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priority as creditor subrogation of surety.

At common law a surety is not subrogated to the rights of the sovereign (No. against the principal debtor until the claims of the former have been satisfied in full.

Peoples v. Peoples Bros. 254 Fed. 489; Sheldon, Subrogation, 2d ed. § 127; (No. United States Fidelity & G. Co. v. Union Bank & T. Co. 143 C. C. A. 30, 228 Fed. 448; National Bank v. Rockefeller, 98 C. C. A. 8, 174 Fed. 22; Wilcox v. Fairhaven Bank, 7 Allen, 270; Swan v. Patterson, 7 Md. 164; Willingham v. Ohio 158, 56 S. W. 706, 57 S. W. 467; GuarValley Bkg. & T. Co. 22 Ky. L. Rep. antee Title & T. Co. v. Title Guaranty & S. Co. 224 U. S. 152, 56 L. ed. 706, 32 Sup. Ct. Rep. 457; Taxation Comrs. v. Palmer [1907] A. C. 179, 76 L. J. P. C. N. S. 41, 96 L. T. N. S. 278, 23 Times L. R. 304, 14 Manson, 106; Dollar Sav. Bank v. United States, 19 Wall. 227, 22 L. ed. 80; United States v. State Bank, 6 Pet. 29, 8 L. ed. 308.

The United States, having been given by U. S. Rev. Stat. § 3466, priority over other creditors of an insolvent debtor, is entitled to such priority, as against a surety on the debtor's bond to the government, for the amount of its claim remaining unpaid after the surety has paid the full amount of the liability on the bond, although by § 3468, when a surety pays to the United States the money due upon a bond, such surety is given like priority for the recovery of the money as is secured to the United States. While the priority given the surety by such statute attaches as soon as the obligation upon the bond is discharged, it cannot ripen into enjoyment unless or until the whole debt due the United States is satisfied.

[For other cases, see United States, V.; Bankruptcy, X. c, 3, in Digest Sup. Ct. 1908.]

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N WRIT of Certiorari to the United States Circuit Court of Appeals for the Eighth Circuit to review a decree which affirmed a decree of the District Court for the Eastern District of Missouri, allowing equal priority with the United States to a claim of a surety on the bond of a government contractor. Reversed.

See same case below, 262 Fed. 62.

C. C. A.,

The facts are stated in the opinion. Assistant Attorney General Spellacy and Mr. Leonard B. Zeisler submitted the cause for the United States:.

Note. On priority of United States in cases of insolvency-see notes to Field v. United States, 9 L. ed. U. S. 94, and Prince v. Bartlett, 3 L. ed. U. S. 614.

As to common-law priority of state or United States in payment from assets of debtor-see notes to State v. First State Bank, L.R.A.1918A, 398; Re Carnegie Trust Co. 46 L.R.A. (N.S.) 260; and State v. Foster, 29 L.R.A. 226.

United States Rev. Stat. § 3468, Comp. Stat. § 6374, 2 Fed. Stat. Anno. 2d ed. p. 223, does not change the common law, but is merely declaratory_of_it.

Manisty v. Churchill, L. R. 39 Ch. Div. 174, 58 L. J. Ch. N. S. 136, 59 L. T. N. S. 597, 36 Week. Rep. 805; Orem v. Wrightson, 51 Md. 34, 34 Am. Rep. 286; Richeson v. Crawford, 94 Ill. 165; United States v. Ryder, 110 U. S. 729, 28 L. ed. 308, 4 Sup. Ct. Rep. 196; Chicago, M. & St. P. R. Co. v. United States, 127 U. S. 406, 32 L. ed. 180, 8 Sup. Ct. Rep. 1194; United States v. State Bank, 6 Pet. 29, 8 L. ed. 308; Re Wi_Matua [1908] A. C. 448; Robertson V. Trigg, 32 Gratt. 76.

