« ForrigeFortsett »
over to such receiver under the direction of Henry W. Bishop, a master in chancery of this court, all the property, real and personal, wheresoever found in this district, and all contracts for the purchase of land, and all other equitable interests, things in action, and other effects which belonged to, or were held in trust for, said defendant railroad company, or in which it had any beneficial interest, including the stock books of said railroad company, in the same condition they were at the time of exhibiting the said bill of complaint in this cause, except as far as necessarily changed in the proper management of said road, or in which it now has any such interest, and that said defendant, Chicago & South Atlantic Railroad Company, deliver over, in like manner all books, vouchers, bills, notes, contracts, and other evidences relating thereto, and also the stock books of said railroad company.
"And it is further ordered that the said receiver have full power and authority to inquire after, receive and take possession of all such property, debts, equitable interests, things in action, and other effects, and for that purpose to examine said defendant, its officers, and such other persons as he may deem necessary on oath before said master from time to time."
Afterwards a further order was entered, nunc pro tunc, as follows:
Atlantic Railroad Company, and who is a
The cause went to hearing, and a money decree was rendered by the circuit court in favor of Pope, receiver, against appellee, which appellee was adjudged by that decree to pay. An appeal having been prosecuted to the circuit court of appeals for the seventh circuit, a motion was made to dismiss the appeal for want of jurisdiction, and the motion, overruled. On final hearing the decree of  the circuit court was reversed by the circuit court of appeals, with instructions to dismiss the amended bill. The opinion of the circuit court of appeals was filed June 12, 1897. 53 U. S. App. 332. Thereafter a petition for a rehearing was filed and denied. Subsequent"And now comes the receiver, Charles E. ly Pope, receiver, applied to this court for a Pope, of said Chicago & South Atlantic Rail-writ of certiorari, which application was deroad Company, and on his application it is nied March 7, 1898. 169 U. S. 737 [42: ordered and directed that said receiver have 1216]. On March 23 Pope moved the circuit full power and authority to bring and prose-court of appeals for leave to file a second pecute any and all necessary suits for the col-tition for rehearing, and the motion was overlection of any claims, choses in action, and ruled. Pope then applied to the circuit court enforcement of any and every kind and nature, and to defend all suits and actions touching the rights or interests of the property or effects of any kind in his possession or under his control as receiver. This order to be entered now as of the date of his appointment and qualification as receiver."  *Soon after, Pettit filed his bill in the circuit court of the United States for the district of Indiana, averring that he was a citizen of the state of Wisconsin, against "the said Chicago & South Atlantic Railroad Company, a corporation organized under the laws of the state of Indiana and state of Illinois, by the consolidation of an Illinois corporation of the same name of defendant herein, and an Indiana corporation known as 'the Chicago & South Atlantic Railroad Company of Indiana.'" L'ope was appointed receiver on that bill, the order being similar in its terms to that entered in the circuit court for
the northern district of Illinois. After such appointment, and on July 12, 1881, Pope, as receiver, filed his bill of complaint in the circuit court for the district of Indiana, seeking to recover certain property and property rights held and claimed by certain of the defendants which appellant claimed belonged to the Chicago & South Atlantic Railroad Company and to the ownership of or right to which he had succeeded as such receiver.
