East Tennessee, V. & G. R. Co. v. Atlanta & F. R. Co.

• Decision Date: 24 February 1892
• Parties: EAST Tennessee, V. & G.R. CO. et al. v. ATLANTA & F.R. CO.
• Court: U.S. District Court — Southern District of Georgia

49 F. 608

EAST Tennessee, V. & G.R. CO. et al. v. ATLANTA & F.R. CO.

United States Circuit Court, S.D. Georgia, Western Division.

February 24, 1892

Calhoun King & Spalding, for plaintiffs.

Marion Erwin, for R. H. Plant, receiver.

Henry R. Jackson and John L. Tye, for attachment defendant.

SPEER District Judge.

It appears from the record and other evidence before the court that at 40 minutes after 9 o'clock on the 9th day of February we signed an order directing R. H. Plant, as receiver of the circuit court, to take possession of the property of the Atlanta & Florida Railroad Company. The order was granted upon consideration of the bill before the court and in view of its sworn allegations. Mr. Plant, through his agent, immediately proceeded to take possession of the property as directed, and, according to his report, verified by oath, his agent and representative was in actual custody in the office of the company, the officers present having been notified of the order appointing him, when T. W Garrett, superintendent of the defendant corporation, entered the office, and, having been informed by the agent of Mr. Plant of his possession as receiver, declined to recognize the same. Mr. Garrett informed the agent of the receiver that he himself had been appointed receiver by the state court at 10 minutes after 11 o'clock. The order put in evidence here by the respondent indicates that the appointment by the state court was made at 15 minutes after 11. Then, in the presence of the agent of Mr. Plant, Mr. Garrett went to the telephone, and notified a Mr. Humphreys that he (Garrett) had been appointed receiver, and directed him to recognize his authority. At this time the receiver of this court had been in actual possession for some time; how long, it does not distinctly appear. It is therefore evident that the receiver of this court was appointed nearly two hours before the order appointing the receiver of the state court was granted by Judge CLARKE; and, further, that he was actually in possession when the receiver of the state court came in, announced his appointment, and attempted to take possession. It is insisted, however, that the bill in the state court was pending for quite a while before the bill in this court was filed. But it is perfectly evident that it was an amicable proceeding, to which certain creditors and the road were parties, with no immediate purpose to ask for the appointment of a receiver. One of the learned counsel, Mr. Jackson, who has opposed this motion, who appears now for the respondent, and who states that he represents large interests in the bill in the state court, has stated in his argument here that the bill before that court was an attempt to 'nurse the struggling little road into success,' and he stated further that at various times counsel for and against the bill had consulted, and had endeavored, with success, to prevent Judge CLARKE from appointing a receiver. No rule nisi, calling upon the defendants to show cause why a receiver should not be appointed, had been issued; and yet, notwithstanding these admitted facts, in two hours after the United States court had acted, we find that an order, granted by the consent of the parties, was taken, appointing a receiver of the state court. On the other hand, the bill brought in the United States court is presented at the instance of creditors for a large amount, who appear to be earnestly insisting upon the payment of their debts. If it be true, as the bill alleges, that the East Tennessee, Virginia & Georgia Railroad Company and the Western Railroad Company of Alabama, the plaintiffs, are creditors of the Atlanta & Florida Railroad Company, must they be debarred the privilege of applying to a forum which they have a right to seek because there has been in the state court an amicable bill, intended to 'nurse' their debtor into prosperity? It is competent by a proceeding of that character for a portion of the creditors to take charge of litigation involving the entire assets of the company to 'stand off' other creditors, urge the court to delay the relief which the bill apparently seeks, and then invoke the doctrine of comity to defeat an earnest attempt by the creditors to seek relief elsewhere? We think not. To apply the doctrine of comity to such facts would seem unwarrantable.

