American Freedom Train Foundation v. Spurney
| Decision Date | 08 November 1984 |
| Docket Number | No. 84-1438,84-1438 |
| Citation | 747 F.2d 1069 |
| Parties | 1984-2 Trade Cases 66,274 The AMERICAN FREEDOM TRAIN FOUNDATION, etc., Plaintiff, Appellant, v. Peter L. SPURNEY, et al., Defendants, Appellees. |
| Court | U.S. Court of Appeals — First Circuit |
Patrick W. Crowley, Seattle, Wash., with whom Charles R. Lonergan, Jr., Raymond H. Siderius, Siderius, Lonergan & Crowley, Seattle, Wash., Desmond Sullivan, Peter Sultan, and Hoag & Sullivan, Boston, Mass., were on brief, for plaintiff, appellant.
John J. Curtin, Jr., Boston, Mass., with whom Robert E. McDonnell, Bingham, Dana & Gould, Harvey Weiner, Peabody & Arnold, Boston, Mass., Robert T. Johnson, D. Scott Hargadon, and Bell, Boyd & Lloyd, Chicago, Ill., were on brief, for defendants, appellees Thomas Allsopp, Vincent C. Burke, Jr., John C. Cornelius, William S. Field, J.J. MacDonald, George A. Peapples, and Alan M. Pottash.
Harvey Weiner, Boston, Mass., with whom Peabody & Arnold, John J. Curtin, Jr., Robert E. McDonnell, Bingham, Dana & Gould, Boston, Mass., Robert T. Johnson, D. Scott Hargadon, and Bell, Boyd & Lloyd, Chicago, Ill., were on brief, for defendants, appellees H. Keith Ridgway, and Gordon Edwards.
John Wall, Harry C. Mezer, and Cullen & Wall, Boston, Mass., were on brief, for defendant, appellee Howard S. Epstein.
Before COFFIN, Circuit Judge, ALDRICH and COWEN, * Senior Circuit Judges.
This is an appeal from a judgment of the district court, which dismissed appellant's (plaintiff's) complaint on the ground that the court lacked jurisdiction. Plaintiff is the receiver of The American Freedom Train Foundation, Inc. (AFTF), a dissolved Massachusetts charitable corporation. The receiver brought this action against AFTF's former officers and directors (defendants) seeking to recover damages stemming from an alleged breach of their fiduciary duties which resulted in an antitrust judgment being rendered against AFTF by a federal district court in Washington. Since we agree with the district court's alternative holding that it had no jurisdiction, we affirm.
AFTF was organized in 1972 to operate a steam-powered museum train (Freedom Train) which would stop to show its exhibits in each of the 48 contiguous United States in 1975-76 in commemoration of the American Bicentennial. The train began its run in Wilmington, Delaware on April 1, 1975, and it stopped in three locations in Massachusetts between April 20 and May 5, 1975.
In November 1975, the Ace Novelty Co. (Ace), a Washington corporation in the business of selling souvenir and novelty items, brought an antitrust suit against AFTF in the District Court for the Western District of Washington. Ace alleged that AFTF conspired with its exclusive concessionaires in violation of the Sherman Act by unfairly restraining Ace from selling concession items in the vicinity of the Freedom Train. The anticompetitive practices complained of by Ace were alleged to have begun in "approximately July" of 1975. The complaint states that Ace first attempted to market its novelties where the train stopped in "approximately November of 1975"; this was nearly 6 months after the train's last stop in Massachusetts. Ace did not sue the individual directors of AFTF in the Washington lawsuit and did not seek to obtain any attachment or injunction in that action.
Following settlement negotiations which were unsuccessful, the suit remained dormant for nearly 5 years, and was dismissed for lack of prosecution by the Washington district court in July 1980. In the interim, in August 1978, AFTF obtained an interlocutory decree of dissolution in the Supreme Judicial Court of Massachusetts, which decree was made final in October 1980. AFTF attached to its petition seeking dissolution an affidavit of its general counsel and chief executive officer, which stated that "there are no remaining creditors of the Foundation which I am currently aware of." The receiver alleges that this affidavit was fraudulent, because AFTF's directors knew of the pendency of Ace's antitrust suit when it filed this petition. We note, however, that an audit report attached to the petition showed the 1978 status of the lawsuit and stated that both management and retained counsel were of the opinion that AFTF had a meritorious defense and counterclaim. The report also indicated that most of the corporate assets had been distributed before the filing of the petition rather than as a result of the decree of dissolution.
In December 1981, the United States Court of Appeals for the Ninth Circuit reversed the dismissal of the Washington suit and remanded the case to the district court. Ace Novelty Co. v. Gooding Amusement Co., 664 F.2d 761 (9th Cir.1981). The district court then held a jury trial, which resulted in a judgment against AFTF of $85,000 (trebled) in August 1982. The judgment was registered in the district of Massachusetts in October 1982, but was returned unsatisfied.
Ace then moved for the appointment of a receiver in the Massachusetts district court in October 1983, for the purpose of recovering the proceeds of the sole remaining corporate asset--a "potential cause of action" against AFTF's former officers and directors for breach of their fiduciary duties to AFTF. Following the granting of this motion, the receiver brought the present action and all defendants, nonresidents of Massachusetts, were personally served outside the state as provided in Rule 4(e) of the Federal Rules of Civil Procedure and the Massachusetts "long-arm" statute.
