Ashley v. Quintard

• Decision Date: 03 October 1898
• Docket Number: 1,424.
• Citation: 90 F. 84
• Parties: ASHLEY v. QUINTARD et al.
• Court: U.S. District Court — Northern District of Ohio

90 F. 84

ASHLEY v. QUINTARD et al.

No. 1,424.

United States Circuit Court, N.D. Ohio, Western Division.

October 3, 1898

Appearing only to make this motion, certain of the defendants ask to vacate a service by publication of an attachment writ, and to discharge the attachment. The suit was brought in the state court, and removed here by one of the defendants. That defendant, the Ann Arbor Railroad Company, has answered, but there has been no service of the summons upon Quintard and others of the defendants, and only by the attachment and publication involved in this motion have they been brought in, if at all. There seem to have been two writs, one from the state court before removal, and the other from this court after removal, but the question here made concerning each is the same. The attachment was served in Lucas county, Ohio upon the defendant the Ann Arbor Railroad Company, by garnishment, to which that defendant has answered, saying that it is a corporation of the state of Michigan, operating a line of railroad partly in Michigan and partly in Ohio only a small part of its property being located in the state of Ohio. This garnishee's answer also states the defendants Quintard, and others, making this motion, are citizens and residents of New York; that each owns the amount of the common or preferred stock of the Ann Arbor Railroad Company set opposite his name in the garnishee's answer and that the garnishee has no other property whatever of the said defendants in its possession or control. This is all that appears by the garnishee's answer. It is stated in the motion that the company has 'its principal office in Durand,' in the state of Michigan, but this is not sworn to by any one. However, by the seeming agreement of counsel in argument it is generally understood that the company has an office in New York City, where the stock books are kept, and transfers are made, and other financial operations conducted; that it has its terminal offices at Toledo, Ohio, where most of its administrative or operative offices are kept, but its corporate headquarters are at the village of Durand, in Michigan. The details of these matters are now shown, as no affidavits have been submitted in support of or against the motion.

C. W. Everett, John J. Kumler, and Charles S. Ashley, for plaintiff.

Smith & Beckwith and Clarence Brown, for defendants.

HAMMOND J.

(after stating the facts). Technically, perhaps, this motion should be decided solely upon the answer of the garnishee, which is not at all full in its statement of the facts, though it sufficiently appears by that document that the defendants are citizens of New York and nonresidents in Ohio, while the railroad company is only a Michigan corporation. But even that is not stated in the answer of the garnishee, but rather stands upon the agreement of counsel in argument that it is not incorporated in Ohio as it might be in both states. We find the fact to be that it is solely a Michigan corporation. It seems to be conceded by counsel for the motion that the shares of stock would be leviable either in Michigan, the corporate domicile of the company, or in New York, the residence of the owners of the shares. Apart from any authoritative adjudication on the subject, it is not very clear, considering the nature of shares of corporate stock, if it be leviable in New York, why it may not likewise be leviable in Ohio, or any other state, if service could be had upon the garnishee company. Merely because the debtors in execution or attachment reside in New York, and because that state may be taken as the situs of the shares for some of the purposes of ownership, such as the peculiar nature of the property permits,-- as, for example, bequest by will or distribution after death intestate, or for taxation, and the like,-- it does not follow that the shares may be subjected to the process of execution or attachment in that state, any more than other tangible or intangible personal property the debtors might own which happened, in fact, to be within the boundaries of the state of Michigan; wherefore the ultimate logic of the doctrine contended for by counsel for the motion must be that shares of stock are leviable only in the state where there the company has its corporate domicile, or else in any state where there can be service on the company. Public policy would seem to favor the former rule, particularly as to quasi public corporations, and those which, like railroads, are practically perpetuated in their existence in one way or another. It would be a convenience and source of safety to have on place only to which all might resort to effectuate by sale under judicial process any enforced change of title or ownership of the shares. If that should require the plaintiff here to go first to New York for his judgment, and then to Michigan for another judgment, it would only be a result common to legal procedure, and the same result that would be found necessary if the same debtors owned other property located in Michigan. Perhaps one suit in Michigan, the corporate domicile, furnished by a law of that state authorizing nonresidents to be sued as to any property located there, might suffice. The case of Jellenik v. Mining Co., 82 Fed. 778, is not against this doctrine, but rather in favor of it. There our Brother Severens held that plaintiffs, claiming that the shareholders held their shares fraudulently as against them, could not, in Michigan, try that question with shareholders nonresident there, under the laws of Michigan in that behalf. They first must go to the state of residence, settle the title there, and then to Michigan to compel a transfer, if the personal jurisdiction over the shareholders at their residence would not secure complete relief by compelling the transfer there. The truth is that the peculiar characteristic of shares of stock, united with the misfortune of having one's debtor owning property in foreign parts, combine to present difficulties in litigation concerning the shares which cannot be overcome, except in some such manner as that suggested by Judge Severens. Possibly they may be insuperable difficulties without special legislation to remedy them, but that is the reason for the existence of legislatures,-- to provide remedies as the necessities for them arise. It does not follow from his decision that executions and attachments against nonresident shareholders cannot be had in Michigan. If so, however, it only shows that further legislation may be needed there to give relief as against nonresident shareholders in Michigan corporations.

