Mitchell v. Maurer

• Decision Date: 26 February 1934
• Docket Number: No. 7262.,7262.
• Citation: 69 F.2d 233
• Parties: MITCHELL, Insurance Com'r of California, v. MAURER et al.
• Court: U.S. Court of Appeals — Ninth Circuit

69 F.2d 233 (1934)

MITCHELL, Insurance Com'r of California, v. MAURER et al.

No. 7262.

Circuit Court of Appeals, Ninth Circuit.

February 26, 1934.

Frank L. Guerena, of San Francisco, Cal., for appellant.

E. D. Lyman, P. B. Plumb, C. L. McGaughey, and Ben S. Beery, all of Los Angeles, Cal., for appellee.

Before WILBUR, SAWTELLE, and GARRECHT, Circuit Judges.

SAWTELLE, Circuit Judge.

Since the precise sequence of events is of crucial importance in determining the question presented by this appeal, involving as it does priority of jurisdiction as between a federal and a state court, we will give a chronological statement of the facts.

1. The appellee corporation was organized under the laws of Delaware. Prior to April 19, 1933, it was authorized to transact, and was engaged in, the business of insurance in California under a certificate of authority issued by the appellant.

2. On March 23, 1933, in the Court of Chancery for New Castle county, Del., the appellee Maurer filed a bill for the appointment of a receiver for the appellee corporation. The complaint recited that the appellee Maurer had recovered a judgment against Fred Sauderoff in a New Jersey court for $20,000; that of this amount $5,000 was covered by a casualty insurance policy in favor of Sauderoff issued by the Commonwealth Casualty Company, of Pennsylvania, which, it was alleged, was a predecessor in interest of the appellee corporation; that, by reason of an alleged merger with the Commonwealth Company, the appellee corporation is indebted to the appellee Maurer in the sum of $5,000; and that the appellee corporation was insolvent.

3. On March 30, 1933, the appellant suspended the right of the appellee corporation to transact the business of workmen's compensation insurance in California. That suspension was in effect on April 19, 1933.

4. On April 19, 1933, at an undisclosed hour, on motion of the solicitor for the complainant-appellee Maurer for a decree pro confesso, the Chancellor of the Delaware court appointed three receivers for the appellee corporation, as set forth more fully infra.

5. On April 19, 1933, at 4:45 p. m., a bill of complaint, apparently verified on April 18, 1933, was filed in the court below, the pleading being entitled a "Petition for Appointment of Ancillary Receiver," and bearing the caption of "Bertha E. Maurer v. International Re-Insurance Corporation," etc. The preamble of the pleading, however, recited that it was "the petition of Arthur G. Logan, Carl M. Hansen and George de Bienzille (sic) Keim," who, the petition alleged and the record so shows, were appointed receivers for the appellee corporation by the Delaware court.

6. On April 19, 1933, at 4:54 p. m., in the superior court for the county of Los Angeles, Cal., the appellant filed a petition praying, inter alia, that he be placed into possession of the property and business of the appellee corporation. That court will hereinafter be referred to as "the state court."

7. On April 19, 1933, at an undisclosed hour, the court below signed an order appointing Keim and W. H. Comstock ancillary receivers of the appellee corporation, and enjoining any one else from interfering with its property.

8. On April 19, 1933, at an undisclosed hour, the state court issued a temporary restraining order against the appellee corporation enjoining it from disposing of its property or transacting business in California, and ordering the appellant "into the actual possession of said property."

9. On April 20, 1933, at 9:30 a. m., the temporary restraining order of April 19, 1933, supra, an order against the appellee corporation to show cause, and a copy of the petition, filed in the state court, were served on Emil Johnson, as vice president of the appellee corporation. The order to show cause was returnable on April 28, 1933.

10. On April 20, 1933, at an hour subsequent to 9:30 a. m., and variously indicated as having been prior to 12:20 p. m. or prior to 2 p. m., or shortly afterward, Comstock served on Johnson a copy of the order of the court below appointing the ancillary receivers, and told Johnson that "until further orders" the latter "was to regard himself as an agent and employee of said ancillary receivers."

11. On April 20, 1933, at an hour variously indicated as having been 12:20 p. m. or about 2 p. m., as already stated, Johnson exhibited to two deputies of the appellant the order appointing ancillary receivers.

