Commonwealth of Pennsylvania v. Williams
Citation | 72 F.2d 509 |
Decision Date | 24 July 1934 |
Docket Number | No. 5238.,5238. |
Parties | COMMONWEALTH OF PENNSYLVANIA v. WILLIAMS et al. |
Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Wm. A. Schnader, Atty. Gen., and Harold D. Saylor, Dep. Atty. Gen., for the Commonwealth of Pennsylvania.
Gordon A. Block, of Philadelphia, Pa. (Wolf, Block, Schorr & Solis-Cohen, Ladner & Ladner, and Bernheimer & Sundheim, all of Philadelphia, Pa., of counsel), for appellees.
Before BUFFINGTON, DAVIS, and THOMPSON, Circuit Judges.
This is an appeal from an order of the District Court dismissing the petition of the commonwealth of Pennsylvania, wherein it prayed the court to direct the receivers, appointed by it, of the Mortgage Building & Loan Association, hereinafter called the association, to deliver over to the secretary of banking of Pennsylvania all the assets and records of the association held by them.
This was a stockholder's bill filed against the association for the appointment of receivers by Edward B. Elson, a resident of the state of New York, who owned stock in the association, to the amount of $31,000. The bill alleged that the association was then, and for a long time had been, insolvent, and that the real, actual, and fair value of its assets was far less than its liability to stockholders on dues paid in, together with its general indebtedness; that the association had stopped making loans or collecting dues; and that, "unless its affairs should be liquidated and its assets distributed under the equitable and impartial supervision of a court of competent jurisdiction," immediate and irreparable damage would be suffered. It therefore prayed for the appointment of receivers.
The association filed an answer in which it admitted its insolvency and joined in the prayer of the plaintiff for the appointment of receivers. They were appointed and took over the assets of the association. The commonwealth of Pennsylvania intervened and filed a petition, and, as above stated, prayed that the assets of the association be delivered to the secretary of banking of Pennsylvania. The court denied the prayer and entered an order dismissing the petition. From this order the commonwealth appealed.
Two questions arise: (1) Did the District Court have jurisdiction and consequent power to appoint receivers? (2) If it had, did it abuse its discretion in appointing them?
The District Court derives its power from the Constitution and from Congress and not from the commonwealth. Article 3, section 2, of the Constitution, provides that: "The judicial Power shall extend * * * to Controversies * * * between citizens of different States." Congress, pursuant to this authority, has provided that District Courts shall have original jurisdiction of all suits of a civil nature at common law or in equity, where the matter in controversy exceeds, exclusive of costs and interest, the sum or value of $3,000 and is between citizens of different states. Section 24, Judicial Code (28 USCA § 41). This is the source of the jurisdiction and power of the District Court in this case.
While sitting in a state as a court of the United States, the federal court accepts and gives effect to the laws of the state, so far as they do not affect its jurisdiction and the rights of nonresident creditors. Yet it exercises powers independent of the state. A state cannot take away the plenary power of the federal courts given to them by Congress by conferring exclusive jurisdiction of such controversy upon its own courts and administrative bodies, by prescribing exclusive methods of commencing or conducting litigation, by prohibiting the seizure of the subject of the litigation during its pendency, or by any other means. National Surety Co. v. State Bank of Humboldt (C. C. A.) 120 F. 593, 602, 61 L. R. A. 394; Morrill et al. v. American Reserve Bond Co. (C. C.) 151 F. 305, 313; O'Neil v. Welch (C. C. A.) 245 F. 261, 265; Leadville Coal Co. v. McCreery, 141 U. S. 475, 477, 12 S. Ct. 28, 35 L. Ed. 824.
In the case of National Surety Co. v. State Bank, supra, Judge Sanborn, speaking for the Circuit Court of Appeals for the Eighth Circuit, said:
In the Morrill Case, supra, Judge Sanborn further said:
In the case of O'Neil v. Welch, supra, Judge Woolley, speaking for this court said: "It cannot be doubted that the Federal court, in the exercise of its general equity jurisdiction, has power to appoint a receiver on a stockholder's bill, determine a corporation's solvency and distribute its assets, and that no State statute can impair or destroy that power."
In that case the District Court in Pennsylvania had appointed a receiver for an insurance company, for the supervision and liquidation of which the commonwealth had provided the same general complete system that it has for building and loan associations. Judge Woolley further said: "While the two courts have concurrent jurisdiction in the sense that each has the same jurisdiction, it is the policy of the law that the jurisdiction of both shall not be concurrently invoked and exercised; hence it is a well settled rule that as between two courts having concurrent jurisdiction of the subject of an action, the court which first obtains jurisdiction has the right to proceed to its final determination without interference from the other."
In Leadville Coal Co. v. McCreery, supra, the Supreme Court said: ...
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