THESE were appeals from decrees of the Circuit Court for Wisconsin, sustaining demurrers to two bills of complaint. Both bills and the essential question in each were the same; certain small differences between the bills being noted further on. The case was this:
In September, 1857, the La Crosse and Milwaukie Railroad Company, a company organized to build a railroad from Milwaukie to La Crosse, across the State of Wisconsin, but whose road was not then completed, entered into articles of agreement with Chamberlain, for the double purpose of insuring the completion of the road and securing to him a large debt, alleged to be due from the company. By this contract the road was leased to Chamberlain, in consideration that he would apply the income to the working and extension of the road, to the payment of interest on debts of the company, and to the payment of Chamberlain's own debt, on satisfaction of which, either by application of the income or otherwise, the road was to be restored to the company. After the execution of this contract, and in the following month, the company confessed a judgment in his favor for $629,089.72. Afterwards, and in the same month, Cleveland obtained a judgment against the company for $111,700.71.
To enforce the satisfaction of this judgment, by sale of the road and other property of the La Crosse Company, as for brevity the corporation was usually styled, Cleveland filed his bill in the District Court of the United States for the District of Wisconsin, against that company and Chamberlain, with whom were joined some other defendants.
In this bill, according to the account given of it by the complainants in the present cases, Cleveland insisted that the lease to Chamberlain and the judgment confessed in his favor were without consideration and in fraud of creditors, and that they hindered the collection of his judgment, and he prayed that they might be declared void. The La Crosse Company and Chamberlain answered, denying all fraud, and Cleveland took issue by replication.
The court found against the respondents, and at January Term, 1859, decreed that the articles of agreement between the La Crosse Company and Chamberlain 'be and hereby are vacated, annulled, and made void, so that the same shall not be of any force and effect whatever,' and that 'the judgment and all executions and proceedings thereon be and hereby are vacated, annulled, made void, and set aside, so that the same shall have no effect whatever.' The decree also 'perpetually enjoined and restrained' Chamberlain from 'controlling or meddling with the railroad or anything belonging to it under the articles of agreement.'
In 1860, a company-called for brevity the Minnesota Company succeeded, through a purchase, and through a subsequent organization, such as is allowed by the statutes of Wisconsin, as a railroad company, in order to take and manage the property acquired by the purchase, to all the property, franchises, and rights of the La Crosse Company; subject, however, to prior incumbrances.
This Minnesota Company being thus interested in the matter, alleged by their bill below (the first of the two cases now under review), that by this decree the agreement and the confessed judgment were made absolutely void, not only against Cleveland, the judgment creditor, but also as between Chamberlain and the La Crosse Company, and that Chamberlain, notwithstanding this decree, having purchased the Cleveland judgment, remained in possession of the road, receiving large sums of money, amounting altogether to more than $200,000, for which he was bound to account. They prayed, therefore, that Chamberlain might be ordered to apply to the payment of the Cleveland judgment, from the money so received, a sum sufficient for that purpose; that he might be ordered to account; that he might be credited with the sum applied to the Cleveland judgment; that the balance be ascertained; that the Cleveland judgment be ordered to be cancelled; and that the ascertained balance, if against Chamberlain, be paid to the Minnesota Company, or, if in his favor, by the Minnesota Company to him. They also prayed further relief.