same obligations are held to be void. I apprehend that the power of a court of equity to decree the surrender and cancellation of instruments has never before been appealed to or exercised for such a purpose."

As authority for the proposition that one court of equity may restrain an action pending in another court of equity, I am referred to Erie R. R. Co. v. Ramsey, 45 N. Y. 637. An examination of the case shows that it determined only the existence of the power, and not the propriety of its exercise under the circumstances presented. The case is a somewhat notorious one. The company had procured from Justice Barnard, of the Supreme Court, an injunction restraining Ramsey from proceeding further in an equitable action that he had previously brought in the same court against the company and certain of its directors. Ramsey, on advice of counsel, disobeyed the injunction on the ground that the court had no jurisdiction to stay his proceeding in another action in the same court. Thus the question was raised whether he was guilty of contempt. The Court of Appeals held that he was. In the opinion, the action of Justice Barnard in issuing the injunction is excused on the ground that upon the case as presented to him Ramsey was charged with a purpose to throw the vast property of the Erie Railroad Company into the hands of a receiver by fraudulent

the company and a consent to the receivership by an attorney acting in collusion with Ramsey and without authority from the company. The opinion plainly intimates that Justice Barnard erred in not requiring that the application to stay proceedings be made in the action already pending; the decision was, simply, that he acted within his jurisdiction, and that his injunction could not be ignored as void on its face. (See citations, Daly v. Amberg, 126 N. Y. 494, 27 N. E. 1038; Cauffman v. Van Buren, 136 N. Y. 265, 32 N. E. 775.)

In 22 Cyc. 810, the topic is treated as follows, with abundant citation of authorities: "It is a general rule that a party will not be restrained by injunction from proceeding with a suit in equity, because complainant's equitable rights can be fully protected in that suit. An order to stay such suit should be obtained by an application in that court itself. It follows that equity will not enjoin a suit to obtain an injunction, or an accounting or a receiver. Nor will a foreclosure suit be enjoined for the relief of one who might obtain full relief in that suit itself. However, a court of equity has 'power' to enjoin a party from proceeding with other equitable suits, and such an injunction, when issued, is not void and must be obeyed. But the power should be exercised only in extreme cases. The court first acquiring jurisdiction of a case will protect that jurisdiction by enjoining an action by the same parties on the same subject-matter in another court, even though that other court may also have equity jurisdiction. Wherever complainant's rights cannot be fully protected in the other suit it will be enjoined. An injunction will be granted in actions of interpleader against the further prosecution of suits against complainant, even though one of these suits may be in equity, because of the necessity of disposing of the whole matter in one action. And where equity has undertaken to administer the assets of an insolvent corporation, so far as they are within its jurisdiction, other equitable suits for the same purpose will be enjoined. So a bill of peace lies to prevent a multiplicity of suits, even though the suits may themselves be in courts of equity."

My examination of the authorities convinces me that the reported instances of interference by courts of equity in equitable actions already pending in other courts are all based upon exceptional circumstances, and may be classed within a very few groups. Without assuming to enumerate all of these groups, I may mention the following principal ones:

(1) In early times in England there was a controversy about jurisdiction between the chancery and the exchequer; the former holding that the latter was a sort of "private" court, its equitable as well as its legal jurisdiction being dependent upon the