Messrs. Samuel W. Fordyce and Thomas W. White submitted the cause for the National Surety Company. Mr. John H. Holliday was on the brief:

The priority acquired by the surety is identical with that secured to the United States.

Badger v. Daniel, 79 N. C. 387.

The express words of the statute give priority to the surety when the bond is paid, and not when all debts due the United States are paid.

United States v. Heaton, 63 C. C. A. 156, 128 Fed. 414; United States v. Ryder, 110 U. S. 729, 736, 28 L. ed. 308, 311, 4 Sup. Ct. Rep. 196; Hunter v. United States, 5 Pet. 173, 8 L. ed. 86; Guarantee Title & T. Co. v. Title Guaranty & S. Co. 224 U. S. 152, 56 L. ed. 706, 32 Sup. Ct. Rep. 457.

The prerogative of sovereignty as to

payment of debts is taken away by express language.

Guarantee Title & T. Co. v. Title Guaranty & S. Co. supra.

If the surety pays more than the bond, he is a mere volunteer, and is not entitled to subrogation as to the excess. Knowlton v. Moore, 178 U. S. 41, 77, 44 L. ed. 969, 984, 20 Sup. Ct. Rep. 747. Section 3468, Comp. Stat. § 6374, 2 Fed. Stat. Anno. 2d ed. p. 223, was an exception carved out of the right of priority of the sovereign.

Deitch v. Staub, 53 C. C. A. 137, 115 Fed. 399; Voorhees v. Jackson, 10 Pet. 449, 471, 9 L. ed. 490, 499.

Mr. Justice Brandeis delivered the opinion of the court:

The National Surety Company executed as surety two bonds given to secure contracts entered into with the United States. The contractor defaulted and was later adjudicated a bankrupt. The loss to the government was about $13,000. The Surety Company paid to it on account of this loss $3,150, the full amount of the liability on the bonds. Thereupon the government proved its claim in bankruptcy for the balance, claiming, under Revised Statutes, § 3466,1 Comp. Stat. § 6372, 2 Fed. Stat. Anno. 2d ed. p. 216, priority therefor over all other [75] creditors. The surety Company proved for the $3,150, and claimed that under Revised Statutes, § 3468,2 Comp. Stat. § 6374, 2 Fed. Stat. Anno. 2d ed. p. 223, it was entitled to a share in the distribution of the estate pro rata on an equality with the government. The net assets of the estate were less than the amount of the government's claim. The referee sustained the contention of the Surety Company, and his order was affirmed both by the district judge and by the circuit court of appeals for the eighth circuit. C. C. A. -, 262 Fed. 62. The case comes here on writ of cer

tiorari (252 U. S. 577, 64 L. ed. 724, 40 Sup. Ct. Rep. 396). The single question. presented is whether, in the distribution of the bankrupt's estate, the United States has priority over the Surety Company.

Section 3468, applying an established rule of the law of subrogation (Lidderdale v. Robinson, 12 Wheat. 594, 596, 6 L. ed. 740, 741), declares that when a "surety pays to the United States the money due upon [a] bond, such sure

ty
the recovery

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shall have the like priority for of the moneys

