Haight & Freese Co. v. Weiss

Decision Date01 October 1907
Docket Number695.
PartiesHAIGHT & FREESE CO. v. WEISS et al.
CourtU.S. Court of Appeals — First Circuit

Gilbert F. Ordway (Franklin Bien, on the brief), for appellant.

William P. Maloney, for appellee Weiss.

William D. Turner (George Hoague, on the brief), for appellees Colt and Campbell and others.

Before COLT and PUTNAM, Circuit Judges, and ALDRICH, District Judge.

PUTNAM Circuit Judge.

This is a bill in equity, brought on May 8, 1905, by Anna L. H Weiss, administratrix, against the Haight & Freese Company, a corporation, in behalf of herself and other creditors who might intervene; but neither the complainant nor any one else who did intervene had recovered judgment. The complainant describes herself as a citizen of Massachusetts, and the respondent as a corporation created by the laws of New York with a usual place of business in Massachusetts, and as having appointed the commissioner of corporations of Massachusetts its attorney for receiving service of process Of course, the allegation that it has a usual place of business in Massachusetts, coupled with the allegation that it had appointed the commissioner its agent for receiving service of process, must be accepted as equivalent to a statement that the corporation was transacting business in Massachusetts at the time the bill was brought.

A number of the errors assigned insist merely that the Circuit Court had no jurisdiction because the allegations of the bill make the corporation a citizen of Massachusetts, so that consequently, on its face, both complainant and respondent are citizens of that state. After the Supreme Court has rendered decision on decision that a corporation cannot migrate, and that the fact that it is doing business in a state other than that of its organization does not create it a citizen thereof, it seems quite inconceivable that a proposition of this character should be urged on us. The respondent cites a decision of the Circuit Court for this circuit (Consolidated Store Service Co. v. Lamson Co., 41 F. 833); but that decision was entirely in harmony with the law as we have stated it. It is true that in that suit, which was between two corporations, neither corporation was organized in the state constituting the district where the suit was brought; but that was not the point which was pressed on the court. The court, at page 834 referred distinctly to the rule we have stated, that a corporation cannot migrate, and expressed the fact that this was even then well settled. The opinion continued as follows:

'I think, however, the true ground upon which the court should take jurisdiction is this: That the corporation consents to be sued as a condition for doing business within such state, and that it should be held to its agreement.'

At that time this proposition was somewhat doubtful, but it has since been thoroughly established by the Supreme Court to be the law; and it is on that ground, in connection with the fact that complainant is a citizen of Massachusetts, that the corporation was lawfully served in the district of Massachusetts, and the Circuit Court for that district could take jurisdiction.

The complainant declares that she is the administratrix of the estate of one Charles Weiss; that the respondent is a corporation doing what is known as a 'bucket-shop' business at Boston, New York, and elsewhere; that her intestate gave the respondent orders for the purchase and sale of stocks, paying in various sums of money amounting in all to $5,380; that he supposed the respondent was actually buying and selling stocks on his account; that, instead of buying and selling, the respondent was simply making book entries, without any actual transactions, thus doing the 'bucket-shop' business; that, after the decease of Weiss, the complainant, as administratrix, had a settlement with the respondent in which it made due her only $160; that both the complainant and her intestate were ignorant of the fact that the respondent's transactions with the intestate involved in the account were fictitious, in that no actual purchases and sales were made; that the account was wholly fictitious, unknown both to Weiss and the complainant, as his administratrix; that, in consequence thereof, the respondent really owed the complainant, as such administratrix, at the time of the settlement, $5,380, less $160 paid her by it; that full releases had been given both by Weiss and by the complainant, as his administratrix, in ignorance of the facts; and that the releases were therefore invalid. The bill contained prayers that an account might be taken of the amounts due complainant, and for such other relief as the case might require, which, of course, involved the canceling of the releases.

The bill also complained that the respondent was engaged in an illegal enterprise, meaning what it described as a 'bucket-shop' business, and that therefore the corporation should be restrained, and be wound up, and its assets distributed. It further alleged that the corporation had a large number of creditors and not sufficient assets to pay their claims, and that it was carrying on its operations from day to day by means of the money received from its customers, dealing with them in the illegal and fraudulent manner which we have described, and it was so framed as to make the alleged insolvency another ground for the distribution of its assets. The allegations of the bill, and the portions thereof asking relief, were not exactly in the order or the phraseology which we have stated, but the substance was in accordance therewith.

