Oglesby v. Attrill/Opinion of the Court

by Stephen Johnson Field

United States Supreme Court

105 U.S. 605

Oglesby  v.  Attrill

We do not deem it necessary to consider the rulings of the court upon the admission of evidence, nor the instructions given to the jury, nor those refused. The affirmance of the judgment may be rested on the compromise made between the defendants-the petitioners in reconvention-and the company, assuming that in its absence the petition in reconvention discloses a cause of action against the plaintiff below. They allege that a fraud was practised on them by the directors of the company at his instigation; that he joined in a conspiracy to get possession of their stock at a nominal price; and that in order to carry out this scheme an assessment was levied which was unnecessary for any immediate purpose of the company, and that others were threatened. But they do not allege that the assessment was in excess of the powers of the directors, nor that it would have been unnecessary if the company had intended at the time to purchase or build gas-works required for its business, or to raise money for other corporate purposes; but that under the circumstances then existing it would have been good policy to wait for future proceedings on the part of the city of New Orleans. As to the wisdom of an assessment, or its necessity at the time, or the motives which prompt it, the courts will not inquire, if it be within the legitimate authority of the directors to levy it, and the objects for which the company was incorporated would justify the expenditure of the money to be raised. They will not examine into the affairs of a corporation to determine the expediency of its action, or the motives for it, when the action itself is lawful. Bailey v. Birkenhead, Lancashire, & Cheshire Junction Railway Co., 12 Beav. 433.

The supposed fraudulent intentions of the officers in levying the assessment, which are now alleged as grounds for treating it as invalid, were urged by the defendants as reasons for enjoining its enforcement in the suit they instituted; and any claims arising from that clause were covered by the compromise admitted in the pleadings. A compromise, by the code of Louisiana, is defined to be 'an agreement between two or more persons, who, for promoting or putting an end to a lawsuit, adjust their differences by mutual consent, in the manner which they agree on, and which any one of them prefers to the hope of gaining balanced by the danger of losing' (art. 3071); and has, between the interested parties, a force equal to the authority of a thing adjudged. It cannot be attacked on account of any error in law or any lesion. Art. 3075.

The suits between the defendants and the Crescent City company involved the validity of the assessment which they, on account 'of frauds and machinations of the officers,' sought to enjoin, whilst the company sought to enforce its payment. The compromise concluded embraced the dismissal of the several suits, of those brought against the defendants, and the one brought by them against the company,-the transfer of their stock, and their release from present and future assessments thereon. There is no averment tht it was induced by any false representations of the plaintiff or of the directors, or that the assessment was not a genuine one, or that the agreement of the directors that no assessment should be levied on their stock was carried into effect; or that there was any concealment of the affairs of the company; and of the value of the stock the defendants were as competent to judge as any others in the market. Their ignorance that its purchase by Phipps was made for the plaintiff does not in any respect affect the character of the transaction. It was of no moment to them who became the purchaser, nor did they so regard it, for the transfers of their stock were made in blank. The compromise stands, therefore, as a judgment, making a settlement of the very matters now set up as grounds of complaint in the petition in reconvention; that is, 'the frauds and machinations of the officers of the company' in levying the assessment. It settled all claims arising from the assessment, and the alleged fraudulent purposes of the officers in connection with it. Though made directly between the company and the defendants, it protects from further suit those who advised, equally with those who levied, the assessment; participants in whatever wrong was committed, if any there were, as well as principals; abettors as well as doers of it. No allegations of fraud, in addition to those made at the settlement, can prevent the compromise from having effect as a judgment thereon. It may, indeed, by a direct proceeding instituted for that purpose, be rescinded for fraud, but it cannot, any more than any other judgment, be attacked collaterally. Adle v. Prudhomme, 16 La. Ann. 343. In the face of the compromise, the recorventional demand cannot be sustained.

Judgment affirmed.

Notes