as is secured to the United States." Section 3466, embodying the common-law rule by which the sovereign has priority over other creditors of an insolvent (United States v. State Bank, 6 Pet. 29, 35, 8 L. ed. 308, 310), declares that "the debts due to the United States shall first be satis fied." There is no conflict between the two sections, which are substantially a reenactment and extension of the provisions of $ 65 of the Act of March 2, 1799, [76] chap. 22, 1 Stat. at L. 627, 676, Comp. Stat. §§ 6372, 6374, 2 Fed. Stat. Anno. 2d ed. pp. 216, 223. The priority secured to the United States by § 3466 is priority over all other creditors; that is, private persons and other public bodies. This priority the surety obtains upon discharging its obligation. But what the surety asks here is not to enjoy like priority over such other creditors, but equality with the United States, a creditor whose debt it partly secured. To accord such equality would abridge the priority expressly conferred upon the government. While the priority given the surety by the statute attaches as soon as the obligation upon the bond is discharged, it cannot ripen into enjoyment unless or until the whole debt due the United States is satisfied. This result is in harmony with a familiar rule of the law of subrogation under which a surety liable only for part of the debt does not become subrogated to collateral or to rem1 Sec. 3466. Whenever any person indebt- | solvent, or whenever, such principal being ed to the United States is insolvent, or deceased, his estate and effects which come whenever the estate of any deceased debtor, to the hands of his executor, administrator, in the hands of the executors or adminis- or assignee, are insufficient for the payment trators, is insufficient to pay all the debts of his debts, and, in either of such cases, due from the deceased, the debts due to the any surety on the bond, or the executor, United States shall be first satisfied; and administrator, or assignee of such surety the priority hereby established shall extend pays to the United States the money due as well to cases in which a debtor, not hav- upon such bond, such surety, his executor, ing sufficient property to pay all his debts, administrator, or assignee, shall have the makes a voluntary assignment thereof, or like priority for the recovery and receipt in which the estate and effects of an ab- of the moneys out of the estate and effects sconding, concealed, or absent debtor are of such insolvent or deceased principal as is attached by process of law, as to cases in secured to the United States; and may which an act of bankruptcy is committed. bring and maintain a suit upon the bond, 2 Sec. 3468. Whenever the principal in in law or equity, in his own name, for the any bond given to the United States is in- recovery of all moneys paid thereon.

edies available to the creditor unless he pays the whole debt, or it is otherwise satisfied.3

The judgment of the Circuit Court of Appeals is reversed.

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[77] NILES - BEMENT POND PANY, Petitioner,

V.

molesting workmen employed by the latter corporation to take the places of the strik ers, upon the ground that the petitioning corporation had contracts with such subsidiary corporation, the performance of which was delayed by such interference; and the identity of interest of the two corporations requires that the subsidiary corporation be aligned on the side of the petiCOMtioner, where its interest lies, with the result that if the subsidiary corporation and the individual defendants are citizens of the

IRON MOULDERS UNION, Local No. 68, same state, jurisdictional diversity of citi

et al.

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zenship disappears.

[For other cases, see Courts, 721-769; Parties,
1. a, in Digest Sup. Ct. 1908.]
Pleading · jurisdictional allegations
Federal question.

4. Federal jurisdiction of a cause as presenting a Federal question is not supported by allegations in a bill that are much too casual and meager to give serious color to the claim that the cause of action is one arising under the laws of the United States, and where the contention is plainly an afterthought, not in the mind of the author of the bill.

[For other cases, see Pleading, II. a, in Digest Sup. Ct. 1908.]

[No. 69.]

Argued October 22, 1920. Decided November 8, 1920.

APPEAL from, and CERTIORARI to,
the United States Circuit Court of
Appeals for the Sixth Circuit to review
a decree which, reversing a decree of
the District Court for the Southern Dis-
trict of Ohio, ordered the dismissal of
the bill in a suit by a corporation to en-
join striking former employees of a sub-
sidiary corporation from molesting work-
men employed to take the places of the
Petition
Appeal dismissed.
strikers.
for writ of certiorari granted, and de-
eree of Circuit Court of Appeals af-

[For other cases, see Courts, 721-769, in Di-
gest Sup. Ct. 1908.]
Federal courts
citizenship
alignment.
3. A corporation completely controlled
by another corporation through stock own-
ership and common officers is an indispen-
sable party to a suit by the dominant cor-firmed.
poration to enjoin striking former
ployees of the subsidiary corporation from

em

Note.-Generally, as to diverse citizenship as ground of Federal jurisdiction-see notes to Seddon v. Virginia, T. & C. Steel & I. Co. 1 L.R.A. 108; Myers v. Murray, N. & Co. 11 L.R.A. 216; Emory v. Greenough, 1 L. ed. U. S. 640; Strawbridge v. Curtiss, 2 L. ed. U. S. 435; M'Donald v. Smalley, 7 L. ed. U. S. 287; and Roberts v. Lewis, 36 L. ed. U. S. 579.

