Court Opinion

ID: 8764256
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:19:07.106418+00
Date Added: 2024-06-11T17:01:46.047754
License: Public Domain

GROSSCUP, Circuit Judge
(dissenting). Though the facts are fully and accurately stated in the opinion of the court, I shall summarize such of them, in their logical order, as are necessary to bring out the view upon which this dissent is founded.
The original bill was not the ordinary and usual bill for foreclosure, nor was the decree the ordinary and usual decree foreclosing a mortgage. The bill brought to the attention of the court the fact that certain property claimed by the New England Water Company as its own, free from the Farmers Loan and Trust Company mortgage, and mortgaged by the New England Company as unencumbered property to the International Trust Company, was not in fact property free from the Farmers Loan and Trust Company mortgage, but was property subject to the Farmers Loan and Trust Company mortgage *282as after acquired property; and had not in fact been mortgaged unencumbered to the International Trust Company, but was not subject to that mortgage in any respect; and upon issues made upon these contested questions (the New England Water Company and the International Trust Company being in court for themselves and those who claimed under them) the decree of foreclosure, as a basis on which to foreclose the Farmers Loan and Trust Company mortgage, judicially determined that the property in dispute was subject to the Farmers Loan and Trust Company mortgage, and that, at the sale decreed, the purchaser should take the same free and discharged from the lien or encunrbrance of the alleged mortgage by the New England Company to the International Trust Company in the decree mentioned, and free from all claim or claims, of every kind and nature, of all parties to the cause, and those claiming under them; jurisdiction being retained for the purpose of “enforcing the conditions of this decree, and of any further order made herein.”
Under the decree thus entered — a decree judicially determining the legal status of the property in dispute — all the property, including the property in dispute, was offered for sale, under a provision that a committee of bondholders represented by the Farmers Loan and Trust Company might bid; and, should they become the purchasers, might pay for the same, by turning in cash sufficient to discharge a previous mortgage in which they were not interested, and by paying in cash to the bondholders not represented bv the committee, their proportion of the purchase price, together with costs of suit — the bonds of those represented by the committee to be turned in for the balance; under which provisions — all of them provisions in the decree — the committee made the'highest and best bid for the property.
• When this sale came to the court for confirmation, tire appellant appeared and filed objections as counsel for bondholders claiming under the International Trust Company’s mortgage (he had also been counsel throughout the preceding litigation) on various grounds, including one that the selling price was too small, but chiefly on the ground that the individual bondholders whom, he now appeared for, not having been parties, in name at least, to the previous proceedings, were not bound by the decree, and still retained, notwithstanding the decree, a lien or claim upon the property in dispute.
The filing of these objections put the posture of affairs thus: The court .had a bid, based upon a decree that the purchaser was to obtain the property in dispute free and clear from the claim of the International Trust Company, and those claiming under it (meaning of course these individual bondholders); a bid that required that large sums in cash should be paid to a previous mortgage? and to bondholders not represented. But the individual bondholders claiming under the International Trust Company were now in court insisting, that as against them, notwithstanding the clear terms of the decree, the purchaser should obtain no such free and unencumbered title. So the practical question before the court was: Are these individual bondholders foreclosed by that decree, as to this disputed property, or are they not; for if foreclosed, the court could give title free and clear of encumbrance .according to the provisions of the decree; while *283if not, the purchasers were not obtaining the title free and clear of encumbrance that they had a right, from the decree to expect. The question was a practical question and a pressing one — one on which the court ought to have power to take a practical and effective course.
Unquestionably, to my mind, the court in overruling these objections, determined — was bound to determine — that the individual bondholders were bound by the original decree, and that the purchaser would take the property free from their claims. There is no other reason or logic in the ruling. And unquestionably too, the injunc-lional order included in the decree of confirmation was intended by the court as a method of protecting the purchaser against the disregard, by the individual objecting bondholders and their counsel, of this ruling — a step taken by the court to secure to the purchaser the kind of title that the court in the original decree had offered to the purchaser. Now. was the court.without power to put that ruling into practical effect ?
The opinion from which I dissent does not hold that the court had no power, in its original decree, to order the property sold, free and clear from the claim of the International Trust Company and those claiming under it; nor that the individual stockholders, whose counsel appellant was, are not parties claiming under the International Trust Company, and for that reason not bound by that portion of the decree. On the contrary it proceeds on the assumption that in the original decree the court had such power; and that these individual bondholders are thus bound.
Nor does the opinion from which I dissent hold, that supplemental to the, foregoing power the court would not have had the power, in the original decree, to enter an in junctional order restraining the International Trust Company, and those claiming under them, and their attorneys, from setting up any pretended title against the title of the purchasers acquired under the court’s deed. On the contrary, respecting that question, the opinion says :
“The propositions o£ law upon the general powers oí the trial court to restrain the prosecution of cognate suits in other courts, and in reference to the rights and privileges of counsel in actions so brought — -which are presented in one of the aspects of this ad,indication and discussed in the arguments — are not free from difficulty under the authorities. It is not needful, however, to decide either of these important general questions, unless the validity of the commitment rests upon their solution.”
And further on the opinion proceeds:
“In die foreclosure proceeding, therefore, it may well be assumed that the court possessed ample power to make all needful orders or provisions interlocutory or final, not only to foreclose interests which are represented, but to protect the res and interests involved in the litigation for complete administration.”
