Shelby v. Bacon et al.

itors, to receive his distributive share of the common fund; second, to have an account of the execution of the trust, as far as the defendants had proceeded in it; third, to compel the defendants to complete the execution of the trust, by collecting, selling, and distributing all the assets on which they have not previously administered.

The complainant is a citizen of Kentucky, and the defendants are citizens of Pennsylvania. The parties, therefore, stand exactly in that relation to each other, which, according to the provision of the Constitution of the United States and the law of the United States, entitled the Federal judiciary to entertain jurisdiction of the controversy. In consequence, the complainant brought this in the Circuit Court of the United States for the Eastern District of Pennsylvania.

The defendants pleaded to the jurisdiction of the court. Their plea, in substance, is, that by the local laws of Pennsyl vania jurisdiction is conferred upon one of her local tribunals over all matters of trust, to control, manage, and finally and exclusively to settle and close them. That the defendants have proceeded before that tribunal, in part, to settle and account for the assets which they have received; and that they are only amenable to that local tribunal for the further and complete execution of the entire trust.

The two judges composing the Circuit Court of the United States for the Eastern District of Pennsylvania, being divided in opinion as to the sufficiency of this plea to the jurisdiction of the court, çertified that difference, and the question and only question which this court has now to determine is, whether the Circuit Court had or had not jurisdiction of the cause.

That question involves two others;-first, had the complainant a right, by the Constitution and the law of the United States, to resort to the Federal tribunal; and secondly, whether he could be divested of that right by the laws of any State, in the passage of which he had no voice. To which may be added a third question, and that is, whether, if the State of Pennsylvania could divest a citizen of Kentucky of a right with which he is invested by the Constitution of the United States, that has been done by the laws of that State, and the proceedings which have taken place under them.

The mere statement of these questions is an answer to them. The Constitution of the United States expressly confides to the Federal judiciary all controversies arising between citizens of different States. It is the constitutional privilege, therefore, of a citizen of one State to sue a citizen of another State in the tribunal which is common to them both. He cannot be deprived of this right by any act of the State of which he is

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not a citizen. Nor is this right at all impaired or affected by the nature or object of the suit. which he prosecutes. It cannot be contended, that, because the subject-matter of controversy arises out of the local laws of a State, he is bound to submit to the tribunals of that State, and is stripped of his privilege to appeal to the Federal tribunal. It is true, when he goes before the latter, that is bound, in the particular case, to administer the laws of the State which govern it. But the Constitution of the United States is founded on the presumption, that the Federal judiciary will be less biased and more impartial in the administration of justice between citizens of different States than the local tribunal of one of them would be.

If, by any arrangement of its own laws and tribunals, a State or Legislature of a State could divest the Federal judiciary of that branch of its jurisdiction which relates to controversies between citizens of different States, it might, by other or similar arrangements, divest their judiciary of all judicial power granted to it by the Constitution of the United States.

So careful has Congress been to preserve to the citizens of different States their right to be heard before the Federal tribunal, that it has provided, by the act of 1789, that when a citizen of one State is sued by a citizen of another State, in a State court, the defendant may remove the cause into the Federal court.

It is not, therefore, true, as a universal proposition, that in cases of concurrent jurisdiction the court that first acquires it can hold fast on the case, to the exclusion of the concurrent court.

If the defendant fail to avail himself of his privilege to remove the cause in due season, he deprives himself of the benefit of the Federal tribunal, and is bound to submit to the local jurisdiction. But it is not pretended that the complainant in this cause has ever waived his right to the Federal jurisdiction. He was no party to the proceedings of the trustecs in the Court of Common Pleas of Philadelphia. No process from that court was ever served upon him; no opportunity ever existed, therefore, for him to remove the cause from the local to the Federal tribunal. And if such opportunity had presented itself, the complainant, being only one of the numerous persons concerned in the trust, could not have removed the settlement of the accounts of the trustees from the Court of Common Pleas of Philadelphia to the Circuit Court of the United States.

I submit, then, with great confidence, to the court, that the Constitution of the United States, which is paramount to all State constitutions and laws, having secured to Isaac Shelby,

Shelby v. Bacon et al.

the complainant, a citizen of Kentucky, the privilege of bringing his suit in the Circuit Court of the United States against the defendants, citizens of Pennsylvania, the power of that State is incompetent to deprive him of that privilege. Upon an examination of the laws of Pennsylvania in relation to trusts, the settlement of trustees' accounts, and the distribution of trust funds, it will be found, I think, that the jurisdiction conferred on the several Courts of Common Pleas was only preliminary and precautionary, and not final and absolutely conclusive. The object was, on the one hand, to exert a salutary supervisory authority over the trustees, to prevent the waste and misapplication of the trust funds, and, on the other, to afford protection and security to the trustees, by the sanction of a court of justice, in the periodical settlement of their accounts, and in the investment and distribution of the trust funds.