3 Sheldon, Subrogation, 2d ed. § 127; Pom. Eq. Jur. 4th ed. § 2350; 25 R. C. L. 1318: Peoples v. Peoples Bros. 245 Fed. 489, 491, 492; United States Fidelity & G. Co. v. Union Bank & T. Co. 143 C. C. A. 30, 228 Fed. 448, 455; National Bank v. Rockefeller, 98 C. C. A. 8, 174 Fed. 22, 28.

See same case below, 169 C. C. A. 424, 258 Fed. 408.

The facts are stated in the opinion.

Messrs. Lawrence Maxwell and Murray Seasongood argued the cause and filed a brief for petitioner:

The plaintiff has a separate justiciable controversy with the individual defendants, and the Tool Company is not an indispensable party thereto. If, therefore, the Tool Company, if made a party, would have to be aligned with the plaintiff, it could and should have been dismissed from the action, so as not to defeat jurisdiction.

10

Waterman v. Canal-Louisiana Bank & T. Co. 215 U. S. 33, 54 L. ed. 80, 30 Sup. Ct. Rep. 10; Horn v. Lockhart, 17

145

Wall. 570, 579, 21 L. ed. 657, 660;| Cherokee Nation v. Hitchcock, 187 U. S. 294, 47 L. ed. 183, 23 Sup. Ct. Rep. 115; Shields v. Barrow, 17 How. 130, 15 L. ed. 158; Camp v. Gress, 250 U. S. 308, 309, 63 L. ed. 997, 39 Sup. Ct. Rep. 478; Minnesota v. Northern Securities Co. 184 U. S. 199, 235, 46 L. ed. 499, 515, 22 Sup. Ct. Rep. 308; Williams v. United States, 138 Ū. S. 514, 34 L. ed. 1026, 11 Sup. Ct. Rep. 457; General Invest. Co. v. Lake Shore & M. S. R. Co. 162 C. C. A. 296, 250 Fed. 160; Roberts v. Underwood Typewriter Co. 257 Fed. 583; Mahon v. Guaranty Trust & S. D. Co. 152 C. C. A. 254, 239 Fed. 266; Gas Securities Co. v. Antero & L. P. Reservoir Co. 170 C. C. A. 399, 259 Fed. 423; Fortney v. Carter, 121 C. C. A. 514, 203 Fed. 454; Carter v. Fortney, 170 Fed. 463; Ex parte Haggerty, 124 Fed. 441; Toledo Traction, Light & P. Co. v. Smith, 205 Fed. 643; Chesapeake & O. Coal Agency Co. v. Fire Creek Coal & Coke Co. 119 Fed. 942; Wheeler v. Denver, 229 U. S. 342, 352, 57 L. ed. 1219, 1224, 33 Sup. Ct. Rep. 842; Carroll v. Chesapeake & O. Coal Agency Co. 61 C. C. A. 49, 124 Fed. 305; Lumley v. Gye, 2 El. & Bl. 216, 118 Eng. Reprint, 749, 22 L. J. Q. B. N. S. 463, 17 Jur. 827, 1 Week. Rep. 432, 1 Eng. Rul. Cas. 706; Angle v. Chicago, St. P. M. & O. R. Co. 151 U. S. 1, 38 L. ed. 55, 14 Sup. Ct. Rep. 240; Dr. Miles Medical Co. v. John D. Park & Sons Co. 220 U. S. 373, 394, 55 L. ed. 502, 513, 31 Sup. Ct. Rep. 376; Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 254-257, 62 L. ed. 260, 277, 278, L.R.Á.1918C, 497, 38 Sup. Ct. Rep. 65, Ann. Cas. 1918B, 461; Eagle Glass & Mfg. Co. v. Rowe, 245 U. S. 275, 62 L. ed. 286, 38 Sup. Ct. Rep. 80; Associated Press v. International News Service, 2 A.L.R. 317, 157 C. C. A. 436, 245 Fed. 244, affirmed on other grounds in 248 U. S. 215, 63 L. ed. 211, 2 A.L.R. 293, 39 Sup. Ct. Rep. 68; Bitterman v. Louisville & N. R. Co. 207 U. S. 205, 52 L. ed. 171, 28 Sup. Ct. Rep. 91, 12 Ann. Cas. 693; Tracey v. Osborne, 226 Mass. 25, 114 N. E. 959; Lamb v. Cheney & Son, 227 N. Y. 418, 125 N. E. 817; Minnesota v. Northern Securities Co. 184 U. S. 199, 235, 46 L. ed. 499, 515, 22 Sup. Ct. Rep. 308. If the Tool Company is an indispensable party, it is properly made a defend

