Hall v. Cottingham

• Decision Date: 27 March 1931
• Docket Number: No. 328.,328.
• Citation: 55 F.2d 659
• Parties: HALL et al. v. COTTINGHAM et al.
• Court: U.S. District Court — District of South Carolina

55 F.2d 659 (1931)

HALL et al. v. COTTINGHAM et al.

No. 328.

District Court, E. D. South Carolina.

March 27, 1931.

Willcox & Hardee, of Florence, S. C., for plaintiffs.

Davis & Sharkey and P. H. Arrowsmith, all of Florence, S. C., for defendants.

ERNEST F. COCHRAN, District Judge.

The plaintiffs brought this case for an accounting against the defendant Cottingham as administrator and guardian and the surety on his bond. By consent, the case was referred to a special master to hear and determine all issues, reserving however to the court the right to review any ruling upon exceptions, with the power to modify, reverse, or affirm the report in whole or in part. The special master has filed his report, and the plaintiffs and the defendant Cottingham and the surety on his bond have filed exceptions.

It will be unnecessary to discuss in detail the various exceptions and points of law and fact involved. The main question concerns the jurisdiction of this court. The defendants contend: First, that this court has no jurisdiction, because of the pendency of the administration and guardianship proceedings in the probate court of the state; and, secondly, that even if this court has jurisdiction, it should refrain from taking jurisdiction, on the ground of comity.

The special master held that in the state courts the jurisdiction of the probate courts is not exclusive, but that the court of common pleas on the equity side has jurisdiction to compel an accounting concurrent with the jurisdiction of the probate court. I agree with the special master that the state decisions compel this conclusion. Epperson v. Jackson, 83 S. C. 157, 65 S. E. 217; Beatty v. National Surety Co., 132 S. C. 45, 128 S. E. 40; Chapman v. Smith, 133 S. C. 122, 130 S. E. 212.

The special master further held that there being in this case diversity of citizenship, and the jurisdictional amount requisite by statute, the District Court of the United States, as a court of equity, would have the same jurisdiction that the common pleas would have as a court of equity. I agree with the special master in this conclusion also. Green's Adm'x v. Creighton, 23 How. 90, 106, 16 L. Ed. 419; Walker v. Walker, 9 Wall. 743, 754, 19 L. Ed. 814; Ingersoll v. Coram, 211 U. S. 335, 360, 29 S. Ct. 92, 97, 53 L. Ed. 208.

It would indeed be an anomaly in the law to hold that where a state court of equity has complete jurisdiction in the exercise of the general equitable powers which such courts possess, a federal court, although possessing all the powers of the High Court of Chancery in England as a court of equity, could not entertain such jurisdiction where the requisite diversity of citizenship and amount involved, exist. In Ingersoll v. Coram, supra, the Supreme Court held that in Massachusetts an executor might be compelled by a bill in equity to pay to those entitled their share of the property, and said: "And this being the power of the courts of equity of the state, a like power certainly may be exercised by the Federal courts." Cf. Sutton v. English, 246 U. S. 199, 205, 38 S. Ct. 254, 62 L. Ed. 664.

But I do not think that the jurisdiction of this court need be rested alone on the ground that the common pleas court of the state would have concurrent jurisdiction with the probate courts. I think the jurisdiction of the federal courts can be sustained on broader principles, without regard to the question whether the state court of equity has jurisdiction. There are numerous cases upon the subject, but I shall review only a few of them.

In Green's Adm'x v. Creighton et al., 23 How. 90, 106, 16 L. Ed. 419, a bill was filed by the assignee of certain heirs of an estate against the administratrix and executrix for an accounting. It was held that the fact of the pendency of proceedings in insolvency in the probate court would not oust the jurisdiction of the federal court.

In Walker v. Walker, 9 Wall. 743, 754, 19 L. Ed. 814, Mrs. Walker filed a bill against her husband's executor, alleging a trust or investment in respect to the moneys which she had paid into his hands, and calling for an accounting. It was held that the federal court had jurisdiction. The court used the following language: "Circuit Courts of the United States, with full equity powers, have jurisdiction over executors and administrators, where the parties are citizens of different States, and will enforce the same rules in the adjustment of claims against them that the local courts administer in favor of their own citizens."

