Source: https://caselaw.findlaw.com/us-supreme-court/198/188.html
Timestamp: 2019-04-21 15:19:15+00:00

Document:
[198 U.S. 188, 189] On February 7, 1866, an act passed the Alabama legislature incorporating five persons named, their associates and successors, as 'The Alabama & Georgia Manufacturing Company.' On March 21, 1866, the Georgia legislature incorporated the same individuals under the same name, 'The Alabama & Georgia Manufacturing Company.' The purposes of the two corporations were identical. Among others, the use of the water power of the Chattahoochee river, the boundary line between Alabama and Georgia, was contemplated, and the Georgia act specifically authorized the corporation '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. [198 U.S. 188, 190] 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. (1891) 48 Fed. 12, (1892) 51 Fed. 268, ( 1893) 6 C. C. A. 79, 13 U. S. App. 359, 56 Fed. 690, (1894) 67 Fed. 189, ( 1896) 19 C. C. A. 152, 30 U. S. App. 683, 72 Fed. 708, (1898) 89 Fed. 218; Huguley Mfg. Co. v. Galeton Cotton Mills (1899) 36 C. C. A. 236, 94 Fed. 269, (1899) 175 U.S. 726 , 44 L. ed. 339, 20 Sup. Ct. Rep. 1022; Riverdale Cotton Mills v. Alabama & G. Mfg. Co. (1901) 111 Fed. 431; Huguley Mfg. Co. v. Galeton Cotton Mills (1902) 184 U.S. 290 , 46 L. ed. 546, 22 Sup. Ct. Rep. 452; Re Huguley Mfg. Co. (1902) 184 U.S. 297 , 46 L. ed. 549, 22 Sup. Ct. Rep. 455; Alabama & G. Mfg. Co. v. Riverdale Cotton Mills (1904) 62 C. C. A. 295, 127 Fed. 497.
On May 2, 1901, the Alabama & Georgia Manufacturing Company of Alabama and the Huguley Manufacturing Com- [198 U.S. 188, 191] pany 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.
Messrs. Louis D. Brandeis, Thomas H. Watts, and William H. Dunbar for petitioner.
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.
Upon what is this contention based? The respondents say that the property conveyed by the trust deed was all in Alabama, although the deed recites that part of it was in Georgia; that it originally belonged to the Alabama company; that that company executed the trust deed, although the resolution incorporated in the trust deed purports to have been passed at a meeting of the directors, held at the office of the company in West Point, Georgia; that the Alabama company was not made a party to the foreclosure proceedings, and could not have been, because the plaintiff was a citizen of Alabama, and making the Alabama company a defendant would have ousted the court of jurisdiction; that the subsequent owner of the property, another Alabama company, was also not made a party to those proceedings, and that therefore they were res inter alios acta, and in no way binding upon either Alabama company. It is also insisted by the respondents that the so- [198 U.S. 188, 193] called 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, U. S. Comp. Stat. 1901, p. 581, the Federal court had no power to restrain the further proceedings in the state chancery court.
'That a corporation known as the 'Alabama & Georgia Manufacturing Company,' alleged to be a corporation organized under the laws of Georgia only, and said Huguley Manufacturing Company, together with the said W. T. Huguley, were the sole defendants to said bill, said W. T. Huguley being made defendant as cotrustee, alleged to be interested adversely. The Alabama & Georgia Manufacturing Company, originally chartered and organized as a corporation under said act of the general assembly of the state of Alabama, never has been made a defendant thereto, and never appeared as a party to said cause, the president of said corporation, to wit, W. H. Huguley, himself likewise a citizen and resident of the county of Chambers, state of Alabama, never having been served with notice either of said alleged default of interest, as expressly required under the terms of the trust deed, or notice of said suit of foreclosure against said Alabama & Georgia Manufacturing Company. No attempt was made, by either [198 U.S. 188, 194] 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.
'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.
'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. v. St. Louis, A. & T. R. Co. 59 Fed. 385; Fidelity Ins. T. & S. D. Co. v. Norfolk & W. R. Co. 88 Fed. 815; State Trust Co. v. Kansas City, P. & G. R. Co. 110 Fed. 10.
It must be borne in mind in this connection that the Huguley Manufacturing Company was made a party defendant, and appeared in the original foreclosure suit, and also that it had purchased the property, and owned it subject to the trust deed. So the bill in the state court specifically avers, and the record of the proceedings in the foreclosure suit shows that it took an active part in the litigation. It admitted in that litigation that it was a citizen of Georgia. It now goes into a state court, [198 U.S. 188, 197] 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 , 24 L. ed. 207. 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.
See also Evers v. Watson, 156 U.S. 527 , 39 L. ed. 520, 15 Sup. Ct. Rep. 430.
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.
As appears from the record, the Huguley Manufacturing Company was the owner of the equity of redemption at the time the foreclosure suit was instituted. It, therefore, was unnecessary to make the original grantor in the trust deed a party to the litigation. All that could be accomplished by its presence would be a decree putting at an end all question of its interest, and, possibly, if a sale did not pay the debt, a judgment over for the deficiency. But neither of these results would affect the jurisdiction of the court, so far as the owner of the equity of redemption is concerned, or impede [198 U.S. 188, 199] the transfer of the title by foreclosure and sale to the purchaser.
Whatever may have been within the scope of the ulterior purpose of the Georgia incorporation, the immediate purpose was the development of a single plant, and that purpose was carried into effect. By the charters the office of the Alabama company was located in Alabama, and that of the Georgia company in Georgia. When the trust deed was executed, it was executed in the name which was common to both corporations, but in pursuance of resolutions passed at an office in Georgia. It would be unjust to impute to these incorporators a design to mislead the holders of the indebtedness of the company by giving to them a security which rested alone upon the inconsiderable fraction of property then located in Georgia, when, on the face of the instrument, it purported to convey the entire plant. Evidently the proceedings were had on the supposition that there was but a single entity. That entity was indebted, and it gave the trust deed as security therefor. When the foreclosure suit was filed it would be also an unjust imputation to suppose that the owners of the property carried on the litigation for years, knowing that the proper parties were not present in court, and that the outcome of that litigation meant nothing. Evidently this defense, springing from the existence of two corporations, was an afterthought, when all other resources had failed, and equity may well say that to [198 U.S. 188, 202] 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.
The judgment of the Court of Appeals is reversed, and that of the Circuit Court is affirmed.

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