Nor does the mere pendency of the bill in the state court in itself deny to this court the power of appointing a receiver where it has jurisdiction of the parties, and where its action is otherwise proper. Nor will such pendency affect the title of the receiver of this court. The title of a receiver, on his appointment, dates back to the time of granting the order. Beach, Rec. par. 200. In cases of conflicting appointments, the courts will inquire into the priority of appointment, and, if necessary, will take into consideration fractions of the day. Id. 232. While courts of equity have insisted upon the doctrine of lis pendens, they have found it difficult, and often inequitable, to force it. Id. 200. The rule upon that subject in this state is deducible from the decision of the supreme court in Bank v.Trustees, 63 Ga. 552, where the court (JACKSON, Justice, delivering the opinion) uses this language:

'But it would seem here that the stockholders' bill has been pending here for a long time in the circuit court of the United States, and no receiver is yet appointed. Perhaps none ever will be. Is the judgment creditor to wait until one is to be appointed? He is not even in this case made a party to the bill in the United States court. If he were, and if the bill there filed was similar to this in review here, and could accomplish the same end, to-wit, the collector of this debt by the judgment creditor, having the final process of the state court in his hands, even then we should rule that neither law nor equity nor comity would require the equity to wait upon the United States court in a case like this.'

The application of that decision is that neither law, equity, nor comity will require the United States court to wait upon the state court in a case like this.

In a very carefully considered case, Mr. Justice BRADLEY, while presiding in this circuit, gave a controlling definition of the law. In Wilmer v. Railroad Co., 2 Woods, 426, the learned justice used this language:

'This test, I think, is this: not which action was first commenced, nor which cause of action has priority or superiority, but which court first acquired jurisdiction over the property. If the Fulton county court had the power to take possession when it did so, and did not invade the possession or jurisdiction of this court, its possession will not be interfered with by this court. The parties must either go to that court, and pray for the removal of its hand, or, having procured an adjudication of their rights in this court, must wait till the action of that court has been brought to a close, and judicial possession has ceased. Service of process gives jurisdiction over the person,-- seizure gives jurisdiction over the property; and, until it is seized, no matter when the suit is commenced, the court does not have jurisdiction.'

In this holding the Honorable John ERSKINE, the judge of this district, now retired, concurred, and in its support Justice BRADLEY cites many authorities, which he states have been 'somewhat carefully consulted.' In addition to these it will be instructive to refer to Barton v. Keyes, 1 Flip. 61; Levi v. Insurance Co., 1 Fed.Rep. 206; Walker v. Flint, 7 Fed.Rep. 437; Erwin v. Lowry, 7 How. 172; Griswold v. Railroad Co., 9 Fed.Rep. 797; Covell v. Heyman, 111 U.S. 176, 4 S.Ct. 355; Heidritter v. Oil-Cloth Co., 112 U.S. 294, 5 S.Ct. 135.

It is insisted, however, that the superior court of the state had taken control of the property, because, upon an amendment to the bill therein pending, alleging that the officers were permitting a use of the corporation funds for private purposes, it had granted a restraining order enjoining the officers of the road from permitting the use of its funds for other than the purposes of the corporation. This, however, was nothing more than an order to restrain actual or threatened malfeasance of an officer or officers of the corporation, and was in no sense a seizure of the property itself. It indeed was a distinct recognition of the fact that the officers were yet in control. Otherwise, no injunction would have been issued against them.

The sole remaining objection to the order apparently necessary to enforce obedience to the decree of this court is that the circuit court of the United States for the northern district of Georgia has exclusive jurisdiction of the controversy presented by the bill, for the reason that the principal office of the company is in that district. In support of this proposition it is urged that in the case of Banking Co v. Seymour, 53 Ga. 499, the supreme court of the state held that section 3406 of the Code of Georgia imperatively requires that the suit must be brought in the county where the principal office of the company is located, unless it is upon a contract made or to be performed in some other county. It is, however, true that the residence of a railroad corporation in Georgia is not restricted to the county in which its principal office is situated. In the case of Davis v. Banking Co., 17 Ga. 323, it was held that such a corporation is a resident of the entire state, and an inhabitant of all the counties through which the road runs. This decision had under consideration the act of the general assembly now embodied in section 3406 of the Code. This allowed suits to be brought against railroad companies in any county in which a tort sued for was committed, or in which a contract declared on...