The amended bill on which the cause was heard stated that "your orator, Charles E. Pope, who is receiver of the Chicago & South
of appeals for an appeal to this court which
Messrs. Henry W. Blodgett, G. W. Kretzinger, and E. C. Field, for appellee, in favor of motion to dismiss:
This suit is ancillary to the Pettit suits. White v. Ewing, 159 U. S. 36, 40 L. ed. 67; Freeman v. Howe, 24 How. 450, 16 L. ed. 749; Krippendorf v. Hyde, 110 U. S. 276, 28 L. ed. 145: Dewey v. West Fairmont Gas Coal Co. 123 U. S. 329, 31 L. ed. 179; Re Tyler, 149 U. S. 164, 37 L. ed. 689; Root v. Woolworth, 150 U. S. 401, 37 L. ed. 1123; Rouse v. Letcher, 156 U. S. 47, 39 L. ed. 341; Davis v. Gray, 16 Wall. 216, 21 L. ed. 452; Carey v. Houston & T. C. R. Co. 161 U. S. 115, 40 L. ed. 638; Gregory v. Van Ee, 160 U. S. 643, 40 L. ed. 566; Pacific R. Co. V. Missouri P. R. Co. 111 U. S. 522, 28 L. ed. 504; Borgmeyer v. Idler, 159 U. S. 413, 40 L. ed. 201; Smith v. Rackliffe, 59 U. S. App. 427, 87 Fed. Rep. 964, 31 C. C. A. 328; Brisenden v. Chamberlain, 53 Fed. Rep. 310; Davies v. Lathrop, 12 Fed. Rep. 353. As to jurisdiction resting upon Federal questions.
Press Pub. Co. v. Monroe, 164 U. S. 105, 41 L. ed. 367; Ex parte Jones, 164 U. S. 693, 41 L. ed. 601.
Mr. John S. Miller, for appellant, in opposition to motion:
| was made final by the act of March 3, 1891, this appeal must be dismissed; and it was so made final if the jurisdiction of the circui court depended entirely on diverse citizen
This appeal lies as of right under cl. 3,
The equitable title to real interests, as well as the title to personal property and equitable interests, passes to the receiver, and in suits in equity by the receiver no assignment is necessary. The order of the court is the effective thing.
Mann v. Pentz. 2 Sandf. Ch. 257; Iddings v. Bruen, 4 Sandf. Ch. 417; Albany City Bank v. Schermerhorn, Clarke, Ch. 298; Porter v. Williams, 9 N. Y. 142, 59 Am. Dec. 519; Atty. Gen. v. Atlantic Mut. L. Ins. Co. 100 N. Y. 282.
The jurisdiction in this case was not dependent entirely on diverse citizenship.
Cohen v. Virginia, 6 Wheat. 264, 5 L. ed. 257; Martin v. Hunter, 1 Wheat. 304, 4 L. ed. 97; Byers v. McAuley, 149 U. S. 608, 37 L. ed. 867.
This suit by a receiver of a Federal court is a case arising under the laws of the United States.
Stuart v. Boulware, 133 U. S. 78, 33 L. ed. 568; Union Bank v. Kansas City Bank, 136 U. S. 223, 34 L. ed. 341; Booth v. Clark, 17 How. 322, 15 L. ed. 164; Davis v. Gray, 16 Wall. 203, 21 L. ed. 447; Texas & P. R. Co. v. Cox, 145 U. S. 593, 36 L. ed. 829; Buck v. Colbath, 3 Wall. 334, 18 L. ed. 257; Feibelman v. Packard, 109 Ú. S. 421, 27 L. ed. 984; Bock v. Perkins, 139 U. S. 628, 35 L. ed. 314; Keihl v. South Bend, 44 U. S. App. 687, 76 Fed. Rep. 921, 22 C. C. A. 618, 36 L. R. A. 228; Jewett v. Whitcomb, 69 Fed. Rep. 417; Cooke v. Avery, 147 U. S. 375, 37 L. ed. 209; Morgan's L. & T. R. & S. S. Co. v. Texas C. R. Co. 137 U. S. 171, 34 L. ed. 625; Benjamin v. New Orleans, 169 U. S.
161, 42 L. ed. 700.
The orders appointing complainant receiver and authorizing him to bring this suit "were entered, and all action of the court in the premises taken, by virtue of judicial power possessed and exercised under the Constitution and laws of the United States." Teras & P. R. Co. v. Cox, 145 U. S. 593, 36 L. ed. 829; White v. Ewing, 31 U. S. App. 178, 66 Fed. Rep. 2, 13 C. Č. A. 276, 159 U. S. 36, 40 L. ed. 67; Price v. Abbott, 17 Fed. Rep. 506; Armstrong v. Trautman, 36 Fed. Rep. 275.
