293 U.S. 237 (1934), 54, Mitchell v. Maurer

Docket Nº:No. 54
Citation:293 U.S. 237, 55 S.Ct. 162, 79 L.Ed. 338
Party Name:Mitchell v. Maurer
Case Date:December 03, 1934
Court:United States Supreme Court

Page 237

293 U.S. 237 (1934)

55 S.Ct. 162, 79 L.Ed. 338




No. 54

United States Supreme Court

Dec. 3, 1934

Argued November 7, 8, 1934




1. Where receivers of a corporation, appointed by a state court, file a suit against it in the federal court in another State in which they seek an ancillary receivership and are the only actors, there is no federal jurisdiction on the ground of diversity of citizenship if one of them and the corporation are citizens of the same State, and, in this regard, it is immaterial that the bill, in its caption, names as

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sole plaintiff the plaintiff in the original suit, and that diversity of citizenship existed between him and the corporation. P. 242.

2. A suit by primary receiver, appointed by a state court, for an ancillary receivership in a federal court, is an original, independent bill, which cannot be entertained by the federal court in the absence of diversity of citizenship or other independent ground of federal jurisdiction. P. 243.

3. Lack of federal jurisdiction cannot be waived or overcome by agreement of the parties. P. 244.

69 F.2d 233 reversed.

Certiorari to review an interlocutory decree sustaining an order appointing ancillary receivers.

BRANDEIS, J., lead opinion

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

International Re-Insurance Corporation is organized under the laws of Delaware. It had a place of business and [55 S.Ct. 163] real and personal property in California. On April 19, 1933, the Court of Chancery of Delaware appointed Arthur G. Logan of that State, Carl M. Hansen of Pennsylvania, and George De B. Keim of New Jersey, primary receivers of all its property. The statutes of Delaware purport to vest in receivers so appointed title, as quasi-assignees, to all property, wherever located, except real estate not situated within the State. R.S. Del. § 3884. The order appointing the primary receivers authorized them to apply in other jurisdictions for the appointment of ancillary receivers. On the day of their appointment, they filed in the federal court for Southern California a petition or bill praying that ancillary receivers be appointed

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of property there located. The prayer was granted ex parte. W. H. Comstock of California and De B. Keim were appointed ancillary receivers. And an order issued enjoining all persons from interfering with their possession and control.

On the same day, E. Forrest Mitchell, the Insurance Commissioner of California, filed, in the Superior Court of that State, a petition praying that he be placed in the possession of the property and business of the Corporation. That court entered immediately an order temporarily enjoining the Corporation from disposing of its property in California, and ordered the Insurance Commissioner to take possession thereof. Its license to transact the business of workmen's compensation insurance in California had been revoked by the Commissioner prior to the appointment of the primary receivers.

Service was promptly made of the orders issued by the two courts. A dispute arose as to the exact times of the filing of the several proceedings; of the entry of the orders; of the service thereof, and of taking possession. To resolve the controversy, the Insurance Commissioner filed in the federal court, on May 2, 1933, a motion to vacate its order appointing the ancillary receivers; to dissolve the restraining order, and to dismiss the petition of the primary receivers. The motion alleged that, before the federal court assumed to act, the California court had acquired jurisdiction and the Insurance Commissioner had actually taken possession of the Corporation's property. It charged, among other things, that the petition of the primary receivers on which the appointment of the ancillary receivers had been made did not state facts sufficient to give the court jurisdiction of the subject matter or of the parties, and that both the order of appointment and the restraining order were therefore invalid.

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At the hearing of the motion, it was admitted that "the situation presented is within the California statute providing for proceedings against delinquent insurance companies;" that the California assets of the Corporation

were in the possession of the Insurance Commissioner at the time of the appointment and qualification of the receivers appointed by the district court;

and that the proceeding brought by the primary receivers had been filed a few minutes before the Insurance Commissioner made his application to the state court. On these facts, the District Court held that, since the proceeding brought by the primary receivers was "first filed in this Court, jurisdiction of the res is in the district court." Upon a rehearing had on additional affidavits, the court reaffirmed its denial of the motion to vacate the order appointing the ancillary receivers.

From this judgment, the Insurance Commissioner appealed to the Court of Appeals. There, he contended that the original proceedings, in which the primary receivers petitioned for the appointment of ancillary receivers, was not a bill of complaint, and was insufficient to confer jurisdiction upon the District court, cf. McCandless v. Furlaud, 68 F.2d 9251 ; that the subsequent amendments purporting to state a cause of action against the corporation were inoperative to sustain the jurisdiction of the federal court because they were not filed until after the state court had acquired possession of the property, and that the bill, even as amended, did not state a cause of action in which a valid order appointing ancillary receivers could be made.

The Court of Appeals, in an elaborate opinion, affirmed the judgment of the District Court, 69 F.2d 233,...

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