Metropolitan National Bank v. St. Louis Dispatch Company/Opinion of the Court

by Melville Fuller

United States Supreme Court

149 U.S. 436

Metropolitan National Bank  v.  St. Louis Dispatch Company

In the language of counsel for appellant, this bill 'was filed for the foreclosure of a mortgage upon a certain newspaper, a newspaper plant, and a membership in the Western Associated Press.' The contention is that the newspaper, plant, and membership were subject to the lien of the Sutton mortgage, as one homogeneous property, and that any property of like kind, substituted for any portion lost or destroyed, became subject to this lien; that the identity of the newspaper, the membership, and the plant remained up to July 1, 1887, when the bill was filed, and that the defendant was estopped to deny such identity because of the similarity of the names, the willful confusion of the good wills, the obtaining of the second certificate in lieu of the first, and because, from the character of the plant, all the changes made were in the nature of repairs, parts being replaced from time to time by reason of constant wear and tear, from which resulted a confusion of chattels, making the identification of the several parts of the plant impossible.

On December 1, 1879, when the note matured, and the defendant the Dispatch Publishing Company refused to pay it, or to surrender the property on the demand of the trustee, the bill stated that none of the original presses, type, and paraphernalia for printing a newspaper, described in the mortgage, was in existence. The bill was not framed on the theory of holding the defendant for the value of the mortgaged chattels on the ground of wrongful conversion, nor was it charged that there was any wrongful intermingling of the original plant with that subsequently acquired, either by the St. Louis Dispatch Company, or the purchaser under the second mortgage, or his grantee, the Dispatch Publishing Company. The allegation was that the machinery, type, presses, and property of a perishable nature, had been alienated or destroyed, or gradually used up. This was done in the course of business, and as the plant on hand at the maturity of the note was an entirely new plant, not described in the mortgage, we think the mortgage could not be extended to it upon the theory of willful intermingling. The clause in the Sutton mortgage in relation to after-acquired property was an executory agreement, for the nonperformance of which the mortgagee might recover compensation in damages as against the mortgagor; but, as against the grantee of the purchaser at the sale, the lien of the mortgage could not embrace what had no existence when it was given, and was not acquired by the mortgagor, and, if such grantee were liable at all, it would be for the conversion of the existing property, and no foundation for such a charge is laid here, irrespective of the objection that the remedy would be at law.

Undoubtedly, good will is in many cases a valuable thing, although there is difficulty in deciding accurately what is included under the term. It is tangible only as an incident, as connected with a going concern or business having locality or name, and is not susceptible of being disposed of independently. Mr. Justice Story defined 'good will' to be 'the advantage or benefit which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers on account of its local position, or common celebrity, or reputation for skill or affluence or punctuality, or from other accidental circumstances or necessity, or even from ancient partialities or prejudices.' Story, Partn. § 99.

As applied to a newspaper, the good will usually ataches to its name, rather than to the place of publication. The probability of the title continuing to attract custom in the way of circulation and advertising patronage gives a value which may be protected and disposed of, and constitutes property.

On the 9th of December, 1878, the St. Louis Dispatch Company ceased business as the publisher of a newspaper, and on that day another newspaper was published under the name of the 'Post-Dispatch.' If the Dispatch Publishing Company acquired the good will of the St. Louis Dispatch Company, it also acquired the good will of the Post. The Sutton mortgage covered the good will of the St. Louis Dispatch, but it did not embrace the good will of the Dispatch Publishing Company or of the newspaper known as the 'Post-Dispatch,' as existing July 1, 1887. Indeed, if there had been no consolidation with any other paper, and the good will that the St. Louis Dispatch had in 1878 had been conveyed to a separate concern, it could hardly be held that the good will of the latter, eight years afterwards, was the same good will which had been conveyed. Moreover, the good will of the Dispatch Publishing Company was from the first different from the good will named in the mortgage. The paper was of a different name, and issued by a different company, and the good will was the joint good will, as we have said, of two papers; and if the Dispatch Publishing Company acquired on the 10th day of December, 1878, the good will belonging to the St. Louis Dispatch, for which it should have accounted, but refused to account, then it would be only liable as for a conversion, for the lien of the mortgage certainly could not extend to a good will which there was no pretense was ever embraced in it.

