Boynton v. Moffat Tunnel Improvement Dist.

• Decision Date: 13 May 1932
• Docket Number: No. 555.,555.
• Citation: 57 F.2d 772
• Parties: BOYNTON et al. (SUPREME CAMP OF AMERICAN WOODMEN et al., Interveners) v. MOFFAT TUNNEL IMPROVEMENT DIST. et al.
• Court: U.S. Court of Appeals — Tenth Circuit

57 F.2d 772 (1932)

BOYNTON et al. (SUPREME CAMP OF AMERICAN WOODMEN et al., Interveners) v. MOFFAT TUNNEL IMPROVEMENT DIST. et al.

No. 555.

Circuit Court of Appeals, Tenth Circuit.

March 29, 1932.

Rehearing Denied May 13, 1932.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Clayton C. Dorsey, of Denver, Colo. (John W. Davis, of New York City, James H. Pershing and Gerald Hughes, both of Denver, Colo., James M. Ogden, Atty. Gen., of Indiana, and Ernest L. Rhoads and Bernard J. Seeman, both of Denver, Colo., on the brief), for appellants.

Erskine R. Myer, of Denver, Colo. (Norton Montgomery, of Denver, Colo., on the brief), for appellees.

Before LEWIS and McDERMOTT, Circuit Judges, and KENNEDY, District Judge.

McDERMOTT, Circuit Judge (after stating the facts as above).

The plaintiffs and interveners have invested $6,677,000 in the obligations of the Moffat Tunnel district. Their money has been expended in the construction of the tunnel. They have not been paid their interest as it became due, although taxes have been collected for that purpose. They have come into a court of competent jurisdiction, presented their grievances, and have asked for a hearing. They are stopped at the threshold, and their bill dismissed. The Constitution of the United States (article 3, § 2) confers upon courts of the United States the power to determine controversies between citizens of different states, and to cases arising under the Constitution. The statutes of the United States (Jud. Code § 24 28 USCA § 41) confer upon those situated, as are these plaintiffs, the right to invoke that jurisdiction. They have invoked it. It becomes then the duty of the federal court to hear and determine the controversy, unless the established principles of law relieve such court of that duty. The trial court found, at the time it dismissed the cause, that the state court had such exclusive control of the res that the federal court might not proceed. At that time, the custodial order of February 13, 1931, was in force. It is no longer in force, and since appeals in equity are trials de novo, and since equity speaks as of the present (Richardson v. Green C. C. A. 9 61 F. 423; City of Denver v. Mercantile Trust Co. C. C. A. 8 201 F. 790; 21 C. J. 663), we need not explore the effect of that order. Our task is to determine, upon the facts drawn onto the record by stipulation of the parties, whether the cause should stand dismissed, whether it should be reinstated and stayed, or whether the plaintiffs are entitled to a decree at our hands, on the record.

Questions involving conflicts of jurisdiction between courts are always delicate, and sometimes difficult. But neither the delicacy nor the difficulty of the task can justify a refusal to pass upon the controversy. Chief Justice Marshall, speaking for the Supreme Court of the United States, said many years ago that: "We cannot pass it by, because it is doubtful. With whatever doubts, with whatever difficulties, a case may be attended, we must decide it, if it be brought before us. We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given." Cohens v. Virginia, 6 Wheat. 264, 404, 5 L. Ed. 257. In more recent years, the Supreme Court, in dealing with a conflict between the state and federal courts, said that, while the task was not an agreeable one, "it is a question, however, which we are called upon, and which it is our duty to decide." Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 447, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764. In this case, fortunately, the task, while delicate, is not difficult, for the principles governing its determination have been settled by decisions which are controlling upon us.

No question arises when the actions in the two courts are in personam; both may proceed; when one has gone to judgment, the judgment may be set up in the other action. It does not matter that both may involve the same controversy, for "a controversy is not a thing." Kline v. Burke Constr. Co., 260 U. S. 226, 230, 43 S. Ct. 79, 81, 67 L. Ed. 226, 24 A. L. R. 1077. The question arises when the action in one or the other court is in rem, and when it may be that the force of the court's decree will be exerted against specific property, and not alone against a person. When that situation exists, certain rules have been evolved designed to prevent a struggle between the officers of two courts for possession of, or control over, a thing. These rules, applicable alone to actions in rem, may be divided into two classes. The first is where one court has reduced the res to its actual possession, in which event the res is withdrawn from the judicial power of other courts. With that branch of the rule we are not concerned, for there is and can be no claim that the fund is now in the possession of either court. The fund is now, and since the inception of both suits has been, in the possession of the commission. Both courts have issued personal injunctive orders directed to the members of the commission, but neither has reduced the fund to possession. Whether the state district court did at one time reduce the fund to custody is not now material; that order has expired; the Supreme Court of Colorado did not see fit to issue a similar order, but instead issued an injunction against those in possession of the fund.

