Burke Const. Co. v. Kline

• Citation: 271 F. 605
• Decision Date: 18 March 1921
• Docket Number: 5706.
• Parties: BURKE CONST. CO. v. KLINE et al. [a1]
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

271 F. 605

BURKE CONST. CO. v. KLINE et al. ^[a1]

No. 5706.

United States Court of Appeals, Eighth Circuit.

March 18, 1921

Lewis District Judge, dissenting.

Before SANBORN, Circuit Judge, and LEWIS and COTTERAL, District judges.

SANBORN Circuit Judge.

This is an appeal of the Burke Construction Company, a corporation, a citizen and resident of the state of Missouri, from an order denying its application for an injunction restraining the board of improvement of paving improvement district No. 20 of the city of Texarkana, a corporation and citizen of the state of Arkansas, the members of the board, its attorney, agents and representatives, from prosecuting a suit in equity it brought against the Burke Construction Company and others on March 19, 1920, to obtain a trial and adjudication of the same controversy between these two citizens, to obtain a trial and adjudication of which the Burke Company had brought an action at law against the board and its members in the United States District Court of the Western District of Arkansas to recover $85,250.84 on February 16, 1920. The controversy between the two corporations involved their respective liabilities, each to the other, under a contract between them, made on November 29, 1916, whereby the Burke Company agreed to pave certain streets in the town of Texarkana, under which contract it had partially paved those streets. The Burke Company alleged in its complaint for the $85,250.84 that in all things it had complied with and was ready and willing to fulfill the terms of the contract between them, but that the board failed to pay it, according to the terms thereof, moneys which it had earned, wrongfully and arbitrarily changed the requirements of the agreement after it was made, unnecessarily delayed the Burke Company in its work thereunder, unlawfully seized and appropriated to its own use the tools, machinery, and equipment of the Burke Company, which it had furnished to perform the contract notified and compelled it to cease performance before the contract was completed, and committed other breaches of the agreement, to the damage of the Burke Company in the amount stated.

In the subsequent suit, which the board brought in the state chancery court of Arkansas in March, 1920, against the Burke Company, it counted on the same contract, joined with the Burke Company as defendants M. C. Burke, J. A. Burke, and the United States Fidelity & Guaranty Company, signers of the Burke Company's bond as sureties for its faithful performance of the contract, and alleged, among other things, that the board had complied with its obligations thereunder, but that the Burke Company had failed to complete its performance thereof, though notified to do so; that the board held in its hands $13,752.45, retained percentages of the compensation that had been earned by the Burke Company on the work it had completed previous to November, 1919, $60,000 balance of $150,000 the board had received for bonds of the district it had sold to pay for the paving under the contract, and the compensation earned by the Burke Company in November, 1919, amounting in all to approximately $77,000; that it had taken the tools, machinery, and equipment which the Burke Company had provided for itself to perform the contract; that it will cost $80,000 to complete its performance; and that there is 'a conflict between plaintiff and defendants upon many subjects arising under said contract'; and the board prayed that (1) an accounting be had with reference to the work that had been done by the Burke Construction Company under the agreement, and (2) that the board have judgment against the Burke Construction Company and the sureties on its bond for $80,000, the amount required to complete performance of the contract, and have judgment for other damages; that it retain and use the Burke Company's tools, machinery and equipment and the $77,000 in money.

On July 2, 1920, the board filed its answer to the complaint of the Burke Company in the action in the Federal court, in which it denied many of the averments of the Burke Company in its complaint, repeated the allegations of the board in its complaint in the state chancery suit, set up a counterclaim, and prayed for a judgment against the Burke Company for $99,498.63, the amount then alleged to be required to complete performance of the contract, for a lien on the $77,000 in its hands, and for other relief. In July, 1920, the action in the federal court below was tried to a jury, which disagreed. Counsel for the board then gave notice that they would proceed with the prosecution of its suit against the Burke Company and its sureties in the state chancery court.

