Bradley Palmer v. State of Texas

• Decision Date: 18 January 1909
• Docket Number: No. 224,224
• Citation: 212 U.S. 118,29 S.Ct. 230,53 L.Ed. 435
• Parties: BRADLEY W. PALMER and H. Clay Pierce, Petitioners, v. STATE OF TEXAS and Robert J. Eckhardt, Receiver of the Waters-Pierce Oil Company
• Court: U.S. Supreme Court

212 U.S. 118

29 S.Ct. 230

53 L.Ed. 435

BRADLEY W. PALMER and H. Clay Pierce, Petitioners,

v STATE OF TEXAS and Robert J. Eckhardt, Receiver of the Waters-Pierce Oil Company.

No. 224.

Argued April 8, 9, 1908.

Decided January 18, 1909.

Messrs. Moorfield Storey, E. B. Perkins, J. L. Thorndike, and J. D. Johnson for petitioners.

[Argument of Counsel from pages 119-120 intentionally omitted] Messrs. T. W. Gregory, G. W. Allen, Robert Vance Davidson, Jewel P. Lightfoot, John W. Brady, and Messrs. Gregory & Batts, Allen & Hart, and D. W. & D. H. Doom for respondents.

[Argument of Counsel from pages 121-123 intentionally omitted] Mr. Justice Day delivered the opinion of the court:

This case grows out of the proceedings in the state of Texas to forfeit the permit of the Waters-Pierce Oil Company to do business in that state, and the subsequent proceedings for the appointment of a receiver of the property of the company in the state court, just decided, cases Nos. 359 and 360, 212 U. S. 86, 112, 53 L. ed. ——, 29 Sup. Ct. Rep. 220, 227. It is unnecessary, in view of the recital of the facts contained in those cases, to repeat herein what is there said in this connection.

On the 19th day of June, 1907, after the appointment of a receiver in the state case and the acceptance and approval of his bond, an appeal was taken from the district court of Travis county to the court of civil appeals of Texas, and bond given to supersede the receivership. Immediately thereafter, and upon the same day, a bill was filed by Bradley W. Palmer, one of the petitioners herein, against the Waters-Pierce Oil Company, in the circuit court of the United States for the eastern district of Texas, praying for the appointment of a receiver for the Waters-Pierce Company. Palmer filed the bill as a stockholder in the company. The bill is quite lengthy and recited the proceedings in the district court of Travis county, Texas, stated in cases Nos. 359 and 369, 212 U. S. 86, 112, 53 L. ed. ——, Sup. Ct. Rep. 220, 227, recites the appeal from the order appointing a receiver, to the court of civil appeals, also the appeal from the judgment terminating the right to do business in Texas, and for the recovery of penalties.

The prayer of the bill is for the appointment of a receiver to take possession of the property belonging to the company in Texas, that the business of the company might be wound up and its property sold, that the receiver be authorized to operate and manage the property, etc.

On the same day the Waters-Pierce Oil Company waived the service of subpoena, confessed the averments of the bill, and the circuit court appointed Chester B. Dorchester receiver.

On the same day H. C. Pierce intervened, and, repeating the allegations of the original bill, prayed the same relief. On June 20, 1907, Dorchester qualified and gave bond as receiver, and was put in possession of the property.

The cases involved in Nos. 359 and 360, 212 U. S. 86, 112, 53 L. ed. ——, 29 Sup. Ct. Rep. 220, 227, having been appealed to the court of civil appeals, Robert J. Eckhardt, the state receiver appointed in the district court of Travis county, applied in the court of civil appeals for an order to obtain possession of the property which had been placed in the hands of the Federal receiver.

The court of civil appeals on June 28, 1907, handed down an opinion (103 S. w. 836 in which it declined to make an order directing the receiver in the Federal court to surrender possession, but did direct its receiver, in conjunction with the law officers of the state of Texas, to appear before the circuit court of the United States for the eastern district of Texas, and to there urge the rights of the state and the prior jurisdiction of its courts over the property in question, and to ask for such orders, decrees, and judgments as might be proper and necessary to protect that jurisdiction.