However, it is urged that the Dispatch Publishing Company did in fact acquire the place of business of the St. Louis Dispatch Company and the existing plant, with the good will attached thereto, subject to the lien of the first mortgage; that, when it consolidated the property and good will so acquired with the property and good will of the other newspaper, it retained the word 'Dispatch' as part of the name; that it paid the interest up to October 1, 1879; and that its conduct was such as to amount to a direct representation to the mortgagee that it had agreed to put itself in the shoes of the mortgagor. Hence it is contended that the averment of the bill that the Dispatch Publishing Company agreed and assumed to pay the mortgage debt was justified, as a legal conclusion, upon the principle of estoppel. We do not concur in this view. It is admitted that there was no express or direct promise on the part of the defendant to pay the mortgage debt; and it cannot be held that the mere purchase of premises subject to a mortgage renders the purchaser personally liable to the mortgagee, as having assumed to pay it, or that the mere payment of interest, in itself, imposes that liability. Elliott v. Sackett, 108 U.S. 132, 2 Sup. Ct. Rep. 375; Drury v. Hayden, 111 U.S. 223, 4 Sup. Ct. Rep. 405; Hall v. Morgan, 79 Mo. 52.

There was no personal connection between the Dispatch Publishing Company and the complainant, and it is not charged that there was any representation that that company would be personally responsible for the debt, or that property acquired by it from other sources, and not embraced in the mortgage, should be subject to the mortgage lien. No fraud is alleged, but, in effect, only that the complainant was misled by the payment of interest. What beneficial course the complainant was prevented from pursuing by reliance on the conduct of the Dispatch Publishing Company prior to the maturity of the note does not appear; but it does appear that on December 1, 1879, the Dispatch Publishing Company refused to pay the note and the last installment of interest, and refused to surrender the property. Yet the complainant did not file this bill until nearly eight years afterwards. Clearly that delay is not attributable to the payment of interest, nor to any conduct of the Dispatch Publishing Company prior to December 1, 1879. After that date the latter company, confessedly, held adversely to complainant, and it is difficult to see why any claim in respect of either the plant or the good will of the St. Louis Dispatch is not barred.

Courts of equity, in cases of concurrent jurisdiction, consider themselves bound by the statutes of limitation which govern actions at law. In many other cases they act upon the analogy of cases at law; but, even when there is no such statute governing a case, a defense founded upon the lapse of time and the staleness of the claim is available in equity. Godden v. Kimmell, 99 U.S. 201; Speidel v. Henrici, 120 U.S. 377, 7 Sup. Ct. Rep. 610.

Under the statute of limitations of Missouri, actions upon any writing, whether sealed or unsealed, for the payment of money or property, must be commenced within ten years, and actions for taking, detaining, or injuring any goods or chattels, including actions for the recovery of specific personal property, or for any other injury to the person or rights of another, not arising on contract, must be brought within five years. Rev. St. Mo. 1879, §§ 3229, 3230.

If the original plant were wrongfully used up, or by the consolidation the good will of the St. Louis Dispatch Company was wrongfully appropriated, the Dispatch Publishing Company became responsible as for a conversion. The rule in relation to wrongful admixture of property had no application, and it is not perceived how the act of appropriation in relation to either the plant or the good will could be made to operate, nearly eight years after adverse possession commenced, to extend the lien of the mortgage over property not embraced in it. If the use of the word 'Dispatch' in the title of the new newspaper became wrongful after the Dispatch Publishing Company refused to pay the note, or to surrender the property, then the complainant should have made its objections promptly known, and sought the appropriate remedy; but this it did not do, and it would be inequitable to accord relief by injunction after the lapse of so many years, and the inevitable changes in the condition of the property. Such relief, however, is not invoked in this case; and the right to it, if it existed, would furnish no aid to the application to foreclose. It is very clear that the circuit court was right in holding that there was no plant or good will, the sale of which could be decreed.

