Henry Bogart v. Southern Pacific Company

• Citation: 33 S.Ct. 497,57 L.Ed. 768,228 U.S. 137
• Decision Date: 07 April 1913
• Docket Number: No. 165,165
• Parties: HENRY L. BOGART, Townsend Lawrence, and Anita Lawrence, as Executors of Walter B. Lawrence, Suing on Behalf of Themselves and Other Stockholders, etc., Appts., v. SOUTHERN PACIFIC COMPANY et al
• Court: United States Supreme Court

228 U.S. 137

33 S.Ct. 497

57 L.Ed. 768

HENRY L. BOGART, Townsend Lawrence, and Anita Lawrence, as Executors of Walter B. Lawrence, Suing on Behalf of Themselves and Other Stockholders, etc., Appts.,

v SOUTHERN PACIFIC COMPANY et al.

No. 165.

Argued March 5, 1913.

Decided April 7, 1913.

Messrs. H. Snowden Marshall, James A. O'Gorman, A. J.

Dittenhoefer, and David Gerber for appellants.

[Argument of Counsel from page 138 intentionally omitted] Mr. Arthur H. Van Brunt for the Southern Pacific Company, the Houston & Texas Central Railroad Company, and the Central Trust Company.

Mr. Frederick Geller for the Farmers Loan & Trust Company.

[Argument of Counsel from pages 139-141 intentionally omitted] Messrs. Tompkins McIlvaine and Woodhull Hay for the Metropolitan Trust Company.

Mr. Justice Day delivered the opinion of the court:

This is a direct appeal from a decree of the United States circuit court for the eastern district of New York upon the ground that the jurisdiction of the circuit court is in issue under § 5 of the circuit court of appeals act (26 Stat. at L. 826, chap. 517, U. S. Comp. Stat. 1901, p. 488), and a certificate to that effect has been sent to this court.

The suit was originally brought in the New York supreme court for the county of Queens by Walter B. Lawrence, who has since died, and for whom the appellants have been substituted, against the Southern Pacific Company, Frederick P. Olcott, Central Trust Company of New York, Farmers's Loan & Trust Company, Metropolitan Trust Company of the City of New York, the Houston & Texas Central Railroad Company (which we will call the 'railroad company'), and the Houston & Texas Central Railway Company (which we will call the 'railway company'). Upon the petition of the Southern Pacific Company, Olcott, and the railroad company, the case was removed to the United States circuit court. Lawrence alleged in his complaint that he was a stockholder of the railway company, of which the Southern Pacific Company owned a majority of the stock; that the railway company became involved in various foreclosure suits, to which it set up certain defenses claimed by Lawrence to be valid and sufficient; that the Southern Pacific Company entered into a certain reorganization agreement, whereby, in consideration of the withdrawal of the defenses, which was procured by the Southern Pacific Company, the mortgages were foreclosed and all the property of the railway company bought in by defendant Olcott, who transferred the lines of railroad, rolling stock, etc., to the defendant railroad company, organized pursuant to the agreement; that new bonds were issued by the railroad company to retire the old bonds, and the lands of the railway company, purchased by Olcott, were conveyed to the three trust companies under the new mortgages, defendants herein, as further security for the bonds; and that under the plan the Southern Pacific was given more favorable terms than the minority stockholders in the matter of receiving the benefits of the reorganization agreement, and that consequently all the stock of the railroad company was taken over by the Southern Pacific Company. Lawrence prayed that the Southern Pacific Company be decreed trustee of all benefits received under the plan, and for an accounting, and prayed that the trust companies convey the surplus arising from the sale of land, after the bonds have been liquidated, to the railway company, and for certain other relief.

After the removal of the case to the circuit court, a motion was made to remand to the state court, which was overruled. Thereafter the defendants the Southern Pacific Company, Olcott, and the railroad company filed a plea in which it was set up that the railway company was a necessary and indispensable party to the suit; that it was beyond the jurisdiction of the court, and could not be brought in by process, and without its presence no decree could be rendered in the case, and therefore prayed that the bill be dismissed. Special pleas were filed by the Central Trust Company of New York, the Farmers' Loan & