General Inv Co v. Lake Shore Ry Co

• Decision Date: 27 November 1922
• Docket Number: No. 34,34
• Citation: 43 S.Ct. 106,67 L.Ed. 244,260 U.S. 261
• Parties: GENERAL INV. CO. v. LAKE SHORE & M. S. RY. CO. et al
• Court: U.S. Supreme Court

260 U.S. 261

43 S.Ct. 106

67 L.Ed. 244

GENERAL INV. CO.

v LAKE SHORE & M. S. RY. CO. et al.

No. 34.

Argued Oct. 6, 1922.

Decided Nov. 27, 1922.

[Syllabus from pages 261-264 intentionally omitted] This suit in equity was begun in the court of common pleas of Cuyahoga county, Ohio, to enjoin a proposed consolidation of the New York Central & Hudson River Railroad Company, the Lake Shore & Michigan Southern Railway Company, and nine other companies, not identified in the bill, and to secure other relief of an incidental nature. The suit was brought by the General Investment Company, a Maine corporation, and the New York Central & Hudson River Railroad Company, the Lake Shore & Michigan Southern Railway Company, the Central Trust Company, and three individuals, called the 'Read committee,' were named as defendants.

The principal ground on which the proposed consolidation was assailed was that it would contravene the Sherman Anti-Trust Act (Comp. St. §§ 8820-8823, 8827-8830) and the Clayton Act (38 Stat. 730)—both laws of the United States. There were also charges that it would be contrary to the Constitution and laws of Ohio and other states, but the general tenor of the bill made it evident that these charges were to be taken as of secondary importance. The plaintiff's right to sue was based on allegations that it was a stockholder in the New York Central Company and the Lake Shore Company, and, as such would be subjected to irreparable loss and damage, should the consolidation be effected.

Process was duly served on the Lake Shore Company and there was a purported service on the New York Central Company; but there was neither service on nor appearance by the other defendants. The New York Central Company, appearing specially for the purpose, promptly challenged the validity of the service on it by moving to set the same aside; but the state court overruled the motion.

In due time the two railroad companies caused the suit to be removed into the District Court of the United States for the Northern District of Ohio. The plaintiff objected to this and reserved an exception to the order allowing it. The removal was sought and allowed on the ground that the suit, according to the claim made in the bill, was one arising under the laws of the United States, and of which the District Courts of the United States are given original jurisdiction. Diversity of citizenship was shown, but not specified as a ground for removal.

Shortly after the removal the New York Central Company, again appearing specially for the purpose, sought and obtained in the District Court another hearing on its objection to the purported service on it, and on that hearing the objection was sustained and the service set aside. 226 Fed. 976. Afterwards motions by the plaintiff to remand the suit to the state court, to direct special service on the New York Central Company and other defendants in the mode provided in section 57 of the Judicial Code (Comp. St. § 1039), and for leave to file a supplemental bill and make new parties defendant, were severally overruled. And lastly a motion by the Lake Shore Company, the only defendant then before the court, to dismiss the suit, was sustained on the ground that the New York Central Company was an indispensable party, had not voluntarily appeared, and was not within the reach of the court's process.

From the decree of dismissal the plaintiff appealed to the Circuit Court of Appeals. That court upheld the rulings setting aside the service on the New York Central Company, denying the motion to remand to the state court, declining to direct special service on the New York Central Company and other defendants, and refusing leave to file a supplemental bill and make new parties. It also sustained the decree of dismissal as to much of the bill, with the qualification that it be without prejudice, and reversed it as to other parts of the bill to which that court thought the Lake Shore Company was the only necessary defendant. 250 Fed. 160, 162 C. C. A. 296.

When the cause was returned to the District Court, the plaintiff, complying with a direction that the bill be made certain in a particular in which the Circuit Court of Appeals deemed it uncertain, so amended it as to show the date on which the directors of the Lake Shore and other companies adopted the agreement for the proposed consolidation. The Lake Shore Company then moved that the bill, as left by the decision of the Circuit Court of Appeals, be dismissed on the grounds: (a) That in so far as it was directed to securing an injunction against alleged or threatened violations of the Sherman Anti-Trust Act, or the Clayton Act, the plaintiff had no right or standing to maintain it, or, if having such a right or standing, could not bring it in a state court, as was done; and (b) that in so far as it was directed against alleged or threatened violations of state Constitutions or laws it did not show a right in equity to the relief sought or any part thereof. This motion was sustained and a decree of dismissal entered. The plaintiff again appealed to the Circuit Court of Appeals, and that court affirmed the decree, but without prejudice to the institution in a proper court of a new suit, based only on infractions of state Constitutions or laws. 269 Fed. 235. A further appeal brings the case here.

