Haight & Freese Co. v. Weiss, 695.

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Citation: 156 F. 328
• Docket Number: 695.
• Parties: HAIGHT & FREESE CO. v. WEISS et al.
• Decision Date: 01 October 1907

156 F. 328

HAIGHT & FREESE CO.
v.
WEISS et al.

No. 695.

United States Court of Appeals, First Circuit.

October 1, 1907

[156 F. 329]

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 [156 F. 330] 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, [156 F. 331] 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

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