Bluefields S.S. Co. v. Steele

• Decision Date: 07 February 1911
• Docket Number: 1,410 (34).
• Citation: 184 F. 584
• Parties: BLUEFIELDS S.S. CO., Limited, v. STEELE.
• Court: U.S. Court of Appeals — Third Circuit

184 F. 584

BLUEFIELDS S.S. CO., Limited, v. STEELE.

No. 1,410 (34).

United States Court of Appeals, Third Circuit.

February 7, 1911

Francis Rawle, for appellant.

Alexander Simpson, Jr., Ernest Dale Owen, and John G. Johnson, for appellee.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

LANNING Circuit Judge.

This is an appeal from an interlocutory order of the Circuit Court of the Eastern District of Pennsylvania appointing an ancillary receiver for the Bluefields Steamship Company, Limited. The complainant, Frederick M. Steele, is a citizen of the state of Illinois, and the defendant, the Bluefields Steamship Company, Limited, hereafter called the 'Bluefields Company,' is a corporate citizen of the state of Louisiana. The bill contains allegations of fact tending to show that the Bluefields Company has a right of action for threefold damages under the seventh section of the anti-trust act of July 2, 1890, against the United Fruit Company hereafter called the 'United Company,' which is a corporate citizen of the state of New Jersey, and that the Bluefields Company refuses to prosecute any action for the recovery of such damages. But the only reference in the bill of complaint to any primary receivership is in its tenth and eleventh paragraphs, which are as follows:

'Tenth. Your orator further says that heretofore, to wit, on the 3d day of December, 1909, a bill in chancery was duly filed by your orator in the United States Circuit Court for the Eastern District of Louisiana, complaining of the said Bluefields Company and others on account of the various matters and things set up in said bill, to which said bill the United Fruit Company was made a party defendant, was duly served with process, and appeared by counsel. That among other things in said bill there was a prayer for the appointment of a receiver to take over the property and conduct the business of the said Bluefields Company. That said bill was so proceeded upon that said Circuit Court appointed one Elmer E. Wood as receiver on the 3d day of December aforesaid. Afterwards a motion was filed by the defendant in said cause to procure the discharge of such receiver, which motion was overruled by the court, whereupon an appeal was taken from the order of the court appointing such receiver and the order overruling the motion to discharge the same, which appeal is still pending and undetermined.

'Eleventh. As a part of the order overruling the motion to discharge said receiver, it was ordered by said court that the receiver should take over the property of said company and actively operate the same, and upon the allowance of said appeal the said court entered as a part of said order a supersedeas to that part of the decree; but the appointment of the receiver has not been suspended by the supersedeas aforesaid and is still in full force and effect.' The prayer of the bill is:

'That your honorable court will forthwith appoint a receiver ancillary to said receivership in Louisiana for the purpose of bringing and conducting the litigation necessary to recover such sum as may be due from the said United Fruit Company to and in behalf of said Bluefields Company, and also for an order, when such receiver shall have been appointed, that he proceed to employ counsel and to bring and conduct such action as may be necessary in that behalf.'

Upon the filing of the bill, the Circuit Court ordered:

'That Elmer E. Wood be and he hereby is appointed ancillary receiver of the Bluefields Steamship Company, Limited, the defendant in the above case; no money or other property to be paid to or received by said ancillary receiver until he shall make report to this court and shall have entered such security as the court may require. And it is further ordered that said ancillary receiver forthwith employ counsel and proceed within the jurisdiction of this court to recover from the United Fruit Company upon the cause of action set forth in the bill filed in this cause.'

It is objected by the appellant that, as this suit was not brought 'in the district of the residence of either the plaintiff or the defendant' (Judiciary Act March 3, 1875, c. 137, Sec. 1, 18 Stat. 470, as amended by Act March 3, 1887, c. 373, Sec. 1, 24 Stat. 552, and Act Aug. 13, 1888, c. 866, Sec. 1, 25 Stat. 433 (U.S. Comp. St. 1901, p. 508)), the Circuit Court was without jurisdiction to appoint the ancillary receiver. The appellee contends, however, that the appellant waived the objection referred to by appearing in the Circuit Court and prosecuting there a motion to vacate the order on grounds relating to the merits of the bill as well as on the ground that neither the complainant nor the defendant is a citizen of Pennsylvania. One of the five objections embodied in the written motion to vacate is that the suit was brought in the wrong district, but the other objections go to the substance and merits of the bill. Having invoked the judgment of the court on the merits of the case, the appellant cannot now properly object that the court had no jurisdiction of its person. In accordance with the decision in Western Loan Co. v. Butte & Boston Min. Co., 210 U.S. 368, 28 Sup.Ct. 720, 52 L.Ed. 1101, this objection for the appellant must be overruled.

Nor do we yield assent to the appellant's argument that the power of a Circuit Court of the United States to appoint a receiver ancillary to a receivership in another jurisdiction is in any wise dependent upon diversity of citizenship of the parties in the ancillary suit. Where a court, having jurisdiction of the person of a defendant corporation, has determined by its decree to take possession of that corporation's property for the purpose of winding up its affairs, and has appointed a receiver to act as its officer in that behalf, such receiver has often been permitted, in cases not conflicting with local policy or the rights of local creditors, to prosecute suits in other jurisdictions for the recovery of debts or assets. Kirtley v. Holmes, 107 F. 1, 46 C.C.A. 102, 52 L.R.A. 738; Hurd v. Elizabeth, 41 N.J.Law, 1; Mabon v. Ongley Electric Co., 156 N.Y. 196, 50 N.E. 805; Lewis v. Clark, 129 F. 570, 64 C.C.A. 138; Converse v. Mears (C.C.) 162 F. 767. It is true that in Great Western Mining Co. v. Harris, 198 U.S. 561, 25 Sup.Ct. 770, 49 L.Ed. 1163,

it was held that an ordinary chancery receiver is a mere custodian for the court and has no estate in the property, and that comity does not authorize such a receiver to sue in a foreign jurisdiction. But where a receiver is, by the law under which he is appointed, a quasi assignee and representative of the creditors of a corporation, he may sue in a foreign jurisdiction. Bernheimer v. Converse, 206 U.S. 516, 534, 27 Sup.Ct. 755, 51 L.Ed. 1163.

Where the receiver has no such character, or where because of local policy or the rights of local creditors the rule permitting a receiver to sue in a jurisdiction other than the one in which he was appointed is not deemed applicable, a bill may be filed for the appointment of an ancillary receiver, and, on a proper showing, such a receiver will be appointed. In any such case the jurisdiction is analogous to that of a court to appoint a receiver on a proper bill in a suit ancillary to another suit or action pending in the same court. In a suit strictly ancillary to another suit pending in the same court no subpoena ad respondendum is necessary. The parties are already in court. The service of a rule or of notice is all that is required to enable the court to proceed with the ancillary suit. So, where a defendant has been regularly brought into court in an original suit, and a receiver of his property has been appointed in that suit, another court, whose jurisdiction is invoked in aid of the original receivership, may proceed on the service of a rule or notice merely. Such service may be made on the defendant wherever he is found, or it may be published, as is the practice in the United States Circuit Court for the District of Maine. See preliminary statement in Conklin v. U.S. Shipbuilding Co. (C.C.) 123 F....