(dissenting in part).
While concurring in the main with the majority, it seems to me plain that defendant should have received credit upon the accounting for such of the floating indebtedness of the Houston, etc., Railway as it gave up in the reorganization as carried through. We have held the Southern Pacific to an account as a majority shareholder because the majority holder or holders of record w.ere but defendant’s puppets, to which proposition I agree.
But defendant when it took all the shares of the reorganized or new corporation, after these plaintiffs had declined to take any, certainly lost what the old company owed to the Southern Development Company and Morgan’s, etc., Co., in the very real sense of having no one to pay the debts. To have caused the new or reorganized corporation to pay these debts (when Southern Pacific practically owned both debt- or and creditors) would have been merely taking money out of one pocket and putting it in the other; the debts would have remained lost just the same.
It is because this defendant owned and controlled the companies which were at once confessed creditors, and themselves the immediate controllers of the old Houston, etc., Railway, that liability has been imposed on defendant; but why plaintiffs should now receive their share of what defendant got, without paying their share of what defendant lost, is quite beyond me. I think such credit or allowance inheres in the very reasons for our decision. If the Southern Pacific had itself been sole unsecured creditor of and majority shareholder in the old Houston, etc., Railway, and the same kind of reorganization had occurred, it is inconceivable that the minority stock owners would have been let in without paying their share of the floating debt. Yet we seem now to admit them as shareholders, while leaving the burden of unpaid debt to be shouldered by the concern which we hold to have been (in effect) the majority owner. That the point was not pleaded, is immaterial; the matter is a detail of accounting.
As for the difficulty of ascertaining just what was the indebtedness over collateral, it may be great; but the legal error below was in refusing to consider the matter at all.
On the question of laches, I venture to emphasize what seems to me the logical result of our decision. The action at bar was begun over 25 years after it arose. In the sense of inactivity or acquiescence there was no laches at all; but every effort was legally misdirected until this suit began. It rests not on fraud, nor concealment, but on the assertion of a legal right, which is now enforced by declaring a constructive trust and decreeing an accounting. No statute of limitations was pleaded; this we have said is not essential in equity (Waller v. Texas, etc., Co., 229 Fed. at page 92, 143 C. C. A. 363), meaning that the advantage of measuring by the statute a plaintiff’s negligence in pursuit does not rest on pleading. If the act is relied on as a bar, it must be pleaded. Sullivan v. Portland, etc., Co., 94 U. S. *66806, 24 L. Ed. 324. We have measured laches by analogy with the statute (Venner v. Central Trust Co., 204 Fed. 779, 123 C. C. A. 591), and done so (in admiralty) even when the party claiming the benefit was a foreign corporation in whose favor the statute did not run (Davis v. Smokeless Fuel Co., 196 Fed. 753, 116 C. C. A. 381).
But in principle this court has. adhered firmly to the doctrine that its equity jurisdiction is not subject to limitations of time or other matters created by state laws. Kirby v. Lake Shore, etc., R. R., 120 U. S. at page 138, 7 Sup. Ct. 430, 30 F. Ed. 569. And see Hubbard v. Manhattan Trust Co., 87 Fed. 51, 30 C. C. A. 520. Yet where the jurisdiction is concurrent as between law and equity, the chancellor is bound to apply the statute (Hall v. Faw, 102 U. S. at page 466, 26 L. Ed. 217); “in other cases (he) acts only by' analogy, and not in obedience to the statutes.”
It follows that the present decision holds, in substance, that there is no remedy at law for these plaintiffs, that equity is the only jurisdiction for them, and that 25 years of failure to discover an always existing cause of action, based on facts of almost-public notoriety, does not constitute laches, in the absence of silence, inaction, or acquiescence by plaintiffs, or loss of advantages or change of situation caused or contributed to by plaintiffs on defendant’s part.
In this holding I concur, extreme as the facts are, on the assumption that the case is not one of concurrent jurisdiction. I make that assumption only because the parties have assumed it.