CENTRAL NAT. BANK: fl. HAZARD.
'hat ease are presented in this. The decision in that case, thllD, as to this question settles this. The opinion in that case discusses alI the questions presented in this. The view of the court, 88 expressed in. tl)lt case, is that no fedel'al question was presented under the facts alleged. The defendant demurred to,the complaint upon the ground that this court had no diction of the case presented. The demurrer is sustained, and the cause ia dismissed. at plaintiff's cost.
CENTRAL NAT. BANK: OJ' BOSTON tI. HAZARD e£
(Oircu(t Oourt, N. D. New Yor1c. February 26, 1892.)
STATB AND FEDERAL
tb.eparties thereto, in a suit in which tbe federal court. has iirst acquired jurisdiO' tion of the controversy and the reB. ,
:A. state court has no authority to enjoin the proceedings of a federal court. or of
When a federal court has ordered the sale of a railroad, and its officer has advertisedthe same for sale, that \lourt has complete dominion thereof, so as to exclude all interference by a state court.
A proceeding in a state court to set aside a former decree thereof for fraud In ita procurement is an original suit, and does no$ revive the dominion exercised in the former. suit over the res, so as to exclude the jurisdiction of a federal court. which has attached in the mean time. ' The. dominion of a court over a railroad sold by its decree entirely ceases upon the oonveyance thereof to the, purchasers. ' .
CoURTS....J"URISDICTION IN REIll-8ALE 011' PROPERTY.
. In Equity. Suit by the Central National Bank of Boston, in its own behalf and. in behalf of all other certificate holders, against Rowland N.o Hazard, William Foster, Jr., and others, to declare and enforce the lien of ceJ'tain receiver's certificates against the Lebanon Springs RaUroo'd Company. Heard on petition fOral! order directing an officer of the court. to proceed with a sale of the railrolj'd property J in accordance a decree heretofore entered. . Granted. Esek Cowen, for petitioner. E. W. Paige; for defendants.
WALLACE, Circuit Judge. The petitioner asks the court to set in motion one of its officers pro hac vice, who, by a decree made on the 24th day of March, 1887, (30 Fed. Rep. 484,) was directed to seU at public auction, after giving due notice of the time and place of sale, according law and the practice of this court, certain real and personal property. consi\'lting ofthe railroad, rolling stock, etc., which formerly belonged to the Lebanon Springs Railroad Company. The petitioner invokes the aCtion of the court because a decree has been made by the supreme court of the state of New York in suit brought subsequent to the rendition of the decree of this court, ,which, among other things, perpetually en'; joins and restrains the parties in this suit from proceeding with the sale of the property under the decree of this court.. The petitioner was nota
formalpal'ty. to ,the suit lin' anck'all; th,suit in this court prosecatedinhis behalf,as'onEldf those similarly situated with tho complatfiant,t ,he hils a 8WtUs. wMclrenables him to ilitervene, as is suppbsecf;:W,Hhont vi6latitigthe injuricticm 'of the ... If there were corHUluaCytot.M officer who .hll.s halted in the performa'ilceot the duty imposed upon' hiill by the court, the appropriate application would be one for his removal; but it is apparent that his con,l uct is influenced by a desire to respect the injunction of a state court, which in spirit, though not in him from proceeding with the sale until the instructions of this court have been obtained. The -thi!l;,Briorto the year 3.880, the ,Lebanon Springs Railroad Company had mortgaged its property, to secure bonds to the amount of $2,000,000, to the UniGllTrust Company, as trustee, and that mortgage had been foreclosed and the property sold. and, by mesne from the purchaser, thtditle to the property had been acquired' byihe New York, Boston &' Montreal Railway Company. In the year 1880 an action was brought in the supreme court of the state of New..rork by one Sackett, who owned some of the mort/(age bonds, in hisdwn 'behalf, and that of owners of the bonds,the object of which was,. in substance, to obtain an adjudication that the equitable title to the property was still in the bondholders, and a decree for a sale I of the road for the benefit.of the bondholders. During the pendency of the action the court appointed a receiver, and authorized the receiver to issue certifiCates to the amoliilt6f:$350,OOO, to constitute a first lien upon the property. That action resulted in a decree entered in January, 1885, adjudging that the title to the railroad property was in the original. bondholders, and ordering the road to be sold' for their benefit, subject to the principal arid accrued interest upon the receiver's certificates. A sale was made pursuant to that decree, and upon the sale Hazard & Foster became the purchasers. By the terms of the purchase Hazard & Foster assumed and agreed to pay the receiver's certificates, but after complainant in the present acquiring adet-d they made default. suit was the owner of $250,000 of the certificates, and in April, 1886, brought this suit, in behalf of itself and all the other certificate holders, to obtain a decree declaring the certificates to be a lien upon the property, and to enforce payment by a sale of the property and a personal judgment against Hazard & Foster for any deficiency. Hazard & Foster contested the suit, but it resulted in a decree adjudging the certificates to be a lien, ordering a sale of the property, and requiring Hazard & Foster to pay to the complainant, and the other holders of the certificates, any deficiency remaining unsatisfied after the sale of the property. The decree also reserved leave to the complainant and to the other certificate holders to apply to the court at any time for the appointment of a receiver to take possession of the property, and keep it until the sale. The pmperty' was duly advertised for sale pursuant to .this decree, but the sale .wasadjourued from time to time until late in the year 1890, whentbeeuit was brought by Stevens and others in the suprcrne court of the state ,of New York, in which the injunction was granted which
CENTRAL NAT. BANK fl. HAZARD.
