Court Opinion

ID: 6514547
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:25:25.056513+00
Date Added: 2024-06-11T15:54:58.883992
License: Public Domain

[On Application for Reiiearing.]
Pettus & Pettus, for the appellees. — (1.) ‘‘It is a doctrine of law too long established to require the citation of authorities, that where a court has j urisdiction, it has a right to decide every question which occurs in the cause, and whether its decision be correct or otherwise, its judgment, till reversed, is regarded as binding on every other court; and that where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right can not be arrested or taken away by proceedings in any other court. These rules have their foundation, not merely in comity, but in necessity. For, if one may enjoin, the other may retort by injunction; and thus the parties be without remedy, being liable for a process for contempt in one, if they dare to proceed in the other. Neither can one take property from the custody of the other by replevin, or any other process, for this would produce a conflict extremely embarrassing to the administration of justice.”- — Peck v. Jenness, 7 How. 624. To the same
*329effect, but on different phases of the doctrine, are the following cases : Peale v. Phipps, 14 How. 368; Williams v. Benedict’ 8 How. 107; Wiswall v. Sampson, 14 How. 52; Stout v. Lye, 103 U. S. 66; Randall v. Howard, 2 Black, 585; Amy v. Supervisors, 11 Wall. 136. The attention of the court is again invited to these cases, and a reconsideration of the opinions delivered is asked, in order that this court may put itself in alignment with the Supreme Court of the United_ States, which is the final arbiter of every case involving a Federal question, as this case does.
(2.) The complainants are not without remedy, although they could not have made themselves parties defendant to the suit in the Federal court. They might have filed their bill in the Federal court, which has possession of the property, and is administering the trust estate; and their suit being regarded as ancillary, the question of citizenship would be immaterial. Minnesota Co. v. St. Paul Co., 2 Wall. 633; Johnson v. Christian, 125 U. S. 642; Krippendorf v. Hyde, 110 U. S. 276 ; Freeman v. Howe, 24 How. 450; Morgan Co. v. Texas Central Railroad Co., 137 U. S. 201.
(3.) The bill was not filed in the proper' county. The residence of the corporation is shown to be in Bibb county, and its real estate is located in Bibb and Shelby counties. Chambers resides in Colbert county, but he had no interest in any of the property, and was not a stockholder or bondholder; nor is any fraud or misconduct in reference to the matter in litigation charged against him. He was not a material or necessary party. — Code, § 3421.
(4.) Chambers was in possession of the property under the appointment and order of the. court, and he could not be sued, in reference to the property, without the permission of the court. — Davis v. Gray, 16 Wall. 203; Barton v. Barbour, 104 U. S. 126; Ames v. Trustees, 20 Beav. 332; 9 Vesey, 335; 7 Paige, 515. The act of Congress of March 3d, 1847, does not authorize the suit. — U. S. Statutes, 1887-8, p. 436.
Alex. T. London, contra. — (1.) The validity of Chambers appointment as trustee can not be questioned.— Griffin v. Doe, 12 Ala. 783; Foster v. Goree, 4 Ala. 440; Girard v. Philadelphia, 7 Wall. 1; Irvine v. Dunham, 111 U. S. 327; 1 Perry on Trusts, § 275; Dumas v. Robbins, 48 Ala. 545. (2.) By the substitution of Chambers as trustee, the legal title to the property became vested in him, and he was an indispensable party to the bill.— Thayer v. Life Asso., 112 U. S. 717; McCully v. Chapman, 58 Ala. 325; Powe v. McLeod, 76 Ala. 418; Harris v. Moore, 72 Ala. 507.
STONE, C. J.
— It is contended before us that the bill in this case ought to have been dismissed, because of an error in the local jurisdiction; that is, that the bill was filed in Colbert county, the residence of Chambers, the trustee, but of no other party to the suit.. The contention is, that Chambers was a naked trustee, having no interest in anything involved in the litigation, and that his residence did not and could not constitute him a material defendant, so as to authorize the suit to be brought in that county. — Code of 1886, § 3421.
This case was not heard in Colbert, but in Jefferson county. It was removed to the latter county by an order entered on the minutes of the Colbert court, as follows:
“Gay, Hardie & Co. v. Brierfield Coal & Iron Co. W. L. Chambers as Trustee.
By the consent of counsel for the respective parties in the above entitled cause, the same is removed for trial from the Chancery Court of Colbert county to the Chancery Court of Jefferson county, and the register of Colbert county is hereby directed to transfer to the Chancery Court of Jefferson county all the original process and papers in said cause, and a bill of his cost to "this date. The register of Colbert county will file in his office the consent of counsel and this decree.” Signed by Chancellor Cobbs, and dated December 18th, 1889.
In addition to the foregoing, the following orders were made and filed in the Chancery Court of Jefferson county, after the cause was removed to that county; and this, without any reference being made to the irregularity of filing the bill in Colbert county, if that be an irregularity.
“Gay, Hardie & Co. v. Brierfield Coal & Iron Company et. al.
"j In chancery. .Pall term, 1889-i 1890. It is ordered by the court r”that this cause be, and the same is J hereby, submitted on demurrer to the bill, to be heard on briefs.”
“Gay, Hardie & Co. v. The Brierfield Coal & Iron Company.
h In chancery. This cause com-ling on to be heard, was submitted ¡ upon the demurrers to the bill, J and was argued by counsel; and being duly considered, it is ordered, adjudged and decreed, that the demurrers are well taken, and are sustained.” Signed by Chancellor Cobbs, and marked “Filed and enrolled this June 26, 1890,” by the register.