12. On April 20, 1933, at a time variously stated in the record to have been in the morning or at 2 in the afternoon, two deputies of the appellant served Johnson with an "Order to Seize and Take Possession," signed, not by the state court of California, but by the appellant himself, through a deputy.

13. On April 20, 1933, at 1:50 p. m., the order of the court below appointing ancillary receivers and restraining all other persons from interfering with the property of the appellee corporation was filed in the court below.

14. On April 21, 1933, in the afternoon, a certified copy of the order of the court below appointing ancillary receivers was served upon the appellant, through two deputies. A copy of the restraining order by the court below was also served on the appellant, on the same afternoon.

15. On April 25, 1933, various amendments to the bill of complaint were filed in the court below, together with a new "petition for the appointment of ancillary receiver, including the amendments, and together with an exemplified copy of the bill of complaint filed in the Delaware court, and other papers.

16. On April 25, 1933, the appellee corporation filed its answer to the bill of complaint in the court below, admitting all the allegations of the bill, and consenting to the appointment of an ancillary receiver or receivers.

17. On a date undisclosed by the record, the state court in California continued the hearing on the order to show cause from April 28, 1933, to May 10, 1933, in view of the pendency of the proceedings in the court below.

18. On May 2, 1933, the appellant served upon the appellee corporation, and filed in the court below, a "motion to vacate the order appointing receivers," etc., "to dismiss the petition for the appointment of receivers, and to re-examine the ex parte order appointing the receivers."

19. On May 12, 1933, the court below denied the appellant's motion to vacate the order.

20. On June 13, 1933, a motion to rehear the appellant's motion to vacate the order appointing receivers, etc., which motion to rehear was filed by the appellant on May 26, 1933, was denied by the court below.

21. From the orders of the court below of May 12, 1933, and of June 13, 1933, supra, the present appeal was taken.

There are several preliminary questions to be disposed of before we address ourselves to the main issue.

In the first place, the status of the appellant as a party herein has been seriously brought into question. In the captions of the transcript of record, of the supplemental transcript of record, and of the various briefs, the appellant is designated as "intervenor." In the appellant's petition for appeal, in his assignments of error, in his cost bond, in the stipulation re supplemental transcript of record on appeal, and, finally, in the specifications of error in his own brief, the appellant is repeatedly referred to as "intervenor." He is therefore clearly in error when he states, in his supplemental brief, that "the only reference in the record to appellant as `intervenor' is on Page 71, where counsel for the State Insurance Commissioner signed the petition for appeal as `attorneys for intervenor,' and in the cost bond (Tr. p. 75), * * *" and that "The assignments of error (Tr. p. 72) * * * properly refer to the Commissioner as the `appellant.'"

In view of these frequent references by the appellant to himself as "intervenor," we regard as quite pardonable the error of the appellees in accepting the appellant's own designation of himself, and devoting the first thirteen pages of their brief to the proposition that "the right of intervention must be in subordination to and in recognition of the main proceeding."

Nevertheless, a careful study of the record and of the law applicable thereto convinces us that the appellant has brought himself into court — not, indeed, as intervener, but by his motion to vacate the order of the court below appointing the ancillary receivers, as set forth above. The order of the lower court contained an injunction in the following language, the italics being our own: "It is further ordered, adjudged and decreed that the said respondent and each and every of its agents and employees, and all the creditors of the respondent and all * * * commissioners and all deputies * * * and generally all persons * * * whatsoever are hereby enjoined from removing, transferring, disposing," etc.

We believe that the language of the above injunction was sufficient to bring the appellant into court and to authorize his filing of the motion to vacate. It will be remembered that a certified copy of the restraining order of the court below was served upon the appellant, on the day after the order was filed.

In Mitchell v. Lay, 48 F.(2d) 79, 84, 85, this court said: "At this juncture we pause to consider appellee's motion to dismiss so far as the motion is based upon the claim that the appellant is not entitled to appeal from the order granting the injunction or from the order refusing to vacate the receivership on the ground that the appellant is not a party to the action, and that the appellant did not ask permission to intervene in the action, that therefore he is a stranger to the action and not entitled to the appeal from the orders made. It is true that the appellant is not a party to the original action, but when he was brought into court by the process of the court at the instigation of the parties to the action or of the receiver he became a party to the ancillary proceedings and entitled to...