The complainant, receiver herein, is as much an officer of the court under and by virtue of the Constitution and laws of the United States as are the receivers of national banks.
Texas & P. R. Co. v. Cox, 145 U. S. 593,
 Mr. Chief Justice Fuller delivered the opinion of the court:
If the decree of the circuit court of appeals
The circuit courts of the United States have original jurisdiction of suits of a civil nature, at law or in equity, by reason of the citizenship of the parties, in cases between citizens of different states, or between citizens of a state and aliens; and, by reason of the cause of action, "in cases arising under the Constitution or laws of the United States, or treaties made or which shall be made under their authority," as, for instance, suits arising under the patent or copyright laws of the United States. Press Publishing Company v. Monroe, 164 U. S. 105 [41: 367].
Diversity of citizenship confers jurisdiction, irrespective of the cause of action. But if the cause of action arises under the Con- stitution, or laws, or treaties, of the United States, then the jurisdiction of the circuit court may be maintained irrespective of citizenship.
The circuit court undoubtedly had jurisdiction of this suit on the ground of diversity of citizenship, not only because that fact existed in respect of complainant and defendants, but because the suit was ancillary to those in which the receiver was appointed. When an action or suit is commenced by a receiver, appointed by a circuit court, to accomplish the ends sought and directed by the suit in which the appointment was made, such action or suit is regarded as ancillary so far as the jurisdiction of the circuit court as a court of the United States is concerned; and we have repeatedly held that jurisdiction of these subordinate actions or suits is to be attributed to the jurisdiction on which the main suit rested; and hence that where jurisdiction of the main suit is predicated on diversity of citizenship, and the decree therein is, therefore, made final in the circuit court of appeals, the judgments and decrees in the ancillary litigation are also final. Rouse v. Letcher, 156 U. S. 47 [39: 341]; Gregory v. Van Ee, 160 U. S. 643 [40: 566]; Carey v. Houston & T. C. Railway Company, 161 Ú. S. 115 [40: 638]. It is true that Rouse v. Letcher and Gregory v. Van Ee were proceedings on intervention, but Carey v. Houston & T. C. Railway Company arose on an original bill in the nature of a bill of review. In that case we took occasion to quote from the opinion of Mr. Justice Miller in Milwaukee & Minnesota R. Company v. Milwaukee & St. Paul R. Company, 2 Wall. 609 [17: 886], in which the distinction is pointed out between sup plemental and ancillary, and independent and original, proceedings, in the sense of the rules of equity pleading, and such proceedings "in the sense which this court has sanctioned with reference to the line which divides the jurisdiction of the Federal courts from that of the state courts." Krippendorf v. Hyde, 110 U. S. 276 [28: 145]; Pacifio Railway Co. v. Missouri Pacific Railway Co. 111 U. S. 505 [28: 498], and other cases were cited the bill held to be ancillary to the suit the decree in which was attacked; and the
rule laid down in Rouse v. Letcher and Greg-| money decree, nor to any other remedy ory v. Van Ee applied. prayed for in the amended bill. The liabil The suits in which this receiver was ap-ity of defendants arose under general law, pointed were in the *nature of creditors' bills and was neither created nor arose under the alleging an indebtedness due from the At- Constitution or laws of the United States. lantic Company; the insolvency of that com- In Bausman v. Dixon, 173 U. S. 113 [ante, pany; that certain corporations had in their 633], we have ruled that a judgment against possession assets of the Atlantic Company; a receiver appointed by a circuit court of the and praying for the appointment of a receiv- United States, rendered in due course in a er; the marshaling of assets; the winding up state court, does not per se involve the deof the Atlantic Company, and the application nial of the validity of an authority exercised of its assets to the payment of its debts. The under the United States, or of a right or imonly ground of Federal jurisdiction set up in munity specially set up and claimed under a the bills was diversity of citizenship, and if statute of the United States. That was an the decrees therein had been passed on by the action to recover damages for injuries suscircuit court of appeals, the decision of that tained by reason of the receiver's negligence court would have been final under the stat- in operating a railroad company of the state ute. And as this suit was in effect merely of Washington, though the receiver was the in collection of alleged assets of the Atlantic officer of the circuit court, and we said: Company, it must be regarded as auxiliary, "It is true that the receiver was an officer of and the same finality attaches to the decree of the circuit court, but the validity of his au the circuit court of appeals therein. thority as such was not drawn in question, And this is true although another ground and there was no suggestion in the pleadings, of jurisdiction might be developed in the or during the trial, or, so far as appears, in course of the proceedings, as it must appear the state supreme court, that any right the at the outset that the suit is one of that receiver possessed as receiver was contested, character of which the circuit court could although on the merits the employment of properly take cognizance at the time its ju- plaintiff was denied, and defendant contendrisdiction is invoked. Colorado Central Con-ed that plaintiff had assumed the risk which sol. Min. Company v. Turck, 150 U. S. 138 [37: 1030]; Ex parte Jones, 164 U. S. 693 [41: 602]; Third Street & S. Railway Company v. Lewis, 173 U. S. 457 [ante, 766].
