Source: http://www.chanrobles.com/usa/us_supremecourt/260/261/case.php
Timestamp: 2018-01-20 08:48:32
Document Index: 308945894

Matched Legal Cases: ['§ 57', '§ 28', '§ 51', '§ 24', '§ 51', '§ 51', '§ 24', '§ 51', '§ 24', '§ 51', '§ 28', '§ 4', '§ 7']

18. Want of jurisdiction in a state court is not cured by removal of the cause to the federal court. P. 260 U. S. 288. chanroblesvirtualawlibrary
269 F.2d 5 modified and affirmed.
The principal ground on which the proposed consolidation was assailed was that it would contravene the Sherman Anti-Trust Act and the Clayton Act, both laws of the United States. There were also charges that it would be contrary to the constitution and laws of Ohio and other states, but the general tenor of the bill made it evident that these charges were to be taken as of secondary importance. The plaintiff's right to sue was based on allegations that it was a stockholder in the New York Central Company and the Lake Shore Company and, as such, chanroblesvirtualawlibrary
Shortly after the removal, the New York Central Company, again appearing specially for the purpose, sought and obtained in the district court another hearing on its objection to the purported service on it, and, on that hearing, the objection was sustained and the service set aside. 226 F.9d 6. Afterwards, motions by the plaintiff to remand the suit to the state court, to direct special service on the New York Central Company and other defendants in the mode provided in § 57 of the Judicial Code, and for leave to file a supplemental bill and make new parties defendant were severally overruled. And lastly, a motion by the Lake Shore Company, the only defendant then before the court, to dismiss the suit was sustained on the ground that the New York Central Company was an indispensable party, had not voluntarily appeared, chanroblesvirtualawlibrary
From the decree of dismissal, the plaintiff appealed to the circuit court of appeals. That court upheld the rulings setting aside the service on the New York Central Company, denying the motion to remand to the state court, declining to direct special service on the New York Central Company and other defendants, and refusing leave to file a supplemental bill and make new parties. It also sustained the decree of dismissal as to much of the bill, with the qualification that it be without prejudice, and reversed it as to other parts of the bill to which that court thought the Lake Shore Company was the only necessary defendant. 250 F.1d 0.
When the cause was returned to the district court, the plaintiff, complying with a direction that the bill be made certain in a particular in which the circuit court of appeals deemed it uncertain, so amended it as to show the date on which the directors of the Lake Shore and other companies adopted the agreement for the proposed consolidation. The Lake Shore Company then moved that the bill, as left by the decision of the circuit court of appeals, be dismissed on the grounds (a) that, insofar as it was directed to securing an injunction against alleged or threatened violations of the Sherman Anti-Trust Act or the Clayton Act, the plaintiff had no right or standing to maintain it, or, if having such a right or standing, could not bring it in a state court, as was done, and (b) that, insofar as it was directed against alleged or threatened violations of state constitutions or laws, it did not show a right in equity to the relief sought or any part thereof. This motion was sustained, and a decree of dismissal entered. The plaintiff again appealed to the circuit court of appeals, and that court affirmed the decree, but without prejudice to the institution in a proper court of a new suit based only on infractions of state chanroblesvirtualawlibrary
constitutions or laws. 269 F.2d 5. A further appeal brings the case here.
While the state court considered the objection to the service and overruled it before the removal, this was not an obstacle to an examination of the question by the district court after the removal. The state court's ruling was purely interlocutory, and its status in this regard was not affected by the removal. Being interlocutory, it was subject to reconsideration, and would continue to be so up to the passing of a final decree. Had the cause remained in the state court, the power to reconsider would have been in that court, but when the removal was made, the power passed with the cause to the district court. Of course, in the latter the ruling was to be treated with respect, but not as final or conclusive. Garden City Manufacturing Co. v. Smith, 9 Fed.Cas. p. 1153; Bryant v. Thompson, 27 F.8d 1. And see Goldey v. Morning News, 156 U. S. 518, 156 U. S. 522.