In this state of facts the Burke Company brought this suit in equity in the federal court below against the board and its members, setting forth in its complaint the facts which have been recited, and prayed for an injunction against the board, its members, its attorneys, representatives, and servants, from proceeding with the taking of testimony or the further prosecution of its suit in the state chancery court until after the trial and adjudication of the controversy between these citizens of different states in the action first brought in the federal court below, and the enforcement of its judgment or decree by that court.

The controversy which was the subject thereof was between citizens of different states. Of that controversy between these citizens of different states and of the parties to that suit the court below acquired full jurisdiction by the filing of the complaint and the commencement of that suit by the Burke Company on March 19, 1920. By the Constitution of the United States (article 3, Sec. 2) and the acts of Congress (U.S. Comp. Stat. Sec. 991), the constitutional right was granted to the Burke Company to ask and to have a trial and adjudication of that controversy and the enforcement of that adjudication by the federal court. If the board, which subsequently, on March, 1920, brought its suit against the Burke Company and the sureties on its bond to secure an adjudication by that court of the same controversy between the same citizens, by a race of diligence lawfully may secure such an adjudication in the suit in the state court before in the orderly and proper course of proceeding in the suit in the federal court, the Burke Company is able to obtain such an adjudication and the enforcement thereof in the federal court, then the federal court's adjudication will be made futile, because before it has rendered it the controversy will have become res adjudicata by the adjudication of the state court (Boatmen's Bank v. Fritzlen (8 C.C.A.) 135 F. 650, 667, 68 C.C.A. 288; Insurance Co. v. Harris, 97 U.S. 331, 336, 24 L.Ed. 959; Barber Asphalt Paving Co. v. Morris (8 C.C.A.) 132 F. 945, 951, 66 C.C.A. 55, 67 L.R.A. 761), and the Burke Company will have been deprived of the right granted to it by the Constitution of the United States to the determination of its controversy with the board by the trial and adjudication thereof by the federal court, which first acquired jurisdiction of it and of the parties thereto.

A citizen who would exercise this constitutional right usually is compelled to bring his suit in the federal court in the state of the residence of the defendant in order to get service of process upon and jurisdiction of him. The reason for the grant to him by the Constitution, and in this case to the Burke Company, of this right to have the decision of its controversy with the citizen of another state by the federal court, was thereby to avoid the local attachments and prejudices in favor of the defendant that those who made the Constitution feared might injuriously affect the administration of justice in the state courts against the claims of citizens of other states, and the question which this case presents is:

When a citizen of one state, in the exercise of his constitutional right to an adjudication of a controversy he has with a citizen of another state, brings a personal action against the latter in the proper federal court in the state of the defendant's residence and citizenship, invokes and persistently demands an adjudication of that controversy and the enforcement of that adjudication by that federal court, and that court first acquires full jurisdiction of the controversy and the parties to it, may the defendant, by subsequently commencing a suit in one of the courts of his state against the plaintiff in the first suit and others to secure an adjudication of the same controversy, and by pressing it to a judgment or decree before an adjudication can be obtained in the federal court, deprive the plaintiff of his constitutional right to an adjudication of the controversy and enforcement thereof by the federal court, oust that court of the jurisdiction first acquired by it and render the action in it futile, or may the federal court, which first acquires jurisdiction of the controversy and of the parties, lawfully protect and preserve its jurisdiction, its adjudication of the controversy, and the enforcement thereof by the use of its injunction against the defendants, who seek to deprive it of jurisdiction, their attorneys, representatives, and agents?

The first impression which the presentation of the question presents to the mind is that it should be so answered as to preserve and enforce the right of the citizen to the trial and decision of his controversy by the federal court which the Constitution and the acts of Congress granted to him. Counsel for the board, however, while they concede that where courts have concurrent jurisdiction of the same parties and controversies, the court which first acquires jurisdiction of the res in a controversy holds it against courts in...