has given rise to. this application. Stevens was the owner of of the bonds. The object of his suit was, in substance,to impeach the decree in the Sackett suit for fraud, and to obtain a strict foreclosure of the mortgage made by the Lebanon Springs Railroad Company. The theory of the action was that the Sackett suit had been prosecuted for the benefit of a portion of the bondholders, and in fraud of the interests of otheril. That suit resulted ina decree, by which itwas adjudged that the Sacl\.ett suit was fraudulently conducted as against certain of the bondholders whom he purported to represent, and solely in the interest ·of bondholders representing only about $1,200,000 of the $2,000,000 of bonds. The decree vacated the judgment in the Sackett suit, ordered a sale of the property, declared that the owners of the· receiver's certificates were entitled to only the distributive share of the proceeds of the sale liS might be applicable to the bonds which were actually represented in the Sackett suit, and ordered the 'perpetual injunction which has been referred to. No federal court has ever recognized· the authority .of a state court to enjoin its proceedings, or to enjoin parties from proceeding, in a suit in which the federal court has first acquired the jurisdiction of the controversy and the res, but such authority has been uniformly denied by the ferleral COllrts. McKim v. Voorhies, 7 Cranch. 279; Biggs v. Johnson Co., 6 Wall. 166; Mayor v. Lord, 9 Wall. 409; Suprrrvisors v. Durant, ld. 415 j Amy v.' Supervisors, 11 Wall. 136. "The forbearance which courts of coordinate jurisdiction, administered under a single system, exercise towards each other, whereby conflicts are avoided by avoiding interference with the process of eaoh other, is a principle of comity, with perhaps no higher sanction than. the utility which comes from concord; but between state courts and those of the" United States it is sQmething more. It is a principle of right and of law, and therefore of necessity. It hJaves nothing to discretion or mere convenience. These courts do not belong to the same system, so far their jurisdiction is concurrent; and, al.. though they eo-exist in the same space, they are independent, and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes intl) its jurisdiction a specific thing, that res is .as much withdrawn from the judicial power of the other as if it had been carried physically into a dif.. ferent territorial sovereignty. To attempt to seize it by a foreign process is futile and void. The regulation of p.rocess, and the decision of ques.. tions relating to it, are part of. the jurisdiction of the. court from. whi<;h it issues." Covell v. Heynuzn, 111 U. S. 183, 4 Sup. Ct. Rep. 355. These principles were recognized and enforced by one of the federal courts in a case which is very much in point. In Fox v. Railroad Co., 2 Abb. (U. S.) 151, a court of the state of Pennsylvania had proceeded to a decree·in a suitto foreclose a mortgage executed by the railroad company, and after the decree, and pending a sale ordered by the decree, executions were issued upon judgments rendered by the.United Stfltes circuit court, and levies were made upon the mortgaged property. The federal court set aside: the levy, holding. that the court of Pennsylvania having by its deorees and authorized officers taken judicial control of the prop--
,FEDERAL ,REPORTER ,.vol.' 49.
erty, and ordered its' SalEl?the not be taken in by 'process from any other Jurisdiction. In the 'present case. 'after the decree was made by this court ordering the property to be sold by its officer; and the officer had proceeded towal:'ds the da¢ree by advertising the property for sale, the prop was under the dominion' of this ,court as effectually as though it rty had. bien'seized upon an 'execution. Ar,rd it is equally clear that after the safe had taken place under the decree in the Sackett suit, and the property had been conveyed to Hazard & Foster, the property passed from the dominion which the state' court had previously, exercised over it.' The Stevens suit was an original and independent proceeding, not asupplementary proceeding connected with the Sackett suit. As was said in Barrow v. Hunton, 99 U. S. 80:
"If·theproceedings are tantamount to a bill in equity to set aside a decree for fraud in the obtaining thereof. then they constitute an original and independent proceeding; .*;* ,8 new C&Se arising upon.new facts. although h,aving, r..elation to the validity of an actual jUdgment or 4epree."