The sheriff returned that he had served the summons on the New York Central Company in Cuyahoga County by delivering a copy to "W. A. Barr, regular ticket agent, in charge of the business of said company." As grounds chanroblesvirtualawlibrary
for assailing this service, the company alleged that it was a New York corporation, had no railroad in Ohio, was not doing business there, did not maintain a place of business or office in that state, and had not made Barr its agent or employee. From the evidence adduced on that issue, the district court, as also the circuit court of appeals, found that the grounds of the company's objection were all true in point of fact. We have examined the evidence, and discover no occasion for disturbing the finding. Indeed, we think a different one would have been quite inadmissible. The substance of the evidence is accurately set forth in the opinion of the circuit court of appeals (250 F.1d 5), and need not be repeated here.
In fact, the petition for removal contained an express declaration that the company was "not intending to waive any question of the sufficiency of service or the want of service," but was "reserving all questions of service, jurisdiction, and want of service." Besides, it is well settled that a petition for removal, even if not containing such a reservation, does not amount to a general appearance, but only a special appearance, and that, after the removal the party securing it has the same right to invoke the decision chanroblesvirtualawlibrary
After the service on the New York Central Company was held invalid and set aside, the plaintiff moved that the cause be remanded to the state court. At that time, the Lake Shore Company was the only defendant before chanroblesvirtualawlibrary
A restatement of the facts bearing on the propriety of this ruling will be helpful. The suit, according to the plaintiff's statement of its case as made in the bill, was one chanroblesvirtualawlibrary
This restriction, as repeatedly has been held, does not affect the general jurisdiction of a district court over a particular cause, but merely establishes a personal privilege of the defendant, which he may insist on, or may waive at his election, and does waive, where suit is brought in a district other than the one specified, if he enters an appearance without claiming his privilege. Central Trust Co. v. McGeorge, 151 U. S. 129; Interior Construction, & Impro. Co. v. Gibney, 160 U. S. 217; 209 U. S. 501; United States v. Hvoslef, 237 U. S. 1, 237 U. S. 12; Camp v. Gress,@ 250 U. S. 308, 250 U. S. 311.
The next section (29) provides that the removal shall be "into the district court to be held in the district where chanroblesvirtualawlibrary
From what has been said, it seems plainly to follow that this suit was removable and that the removal was to the District Court for the proper district. But the plaintiff insists that this view does not give due effect to the clause in § 28, "of which the district courts of the United States are given original jurisdiction," and the provision in § 51 respecting the place of suit or venue. These, it is argued, show that removability is not to be determined by inquiring merely whether the particular suit is one of which § 24 says the district courts "shall have original jurisdiction," but by inquiring also whether it is one which under § 51 could be brought, over the defendant's objection, in the district court for the particular district within which chanroblesvirtualawlibrary
Coming to the removal section (28), it is apparent that the clause "of which the district courts of the United States are given original jurisdiction" refers to the jurisdiction conferred on the district courts in general, for it speaks of them in the plural. That it does not refer to the venue provision in § 51 is apparent first because that provision does not except or take any suit from the general jurisdiction conferred by § 24; next, because there could be no purpose in extending to removals the personal privilege accorded to defendants by § 51, since removals are had only at the instance of defendants, and lastly chanroblesvirtualawlibrary
Prior to the adoption of the Judicial Code, with its present arrangement of sections, the jurisdictional provisions of § 24 and the venue provision of § 51 constituted the first section of the Act of August 13, 1888, c. 866, 25 Stat. 443, the jurisdictional provisions preceding the other. The removal provision of § 28, with the clause, "of which the Circuit Courts [Footnote 3] of the United States are given original jurisdiction," constituted the second section of the same chanroblesvirtualawlibrary
The plaintiff cites the cases of Tennessee v. Bank of Commerce, 152 U. S. 454, Cochran v. Montgomery County, 199 U. S. 260, and In re Winn, 213 U. S. 458, as holding that, to be removable into a particular federal court, a suit must be one which as of right could have been brought originally in that court. But those cases are not fairly susceptible of that interpretation. In each, a right of removal was claimed and was denied. In the first and third, the right was claimed on the ground that the suit was one arising under the laws of the United States, and the denial was put on the ground that the plaintiff's statement of his cause of action, apart from any anticipation of defenses, did not show that it arose under those laws. Because of this, it was said in both cases that the suit could not have been brought originally in the Circuit Court, and therefore could not be removed into it. In the second case, the right was claimed on the ground of diversity of citizenship coupled with prejudice and local influence, and the denial was put on the ground that the requisite diversity of citizenship did not exist, the plaintiff and one of the defendants being citizens of the same state. Thus, the turning point in each case was that the suit was not one of which the Circuit Courts were given original jurisdiction -- in other words, that it could not have been brought in any of them, and not that there was any special obstacle to the exercise of jurisdiction by the particular one to which removal was sought. The opinions chanroblesvirtualawlibrary