We are concerned only with that branch of the rule which deals with the situation where property has not been actually seized by judicial process, but where it may later become necessary in order to effectuate the decree of the court, to seize it. Such suits are those to foreclose mortgages or enforce other specific liens, to administer trusts, to liquidate insolvent estates, and other suits of like nature; the rule is limited, however, to actions which deal either actually or potentially with specific property or objects. Kline v. Burke Constr. Co., supra; Harkin v. Brundage, 276 U. S. 36, 48 S. Ct. 268, 72 L. Ed. 457; Palmer v. Texas, 212 U. S. 118, 29 S. Ct. 230, 53 L. Ed. 435; Wabash Railroad v. Adelbert College, 208 U. S. 38, 54, 28 S. Ct. 182, 52 L. Ed. 379; Farmers' Loan & Trust Co. v. Lake St. Rd. Co., 177 U. S. 51, 61, 20 S. Ct. 564, 44 L. Ed. 667; Ingram v. Jones (C. C. A. 10) 47 F.(2d) 135; Superior Oil Corp. v. Matlock (C. C. A. 10) 47 F.(2d) 993; Barnett v. Mayes (C. C. A. 10) 43 F.(2d) 521; Westfeldt v. North Carolina Mining Co. (C. C. A. 4) 166 F. 706; Merritt v. American Steel-Barge Co. (C. C. A. 8) 79 F. 228. Such actions are often designated, perhaps unhappily, as "quasi in rem," in order to distinguish them from the first class, which are designated as actions "in rem." Both in fact are actions in rem; in the first instance, possession of the res is actual, and, in the latter, potential. The federal court action falls within the latter classification; it is a suit to administer a trust in a specific res, the supplemental bond fund; plaintiffs assert an interest in that fund and pray for a receiver thereof; any decree rendered in favor of plaintiffs will operate on the fund. The action in the state court did not originally have to do with the res involved in this action, for it was not then in existence. If it was an action in rem at all, which we need not decide, it was because of its prayer to remove a cloud from the title of an entirely different res, to wit, real estate owned by plaintiff. It is claimed, however, that the state court action was converted into an action in rem, by the injunctive order issued by that court as to the res involved in this action. It is correctly argued that a court has inherent power to make such interlocutory orders as may be necessary to protect its jurisdiction, and to make certain that its eventual decree may not be ineffective. We have not been able to see what decree can be made in the state court suit, responsive to the issues, which might require any control over this fund. It is stipulated that plaintiff has never paid anything into the fund, so by no possibility would it be entitled to anything out of it. Plaintiff only pretends to represent property owners similarly situated, — those who have not paid their taxes. Those who have paid have no cloud on their titles; they have a suit to recover taxes paid, if anything. No property owner who has paid taxes into the fund is in court, asking for anything from the fund. The bondholders in the state court suit have, not only not asked for affirmative relief, but have challenged the jurisdiction of the court to act at all. Any amendment to the pleadings, or any order made, after the federal court suit was filed, would of course be ineffective to deprive that court of the jurisdiction over the res which attached with the filing of the bill. It is not to be assumed that the state court would direct the payment of the fund to parties not before it. But if the power existed, it was not exercised, for no dominion over the fund was exercised by the injunctive orders issued prior to the commencement of this suit; no change in the commission's possession was effected by these orders, they operating purely in personam on the members of the commission. Orders issued after the commencement of the action in the federal court would of course be ineffective to oust that court of a jurisdiction in rem which then attached. For these reasons we are unable to see wherein the state court suit involves the res which is the subject of the federal court action; but we feel it unnecessary to pass directly upon the point for reasons now to be stated.

The rule that as between two actions quasi in rem the one first filed excludes the later one is subject to an important and well-settled qualification, to wit, that the two actions shall invoke the same jurisdiction. This qualification is essential to the administration of justice; except for it, a stockholder could apply for a...