,The 'case, therefore, is one fOf the application of the rule that the jurisdiction of a court oftha United States once obtained over property by its being brought within its custody contil'lUeS until the purpose of the ,"uit is' accomplished, and cannot be impaired or affected by any proceedings sUbsequently commenced in a state court. Railroad 00. v. Gomua, 132 U; S. 478, 10 Sup. Ct. Rep. 155,. It is noV necessary to consider whether a state court, in the exercise of eqUity jurisdiction, may not annul the judgment of a federal court for fraud, 'and, as an incident to relief, enjoin the enforcement of the judgment to the extent necessary to do justice. Johnson v. Water", 111 U. S. 640,4 Sup. Ct. Rep. 619. In the present case the state court has not !assumed to disturb the decree of this court. It has adjudged that the liim of the oeTtiticate holders has priority over that of the bondholders, but is 0l1a,to be satisfied pari PaB8?Jl with theirs; and by its deci'eeit subordinates the title which will be acquired under the sale by this court to the title which wiU be acquired by a sale under its own decree. The decree of this court· finally' determines the rights of the parties ttl 'the fluit as between themselves. Manifestly the decree of the fltate court: does not disturb the right of the certificate holders to enforce thepaYnient of their certificates against Hazard & Foster by a sale of their and a personal judgment for the deficiency. A personal judgment cannot be obtained under the present decree without a sale of the property, in' order to ascertain the deficiency and fix the amount recoverable. 'Such a sale cannot injuriously affect the property interests which are recognized and protected by the decree of the state court. A sale under its decree will extinguiSh all subordinate titles,good as well as bad. . ,,' It would be rank injustice to the complainant and the other certificate holders to postpone the enforceR1ent of their demands against Hazard & Foster "to await the result of the litigation in' the state court, which seems,"likelytobea protracted. one. The order. applied for ,is therefore granted.
UNITEDrBTATES V.SOUTHERN PAO. R. CO.
SU'l'ES 'D. SOUTHERN' PAC.
R. Co.' et al.
(Oircuit COUrt. N. D. Catifornia. February 14, 1892.)
, The federal circuit courts possess no powers except such as the constitution and acts of congress ooncur in conferring, lU1d' t1;1e presumption is ,th$t every is without their jurisdiction until the contrary affirmatively appears,
la.SAME-RBSIDENOE 011 PARTIDS,
Act Congo M:arch 8, re\l,uiring suits in w1:lich tbe federal jurisdictioD, founded only on diversIty of CItizenship to be brougbt in tbe distriot of the reSI"dence either of the plaintUf or the defendarit, does not apply to sUits brought by the "fede.r,al g,pvern,meI),t,s,ino.e,.itls present, ere,rywhere within the tern.toriall,iIl11,'ts, of ' the United States. ,.The only' restrictfonwith respect to such suit8 is tbat they sh81I'be brought irithe distriot1lf which the liefendant is au "inhabitant. " '
8; BAilIB.:..:oU1ZENSHIP OF CORPORA'l'IONs-"tWABITANOT."
: While, 'under tbe aotsrespecting of the federal courts. a corporation l'ja.!loitizen ", on,1,1 jot,' ,1;\1e state ulJder ""hose laws, it w,,as"o"gan,l,'zed, yet, wi. '. , rllllP,eAli" the In Which it may under Alit, Con,g. March 8, 188,7,' a Taili'da<l' 'or telegraplfcompany,chartered e,\h,er by a state or the United States, 'is an "itibiillitant" of any state itl which it Op8l11tes its lines and maintains offices f6r the traI),S8ction ,of business. " ' "
Suit by 'the United States against the Southern Pll.cifib the Southern Paci(lq'Company, the Atlantic & Pacifig Uni9n Telegraph Company. ,Heard on. ple"s,snd motion Overruled. Atty. Gen. Miller and Oharles H. AldrWh, for the United States. Tweed, J. Hubley Ashtnn, ,and Harvey S. Brnwn, for the SouthCompany and the Pacific Company. .' Pillabury, Blanding &: Ha:yne, Wm. a. Hazledine, and John J. McCook, for tbe Atlantic & Pacific Railroad Company. . ' Wager SuJq,yne andRuah Taggart, fo'rthe Western Union Telegraph Company. . . Circuit Justice. l This case is under submission on pleas and motions to dismiss, which contest the jurisdiction of this court to proceed in personam against such of the defendants, not corporations of California, as are not before the court otherwise than by service of pro;cess upon their agents in this district. On this question there is such conflictJn the decisions of the circuit courts that it is proper to examine it as if now for the first time presented. It depends upon the interpretationthat may be given to the act of March 3, 1887, defining the jurisdiction of the circuit courts of the United States. ,24 St. p. 552, c. 373;25 St. p. 433, c. 866. Before looking at the provisions oqhat act, it will well to inquire as to tbe nature of this suit. act of congress 'of' August 7, known as the "Telegraph Act," it is provided that all railroad and telegraph companies to which the United;Sta.tes has granted any subsidy in lands, bonds, or wan of credit, for the construction of eitherrailroad or telegraph lines, and which
Jll8tice HARLAN heard this case under special commission issued by Mr. F'IBLD; pursuaIitto seotion617 of the Revised Statutes, and byconsent of the partiel.