Chicago Title & Trust Co. v. Newman

• Decision Date: 18 April 1911
• Docket Number: 1,745.
• Citation: 187 F. 573
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: CHICAGO TITLE & TRUST CO. v. NEWMAN et al.

187 F. 573

CHICAGO TITLE & TRUST CO. v. NEWMAN et al.

No. 1,745.

United States Court of Appeals, Seventh Circuit.

April 18, 1911

The bill of complaint was filed in the superior court of Cook county, Ill., October 16, 1909, by appellee Albert A. Newman as complainant, and the other appellees as defendants. It was brought for an injunction to prevent alleged illegal corporate action feared by complainant, at the hands of the individual defendants, owners of 58 percentum of the corporate capital. Complainant owns the balance. The alleged apprehended wrong affected complainant's interest as a stockholder. Other wrongs charged to have been already committed by defendant Renshaw were against the corporation consisting of neglect and fraudulent mismanagement, an account of which was prayed, and an injunction against the holding of a certain corporate meeting in New York, alleged to be unlawful. A receiver was also prayed for to prevent the removal of the corporate assets from Chicago to New York. The relief prayed, other than the receivership, related entirely to the internal affairs of the corporation. The record does not show service of subpoena on any defendant, but there was an appearance in the state court by the corporation alone.

Upon the filing of the bill, October 16, 1909, the state court issued a preliminary injunction, restraining Renshaw Magoffin, and Ward from holding the corporate meeting, from managing the affairs of the corporation in the interest of another corporation, selling merchandise to a third corporation, or removing the corporate assets. Appellant was appointed receiver at the same time, and complainant, as president, turned over to it the corporate assets. On October 19, 1909, defendants Clock Company, Renshaw, Magoffin,and Ward appeared specially in the state court and removed the case to the federal court, upon the ground that they were citizens of different states from complainant, and that the proper jurisdictional sum was involved; alleging, also, that Fegtley and M. A. Newman were neither proper, necessary, nor indispensable parties, but were agents of complainant. The matter of the removal was brought to the attention of the state court. On the same day the removing defendants filed a transcript of the record in the circuit court, and at once filed a general appearance therein (called on its face a special appearance), asking a dissolution of the injunction a discharge of the receiver and a dismissal of the bill, all on the alleged ground that the federal court, as well as the state court, was without jurisdiction. The next morning an order of removal was made by the state court.

The defendant corporation appeared generally in the Circuit Court November 10, 1909, and filed a general demurrer to the bill, and a special demurrer to the jurisdiction of the state court over the subject-matter, or the persons of the corporation and other removing defendants, and a like demurrer to the jurisdiction of the Circuit Court. The same day the receiver, on notice to all parties, applied to the court for directions, and was by it ordered to continue the corporate business; no one objecting. Appellant continued the business successfully, and until it was discharged.

At or about the time of filing the transcript in the Circuit Court the removing defendants again appeared generally in that court by giving notice to complainant that they would apply for an order compelling complainant to file a bond for $300,000 against loss by reason of the temporary injunction, and an additional bond for $300,000 against damage from the receivership, for dissolution of the injunction, discharge of the receiver, and dismissal of the bill for want of jurisdiction in the state court. The motion went over until the next day, when the third and fourth general appearances of the removing defendants were made (also denominated special ones), by filing . . . formal motion for dissolution and discharge, as outlined in the notice of the previous day, and a formal motion for bonds, reducing the amounts, however, from $300,000 to $100,000. A hearing of the motions was set for October 26th, prior to which all the removing defendants served affidavits in support of their motions.

The motions were heard and taken under advisement. The bill having been lost, it was stipulated between counsel for the receiver and the removing defendants that an amended and supplemental bill might be filed, which was done December 14, 1909, and subpoena issued, returned non est inventus as to defendant Renshaw. On December 18th, the Circuit Court made an order finding that the solicitors for defendants Renshaw, Magoffin, and Ward had no authority to make other than a special appearance, and did not intend to do so, that the appearance of October 19th be stricken out, and all motions in behalf of said defendants held for naught. This left the case standing on general demurrer and motion to dismiss for want of jurisdiction interposed by the corporation defendant alone.

The demurrer of the corporation was sustained December 18, 1909 the receiver discharged, and ordered to turn back to the corporation all its property. It was also directed to present its accounts for consideration within three days. It filed a detailed account showing gross cash receipts of $25699.69, and disbursements $12,105.96, including $500 paid to its attorneys, and $1,000 retained for its own compensation,...