Some further observations may be usefully added, although what has been said necessarily disposes of the motion.
resulted in the injury, and had also been guilty of contributory negligence. The mere order of the circuit court appointing a receiver did not create a Federal question under section 709 of the Revised Statutes, and the receiver did not set up any right derived *from that order, which he asserted was The receiver based his right of recovery on abridged or taken away by the decision of the alleged seizure by one of the defendant the state court. The liability to Dixon decompanies of certain rights of way, and pended on principles of general law applicagrading done thereon by the Atlantic Com- ble to the facts, and not in any way on the pany under two specified contracts, which terms of the order." That was indeed a seizure and appropriation were alleged to writ of error to a state court, but the reasonhave been fraudulently and forcibly made; ing is applicable here. Pope was appointed and it was averred that appellee, the Louis- receiver by an interlocutory order of the cirville, New Albany, & Chicago Railroad Com-cuit court in the exercise of its general pany, acquired title thereto and possession thereof through its consolidation with another of the defendant companies, which had acquired its title and possession through the foreclosure of a mortgage given by the company which had made the seizure. The bill nowhere asserted a right under the Constitution or laws of the United States, but proceeded on common-law rights of action. We cannot accept the suggestion that the mere order of a Federal court, sitting in chanceryments made to him by the Atlantic Company appointing a receiver on a creditor's bill, not only enables the receiver to invoke Federal jurisdiction, but to do this independently of the ground of jurisdiction of the suit in which the order was entered, and thereby affect the finality of decrees in the circuit court of appeals in proceedings taken by him. The validity of the order of appointment of the receiver in this instance depended on the jurisdiction of the court that entered it, and that jurisdiction, as we have seen, depended exclusively upon the diverse citizenship of the parties to the suits in which the appointment was made.
The order, as such, created no hability
equity powers. He did not occupy the position of a receiver of a corporation created under Federal law as in Texas & Pacific R. Company v. Cox, 145 U. S. 593 [36: 829] or of a marshal of the United States as in Feibelman v. Packard, 109 U. S. 421 [27: 984]; or of a receiver of a national bank, as in Kennedy v. Gibson, 8 Wall. 498 [19: 476]. Nor did his cause of a tion originate or deend on the order of appointment, or assign
pursuant to that order. Nor was any right claimed by him by virtue of his order of appointment or of his deeds of assignment denied or alleged to have been denied. The decrees of the circuit court and of the circuit court of appeals dealt solely with the alleged rights of the Atlantic Company as against certain Indiana corporations. It is impossible to hold that these orders of appointment were equivalent to laws of the United States within the meaning of the Constitution.
We agree with counsel for appellee that Provident Savings L. Society v. Ford, 114 U. S. 635 [29: 261], is in point in this aspect of the case. There it was ruled that "the fact that a judgment was recovered in a 52
GUARANTEE COMPANY OF NORTH
MECHANICS' SAVINGS BANK & TRUST COMPANY, for the Use of J. J. Pryor, Assignee.