The case stands on no different ground in respect of the membership in the Western Associated Press. As averred in the bill, and as shown by the articles and by-laws, such membership was always represented by a certificate of a share of stock, and could be held and sold only in connection with the publication of a newspaper or periodical, and in the manner prescribed. The object of the association was 'the procuring of intelligence for the newspaper press from all parts of the world by telegraph,' and the holders of certificates of membership were entitled thereby to receive the news thus collected. Applications for admission were obliged to be made in writing to the board of directors, and, if a majority of the board voted for the admission of the applicant, he then signed the articles of association and by-laws, and paid into the treasury the sum of $10 and an additional amount equal to what would be his pro rata share in the property of the association; but no new member could be admitted without the unanimous consent of all the members in the town or city where his business was carried on. The twelfth by-law provided, among other things, that 'if any member shall discontinue the publication of a newspaper, or shall sell his newspaper to another member, his membership shall cease, and his certificate of stock shall be canceled on the books of the association, and the treasurer shall refund to him the money paid to the association for the same.' The St. Louis Dispatch Company ceased publication December 9, 1878, and it was averred that about one year thereafter the Dispatch Publishing Company, which during that year had been in the use and enjoyment of the membership, without apparent change of ownership, procured the issue of a new certificate, numbered 64. If, as alleged, the Dispatch Publishing Company acknowledged the title of the St. Louis Dispatch Company to the membership by continuing to use it, while standing in the name of the St. Louis Dispatch Company, it certainly disavowed it when it applied for a new certificate, and to have its name placed upon the books of the association. The Associated Press, in issuing that certificate, admitted a new corporation to its membership, and that membership was not the same membership which was hypothecated to secure the Bowman note. It does not appear that the old certificate was canceled, but as the publication of the St. Louis Dispatch had been discontinued, and the membership, in that sense, had ceased, by the terms of the by-laws, it is perhaps to be inferred that that had been done. Apparently, the association had the right to accord or deny the privileges of membership as it saw fit, and whether its action in the admission of the new corporation to membership was wholly independent of certificate No. 38, or based upon the substitution of one share for the other, it would seem to follow, upon the assumption that a membership could be pledged or mortgaged without its consent, that the association was directly interested in the contention raised by the complainant in respect of that action, and that the circuit court was right in holding that the question ought not to be determined in the absence of the association as a party.

But, in any view, the membership of the Dispatch Publishing Company was held adversely to the complainant. At the time the bill was filed, it had been so held for nearly eight years in the name of the Dispatch Publishing Company, which had paid all the assessments upon it, and enjoyed all its privileges, as the owner. If it obtained that membership under the by-laws, without reference to certificate No. 38, then, of course the bill, as framed, would fail; and, if it had been allowed to avail itself of the old membership, still its liability, if any, would be for a conversion, and the defenses of laches and limitations would apply.

Viewed as an action for conversion, recovery was clearly barred as to the plant and the good will, and also as to this certificate, which was issued independently of the mortgage, and not embraced within it. And so far as the bill proceeds upon the theory that the plant, the good will, and the membership ought, on equitable principles, to be held subject to the lien of the mortgage, the court properly declined to assist a complainant that had slept upon its alleged rights for nearly eight years, and shown no excuse for its laches in asserting them. Cases sustaining the proposition that a mortgage may be foreclosed even after the debt has become barred by limitation have no application, nor does the fact that the Bowman note was still alive when the suit was instituted, since the question, in this aspect, is whether either or any of these alleged properties should, on equitable grounds, be brought within the operation of the mortgage, and upon that question we regard the delay of the complainant as an insuperable obstacle to a decree in its favor. Decree affirmed.

Notes