Source: https://supreme.justia.com/cases/federal/us/198/188/
Timestamp: 2019-04-25 04:14:39+00:00

Document:
Justia › US Law › US Case Law › US Supreme Court › Volume 198 › Riverdale Cotton Mills v. Alabama & Georgia Mfg. Co.
A federal court exercising a jurisdiction apparently belonging to it, may thereafter, by ancillary suit, inquire whether that jurisdiction in fact existed, and may protect the title which it has decreed as against all parties to the original suit and prevent any of such parties from relitigating questions of right already determined.
on the ground of diverse citizenship, alleged and admitted, the judgment or decree which is entered is conclusive, and cannot be upset by either of them in any other tribunal on the mere ground that diverse citizenship did not actually exist.
In an ancillary suit, a party to the original action cannot challenge the jurisdiction of the circuit court in the original action on the ground that its admission of citizenship was an error and that a correct statement would have disclosed a lack of jurisdiction.
Although, where two corporations of the same name, chartered by different states, exist and there has been no merger, the corporations are separate legal persons, the court may, where the circumstances as in this case justify it, look beyond the formal and corporate differences and regard substantial rights, rather than the mere matter of organization.
Federal tribunals are not moot courts, and parties having substantial rights must, when brought before those tribunals, present those rights, or they may lose them.
"to carry on any of the business and manufactures, or any branch or branches of the same, in this state, that said charter authorizes them to engage in or carry on in the State of Alabama."
On January 2, 1884, the Alabama & Georgia Manufacturing Company executed a trust deed conveying property situate partly in Georgia and partly in Alabama, but practically only a single plant, to J. J. Robinson, W. C. Yancey, and W. T. Huguley, as trustees, to secure the payment of sixty-five thousand dollars of the mortgage bonds. There is nothing in the trust deed to indicate whether it was executed by the Alabama corporation or the Georgia corporation, except it be the mention of West Point, Georgia, as the location of the company's office.
On February 28, 1890, the Huguley Manufacturing Company was incorporated under the laws of the State of Alabama, and subsequently acquired by purchase all the property included within the trust deed. Default having been made in the payment of interest on the bonds, Robinson, one of the trustees, and a citizen of Alabama, on January 21, 1891, filed a bill of foreclosure in the Circuit Court of the United States for the Northern District of Georgia against the Alabama & Georgia Manufacturing Company, the Huguley Manufacturing Company, each of which was alleged to have been created under the laws of the State of Georgia, and a resident and citizen of that state, and against W. T. Huguley, also averred to be a citizen of the State of Georgia, and all three residing within the Northern District of Georgia. In the bill, the plaintiff alleged that Yancey, one of the trustees, was dead; that Huguley, the other trustee, was interested adversely to the bondholders, and that plaintiff was therefore the only one authorized to bring the suit. A vast amount of litigation concerning the property has followed the commencement of this foreclosure suit, as partially appears from the following references: Robinson v. Alabama & G. Mfg. Co., 48 F. 12 (1891); Robinson v. Alabama & G. Mfg. Co., 51 F. 268; Alabama & G. Mfg. Co. v. Robinson, 56 F. 690 (1893); Robinson v. Alabama & G. Mfg. Co., 67 F. 189 (1894); Alabama & G. Mfg. Co. v. Robinson, 72 F. 708 (1896); Robinson v. Alabama & G. Mfg. Co., 89 F. 218; Huguley Mfg. Co. v. Galeton Cotton Mills, 175 U. S. 726 (1899); Riverdale Cotton Mills v. Alabama & G. Mfg. Co., 11 F. 431 (1901); Huguley Mfg. Co. v. Galeton Cotton Mills, 184 U. S. 290 (1902); In re Huguley Mfg. Co., 184 U. S. 297 (1902); In re Huguley Mfg. Co., 127 F. 497 (1904).