(See S. C. Reporter's ed. 582-586.)
Decree, when not final.
court of the United States does not, in a suit upon that judgment, raise a question under the laws of the United States within the meaning of the act of March 3, 1875." That was a writ of error to the supreme court of the state of New York to review a judgment of that court denying a motion for the removal of the cause to the United States circuit court. Mr. Justice Bradley delivered the opinion, and, after pointing out that the alleged grounds of removal were insufficient, remarked: "It is suggested, however, that a suit on a judgment recovered in a United States court is necessarily a suit arising under the laws of the United States, as much so as if the plaintiff or defendant were a corporation of the United States; and hence that such a suit is removable under the act of March 3, 1875. It is observable that the removal of the cause was not claimed on any such broad ground as this; but, so far as the Argued March 16, 1899. Decided April 3, character of the case was concerned, only on the ground that the defendant had a defense
A decree which determines that none of the defenses of a guaranty company are good in law, and that it is liable on its bonds for such as may thereafter be found due after ?rediting the amounts that may be realized from certain assets, is not final for the purposes of an appeal.
WRIT OF CERTIORARI to the United
States Circuit Court of Appeals for the Sixth Circuit to review a decree of that court affirming a decree of the Circuit Court of the United States for the Middle District of Tennessee in an action brought by the Mechanics' Savings Bank & Trust Company for the use of J. J. Pryor, Assignee, against the Guarantee Company of North America upon bonds executed by that company conditioned for the faithful performance of the duties of cashier and also of teller and collector of the said Savings Bank by one Schardt. The de cree of the Circuit Court granted the relief prayed for by the plaintiff, and fixed the liability of the defendant at $32,310, and decreed that all collections on assets or collaterals turned over by Schardt to the bank should be applied on said amounts. Decree of the Circuit Court of Appeals is reversed for want of jurisdiction, and the cause is remanded, witn directions to dismiss the appeal prosecuted to that court, and for such further proceedings in the Circuit Court as may be consistent with law.
defense was, and we have already, shown
Without pursuing the subject fur-
In Cooke v. Avery, 147 U. S. 380 [37: 212], jurisdiction was sustained on the ground that the plaintiff's title was derived through the enforcement of a lien, the validity of which depended on the laws of the United States and the rules of the circuit court, and their construction and application were directly involved.
Mr. Justice Brown took no part in the consideration and disposition of this motion.
See same case below, 68 Fed. Rep. 459, and 54 U. S. App. 108.
The facts are stated in the opinion.
Mr. Edward H. East for respondent.
*Mr. Justice Harlan delivered the opinion of the court:
The plaintiff in this suit-originally brought in the chancery court at Nashville, Tennessee, and subsequently removed into the circuit court of the United States for the middle district of Tennessee is the 'Mechanics' Savings Bank & Trust Company, a Tennessee corporation suing to the use of James J. Pryor, assignee, under a general assignment of all the assets, rights, and credits of that company in trust for the benefit of creditors.
The principal defendant is the Guarantee Company of North America, a corporation created under the laws of the Dominion of Canada.
From January 16, 1888, to January 1,
1893, Schardt was teller and collector and from the latter date until his death was cashier of the plaintiff company.
The object of the present suit is to have an accounting and a decree as to the amount due the plaintiff on two bonds executed by the Guarantee Company of North America to the Mechanics' Savings Bank & Trust Company; one, insuring the latter corporation against such pecuniary loss as it might sustain on account of the fraudulent acts of Schardt as teller and collector; the other, insuring the same corporation against pecuniary loss by reason of fraudulent acts by him in his office as cashier.
The bill alleges that while acting as teller and collector of the plaintiff company Schardt fraudulently embezzled of its moneys the sum of $78,956.11, of which $50,856.77 was embezzled during the year ending January 1, 1893; and that during the period covered by the bond insuring his fidelity as cashier he fraudulently appropriated of the plaintiff's moneys the sum of $22,817.30.