This section is, in terms, restricted to suits "to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to, real or personal property" located within the district of suit or partly within that district and partly within another district "within the same state." As to such a suit, it provides that, where a defendant is not an inhabitant of chanroblesvirtualawlibrary
Obviously the section is confined to suits which are local in the sense of relating directly to specific property, real or personal, within the district of suit or partly therein and partly in another district of the same state. This suit was not within that category. It was not brought to enforce a claim to or lien upon specific property so located, nor to cancel an incumbrance or lien thereon, nor to remove a cloud upon the title. On the contrary, as the original bill plainly disclosed, it was brought to enjoin two railroad companies -- one having lines both within and without the state in which the suit was begun, and the other having lines without that state -- from consolidating, along with nine other companies, into a single corporation. Such a suit is essentially in personam, and strictly transitory, and is not made chanroblesvirtualawlibrary
An application for leave to file a supplemental bill is addressed to the discretion of the court, and the ruling thereon will not be disturbed on appeal unless the discretion has been abused. Under Equity Rule 34, the office of a supplemental bill is to introduce matters occurring chanroblesvirtualawlibrary
after the filing of the original bill, or not then known to the plaintiff. Much more was attempted by the supplemental bill tendered in this instance. By it, as we have shown, the plaintiff sought to shift the right in which it was suing and to change the character and object of the suit. Other matters also had a bearing on the propriety of granting leave to file it. The railroad of the Lake Shore Company extended from Buffalo, New York, to Chicago, Illinois. Its maintenance and operation as a through line was a matter of general concern. To dismember it might work a serious disturbance of both public and private interests. If its inclusion in the consolidation was unlawful, it was so in respect of the entire line. The supplemental bill sought to deal with only a minor part, and, if sustained, would result in restoring that part to the Lake Shore Company, while leaving the major part with the consolidated company. At a meeting of the stockholders of the Lake Shore Company at which 459,461 shares were represented, the holders of 459,379 shares had voted to ratify the consolidation. The plaintiff held but 5 shares, and had purchased these knowing that the directors had signed the agreement for the consolidation two months before. The ownership of these shares was put forward as entitling the plaintiff to proceed in the right of the Lake Shore Company. No other shareholder was seeking to join in the proceeding. Under the terms of the consolidation, the plaintiff could surrender its shares and take five times their par value in stock of the consolidated company, or, under a supplemental arrangement, it could surrender its shares and receive five times their par value in cash -- a sum not alleged to be less than the actual or market value. The shareholders represented by the Read committee availed themselves of the latter alternative. The circuit court of appeals, considering all these matters, concluded that the action of the district court in refusing leave to file the supplemental bill was chanroblesvirtualawlibrary
Insofar as the allegations of fact in the bill need be noticed here, they may be summarized as follows: the railroad of the New York Central Company extended from New York City to Buffalo, and there connected with the Lake Shore Company's line from Buffalo to Chicago. Continuously since 1898, the New York Central Company had owned more than a majority of the stock of the Lake Shore Company and the Michigan Central Company. For several years, the Lake Shore Company had been, and it still was, the owner of more than a majority of the stock of the Nickel Plate, the Big Four, the Lake Erie, and the Ohio Central Companies. The railroad of the Michigan Central Company and those of the several companies, a majority of whose stock was owned by the Lake Shore Company, were all parallel to and potential competitors of some part or all of the Lake Shore Company's line. All of the lines named were engaged in both intrastate and interstate commerce. The New York Central Company's interest in and control over the Lake Shore and the Michigan Central Companies had been acquired and was held with a view to suppressing competition in intrastate and interstate transportation and to restraining such commerce. In furtherance of that purpose, the directors of the New York Central, the Lake Shore, and nine other companies (the nine were not named in the bill) recently had formulated and signed an agreement for the consolidation of the eleven companies into a single corporation. The agreement called for a ratification by stockholders' meetings. It was ratified over the plaintiff's protest at a meeting of the stockholders of the New York Central Company. The stockholders of the Lake Shore Company were intending to act on it at a meeting called chanroblesvirtualawlibrary
The plaintiff takes the position that the partial reversal on the first appeal amounted to an adjudication of the chanroblesvirtualawlibrary
As to so much of the bill as sought to enjoin the New York Central Company from voting its shares in the Lake Shore Company and to enjoin the latter from permitting it to vote them, we think it is obvious that the New York Central Company was an indispensable party, and that, with it neither appearing nor reached by any effective process, no other course was open than to dismiss that part of the bill. Minnesota v. Northern Securities Co., 184 U. S. 199, 184 U. S. 235, 184 U. S. 246; Talbot J. Taylor & Co. v. Southern Pacific Co., 122 F.1d 7, 152, 154.