ant.

Helm v. Zarecor, 222 U. S. 32, 36, 56 L. ed. 77, 80, 32 Sup. Ct. Rep. 10; Re Metropolitan R. Receivership (Re Reisenberg) 208 U. S. 90, 52 L. ed. 403, 28 Sup. Ct. Rep. 219.

That the suit arises under the laws of the United States is sufficiently pleaded: but, if not, the court should, in view of the record showing such Federal question to exist and the plaintiff's meritorious case, allow an amendment of the bill in this court, and continue the injunction in force.

Cleveland, C. C. & St. L. R. Co. v. Hirsch, 123 C. C. A. 145, 204 Fed. 849; Schulthis v. McDougal, 225 U. S. 561, 56 L. ed. 1205, 32 Sup. Ct. Rep. 704; Macon Grocery. Co. v. Atlantic Coast Line R. Co. 215 U. S. 501, 506, 507, 54 L. ed. 300, 303, 304, 30 Sup. Ct. Rep. 184; Hopkins v. Walker, 244 U. S. 486489, 61 L. ed. 1270-1274, 37 Sup. Ct. Rep. 711; Taylor v. Anderson, 234 U. S. 74, 58 L. ed. 1218, 34 Sup. Ct. Rep. 724: Hull v. Burr, 234 U. S. 712, 58 L. ed. 1557, 34 Sup. Ct. Rep. 892; Louisville & N. R. Co. v. Mottley, 211 U. S. 149, 154, 53 L. ed. 126, 128, 29 Sup. Ct. Rep. 42; Camp v. Gress, 250 U. S. 308, 317, 318, 63 L. ed. 1000, 1003, 1004, 39 Sup. Ct. Rep. 478; Giles v. Harris, 189 U. S. 475-485, 47 L. ed. 909-911, 23 Sup. Ct. Rep. 639; Re Lennon, 166 U. S. 548, 41 L. ed. 1110, 17 Sup. Ct. Rep. 658.

Messrs. W. B. Rubin and Robert J. Shank argued the cause and filed a brief for respondents:

In all labor disputes the employer is at least an indispensable party.

National Fireproofing Co. v. Mason Builders' Asso. 26 L.R.A.(N.S.) 148, 94 C. C. A. 535, 169 Fed. 259.

As the National Defense Act was not clearly and distinctly averred in the bill of complaint, the district court could not have taken jurisdiction under it, even if an individual might plead it in an individual action.

Hull v. Burr, 234 U. S. 712, 720, 721, 58 L. ed. 1557, 1561, 1562, 34 Sup. Ct. Rep. 892.

There is no right of action, regardless of ground for Federal jurisdiction.

National Fireproofing Co. v. Mason Builders' Asso. supra.

[78] Mr. Justice Clarke delivered the opinion of the court:

The controversy involved in this suit originated in a strike by employees of the defendant the Niles Tool Works Company, hereinafter designated the Tool Company, and the sole question presented for decision is one of jurisdiction.