In Security Trust Co. v. Black River National Bank, 187 U. S. 211, 228, 23 S. Ct. 52, 47 L. Ed. 147, the Supreme Court quoted the above language from Walker v. Walker, and reaffirmed the principle.

Payne v. Hook, 7 Wall. 425, 19 L. Ed. 260, is directly in point, and controls the present case. In that case, the plaintiff filed a bill in the federal court for Missouri against an administrator and the sureties on his official bond, to obtain her distributive share in a certain estate. The object of the bill was to obtain relief against the fraudulent acts of the administrator, and to compel a true account of the administration, in order that the real condition of the estate could be ascertained and the complainant paid what belonged to her. The jurisdiction of the federal court was denied by the defendant, because in Missouri, exclusive jurisdiction over all disputes concerning the duties or accounts of administrators until final settlement is given to the local county court, which is a court of probate, and as the administration complained of was still in progress in the court of probate, it was said that a resort must be had to that court to correct the errors and frauds in the accounts of the administrator. The theory advanced in that case was that the federal court of chancery, sitting in Missouri, would not enforce demands against an administrator or executor, if the court of the state having general chancery powers could not enforce similar demands. In other words, that as the complainant, were she a citizen of Missouri, could obtain a redress of her grievances only through the local court of probate, she had no better or different rights because she happened to be a citizen of Virginia. The Supreme Court held that the jurisdiction of courts of the United States over controversies between citizens of different States cannot be impaired by the laws of the states which prescribe the modes of redress in their courts, or which regulate the distribution of their judicial power; and that the equity jurisdiction conferred on the federal courts is the same that the High Court of Chancery in England possesses, is subject to no limitation nor restraint by state legislation, and is uniform throughout the different states of the Union. It was therefore held that the federal court had jurisdiction to hear and determine the controversy, notwithstanding the peculiar structure of the Missouri probate system, and was bound to exercise it, if the bill, according to the received principles of equity, states a case for equitable relief. It is true that in that case there was a charge of fraud, and in the present case there is no such charge. But in Payne v. Hook the decision of the court was not based upon the ground that fraud was charged. It was held that a court of chancery, as an incident to its power to enforce trusts and make those holding a fiduciary relation, account, has jurisdiction to compel executors and administrators to account and distribute the assets in their hands, and that the bill under consideration had this object and nothing more; that it sought to compel the defendant Hook to account and pay over to Mrs. Payne her rightful share in the estate of her brother, and in case he should not do it, to fix the liability of the sureties on his bond. In other words, an action against fiduciaries for an accounting is a proper ground of equitable jurisdiction.

In Borer v. Chapman, 119 U. S. 587, 7 S. Ct. 342, 30 L. Ed. 532, a bill in equity was filed by a creditor against an administrator and executor, and certain others. The object and prayer of the bill were to marshal the assets of the estate of John Gordon, deceased, alleged to have been received by the defendants, either as representatives or legatees, for the purpose of applying them to the payment of the complainant's judgment. It was argued that the complainant, as a creditor of the estate, was bound to make himself a party to the proceedings in the probate court of San Francisco; and that, failing to do this, he was barred from any right to recover either from the executor or from any legatee. The Supreme Court, however, overruled that argument and held that the jurisdiction of courts of equity in administration suits and creditors' bills brought against executors or administrators, or after distribution against legatees, for the purpose of charging them with a liability to apply the assets of the deceased to the payment of debts, rests primarily on the ground of a trust; and that this part of the ancient and original jurisdiction of courts of equity is vested in the federal courts and is independent of that conferred by the states upon their own courts, and cannot be affected by any legislation except that of the United States. The court cites numerous cases, and especially Payne v. Hook, and reaffirms the doctrine of that case. The court further states that the only qualification in the application of this principle is that the courts of the United States in the exercise of their jurisdiction over the parties cannot seize or control property while in the custody of a court of the state.

In Byers v. McAuley, 149 U. S. 608, 13 S. Ct. 906, 37 L. Ed. 867, a decree was entered in the federal court which assumed full control of the administration of an estate then in the course of administration in the state court. The decree disposed of and distributed the entire estate among all the persons interested. It did...