Sundry creditors were permitted to intervene; but we do not perceive, so far as that is concerned, that we will have any occasion to do more than to state the fact.

On the filing of the bill, and without notice to the respondent, but on a motion therefor which was supported by a bond given by the complainant with a surety in the penal sum of $10,000, conditioned to respond to damages as usual, a receiver was appointed, the order for which, of course, was merely interlocutory, so that the receiver as thus appointed should probably be described as an interlocutory receiver. On June 5, 1905, the respondent filed an answer, the substance of which is sufficiently stated by it as follows:

'The answer of the defendant alleged that Charles Weiss, the complainant's intestate, fully understood the nature of his transactions with the defendant, and that the defendant transacted business with said Weiss according to his instructions; that the complainant, as administratrix, was paid the sum due the said Charles Weiss according to his account with the defendant, and thereupon, after a full opportunity to examine the same, freely and voluntarily executed and delivered to the defendant a release under seal, wherein she released and discharged the defendant from all right of action, claim, or demand for any payment at any time heretofore made or value of anything at any time heretofore delivered on any contract or transaction whatever, and covenanted never to sue therefor. The answer further alleged that the business of the defendant was legitimate and proper, and that it kept proper books of account, and was able to meet all its just claims in the ordinary course of business.'

It filed no plea nor demurrer. Subsequently it amended its answer; but we need not refer to the details of this. On January 17, 1906, the complainant filed a general replication, and thus the case was put fairly and formally at issue on serious and important questions of fact and law. No proceedings, however, were taken in accordance with the rules in equity 67 et seq., which direct how proofs shall be made up after formal issues in the manner we have described; but the case was referred to a master, who passed on all the substantial issues, and made a report to which the respondent excepted at great length. The exceptions were overruled, and, on June 10, 1906, a decree was entered sustaining the claims of the original complainant and of some of the creditors who intervened, and settling the amount of each. We do not find the decree specifically adjudged that the releases in question were invalid and ordered them annulled. It, however, adjudged that the allegations of the bill of complaint had been fully sustained by the proofs, and, as we have said, it established the claims of the complainant and of the intervening creditors. This necessarily includes an adjudication setting aside the releases, notwithstanding the lack of specific phraseology to that effect. The decree also contained the following:

'Ordered, adjudged, and decreed as follows:
'That the receiver heretofore appointed in said cause, James D. Colt, be, and he hereby is, made permanent receiver, with full power to receive, sue for, and recover all moneys, debts, or property to which said company may be entitled, and to enforce, by suit or otherwise, or to compromise, in his discretion, any and all liabilities of any person or corporation to said company; to sell and dispose of, either at public auction or at private sale, at such prices and upon such terms as he may deem expedient, all property, choses in action, rights of action, and assets belonging to said company; and with all such other
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    • U.S. Supreme Court
    • 22 Noviembre 1939
    ...Consolidated Store-Service Co. v. Lamson Consol. Store-Service Co., C.C.Mass.,1890, 41 F. 833, approvingly cited in Haight & Freese Co. v. Weiss, 1 Cir., 1907, 156 F. 328. 12 Texas Land & Mortgage Co. v. Worsham, 76 Tex. 556. 13 146 U.S. 202, at page 207, 13 S.Ct. 44, at page 46, 36 L.Ed. 9......
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    ...authoritatively settled. An affirmative answer is given in Joseph Dry Goods Co. v. Hecht (C. C. A.) 120 F. 760, and Haight & Freese Co. v. Weiss (C. C. A.) 156 F. 328, 334, and a negative one in Pacific Northwest Packing Co. v. Allen (C. C. A.) 109 F. 515, and Root v. Mills (C. C. A.) 168 F......
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    ...v. Mills, 7 Cir., 1909, 168 F. 688, 690; Pacific Northwest Packing Co. v. Allen, 9 Cir., 1901, 109 F. 515, 516. 3 Haight & Freese Co. v. Weiss, 1 Cir., 1907, 156 F. 328, 334, certiorari denied, 1907, 207 U.S. 594, 28 S.Ct. 260, 52 L. Ed. 356; Joseph Dry Goods Co. v. Hecht, 5 Cir., 1903, 120......
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    ...Store-Service Co. v. Lamson Consolidated Store-Service Co., C.C., 41 F. 833 (cited with approval in Haight & Freese Co. v. Weiss et al., 1 Cir., 1907, 156 F. 328, 329), "for the privilege of doing business in Massachusetts the defendant corporation made and filed an agreement as above provi......
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