Central Mexico Light & Power Co. v. Munch, No. 88.

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtSWAN, CHASE, and CLARK, Circuit
Citation116 F.2d 85
PartiesCENTRAL MEXICO LIGHT & POWER CO. et al. v. MUNCH et al. (OLD COLONY TRUST CO., Intervenor).
Decision Date06 December 1940
Docket NumberNo. 88.

116 F.2d 85 (1940)

CENTRAL MEXICO LIGHT & POWER CO. et al.
v.
MUNCH et al. (OLD COLONY TRUST CO., Intervenor).

No. 88.

Circuit Court of Appeals, Second Circuit.

December 6, 1940.


116 F.2d 86

James L. Boone, of New York City (Reid & Priest, Edwards & Smith, Edwin D. Ford, Jr., and George Pfann, all of New York City, on the brief), for plaintiffs-appellants.

Stoddard B. Colby, of New York City (Breed, Abbott & Morgan and Dana T. Ackerly, all of New York City, on the brief), for intervenor-appellant.

Samuel Marion and Albert E. Kane, both of New York City (Louis Kunen, of New York City, of counsel), for defendants-appellees.

Before SWAN, CHASE, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

Plaintiffs herein are Central Mexico Light and Power Company, obligor on certain due and unpaid first mortgage bonds, the Guanajuato Power and Electric Company, guarantor of the bonds, the Michoacan Power Company, whose entire income is asserted to be derived from Guanajuato, and Empresas Electricas Mexicanas, Inc., holder of a large amount of the bonds. The latter claims to represent also all others similarly situated as bond-holders. In this action plaintiffs sought an injunction to restrain three individual bondholders, who have brought suit upon the bonds in the courts of the State of New York, from further prosecution of their suits. They also asked like relief against others situated similarly to the named defendants and further prayed a declaratory judgment adjudicating the various rights of the parties under the bonds. Intervention was sought by Old Colony Trust Company. The district court denied the petition to intervene and dismissed the action on the merits on the motions of defendants. Plaintiffs and the intervenor appeal.

In a careful opinion the court below considered the effect of a no-action clause found in the deed of trust securing the bonds, whereby individual bondholders were prohibited from suing except under conditions not here present (including failure of the trustee to act upon request of one-fourth of the bondholders). The court ruled that the alleged prohibition therein did not restrain defendants from pressing their suits, both because it was not incorporated into the bonds they held and because it referred only to enforcement of the security, and not to actions merely to collect the principal sums due the

116 F.2d 87
separate bondholders. In addition to the issue passed on by the court, there were questions as to whether there was any equity in the plaintiffs' claim for an injunction, particularly in view of 28 U.S.C.A. § 379, or whether they should not be remitted to their defenses in the New York actions. But we think all these matters should be passed by, since we are met at the threshold with a claim of lack of federal jurisdiction, which we think is well taken

Jurisdiction is based on diversity of citizenship. The parties are citizens of different states, but the question arises whether, as the complaint formally alleges, "the matter in controversy exceeds, exclusive of interest and costs, the sum of $3,000.00." Defendants Marx and Peifer filed an answer in which, as a second defense, they asserted that the court lacked jurisdiction because there was not the requisite amount as to each of them. At the same time they filed a motion to dismiss for this lack of jurisdiction, among other grounds. Defendant Munch filed an answer asserting that he was interested in only a single $1,000 bond, and also moved for severance, dismissal, summary judgment, and such other and further relief as might be just and proper. Moreover, in two separate affidavits he raised the question of jurisdiction, and in one he asked specifically for dismissal on that ground. Plaintiffs' suggestion that Munch is not relying upon this objection surely is not well taken, nor is plaintiffs' objection that the motion to dismiss of the other defendants came too late. It is not important whether the objection is called a motion to dismiss or one for summary judgment. Since the same relief is sought, the difference in name is unimportant. In any event, the affidavits presented are available on either motion. Federal Rules 6(d), 12(b), 43(e), 56(e), 28 U.S.C.A. following section 723c; Palmer v. Palmer, D. C. Conn., 31 F.Supp. 861; 1 Moore's Federal Practice 645-647. Moreover, it is well settled that plaintiffs always have the burden of proving jurisdiction, KVOS, Inc., v. Associated Press, 299 U.S. 269, 57 S.Ct. 197, 81 L. Ed. 183, and the court must raise the objection of its own motion if it is not otherwise presented. Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001; Bender v. Connor, D.C.Conn., 28 F.Supp. 903; Federal Rule 12(h).

