Allen Brown v. Alton Water Company
| Decision Date | 09 January 1912 |
| Docket Number | No. 75,75 |
| Citation | 32 S.Ct. 156,56 L.Ed. 221,222 U.S. 325 |
| Parties | ALLEN A. BROWN et al., Appts., v. ALTON WATER COMPANY |
| Court | U.S. Supreme Court |
Messrs. Elijah N. Zoline and James Hamilton Lewis for appellants.
Messrs. William Burry, Levi Davis, and F. B. Johnstone for appellee.
In view of the fact that our interposition was vainly sought at one or the other stage of this protracted litiga- tion, we shall state the history of the controversy more fully than perhaps we would otherwise do.
In 1901 the New England Water Company owned and operated a water plant at Alton, Illinois. This plant was acquired from the Alton Water Works Company. In October, 1901, the United Water Works Company filed in a court of the state of Illinois a creditors' bill against the New England Water Company and the Farmers' Loan & Trust Company, trustee under a mortgage covering the plant of the waterworks company. Other parties and corporations, because of their asserted claims in or to the property, were joined as defendants.
The Farmers' Loan & Trust Company not only appeared in the cause, but in the same court filed a bill to foreclose its mortgage. Among those made defendants to this bill were a corporation known as the Boston Water & Light Company and the International Trust Company. The Boston Company was made a defendant on the ground that it asserted some claim to a portion of the property which the complainant insisted was covered by the mortgage sought to be foreclosed as a result of an after-acquired property clause contained in that mortgage. The International Trust Company was made a defendant as trustee of a mortgage executed in favor of that company by the Boston Company, embracing the property which the bill averred was covered by the prior mortgage in favor of the Farmers' Loan & Trust Company.
The causes were consolidated and a receiver was appointed. The Boston Water & Light Company, asserting a separable controversy, removed the consolidated cause to the circuit court of the United States for the southern district of Illinois, and that court overruled a motion to remand. The International Trust Company answered and contested the claim made in the bill that the property mortgaged to it was covered by the mortgage of the Farmers' Loan & Trust Company.
The circuit court entered a final decree on December 23, 1903. By that decree the operation of the mortgage in favor of the Farmers' Loan & Trust Company, as charged in the bill, was recognized and the priorities of the respective liens upon the property were fixed. While the lien of the mortgage in favor of the International Trust Company, as trustee, was recognized, it was decreed to be subordinate to the prior mortgage to the Farmers' Loan & Trust Company. The decree contained the usual provisions fixing the amount due, directing payment, ordering a sale upon default in payment, and barring all parties and their privies.
The circuit court of appeals, on an appeal taken by the International Trust Company and others, finally disposed of the case. The removal was sustained, and it was held that by the after-acquired property clause in the mortgage of the Farmers' Loan & Trust Company, that mortgage embraced the property covered by the mortgage in favor of the International Trust Company as trustee. 69 C. C. A. 297, 136 Fed. 521. A writ of certiorari was refused by this court on April 3, 1905. Boston Water & Light Co. v. Farmers' Loan & T. Co. and New England Waterworks Co. v. Farmers' Loan & T. Co. 197 U. S. 622, 49 L. ed. 910, 25 Sup. Ct. Rep. 798, 799.
A sale under the decree of foreclosure took place, the property bringing about enough to satisfy the mortgage in favor of the Farmers' Loan & Trust Company. Pending a motion to confirm this sale, certain parties, the same who are now appellants, alleging themselves to be holders of bonds secured by the mortgage of the International Trust Company, objected to the confirmation of the sale, on the ground that the property embraced in the mortgage to the International Trust Company was not covered by the mortgage of the Farmers' Loan & Trust Company. It was alleged that the persons appearing were not privies to the foreclosure proceedings and the decree en- tered therein, because they had not been made parties eo nomine, and were not represented by the International Trust Company, as the powers conferred upon that corporation by the deed of trust did not give authority to represent the bondholders. The objections were stricken from the files, and the sale was confirmed. Among other things, the order of confirmation enjoined all parties to the suit and all persons claiming through or under them, their attorneys, solicitors, etc., 'from setting up any pretended or alleged title against the title of the purchasers.' A question as to the distribution of the proceeds among coupon holders was subsequently reviewed in the circuit court of appeals. 70 C. C. A. 163, 137 Fed. 729.
The present appellee, the Alton Water Company, became the owner of the property sold under the decree in foreclosure. Subsequently the present appellants, as holders of bonds secured by the mortgage to the International Trust Company, and the same persons who had objected to the confirmation of the sale, treating the prior foreclosure proceedings as to them as nonexisting, commenced in a state court a suit to foreclose the mortgage in favor of the International Trust Company. The International Trust Company, the Boston Water & Light Company, the Alton Water Works Company, the Alton Water Company, as one in possession of the property, as well as other bondholders, various alleged lien holders, and adverse claimants, were made parties. As stated by both parties in argument, persons who were interested in maintaining the decree in the prior foreclosure proceedings asked a commitment for contempt against the attorney who appeared for the complainants in the suit in the state court, and under the stress of a commitment for contempt the proceedings in the state court were discontinued. The commitment was, however, set aside by the circuit court of appeals, 83 C. C. A. 211, 154 Fed. 273, and a petition for a writ of certiorari to review the order of reversal was denied by this court. Peck v. Lewis, 207 U. S. 593, 52 L. ed. 355, 28 Sup. Ct. Rep. 258.
Following the decision last referred to, appellants refiled their foreclosure bill in the state court. The Alton Water Company thereupon filed in the court below the bill which is now before us as ancillary to the bill filed in the original foreclosure suit, invoking the authority of the court, in virtue of the jurisdiction acquired in the foreclosure proceedings, to protect, as between the parties to such suit, the rights acquired under the foreclosure sale. The bill only prayed that the further prosecution in the state court be enjoined. The defendants were those who were asserting the right as bondholders under the International Trust Company mortgage to foreclosure in the state court, and their attorneys. Each of such defendants separately filed a general demurrer, and each also specially demurred on the ground that the court was 'without jurisdiction, both over the subject-matter and parties to the suit,' and that the bill was not an ancillary bill, as it appeared on its face that the defendant was not a party to the prior foreclosure proceedings. The demurrers were sustained and the bill was dismissed 'for want of jurisdiction.'
The circuit court of appeals reversed this decree, and held that the persons who, as alleged bondholders, were complainants in the foreclosure suit in the state court, had been fully represented in the prior foreclosure by the International Trust Company, and therefore that such persons were parties and privies to the prior decree, and their rights were concluded thereby. Upon this basis it was expressly decided that the bill did not...
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