As to so much of the bill as sought to enjoin the Lake Shore Company from entering or consummating the proposed consolidation, the New York Central Company plainly was not an indispensable party. Its stockholding interest in the Lake Shore Company did not make its presence essential, its status in this regard being merely chanroblesvirtualawlibrary
As respects the Sherman Anti-Trust Act as it stood before it was supplemented by the Clayton Act, this Court has heretofore determined that the civil remedies specially provided in the act for actual and threatened violations of its provisions were intended to be exclusive, and that those remedies consisted only of (a) suits for injunctions brought by the United States in the public interest under § 4, and (b) private actions to recover damages brought under § 7. Minnesota v. Northern Securities Co., 194 U. S. 48, 194 U. S. 71; Wilder Manufacturing Co. v. Corn Products Refining Co., 236 U. S. 165, 236 U. S. 174; Paine Lumber Co. v. Neal, 244 U. S. 459, 244 U. S. 471; Geddes v. Anaconda Mining Co., 254 U. S. 590, 254 U. S. 593. The present suit for an injunction, brought by a private corporation in its own interest, was not within those remedies, and so could not be maintained under that act standing alone. chanroblesvirtualawlibrary
This section undoubtedly enlarges the remedies provided in the Sherman Anti-Trust Act to the extent of enabling persons and corporations threatened with loss or damage through violations of that act to maintain suits to enjoin such violations, save in the instances specified in the proviso. This right to sue, however, is granted in terms which show that it is to be exercised only in a "court of the United States." This suit was brought in a state court, and, insofar as its purpose was to enjoin a violation of the Sherman Anti-Trust Act, that court could not entertain it. The situation was the same in respect of the purpose to enjoin a violation of the Clayton Act. chanroblesvirtualawlibrary
This branch of the suit was loosely set forth, and, as was observed by both courts below, there is some ground for thinking the references to state constitutions and laws were merely makeweights. With other matters eliminated, this branch, at best, was left in a state of relative uncertainty. After commenting on this, the circuit court of appeals said, with ample warrant (269 F.2d 9):
Our conclusion is that the motions to dismiss were rightly sustained. The circuit court of appeals qualified the dismissal by making it without prejudice as to all parts of the bill save one. We have indicated that the qualification should have included that part. chanroblesvirtualawlibrary
See Ex parte State Insurance Co., 18 Wall. 417; Hess v. Reynolds, 113 U. S. 73; Knowlton v. Empire Spring Co., 14 Fed.Cas. p. 796; Hyde v. Victoria Land Co., 125 F.9d 0; Rubber & Celluloid Harness Trimming Co. v. Whiting-Adams Co., 210 F.3d 3, 395; St. John v. Taintor, 220 F.4d 7; Pavick v. Chicago, Milwaukee & St. Paul Ry. Co., 225 F.3d 5; Eddy v. Chicago & Northwestern Ry. Co., 226 F.1d 0; New York Coal Co. v. Sunday Creek Co., 230 F.2d 5; Ostrom v. Edison, 244 F.2d 8; Matarazzo v. Hustis, 256 F.8d 2, 885, 892.
Fales v. Chicago, Milwaukee & St. Paul R. Co., 32 F.6d 3; Vinal v. Continental Construction Co., 34 F.2d 8; Wilson v. Western Union Telegraph Co., 34 F.5d 1, 564; Cooley v. McArthur, 35 F.3d 2; Kansas City & Terminal Co. v. Interstate Lumber Co., 37 F. 3; Baltimore & Ohio R. Co. v. Meyers, 62 F.3d 7, 372; Duncan v. Associated Press, 81 F.4d 7; Rome Petroleum & Iron Co. v. Hughes Specialty Co., 130 F.5d 5.
See Adams v. Heckscher, 80 F.7d 2, 744.