Finney v. Continental Baking & Milling Corporation

• Decision Date: 12 January 1927
• Parties: FINNEY v. CONTINENTAL BAKING & MILLING CORPORATION (FINNEY BAKING CO).
• Court: New York District Court

17 F.2d 107 (1927)

FINNEY v. CONTINENTAL BAKING & MILLING CORPORATION (FINNEY BAKING CO).

District Court, D. Indiana, South Bend Division.

January 12, 1927.

Mahoney, Fansler & Douglass, of Logansport, Ind., for plaintiff.

B. F. Long, of Logansport, Ind., and Samuel B. Pettengill, of South Bend, Ind., for defendant.

SLICK, District Judge.

Plaintiff filed his complaint in the Cass circuit court of the state of Indiana, November 9, 1926, and summons was issued against defendants, returnable November 20th. On November 16th, four days prior to the return day, defendant Continental Baking & Milling Corporation filed its petition to remove the cause to the federal court, setting up the fact, which is conceded, that the Continental Baking & Milling Corporation and the Finney Baking Company are one and the same corporation; the name of the Continental Baking & Milling Corporation having been changed to that of Finney Baking Company.

Plaintiff is a citizen and resident of the state of Indiana, and the defendant is a citizen, resident corporation, organized under the laws of the state of Delaware, with its principal place of business in the state of Delaware.

Plaintiff in his complaint charges that defendant is indebted to him in the sum of $18,000, which sum is long past due and fully unpaid. Plaintiff further alleges that the defendant, through its president, is so managing and conducting its business, by dissipating its assets and accumulating indebtedness, real and pretended, that, unless a receiver is appointed, its property will be entirely lost, and prays for judgment in the sum of $18,000, and that a receiver be appointed, without notice, to take charge of all the assets of the defendant and operate said property as a going concern.

The Code of the state of Indiana permits the joining of actions at law and in equity, and abolishes all distinctions in pleading and practice between actions at law and suits in equity. Immediately upon the filing of the complaint, the state court appointed a receiver, who qualified, and who is now in charge of defendant's property. When defendant filed its petition for removal, the state court entered a finding that the bond tendered and filed by defendant is good and sufficient, but that the petition does not show a proper legal cause for the removal of the action to the District Court and the same was denied. Transcript was then filed in this court, which amounts in effect to removal.

Plaintiff moves to remand the cause of action, for the alleged reason that this court is without jurisdiction to hear and determine the same. He argues that, the plaintiff being a simple contract creditor, who has not reduced his claim to judgment, but brings suit on account, joining with it an application for the appointment of a receiver pendente lite, a federal court has no jurisdiction, and relies on the well-established rule that, if a case could not have been brought in the federal court in the first instance, it cannot be removed.

The authorities do hold that the federal courts upon objection will not take jurisdiction of a suit for the appointment of a receiver by a mere creditor, who has no lien against the property to be administered by the receiver, and who has not reduced his claim to judgment. But it is equally well settled that this is an objection that may be waived. In re Metropolitan Ry. Receivers, 208 U. S. 90, 28 S. Ct. 219, 52 L. Ed. 403. At page 109 of 208 U. S. (28 S. Ct. 224) supra, Mr. Justice Peckham said: "That the complainant has not exhausted its remedy at law — for example, not having obtained any judgment or issued any execution thereon — is a defense in an equity suit which may be waived, * * * and when waived the case stands as though the objection never existed."

The receiver was appointed by the Cass circuit court without notice. Defendant, before it was required to appear, petitioned for removal. No effort has been made to discharge the receiver. In bringing the case to this court, defendant must and should be deemed to have waived any right to object to the jurisdiction of this court for any purpose in the case.

Plaintiff relies upon two cases, Scott v. Neely, 140 U. S. 106, 11 S. Ct. 712, 35 L. Ed. 358, and Cates et al. v. Allen, 149 U. S. 451, 13 S. Ct. 883, 977, 37 L. Ed. 804. But these cases, when studied, are readily distinguishable from the case at bar. In Scott v. Neely suit was brought, in the first instance, in the federal court, on the equity side, to subject to the payment of a debt, alleged to be due and owing, certain...