City of Norwalk, Ohio v. Equitable Trust Co.

• Decision Date: 17 March 1933
• Docket Number: No. 6126.,6126.
• Citation: 63 F.2d 911
• Parties: CITY OF NORWALK, OHIO, v. EQUITABLE TRUST CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Sixth Circuit

63 F.2d 911 (1933)

CITY OF NORWALK, OHIO, v. EQUITABLE TRUST CO. OF NEW YORK.

No. 6126.

Circuit Court of Appeals, Sixth Circuit.

March 17, 1933.

G. Ray Craig, of Norwalk, Ohio, and W. A. Eversman, of Toledo, Ohio (Rex F. Bracy and E. G. Martin, both of Norwalk, Ohio, and H. C. Laughlin and Williams, Eversman & Morgan, all of Toledo, Ohio, on the brief), for appellant.

George D. Welles and E. F. Boxell, both of Toledo, Ohio (Milbank, Tweed, Hope & Webb, of New York City, and Tracy, Chapman & Welles, of Toledo, Ohio, on the brief), for appellee.

Before MOORMAN, HICKS, and SIMONS, Circuit Judges.

MOORMAN, Circuit Judge.

The Ohio Electric Power Company was engaged in furnishing electricity to the residents of the city of Norwalk, Ohio, for heating and lighting purposes. The city passed an ordinance March 23, 1926, directing the power company to remove its poles and wires from the city streets. Upon the refusal of the company to comply with the ordinance, the city caused quo warranto proceedings to be instituted against it in the Court of Appeals of Huron county, Ohio. The power company answered alleging a perpetual right to use the streets under a grant from the state (Rev. St. Ohio 1880, § 3461, and section 3471a (as added by 84 Ohio Laws, p. 7), and, following the submission of the case on proofs, the court entered a decree of ouster. State, ex rel. Martin v. Ohio Electric Power Co., 35 Ohio App. 481, 172 N. E. 615. The Supreme Court of the state affirmed (Ohio Electric Power Co. v. State ex rel. Martin, 121 Ohio St. 235, 167 N. E. 877); and thereafter this suit was brought by the appellee, as mortgagee of the properties of the power company, to have the ordinance under which the city acted declared void and to enjoin the enforcement of the decree of ouster. Upon the hearing of the case, the District Court entered an order enjoining the city, its officers and representatives, and all others to whom notice of the order should come, from taking any steps or action of any kind to cause the enforcement or carrying out of the decree of the state court. From this order the city appeals.

The argument of counsel before us revolves about the source and extent of the right under which the power company entered and has heretofore used the streets. The appellee insists that it was derived from the state,¹ and, being in perpetuity, both the ordinance of the city and the decree of the state court should be enjoined as violating the constitutional provision guaranteeing the sanctity of contract obligations. The city contends that the grant in the state statute upon which the appellee relies was limited to incorporated companies, and that, as the power company is successor in right, title, and obligations to a partnership which acquired the right to use the streets under city ordinances which have expired, the right of ouster exists. This view of the city was taken by the Supreme Court of the state in the ouster proceeding. We do not find it necessary to pass upon these questions nor to consider in connection therewith, as argued, either the scope of the city's powers or the effect of its acquiescence in the use of its streets after the expiration of the city ordinances, for in our opinion the proofs in the case do not justify a federal court sitting in equity in interfering with the decree of the state court.

The District Court undoubtedly had jurisdiction of both the parties and subject-matter of this litigation. The relief sought was of the character that equity alone can grant, and in that sense there was equity jurisdiction. It does not follow, however, that it was within the legitimate scope of the powers of the court to enjoin all persons to whom notice of the order of injunction should come from taking any steps or action of any kind to cause the enforcement of the judgment of the state court. While it is true that the decree is broad enough in its terms to enjoin the city and its agents from forcibly removing the wires and poles without state warrant, we cannot regard it as a whole as having any other effect or purpose than to stay the hand of the state court in carrying out its judgment of ouster. Thus defining it, its incidental effect upon the possible unauthorized action of city officials is too negligible to be given consideration in determining its character. Considering it, therefore, as effecting its purpose of staying proceedings in the state court, we inquire into its validity under the authorized practice in equity procedure.

Section 265 of the Judicial Code (28 US CA § 379) provides that "the writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy." This provision, as said in Wells Fargo & Co. v. Taylor, 254 U. S. 175, 183, 41 S. Ct. 93, 96, 65 L. Ed. 205, was "designed to be in accord with, and not antagonistic to, our dual system of courts," which means, it seems to us, that, except as may be authorized by laws relating to proceedings in bankruptcy, the powers of federal courts to stay proceedings in a state court are no greater than those with which state courts are invested under the general rules of the equity practice. In the opinion in the case just referred to the court points out three classes of cases in which a federal court is not prevented by the Code provision, supra, from issuing injunctions staying state court proceedings. This proceeding does not fall within any of the classes mentioned. In its objective analysis, it is a suit by a mortgagee to obtain a readjudication of the law and facts adjudicated by a state court of competent jurisdiction in a proceeding to which the mortgagor was a party. There is no claim that an injunction is necessary to protect the jurisdiction of the federal court properly acquired and still subsisting; that the decree of the state court is void for lack of jurisdiction; that the relief here sought should be granted because of fraud or mistake amounting to fraud in the state court proceeding; or that the appellee was denied notice of the state court proceeding and an opportunity to be heard.

In the Wells Fargo & Co. Case, the bill alleged that the express company had not been in any wise "negligent or at fault." Indeed, the express company in that case presented a petition to the state court and asked to be made a party defendant in order to set up the grounds on which it later sought, in the federal court case, to enjoin the enforcement of the judgment. The petition was denied. In Simon v. Southern Railway, 236 U. S. 115, 35 S. Ct. 255, 59 L. Ed. 492, the state...