The sole issue in this appeal is whether the district court had in personam jurisdiction over defendants. The district court held that it did not. It found that its jurisdiction in receivership actions is governed by 28 U.S.C. Sec. 754 and its companion statute governing service of process, 28 U.S.C. Sec. 1692. These statutes vest receivers with jurisdiction over all corporate property, wherever situated, provided that copies of the complaint and order of appointment are filed in the district court for each district in which the property is located within 10 days of the entry of their order of appointment. The district court found that neither party disputed that the sole corporate asset--the "potential cause of action"--resided in Massachusetts and that plaintiff did not file copies of the complaint and appointment order with any other district court. Therefore, the court below held that service of process on the nonresident officers and directors outside of Massachusetts was ineffective under 28 U.S.C. Secs. 754 and 1692. Although their positions are based on different grounds, both parties to this appeal have agreed that the district court had no jurisdiction under section 754.
Under the district court's interpretation, section 754 limited the court's extraterritorial jurisdiction more stringently than the Massachusetts long-arm statute or the "minimum contacts" standard. In the alternative, however, the district court found that under those two "more lenient standards," it still would not have personal jurisdiction over the defendants, because plaintiff's cause of action related solely to AFTF's antitrust violations which were not alleged to have taken place in Massachusetts.
The primary statute relied on by the district court, 28 U.S.C. Sec. 754, reads as follows:
Sec. 754. Receivers of property in different districts
A receiver appointed in any civil action or proceeding involving property, real, personal or mixed, situated in different districts shall, upon giving bond as required by the court, be vested with complete jurisdiction and control of all such property with the right to take possession thereof.
He shall have capacity to sue in any district without ancillary appointment, and may be sued with respect thereto as provided in section 959 of this title.
Such receiver shall, within ten days after the entry of his order of appointment, file copies of the complaint and such order of appointment in the district court for each district in which property is located. The failure to file such copies in any district shall divest the receiver of jurisdiction and control over all such property in that district.
Its companion statute, 28 U.S.C. Sec. 1692, provides:
Sec. 1692. Process and orders affecting property in different districts
In proceedings in a district court where a receiver is appointed for property, real, personal, or mixed, situated in different districts, process may issue and be executed in any such district as if the property lay wholly within one district, but orders affecting the property shall be entered of record in each of such districts.
Section 754 is ancillary to the main suit in which the receiver is appointed, and the purpose of the statute is to give the appointing court jurisdiction over property in the actual or constructive possession and control of the debtor, wherever such property may be located. Inland Empire Insurance Co. v. Freed, 239 F.2d 289, 292 (10th Cir.1956). We are therefore in agreement with the Sixth Circuit's holding that pursuant to sections 754 and 1692,
[t]he appointment court's process extends to any judicial district where receivership property is found. As such, the minimum contacts analysis, as a limitation on state extra-territorial power, is simply inapposite.
Haile v. Henderson National Bank, 657 F.2d 816, 826 (6th Cir.1981) (Emphasis added).
In that case, which is distinguishable on its facts, a receiver appointed in the District of Tennessee, sued Alabama residents and an Alabama bank in the appointing court to recover the debtors' property located in Alabama. The receiver filed a copy of the complaint and the order of appointment in the District of Alabama.
We think the district court erred when it concluded, based largely on dicta in the Haile case, that jurisdiction in an in personam receivership action, such...
To continue reading
Request your trial
-
Stisser v. SP Bancorp, Inc.
...exercise of personal jurisdiction over them without running afoul of the Due Process Clause. See, e.g. , Am. Freedom Train Found. v. Spurney , 747 F.2d 1069, 1074–75 (1st Cir. 1984) (holding that nonresident directors lacked the requisite nexus to Massachusetts, in significant part, because......
-
Colon v. Gulf Trading Co.
...party claiming the existence of jurisdiction must "prove the facts necessary to sustain jurisdiction." American Freedom Train Foundation v. Peter L. Spurney, 747 F.2d 1069 (1st Cir.1984). Furthermore, in view of our construction of the "arises as a result of" language in Rule 4.7, any resor......
-
Carney v. Lopez
...address the argument have uniformly rejected it. See SEC v. Bilzerian, 378 F.3d 1100, 1104–05 (D.C.Cir.2004); Am. Freedom Train Found. v. Spurney, 747 F.2d 1069 (1st Cir.1984); Haile v. Henderson Nat'l Bank, 657 F.2d 816, 826 (6th Cir.1981). The service of a summons and complaint on Peláez ......
-
Robb Evans & Assocs. v. Diaz-Cueto
... ... foundation and filled with hearsay and opinion. Defendants do ... 1145; Bilzerian , 378 F.3d at 1103; Am. Freedom ... Train Found. v. Spurney , 747 F.2d 1069, 1073 ... they might receive in an American court.' ” Id ... citing Fid. Bank PLC v. N. Fox ... ...
-
A New Bankruptcy Subchapter for Institutions of Higher Education: A Path but not a Destiny.
...a federal case when the forum does not have subject matter jurisdiction over an in personam lawsuit. Am. Freedom Train Found. v. Spurney, 747 F.2d 1069, 1074 (1st Cir. (186) See 20 U.S.C. [section] 1002(a)(4)(A). (187) See id. (188) 34 CFR [section] 600.31(a)(1). (189) 34 CFR [section] 600.......