of the same state filed their bill in the chancery court of the First District of the Northeastern Division of the State of Alabama, in which they alleged that the plaintiff the Alabama & Georgia Manufacturing Company was at one time the owner of the property included within the trust deed hereinbefore referred to; that it executed that deed to the parties named as trustees; that a foreclosure suit was commenced by one of the trustees, J. J. Robinson, in the United States Circuit Court for the Northern District of Georgia; that the parties named as defendants therein were the Alabama & Georgia Manufacturing Company, alleged to be a corporation organized under the laws of Georgia, the said Huguley Manufacturing Company, and W. T. Huguley. The bill set out with some detail the proceedings in the Circuit Court of Georgia, but alleged that they were null and void so far as concerns the title of the plaintiffs in that suit. The bill sought to redeem the property described from the lien of the bonds and trust deed. On June 10, 1901, this petitioner, a corporation which had acquired all the title to the property described in the trust deed, passing under the foreclosure proceedings hereinbefore referred to, filed in the Circuit Court for the Northern District of Georgia an ancillary bill to restrain the further prosecution of the suit in the state court in Alabama. A temporary injunction was issued which, on final hearing, was made perpetual. Thereupon defendants took an appeal to the Circuit Court of Appeals for the Fifth Circuit, which reversed the decree of the circuit court and ordered that the case be remanded to that court with instructions to dismiss the bill. The case was then brought here on certiorari.
For over ten years from January 21, 1891, the date of the filing of the original bill, litigation was carried on in the Circuit Court of the United States for the Northern District of Georgia, and in appellate courts, in the foreclosure of a trust deed executed by the Alabama & Georgia Manufacturing Company. In the course of that litigation, decrees were entered and reversed, sales were made and set aside, possession of property was transferred and retransferred, accountings had as to the proceeds of property in possession, and when it seemed that at last litigation was at an end, the foreclosure consummated, and the title established in the purchaser, we are told that it all amounted to nothing; that parties, lawyers, and courts have been spending their time and labor in simply beating the air, the title to the property conveyed by the trust deed being exactly where it was before the litigation commenced, and the party which had acquired possession by that litigation subject to an obligation to account as a mortgagee in possession.
ancillary bill filed by the petitioner was not in any sense of the term an ancillary, but in fact an original, bill, and that, under Rev.Stat. § 720, the federal court had no power to restrain the further proceedings in the state chancery court.
direct or ancillary proceedings, to subject the property lying in the State of Alabama to this suit. A portion of the property was erroneously described in the said mortgage as lying within the County of Harris, in the State of Georgia, while the orators aver that all of said property was and is situated within the County of Chambers, in the State of Alabama."
"The property was not advertised in the State of Alabama, nor was any sale or pretense of sale conducted in said state."
"The Huguley Manufacturing Company, a corporation, avers that it purchased and acquired all the property hereinabove described subject to said mortgage, and is now the owner of the same subject to said mortgage."
"That while said Alabama & Georgia Manufacturing Co. may have been incorporated in the State of Georgia, it was also incorporated in the State of Alabama prior to the incorporation in the State of Georgia. And these respondents aver that there never was, by the action of the State of Georgia and Alabama, any merger or consolidation of said two corporations. They therefore allege that said Alabama & Georgia Manufacturing Company, incorporated under the laws of Alabama, was a distinct and separate legal entity from the Alabama & Georgia Manufacturing Company incorporated under the laws of Georgia."
"That while said Huguley Manufacturing Company was alleged in said bill to have been incorporated under the laws of Georgia, the defendants aver that, as a matter of fact it was never so incorporated."
It also avers that the property is all in the State of Alabama. The case was submitted on bill and answer.
"It is well settled that a court of equity has jurisdiction to carry into effect its own orders, decrees, and judgments, which remain unreversed when the subject matter and the parties are the same in both proceedings. The general rule upon the subject is thus stated in Story's Equity Pleading, 9th ed. § 338:"
"A supplemental bill may also be filed as well after as before a decree, and the bill, if after a decree, may be either in aid of the decree, that it may be carried fully into execution. . . ."
"The jurisdiction of courts of equity to interfere and effectuate their own decrees by injunctions or writs of assistance in order to avoid the relitigation of questions once settled between the same parties is well settled. Story's Eq.Jur. § 959; Kershaw v. Thompson, 4 Johns.Ch. 609, 612; Schenck v. Conover, 13 N.J.Eq. 220; Buffum's Case, 13 N.H. 14; Shepherd v. Towgood, Tur. & Rus. 379; Davis v. Black, 6 Beav. 393. In Kershaw v. Thompson, the authorities are fully reviewed by Chancellor Kent, and need not be reexamined here."