The provisions in the laws of Pennsylvania bear a strong similitude to the laws which prevail in all the States, in respect to the settlement of the accounts of executors and administrators. The County Courts and the Courts of Probate have full jurisdiction over executors and administrators, their removal, the settlement of their accounts, and the final distribution of the estates of the deceased. It has never been thought or contended that their jurisdiction excludes that of courts of justice, to which appeals are made for a revisal of the conduct and accounts of such executors and administrators; and on such appeals, what has been done under the sanction of the County Court or Court of Probate will be so far respected as to be presumed to be rightly done, and the onus probandi will be thrown on the party impeaching it. So, in a case of the settlement of a trustee's account before the Court of Common Pleas, the account will be held primâ facie evidence of a proper settlement, until the contrary be shown by the party contesting it.

Assuming that the Court of Common Pleas has any exclusive jurisdiction over these trusts and their administration, what is the extent of that exclusive jurisdiction? It must be limited to what has been actually done by that court, or is now pending before it. It cannot extend to the question, for example, of the rights of Isaac Shelby, which are not submitted to that court. It cannot extend to what remains to be done in the execution of the trust, that is to say, in collecting outstanding debts, selling real estate and other property not yet disposed of, collecting the proceeds of sale, &c., &c. These are matters which are not now before the Court of Common Pleas, which may never be brought by the trustees before it, but which are properly and legitimately included in this suit.

Shelby v. Bacon et al.

I made an examination into the laws of Pennsylvania in respect to trustees some time ago, and regret I have been unable to refresh my recollection of them by a perusal at this time. If my memory does not deceive me, they recognize, if they do not expressly authorize, the investigation of the conduct of trustees before other tribunals than the Court of Common Pleas.

Messrs. Porter and Wharton, for the defendants.

The judgment on which the complainant claimed was recovered after the assignments, and was assigned to him after the accounts of the trustees had been settled in the Common Pleas of Philadelphia, without exception or appeal. The complainant claims subject to the assignments, and not against them. When he took the transfer of the judgment, he was bound to inquire what had been done or permitted by his assignors. It is a fair legal presumption, that he knew the accounts had been filed in the Common Pleas, and that the jurisdiction of that court had attached to the subject-matter of the trust. Shall he be allowed to upturn what has been done in that court?

The law of Pennsylvania is, that such accounts, although partial, are nevertheless conclusive in favor of the accountants, when properly filed, settled, and confirmed. Moore's Appeal, 10 Barr, 435; Weber v.. Samuel, 7 Barr, 499. The trustees have relied on this principle, and have regulated their conduct by it. Shall they have its protection? or shall they be required to resettle their past, and file their future accounts in the Federal court?

The argument of the complainant's counsel assumes that there is no such thing as a proceeding, and an adjudication in rem, which, by its operation on the subject-matter, shall bind the world, no matter who the parties claimant may be, or where they may reside. In the case of a vessel seized under a replevin issued out of a State court, and process subsequently issued out of the admiralty against the same vessel, the former retains the jurisdiction. Taylor v. Royal Saxon, 1 Wallace, jr. 311. Here the suitor was turned out of the admiralty, not for any defect in his cause of action, nor because the question had been decided, but because the replevin was pending in the State court. In the case of an attachment of money in the State court, and an action against the debtor in the Federal court, the former, having first obtained possession of the subject, retains jurisdiction over it. Wallace v. McConnell, 13 Peters, 136. The question is not as to the original right of the party to come into this court, but is it a proceeding in rem? Has

Shelby v. Bacon et al.

jurisdiction attached? Would it produce collision of jurisdiction to disturb it?

In opposition to the complainant's positions, the defendants take the following grounds:

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1. The party assignor, the Bank of the United States, being a corporation created by an act of the Legislature of Pennsylvania, was a local corporation, and, so far as a corporation can be such, was a resident or inhabitant of that State, was liable for its debts in the manner prescribed by the laws thereof, and could only dispose of its property by virtue of the said laws.

2. That becoming insolvent, and, in consequence thereof, making an assignment to secure the payment of its debts, the validity and effect of the assignment are to be determined and regulated by the laws of Pennsylvania.

3. That the administration of the assets, under such an assignment, should be in accordance with the laws of Pennsylvania, and under the direction of the tribunal, and according to the rules, which those laws have prescribed.

4. That a suit like the present, brought to administer the trusts of the assignment of an insolvent local corporation, made to citizens of the same State, in order to secure the payment of its debts, in pursuance of the laws of that State, which control and regulate the whole subject-matter, is not within the jurisdiction of the courts of the United States.

5. That even if the foregoing proposition be not correct, the jurisdiction of the State court had attached, by the filing therein of their partial accounts by the trustees of the bank, and jurisdiction over the subject-matter of these trusts having thus become vested in the State tribunal, the United States court could not withdraw the same therefrom.

6. That the trustees, being subject to the jurisdiction of the State court, and having partially settled their accounts under its authority, are compellable to settle their future accounts before the same tribunal; and, if the present bill be sustained, will be also compelled to adjust and settle, at additional expense to the trust estate, their accounts in a court of the United States, which may be governed by different rules from the State court, and may adjust the same accounts upon different principles.

That court which first rightfully takes possession of the subject, or in which suit has been first commenced, or application made, or petition presented, or writ issued, shall retain the ju risdiction until a final disposition is made of the matter in controversy. Smith v. McIver, 9 Wheaton, 532; Pratt v. Northam, 5 Mason, 95; Merrill v. Lake, 16 Ohio, 373; Ship Robert Ful