The petitioner, a corporation of New Jersey, filed its bill in the district court for the southern district of Ohio, making

the Tool Company, an Ohio corporation, | several local labor unions, and many of the striking employees of the Tool Company (in the bill and hereinafter designated "former employees") parties defendant, it being averred that all of the defendants were citizens of Ohio and residents of the southern district. The jurisdiction of the court was thus invoked on the ground of diverse citizenship.

The relief prayed for was an injunction, restraining the striking former employees of the Tool Company from molesting workmen employed by that company to take their places, upon the ground that petitioner had contracts with the Tool Company the performance of which was being delayed by such interference. No case was stated, or relief asked for, against the Tool Company.

The district court overruled a motion to dismiss for want of jurisdiction, and granted a preliminary injunction as prayed for, but, on appeal, the circuit court of appeals found: that the Tool Company was so essentially a subsidiary of the petitioner, and its interest in the controversy was so certainly on the same side, that it should be treated as a plaintiff; that any decision of the case must necessarily so involve rights of the Tool Company as to render it an indispensable party to the case; and that giving that company its proper classification as a plaintiff resulted in the disappearance of the jurisdictional diversity of citizenship, and required the dismissal of the bill, which was [79] ordered. The case was brought here for review by writ of certiorari.

The facts essential to be considered, which were stipulated or sufficiently proved on the hearing of the application for an injunction, may be epitomized as follows:

The petitioner was a corporation of New Jersey, the defendant Tool Company a corporation of Ohio; the petitioner owned a controlling interest in the capital stock of the Tool Company, and the same men were president and vice president, respectively, of both companies. The president was invested with authority to fix prices for the two companies, three of the five directors of the Tool Company were directors of the petitioner, and more than ninety-five per cent of the business of that company was obtained through the petitioner, acting as its general sales agent. The customary mode of transacting business between the two companies was for the

petitioner to make contracts for machinery, which it passed to the Tool Company for manufacture and delivery.

Before the filing of the bill the petitioner had entered into many contracts with the United States government to furnish it, as quickly as possible, with machinery, tools, and equipment for arsenals and for navy and ship yards, all of which contracts were necessary for the successful prosecution of the war, and were to be given priority over other work. These contracts had been passed to the Tool Company for manufacture, the petitioner remaining liable for their performance. It was averred and sufficiently proved, that the defendants other than the Tool Company had conspired together, for the purpose of hindering, delaying, and preventing the petitioner from performing, through the Tool Company, the contracts thus obtained by it from the government, and for the purpose of intimidating workmen in the employ of the Tool Company by threats, violence, and coercion, when going to and from their places of work and when at their homes. [80] Such defendants, assembled about the plant of the Tool Company, had at times, by threats and violence, prevented employees from entering its factory to work, and had threatened to prevent, and, unless restrained, would have prevented, that company from freely carrying forward its business, and thereby the petitioner from fulfilling its contracts with the government and with others.

On this record the questions presented for decision are: Was the Tool Company an indispensable party to the suit, and, properly classified, should it be treated as a plaintiff? If these questions are both answered in the affirmative, the decree of the circuit court of appeals must be affirmed; otherwise it must be reversed.

There is no prescribed formula for determining in every case whether a person or corporation is an indispensable party or not, but a rule early announced and often applied by this court is sharply applicable to the case at bar. În Shields v. Barrow, 17 How. 130, 139, 15 L. ed. 158, 160, this language-quoted with approval in Barney v. Baltimore, 6 Wall. 280, 284, 18 L. ed. 825, 826, and again in Waterman v. Canal-Louisiana Bank & T. Co. 215 U. S. 33, 48, 54 L. ed. 80, 86, 30 Sup. Ct. Rep. 10-was used to describe parties so indispensable that a court of equity will not proceed to final decision without them, viz.:

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