"If the sheriff is allowed to sell the very property conveyed by the federal decree, such action has the effect to annul and set it aside because, in the view of the state court, it was ineffectual to pass the title to the purchaser. In such case, we are of opinion that a supplemental bill may be filed in the original suit with a view to protecting the prior jurisdiction of the federal court, and to render effectual its decree. Central Trust Co. of New York v. St. Louis, Arkansas &c. Railroad Co., 59 F. 385; Fidelity Ins. Trust & Safe Deposit Co. v. Norfolk & W. R. Co., 88 F. 815; State Trust Co. v. Kansas City &c. R. Co., 110 F. 10."
"In such cases, where the federal court acts in aid of its own jurisdiction, and to render its decree effectual, it may, notwithstanding Rev.Stat. § 720, restrain all proceedings in a state court which would have the effect of defeating or impairing its jurisdiction. Sharon v. Terry, 36 F. 337, per Mr. Justice Field; French v. Hay, 22 Wall. 250, 22 L. ed. 85; Deitzsch v. Huidekoper, 103 U. S. 494."
and, averring that it is a citizen of Alabama, the state of which the plaintiff was a citizen, contends that the United States court in Georgia had no jurisdiction; but, having been in that United States court, litigating the case on its merits, and its rights there determined, that court has power to protect its decree as against any action which such litigant may take in any other court.
It must also be remembered that the trust deed described the property conveyed as situated partly in Georgia and partly in Alabama. The federal court sitting in Georgia had jurisdiction to foreclose that trust deed. Muller v. Dows, 94 U. S. 444. Even if there were errors or irregularities in the proceedings, they would not affect the matter of jurisdiction, and as those proceedings have been sustained on appeal, we may assume that they were free from errors.
"It was settled by this Court at a very early day that, although the judgments and decrees of the circuit courts might be erroneous, if the records failed to show the facts on which the jurisdiction of the court rested, such as that the plaintiffs were citizens of different states from the defendants, yet that they were not nullities, and would bind the parties until reversed or otherwise set aside."
"If the federal court erred in assuming or retaining jurisdiction of Dowell's suit -- a question not necessary to be examined -- would it follow that its final decree, being unmodified and unreversed, can be treated as a nullity when assailed collaterally by one who was a party to the suit in which it was rendered?"
"This disposes of the first objection urged against the decree in the federal court under which Dowell purchased. That decree cannot be treated in this suit as void for want of jurisdiction."
See also Evers v. Watson, 156 U. S. 527.
Some of these cases, as appears from the quotations, go to the extent of holding that although, on the face of the record, jurisdiction does not appear, yet the judgments or decrees are binding upon the parties thereto, and cannot be assailed collaterally. A fortiori, must it be true that when, on the face of the record, jurisdiction appears, the judgment or decree must be held conclusive against a collateral attack by either of the parties thereto. The Huguley Manufacturing Company was, as is conceded in these ancillary proceedings, a party to the original litigation, and cannot now be permitted to challenge the jurisdiction of the federal court on the ground that its admission of citizenship was an error, and that a correct statement would have disclosed a lack of jurisdiction.
the transfer of the title by foreclosure and sale to the purchaser.
"The arrangement by which, without any valuable consideration, the stockholders of the Virginia corporation organized a Pennsylvania corporation, and conveyed these lands to the new corporation for the express purpose -- and no other purpose is stated or suggested -- of creating a case for the federal court, must be regarded as a mere device to give jurisdiction to a circuit court of the United States, and as being, in law, a fraud upon that court as well as a wrong to the defendants. Such a device cannot receive our sanction. The court below properly declined to take cognizance of the case."
in such event, of using Columbus, or La Grange, Georgia, for its offices and shipping points. To that end, the said incorporators did not elect to ask the Legislature of Georgia for any express statutory license authorizing the preexisting Alabama company to exercise in Georgia the same powers and rights which had been given it by the parent state of its creation (Alabama) -- i.e., that it be 'domesticated' in Georgia by the laws of that state, but the application was for the creation of a separate and independent corporation under the same name, and on March 21, 1866, 'The Alabama & Georgia Manufacturing Company,' as a second distinctly independent corporation, was granted a charter by the Legislature of the State of Georgia."
sustain the present contention would give judicial sanction to inexcusable trifling with courts. It is always to be understood that federal tribunals are not moot courts, and that parties having substantial rights must, when brought before those tribunals, present those rights, or may lose them.

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