The opinion from which I dissent does not show, specifically at least, that the iujunctioiial order subsequently entered was not known to the individual bondholders or appellant, before the acts constituting the contempt were committed: though it does state that neither the bondholders nor the plaintiff in error were named as parties to the iujunctioiial order, nor cited in, nor recognized as parties of record. *284But this last statement ignores the fact fully stated elsewhere in the opinion that the injunctional order was entered as a part of the order overruling the objections filed by appellant in behalf of these individual bondholders, and presumptively, therefore, did not escape his notice.
The opinion from which I dissent, puts forth no pretension that if the injunctional order were within the power of the court to enter, appellant can defend against the contempt proceedings on the ground, either that the -proposition of law on which it was founded was erroneous; or that the proceedings were defective or irregular; or that on review on appeal, or in error, the court for any reason other than that of want of power should have vacated the order. And I take it, it is too well settled for further discussion, that a party charged with contempt may not procure a review of the injunctional order entered on any ground other than want of power of the court to enter it — may not obtain a general review of an order by simply defying it.
Assuming,- then, that the court, in its original decree of foreclositre, had power to enter the injunctional order (as assumed though not decided, in the opinion from which I am dissenting; but decided I think in Julian v. Central Trust Company, 193 U. S. 93, 24 Sup. Ct. 399, 48 L. Ed. 629), the opinion proceeds to find that the court was without power to enter the order, in the subsequent confirmatory decree, for the following reasons as I understand them: (a) That such an order was not'within the reservation contained in the original decree; (b) That such an order was not within the issues presented to the court on the confirmatory decree; and (c) That the individual bondholders,, and the plaintiff in error, were not in court at the time the injunctional order was entered, upon any issue that could eventuate in such an injunction.
I take up these reasons in the order stated. Eirst then as to the reservation in the original decree. The original decree reserves full power of “enforcing the conditions of this decree, and of any further order made herein.” Why is not that broad enough to include the condition that the purchaser, at the foreclosure sale, should take title, free and clear of the claims of the International Trust Company and those claiming under them? Indeed, the proviso just named, was one of the main conditions of the decree. .Upon it rested the practical question of what amount the property would sell for, or whether the property could be sold at all. To clear up that condition, the main litigation was fought out — there was no other substantial issue in the case; so that to say now that the court, in entering its original decree, did not intend to reserve power, to the extent if necessary of all the power it possessed, to enforce that condition of the decree, by any order that it might subsequently enter, is to say that the court kept its eyes and its decree open to the. smaller contingencies that might transpire, but closed both its decree and its eyes to the single great contingency that might intervene to defeat the court’s purpose, and the court’s power to subsequently carry out that purpose.
Assuming then that the injunctional order was within the reservations contained in the original decree, is there anything in the proposition that it was not within the issues subsequently presented to the *285court on the confirmatory decree, or that appellant was not in court on that order ? The individual bondholders represented by appellant, and appellant himself, were, in fact, as we have seen, in court at the time the confirmatory decree, carrying along with it this injunction, was entered. The contention of the individual bondholders that they were not bound by the original decree was necessarily before the court, as already stated, when the confirmative decree was entered. The practical question raised by their objections was, whether these individual bondholders were so bound; and though the matters thus brought before the court by appellant on behalf of the individual bondholders did not, perhaps, take the ordinary and usual form of pleadings calculated to present issues, they did present substantial actual issues, upon the consideration of which the court must have predicated its judgment that the injunctional order should be entered. By what authority then, is the regularity of these proceedings now challenged? Appellant has not brought the injunctional order to this coutl on review or appeal, as lie might have done; he has simply defied it. By what authority does he obtain a review as if, instead of defying, he had in the ordinary course of procedure appealed from it? True, as already stated, the record does not disclose a petition or other pleading formally asking them to show cause why the injunctional order should not he entered, and bringing them into court for that purpose; but being in court for any of the purposes of the case, I take it as fundamental that they were in court for all the purposes of the case; and that unless dismissed out of court, they are bound by every prohibition laid upon them, respecting the subject matter of the litigation that the court had power to lay upon them, unless, and until, it was set aside in the regular course of appeal. To hold otherwise would be to hold, as already stated, that one enjoined from doing a particular act' — ■ one not only notified of the injunction, but a party to the order in which the injunction is entered — can procure a review of the regularity of the proceedings in which it is entered by simply defying it.
The injunctional order entered is an unusual one. But the case in some respects is unusual. The practical consideration behind the court’s determination of the status of the disputed property — whether it should be sold free and clear of the claim of the International Trust Company and those claiming under it, or not — was not merely that the parties might know what, in law, was the status of the disputed property. The practical consideration, behind that portion of the decree, was that the court might obtain the highest price that the property would command, by selling it, in fact, free and clear of such encumbrances. And to secure such a sale, to make good its assurance that the property would gO‘ to the purchaser free and clear of the claims adjudicated, the court had power, in my judgment, at any stage in its proceedings, by giving proper notice to the parties bound by the decree, to lay its mandate of prohibition against their doing anything that would defeat the decree. Indeed, to say now to the purchaser, that it was not a water plant, free and clear of all the claims litigated and determined that he was buying, but a water plant encumbered by a renewed lawsuit, that might be carried on in any of the courts of the country, seems to me to be flying in the face of the very con*286servative, but the very just and healthful, course taken in Julian v. Central Trust Company, supra.
The judgment of the Circuit Court is reversed, with direction to dismiss the petition and discharge the plaintiff in error.