If the interests of defendants are considered separately, jurisdiction here is lacking, since, as the record shows, Munch owns only one $1,000 bond and the other defendants do not each own bonds of $3,000 or more in amount. True, the record shows only their general allegation to that effect, but it is conceded in the briefs that Peifer held $2,000 and Marx $1,500 of the bonds. (It is stated that affidavits expressly showing these facts — strangely enough — were omitted from the record by stipulation.) Plaintiffs assert, however, that in a claim for injunction against these defendants their separate ownerships are not controlling, and that the value of the interest to plaintiffs is the test. This, the so-called plaintiff's viewpoint test — discussed by Judge Dobie in 38 Harv. L. Rev. 733, and in 1 Moore's Federal Practice 511, 512 and 49 Yale L.J. 274 — seems now well settled; but the cases require of the plaintiffs precision in showing exactly what interest the injunction is to protect and that its value exceeds $3,000. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135; Kroger Grocery & Baking Co. v. Lutz, 299 U.S. 300, 57 S.Ct. 215, 81 L.Ed. 251; 49 Yale L.J. 274. As is pointed out in Healy v. Ratta, 292 U.S. 263, at 270, 54 S. Ct. 700, 703, 78 L.Ed. 1248, the "policy of the statute" defining federal jurisdiction, 28 U.S.C.A. § 41(1), and "due regard for the rightful independence of state governments" both call for a strict construction of jurisdictional requirements.

Plaintiffs attempt to meet this issue by showing that reorganizations of the debtor and associated companies will be upset, to the financial loss of the companies and their...

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62 practice notes
  • American-Foreign Steamship Corp. v. United States, No. 126
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • July 28, 1958
    ...1209; KVOS, Inc., v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 81 L.Ed. 183; Central Mexico Light & Power Co. v. Munch, 2 Cir., 116 F.2d 85; Williams v. Minnesota Mining & Mfg. Co., D.C.S.D.Cal., 14 F.R.D. 1; Ramirez & Feraud Chili Co. v. Las Palmas Food Co., D.C.S.D.Cal., 146 F. S......
  • York v. Guaranty Trust Co. of New York, No. 256.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 25, 1944
    ...amount, the claims of the several plaintiffs could not be aggregated. Cf. Central Mexico Light & Power Co. v. Munch, 2 Cir., 116 F.2d 85, 89. For the Rules could not affect basic jurisdictional requirements fixed by statute. But there were no similar inhibitions as to changes affecting loss......
  • Zahn v. International Paper Company 8212 888, No. 72
    • United States
    • United States Supreme Court
    • December 17, 1973
    ...v. Mahogany Assn., 129 F.2d 227 (C.A.3, 1942); Woerter v. Orr, 127 F.2d 969 (C.A.10, 1942); Central Mexico Light & Power Co. v. Munch, 116 F.2d 85 (C.A.2, 1940); Independence Shares Corp. v. Deckert, 108 F.2d 51, 53 (C.A.3, 1939), rev'd on other grounds, 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed.......
  • Aralac, Inc. v. Hat Corporation of America, No. 9184.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 10, 1948
    ...1942, 124 F. 2d 822, certiorari denied 317 U.S. 695, 63 S.Ct. 436, 87 L.Ed. 556; Central Mexico Light & Power Co. v. Munch, 2 Cir., 1940, 116 F.2d 85, 87; Cohen v. American Window Glass Co., 2 Cir., 1942, 126 F.2d 111; also Gallup v. Caldwell, 3 Cir., 1941, 120 F.2d 90, 92; see also Farrall......
  • Request a trial to view additional results
62 cases
  • American-Foreign Steamship Corp. v. United States, No. 126
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • July 28, 1958
    ...1209; KVOS, Inc., v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 81 L.Ed. 183; Central Mexico Light & Power Co. v. Munch, 2 Cir., 116 F.2d 85; Williams v. Minnesota Mining & Mfg. Co., D.C.S.D.Cal., 14 F.R.D. 1; Ramirez & Feraud Chili Co. v. Las Palmas Food Co., D.C.S.D.Cal., 146 F. S......
  • York v. Guaranty Trust Co. of New York, No. 256.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 25, 1944
    ...amount, the claims of the several plaintiffs could not be aggregated. Cf. Central Mexico Light & Power Co. v. Munch, 2 Cir., 116 F.2d 85, 89. For the Rules could not affect basic jurisdictional requirements fixed by statute. But there were no similar inhibitions as to changes affecting loss......
  • Zahn v. International Paper Company 8212 888, No. 72
    • United States
    • United States Supreme Court
    • December 17, 1973
    ...v. Mahogany Assn., 129 F.2d 227 (C.A.3, 1942); Woerter v. Orr, 127 F.2d 969 (C.A.10, 1942); Central Mexico Light & Power Co. v. Munch, 116 F.2d 85 (C.A.2, 1940); Independence Shares Corp. v. Deckert, 108 F.2d 51, 53 (C.A.3, 1939), rev'd on other grounds, 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed.......
  • Aralac, Inc. v. Hat Corporation of America, No. 9184.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 10, 1948
    ...1942, 124 F. 2d 822, certiorari denied 317 U.S. 695, 63 S.Ct. 436, 87 L.Ed. 556; Central Mexico Light & Power Co. v. Munch, 2 Cir., 1940, 116 F.2d 85, 87; Cohen v. American Window Glass Co., 2 Cir., 1942, 126 F.2d 111; also Gallup v. Caldwell, 3 Cir., 1941, 120 F.2d 90, 92; see also Farrall......
  • Request a trial to view additional results

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