The bill also alleged that a few days before his death Schardt assigned to the plaintiff company, as additional indemnity for the losses he had brought upon it, certain policies on his life amounting to $80,000; that upon those policies $20,000 had been collected, and the residue was in dispute; and that Schardt did not give any direction as to which of the bonds insuring his fidelity the insurance moneys when collected should be applied.
The Guarantee Company in its answer insisted that by reason of the violation of the terms and conditions upon which the bonds in question were issued it was not liable to the plaintiff in any sum.
By the decree in the circuit court it was adjudged that the amount embezzled by Schardt during the years 1890 and 1891 had been paid out of the assets and collections transferred by him to the bank just before his death; that his embezzlements from and after September 1, 1890, and up to January 1, 1893, amounted, principal and interest, to $52,736.17, while his embezzlements during his term as cashier amounted, principal and interest, to $23,128.69; and that the total amount, principal *and interest, of all his embezzlements while occupying the two positions of teller and cashier, was $107,223.36.
The decree continued:
"It appearing that Schardt had assigned to the bank to indemnify it against loss, two lots of land assigned to J. B. Richardson and life insurance policies amounting to $80,000, some of which policies have been paid to the assignee without suit, and others are now in litigation in this court, or pending on appeal or writ of error to the appellate court of this circuit, held at Cincinnati, the court adjudges upon inspection of said guaranty bonds, their terms and various conditions, and the proof submitted, that the bank has complied with the same and all its undertakings thereunder, substantially; and that said Schardt embezzled and fraudulently appropriated the moneys of the bank while he filled said two positions, to the amounts named; and that interest should be calculated upon
said sums from the end of his respective terms.
"The court, after considering the various and numerous defenses set up by defendant company, why a recovery should not be had upon either of said bonds, or both, in favor of complainant, is pleased to disallow each and all of said defenses, and to order, adjudge, and decree that complainant have its decree or judgment against the defendant, the Guarantee Company, upon each of said bonds with interest from the time the same should have been paid according to the terms of said bonds, and for the costs.
"That complainant have judgment on the teller's and collector's bond for the sum of ten thousand dollars principal and the further sum of seven hundred and seventy dollars, being interest at six per cent from 9th of April, 1894, to July 1, 1895; and that complainant have judgment on the cashier's bond against defendant Guarantee Company for the sum of twenty thousand dollars principal and the further sum of $1,540.00 interest thereon from April 9, 1894, to July 1, 1895, making in the aggregate of principal and interest on both bonds the sum of thirty-two thousand three hundred and ten dollars ($32,310.00) with interest thereon until paid, and the costs of this suit.
*"And the court orders and decrees that the  liability of the defendant, the Guarantee Company, is secondary to that of John Schardt's estate; and that the bank or its assignee shall account for all collections realized on assets or collaterals turned over to the bank by said Schardt to reimburse it against his shortage, which it has collected, or with due diligence may collect hereafter; and for his fitness, and for convenience, H. M. Doak is appointed master commissioner to report the same to the next term of this court; and the court orders that the same be applied to the shortage of said Schardt in the order in which the same occurred, and in the meantime no execution will issue against defendants for the same, but only for the costs; and the court orders that this cause may be continued upon the docket of this court, for the purpose only of making any orders necessary to apply all collections from the assets of Schardt, held as collateral, in exoneration, to that extent, of the defendant company and of substituting the defendant to the rights of the bank, in case the recovery herein is collected or paid and any of said assets remain above the amount necessary to satisfy the shortage. But the case is re tained for no other purpose, and the decree against defendant company is final as fixing its liability on the bonds to make good the shortage, whatever that may be. This decree is entered in lieu of one entered at a former day of the term and the decree formerly entered is thereby vacated." 68 Fed. Rep. 459.
Upon appeal prosecuted by the Guarantee Company to the circuit court of appeals the decree was affirmed. 54 U. S. App. 108. The case is here upon writ of certiorari.
The circuit court of appeals was without jurisdiction to review the decree of the circuit court because that decree was not a final