Messrs. F. A. Henry, of Cleveland, Ohio, and Elijah N. Zoline, of New York City, for appellant.

Messrs. Walter C. Noyes, of New York City, and Samuel H. West, of Cleveland, Ohio, for appellees.

Mr. Justice VAN DEVANTER, after stating the case as above, delivered the opinion of the Court.

Complaint is made of each of the rulings alluded to in the foregoing statement together with some others. We take them up in their order.

The setting aside of the purported service on the New York Central Company.

While the state court considered the objection to the service and overruled it before the removal, this was not an obstacle to an examination of the question by the District Court after the removal. The state court's ruling was purely interlocutory, and its status in this regard was not affected by the removal. Being interlocutory, it was subject to reconsideration, and would continue to be so up to the passing of a final decree. Had the cause remained in the state court, the power to reconsider would have been in that court, but when the removal was made the power passed with the cause to the District Court. Of course in the latter the ruling was to be treated with respect, but not as final or conclusive. Garden City Manufacturing Co. v. Smith, 9 Fed. Cas. p. 1153, No. 5,217; Bryant v. Thompson (C. C.) 27 Fed. 881. And see Goldey v. Morning News, 156 U. S. 518, 522, 15 Sup. Ct. 559, 39 L. Ed. 517.

The sheriff returned that he had served the summons on the New York Central Company in Cuyahoga county by delivering a copy to 'W. A. Barr, regular ticket agent, in charge of the business of said company.' As grounds for assailing this service the company alleged that it was a New York corporation, had no railroad in Ohio, was not doing business there, did not maintain a place of business or office in that state, and had not made Barr its agent or employe. From the evidence adduced on that issue the District Court, as also the Circuit Court of Appeals, found that the grounds of the company's objection were all true in point of fact. We have examined the evidence and discover no occasion for disturbing the finding. Indeed, we think a different one would have been quite inadmissible. The substance of the evidence is accurately set forth in the opinion of the Circuit Court of Appeals (250 Fed. 165, 162 C. C. A. 296), and need not be repeated here.

It follows that the purported service on this company was invalid and rightly set aside. Philadelphia & Reading R. Co. v. McKibbon, 243 U. S. 264, 37 Sup. Ct. 280, 61 L. Ed. 710, and cases cited.

Alleged submission by New York Central Company to court's jurisdiction.

The plaintiff contends that, even if the service was not good, the company waived the fault and submitted to the court's jurisdiction. Three things are relied on as constituting or showing such a waiver and submission. They are the petition for removal, a stipulation bringing before the District Court evidence presented in the state court, and a brief filed in opposition to the motion to remand. We think the contention had no support in any of them.

In fact, the petition for removal contained an express declaration that the company was 'not intending to waive any question of the sufficiency of service or the want of service,' but was 'reserving all questions of service, jurisdiction, and want of service.' Besides, it is well settled that a petition for removal, even if not containing such a reservation, does not amount to a general appearance, but only a special appearance, and that after the removal the party securing it has the same right to invoke the decision of the United States court on the validity of the prior service that he has to ask its judgment on the merits. Wabash Western R. Co. v. Brow, 164 U. S. 271, 279, 17 Sup. Ct. 126, 41 L. Ed. 431; Mechanical Appliance Co. v. Castleman, 215 U. S. 437, 441, 30 Sup. Ct. 125, 54 L. Ed. 272; Cain v. Commercial Publishing Co., 232 U. S. 124, 131, 34 Sup. Ct. 284, 58 L. Ed. 534. The plaintiff insists that, even if that be the usual rule, it is not applicable here, because by this petition the company sought and secured a removal into a District Court other than the one designated by law. But, as will be shown presently, the court to which removal was asked and effected was the proper one. So, whether the petition be judged by what it says or by its legal effect, it did not amount to a general appearance or a waiver of any invalidity in the service.

The stipulation relied on was made between the plaintiff and the New York Central Company and related to the use of specific evidence bearing directly on the...