We consider it unnecessary to decide whether or not the suit was properly brought in Colbert county. If not, then the conduct of the parties was a waiver of the irregularity. Hair v. Moody, 9 Ala. 399; Byrd v. McDaniel, 26 Ala. 582.
*331We should do injustice to the research of counsel, if we did not pronounce the application for a rehearing in this case to be able, and fully up to the merits of the question it discusses. It certainly demonstrates that, so long as the Circuit Court of the United States has control and possession of the property and effects of the Brierfield Coal & Iron Company, no other court can interfere with that possession, or hinder it in any way in the free consideration and adjudication of the questions before it; and the judgment or decree it may render will, unless reversed on appeal, be determinative of the rights involved, as between the parties to that suit. Does it, or can it, extend any farther ? When that court pronounces judgment, and relinquishes possession, it can not be affirmed that any right or claim has become res judicata, unless both the claim and claimant have been before the court. Such is the mandate of all enlightened jurisprudence. — 2 Black Judgments, §§ 500, 501; 1 Greenl. Ev. §§ 534-5.
No particular charm can attach to the fact that the suit of Preston B. Plumb, referred to in the present bill of Gay, Hardie & Co, was pending in a court deriving its powers from the government of the United, States. The same doctrine of non-interference will apply, and only the same, as if that suit had been pending in a State court, with a limited exception not material to this case. The present suit does not propose to obstruct- or hinder the United States Court in the free control of the property it has in its possession, or in the untrammelled administration of justice between the parties it has before it. It claims, however, and rightfully claims, that the judgment, of that, or of any other court, rendered on issue joined between the parties to that suit, does not, and can not, determine property rights against other claimants who were not parties to that litigation. It founds its claim on the fundamental principle, that judgments bind, and only bind, parties to the suit, and their privies. It claims that if, in a ■contention between A and B, the right be adjudged in A, this does not estop 0 from asserting and proving that the paramount title is in him.
Another argument in support of the main ground on which the equity of the bill in this case is rested. As we have shown in a former opinion, taking the averments of the bill for our guide, wnen the projectors of the Brierfield Coal & Iron Company placed its stock on the market with a view to organization, it was done with the agreement that every‘subscriber who would purchase and pay for the stock of the corporation, should, without further payment or consideration, receive a thousand dollar bond of the company for every nine hundred *332dollars of stock subscribed and paid for; and the payment of these bonds was to be secured by a mortgage on the entire property and effects of the corporation. This agreement was made good, and the subscribers for the stock received not only the certificates of stock they subscribed and paid for, but in addition the said bonds of the company, in excess of the money paid, secured by a first mortgage on the entire property of the corporation. Ten dollars of this first and highest secured debt and obligation of the company for every nine dollars subscribed and paid in.
We have recently had occasion to consider the nature and purpose of capital stock in business corporations, and the legislative policy which requires such stock as a condition on which it grants a corporate franchise. The liabilities of corporations, unlike the debts of natural persons, impose no personal debts on any one. Only the corporation’s effects can be reached for the satisfaction of debts. Hence the purpose and policy of requiring a capital stock to be subscribed and paid in. It is intended as a security and pledge for the payment of any liabilities the corporation may incur, and partakes-largely of the nature of any other pawn or pledge required and given as security for the fulfillment of a ¡Dromise. It is a pledge in trust, primarily for the security of creditors, and can not rightfully be withdrawn until all debts and liabilities of the corporation are paid. — Gibson v. Trowbridge Furniture Co., 93 Ala. 579.
In the organization of the Brierfield Coal & Iron Company, as the pleadings show, this policy was entirely disregarded. True, the capital stock was to be subscribed and paid for, but the money was not to be left in safe pledge for the security of persons that might become its creditors. Stripped of circuity, the money received for stock subscriptions was only borrowed from the stock subscribers, to be repaid to them, not contingently, but in any event that might occur. Repaid, not as an ordinary debt of the corporation, but as a preferred and secured debt. Preferred and secured by bonds and a first mortgage on all the property of the corporation. So, if the averments of the bill be true, the Brierfield Coal & Iron Company, instead of having a capital stock subscribed and paid, or to be paid on call, commenced operations upon no capital stock of its own, either in possession or in prospect, but on borrowed money, secured to be repaid, with a premium by a first mortgage on all its effects, present and prospective, with nothing in pledge for other debts it might incur, and without other security for the payment of such debts, except a possible surplus of assets, left after repaying the borrowed capital *333stock. In this way it went through the form of organizing and exercising its corporate powers. Instead of requiring a capital stock to be paid in and administered as a security for creditors, it practically dispensed with it altogether. Instead of holding the capital stock as a trust fund primarily for the benefit of creditors, and secondarily for the stockholders, it reversed this natural order of things, transformed the stockholders into creditors, and made them a preferred class, with a prior, paramount mortgage lien over all other creditors who may have trusted, or may trust the corporation. So then, we have the case of an incipient corporation issuing five hundred thousand dollars of its bonds upon no consideration, and secured by a first mortgage, as shown in our first opinion, or, as we have attempted to set forth above, a simple act of borrowing from so called stockholders the entire capital stock on whicli it proposed to do business, secured to be repaid in preference to all other liabilities by a first mortgage on all the property of the corporation. If the bill of Gay, Iiardie & Go. truly represents the facts, can further comment be necessary ?
The application for a rehearing must be denied.