Baltimore Building & Loan Ass'n v. Alderson

• Decision Date: 01 November 1898
• Docket Number: 269.
• Citation: 90 F. 142
• Parties: BALTIMORE BUILDING & LOAN ASS'N et al. v. ALDERSON.
• Court: U.S. Court of Appeals — Fourth Circuit

90 F. 142

BALTIMORE BUILDING & LOAN ASS'N et al. v. ALDERSON.

No. 269.

United States Court of Appeals, Fourth Circuit.

November 1, 1898

Fielder C. Slingluff and J. G. McCluer (Dave D. Johnson, on brief) for appellants.

Henry M. Russell (J. G. Sommerville, on brief), for appellee.

Before SIMONTON, Circuit Judge, and MORRIS and BRAWLEY, District Judges.

SIMONTON Circuit Judge.

This is an appeal from decrees of the circuit court of the United States for the district of West Virginia. The case is complicated, and a full statement is necessary.

The original bill was filed on 3d June, 1895, by Joseph C Alderson, a citizen and resident of the state of Maryland, a stockholder in the Loch Lynn Heights Hotel Company, against the Loch Lynn Heights Hotel Company, a corporation of the state of West Virginia; William F. Williams, administrator of Enos R. Williams, a citizen and resident of the state of New Jersey; W. S. Boody, Joseph H. Henry, also citizens of New Jersey; P. T. Garthright, C. M. Rathbun, John A. Wolf, G. A Shirer, William C. Sisk, Frank H. Thrasher, citizens of the state of Maryland; William Rulifson and . . . Culkins citizens of the state of New York; George M. Whitescarver, William A. Wilson, J. B. Sommerville, John T. McGraw, and Louis Walters, citizens of West Virginia; the Mountain Home Company, a corporation of West Virginia; and the Baltimore Building & Loan Association, a corporation of the state of Maryland. The bill stated: That the defendant the Loch Lynn Heights Hotel Company, having purchased a tract of land of 1.128 acres in Garrett county, in the state of Maryland, had entered into a contract with Enos R. Williams on the . . . day of . . ., 1894, to erect an hotel building thereon. That, shortly after he made the contract, Enos Williams took with him into co-partnership W. S. Boody and William F. Williams, and that the corporation recognized the firm as the contractors. On 16th March, 1895, the Mountain Home Company conveyed two tracts of land adjacent to that on which the hotel was in course of erection to the Loch Lynn Heights Hotel Company,-- one of 2.01 acres, and the other of 12 1/3 acres. The first was for no money consideration, but for certain advantages to the grantor. The second was for the sum of $2,733.33, represented by a note not yet paid. On the 18th March, 1895, the Loch Lynn Heights Hotel Company executed to the Baltimore Building & Loan Association a mortgage of all its property for the sum of $10,000, then borrowed from the association. This sum is still unpaid. That this money was paid to the contractors. That, Enos Williams having died, the surviving partners first undertook to finish the contract, but soon abandoned it and the work, and left the state of Maryland, with many debts behind them for work and labor done on the hotel. That the hotel being unfinished, although some $20,200 had been paid thereon, the subcontractors filed mechanics' liens against the hotel,-- in the aggregate, $5,040.84. These contractors are named, and are parties to the bill. That complainant is not only a stockholder, but also a creditor of the company. That a contract had been entered into for leasing the hotel to Mrs. Lillie B. C. List for three years, the company to furnish it, and that it was important to furnish the hotel and fulfill this contract of lease. Whereupon the bill prays that a receiver be appointed to take charge of the property, with authority to borrow money and complete and furnish it; with authority, also, to lease it; with further authority to borrow money on receiver's certificates to pay insurance on the hotel and its furniture, and to pay the interest, dues, and other charges of the Baltimore Building & Loan Association,-- praying also that an account be taken of all outstanding debts of the hotel company. Upon filing the bill, one J. B. Sommerville was appointed the receiver, with all the authority, as to completing and furnishing the hotel, borrowing money, and issuing receiver's certificates, asked for in the bill. Subpoena ad respondendum was issued, and service was accepted 10th June, 1895, thereon, for C. m. Rathbun, William C. Sisk, Frank H. Thrasher, and the Baltimore Building & Loan Association,-- all citizens of the state of Maryland. On 13th June, 1895, the receivership was made permanent. On 17th July, 1895, the defendants, who were served as above, entered special appearance, and moved to quash the return to the subpoena on the ground that they were not citizens or residents of the state of West Virginia, and the returns of the writ in Maryland could not be adopted by the marshal of the district of West Virginia. The record does not disclose any action of the court on this motion, nor is there any order of discontinuance as to these defendants. But on 14th October, 1895, an amended bill is filed by the complainant, in which only the Loch Lynn Heights Hotel Company is made the party defendant, no other names having been mentioned. On the same day the receiver filed his report of his transactions as receiver, carrying out the instructions of the court, and exercising the powers conferred on him, especially in the matter of making contracts for completing and furnishing the hotel, and of issuing receiver's certificates therefor, of which he had already issued certificates for over $9,000.