Even if it should result that shares in a corporation in another state than that in which the debtor resides cannot be subjected to execution or attachment for his debts, because there can be no personal service of summons on and judgment against him in that state upon which to base an execution, and that no attachment could be made effectual, that should not influence the courts in deciding such questions as this, for the reason that they can neither legislate nor impress a different quality upon property than it possesses inherently from the sources of its creation or origin. One must deal with the corporation itself in some form to subject shares of stock to judicial process against their owners, and it may be difficult to find the corporation for that purpose elsewhere than in the corporate domicile, particularly since the latest decisions of the supreme court seem to establish that it can have only one domicile or habitation for the purposes of suits against it, so far as federal jurisdiction is concerned, at least. Railroad Co. v. James, 161 U.S. 545, 563, 16 Sup.Ct. 621; Railroad Co. v. Steele, 167 U.S. 659, 17 Sup.Ct. 925; U.S. v. Northwestern Exp. Stage & Transp. Co., 164 U.S. 686, 689, 17 Sup.Ct. 206; Steamship Co. v. Kane, 170 U.S. 100, 106, 111, 18 Sup.Ct. 526; Railway Co. v. Gonzales, 151 U.S. 496, 14 Sup.Ct. 401; Shaw v. Mining Co., 145 U.S. 444, 12 Sup.Ct. 935; In re Keasbey, 160 U.S. 221, 229, 16 Sup.Ct. 273. Under the existing judiciary act, the plaintiff, being an inhabitant of Ohio, might have brought this suit in this court originally, but he would have required personal service to reach the defendants. Having sued them in the state court, he might attach any property of theirs found in Ohio, and the question is whether his attachment has found their shares of stock in a Michigan corporation in Ohio. If it has not, they may move here to discharge the service made in the state court. Railway v. Brow, 164 U.S. 271, 17 Sup.Ct. 126.

How did the shares of stock become located in Ohio, and subjected to the quite absolute dominion of the laws of that state over any property situated within its boundaries? Certainly, if the corporation is not an Ohio corporation, the shares are not here in that sense. If the owners are not citizens of Ohio, they are not here in the sense that the situs of the shares is that of the domicile of the owners. They can be here, then, only because the corporation is doing business in Ohio, and operates a railroad within its limits. Can that fact operate to bring all the shares of all of its stockholders within the dominion of Ohio, any more than it brings any other or all of their personal belongings here? We have seen that it does not operate to make the corporation itself an 'inhabitant' of Ohio, so as to subject it to suit in the federal courts of Ohio as such 'inhabitants.' The plaintiff may sue it, if he can find service here, only because he himself is an inhabitant of Ohio, not because the company is an inhabitant here. Why, then, should its doing business here by permission of the state of Ohio bring here the shares of its stock, which do not belong to it, but to other people, when...