Thereafter, on July 1, 1907, the state of Texas, through its officers and Eckhardt as receiver, applied to the circuit court of the United States, and prayed it to set aside and annul its order appointing a Federal receiver. On July 15 the circuit court refused to grant the prayer of the state of Texas and the state receiver. The state of Texas and Eckhardt as receiver took an appeal from the order of June 19, 1907, appointing the Federal receiver, and from the order of July 15, 1907, refusing to vacate the order appointing Dorchester receiver. Thereupon the matter came on for hearing in the circuit court of appeals, and that court, holding that the state court had first acquired jurisdiction in the matter, reversed and vacated the order of the circuit court appointing a receiver, and remanded the case to the circuit court, with directions to discharge the receiver, and to tax all the costs of the receivership against the complainant. 158 Fed. 705.

If the state court had acquired jurisdiction over the property by the proceedings for the appointment of its receiver, and had not lost the same by the subsequent proceedings, then, upon well-settled principles, often recognized and enforced in this court, there should be no interference with the action of the state courts while thus exercising its authorized jurisdiction. The Federal and state courts exercise jurisdiction within the same territory, derived from and controlled by separate and distinct authority, and are therefore required, upon every principle of justice and propriety, to respect the jurisdiction once acquired over property by a court of the other sovereignty. If a court of competent jurisdiction, Federal or state, has taken possession of property, or by its procedure has obtained jurisdiction over the same, such property is withdrawn from the jurisdiction of the courts of the other authority as effectually as if the property had been entirely removed to the territory of another sovereignty. Wabash R. Co. v. Adelbert College, 208 U. S. 38, 52 L. ed. 379, 28 Sup. Ct. Rep. 182, and previous cases in this court, cited therein at page 54.

The circuit court of the United States, in the appointment of a receiver in this case, seems to have proceeded upon the theory that the proceedings in the state court had left the property in such a situation that it was no longer in custodia legis, and was liable to seizure by adverse proceedings.

This situation had arisen, in the view of the circuit court, because the Waters-Pierce Oil Company had given a bond securing the amount of penalties awarded against it by the judgment, and had also given a bond in the sum of $100,000 in order to suspend the powers of the receiver to act pending the appeal; and, in the view of the learned circuit judge, the court of last resort of the state of Texas had established the rule that an appeal from such order, and the giving of the security required by the court, had the effect of returning the property to the owner, and to make the order appointing the receiver inoperative. 'It appears to me,' says the learned judge, 'that they [the Texas cases] announce the doctrine that the powers of the receiver cease, and that the adverse party takes the security which the law furnishes, and the defendant takes his property, with the right to use, control, and dispose of the same.' 158 Fed. 717.

The circuit court of appeals in this case, after reviewing the Texas cases, reached a different conclusion, and held that the rulings of the supreme court of Texas showed that the appeal and the giving of the bond had only the effect of suspending the order appointing the receiver, and that the court had not lost jurisdiction over the property by the bond given to supersede the order made.

If the courts of Texas had acquired jurisdiction over this property, and the subsequent procedure amounted to simply suspending the order appointing the receiver, then we are of opinion that the Federal court had no right to intervene. If it is established that the state court had acquired jurisdiction over this property before the application in the Federal court was made, the court of the state had the right to determine for itself, while continuing to lawfully exercise its prior jurisdiction, how far it would permit any other court to interfere with such possession and jurisdiction. People's Bank v. Calhoun (People's Bank v. Winslow) 102 U. S. 258, 261, 26 L. ed. 101, 102.

As already stated, after the case reached the court of civil appeals of Texas an application was made for relief against the receiver appointed by the United States circuit court, and to obtain possession of the property. That court maintained (103 S. W. 836) that the state court had acquired jurisdiction over the property; that the effect of the appeal was simply to suspend the order appointing the receiver; and that the appellate court still had jurisdiction over the res the same as the trial court had; and the court cited the decisions of the supreme court of Texas which seem to support that view.

The court of civil appeals subsequently affirmed the order appointing the receiver, holding that the proceeding was authorized under the act of April 11, 1907, and the general statutes of Texas, authorizing the appointment of a receiver where a corporation had forfeited its corporate rights. Sayles's Civ. Stat. (Tex.) art. 1465.

Upon application to the supreme court of Texas that court refused to allow a petition in error to be filed, and the case was brought here, being No. 360, 212 U. S. 112, 53 L. ed. ——, 29 Sup. Ct. Rep. 227, just disposed of, in which we held no Federal question was raised.

The case also came before the supreme court of Texas, and is reported in 106 S. W. 326. In that case application was made by the attorney general in the supreme court of the state for the appointment of a receiver, and the court, in deciding the motion, stated its reason for recalling the mandate issued by the court of civil appeals upon the motion of the Waters-Pierce Oil Company, and also passed upon the application...