Just here arises a grave question of jurisdiction. It goes without saying that the original bill, on its face, shows that the court had no jurisdiction. A citizen of Maryland brings the bill, and citizens of Maryland are among the defendants. Peper v. Fordyce, 119 U.S. 469, 7 Sup.Ct. 287; Godfrey v. Terry, 97 U.S. 175; Smith v. Lyon, 133 U.S. 315, 10 Sup.Ct. 303. It is true that if the defendants who are citizens of the same state as complainant are not indispensable parties, so that a decree can be made without necessarily affecting them, the objection can be obviated by dismissing the bill as to them. Horn v. Lockart, 17 Wall., at page 579. But the purpose and scope of this bill was to authorize the expenditure of money in completing and furnishing the hotel, paying therefor in receiver's certificates, and thus creating a lien prior to all other liens. In such a decree the defendants, citizens of Maryland, holders of mechanics' liens, and the Baltimore Building & Loan Association, a citizen of Maryland, holder of a prior mortgage, were essential and indispensable parties, directly and ultimately affected by the proposed decree. In this private corporation their consent was indispensable to the issue of receiver's certificates. Hanna v. Trust Co., 36 U.S.App. 62, 16 C.C.A. 586, and 70 F. 2. So the court had no jurisdiction. We may, however, construe the leave to file the amended bill, in which the names of all the other defendants but the hotel company were left out, as practically dismissing the bill as to them. Has anything occurred since that time in this case giving the court jurisdiction over the whole subject? The amended bill was filed 14th October, 1895. On 28th October, 1895, a general appearance was entered in the name of the Baltimore Building & Loan Association by Thomas J. Peddicord, attorney. On 14th January, 1896, an order of the court was entered:

'This day came William Rulifson and John A. Culkins, partners as Rulifson & Culkins, and the said William Rulifson and John A. Culkins individually, by Thomas J. Peddicord, Esquire, their attorney, and, with leave of the court, filed their petition in this cause, praying that they be made parties herein, and asserting a lien upon certain of the property in the bill mentioned; also came the Baltimore Building & Loan Association, of Baltimore, by the said Thomas J. Peddicord, Esquire, its attorney, and, with leave of the court, filed its petition in this cause, praying that it may be made a party herein, and asserting a lien upon the said property; also came P. T. Garthright, Hanson B. Lewis, A. S. Teats, C. M. Rathbun, John A. Wolf, G. A. Shirer, Pickens Lumber Company, William C. Sisk, Frank H. Thrasher, John A. Connell, and Joseph Henry, by Gilmer S. Hamill, Esquire, their attorney, and filed their petition in this cause, praying to be made parties herein, and respectively asserting liens upon certain of the said property. Thereupon the said William Rulifson, John A. Culkins, the Baltimore Building & Loan Association, P. T. Garthright, Hanson B. Lewis, A. S. Teats, C. M. Rathbun, John A. Wolf, G. A. Shirer, Pickens Lumber Company, William C. Sisk, Frank H. Thrasher, John A. Connell, and Joseph Henry are, on their respective motions, made parties defendant herein, with leave to them respectively to prove their claims before the master hereinafter named.'

Following this is an order for the sale of the whole property by the receiver, with directions to a master to take, state, and report an account of the liens upon the property, and the different parties thereof. This order bears the consent in writing of all the defendants named. Thus, these parties, by their action, made themselves parties to these proceedings. On 3d April, 1896, suggestion having been made that the complainant was a citizen of the state of West Virginia, and not of the state of Maryland, the court, hearing the evidence on this point, adjudged that Joseph C. Alderson was when this suit began, and has since remained, a citizen of the state of Maryland. Thus, we have a suit between a citizen of Maryland, complainant, and citizens of Maryland, defendants.

The inherent constitutional limitation of the judicial power of the court forbids it to take jurisdiction. This jurisdiction depends upon the constitution of the United States, and the...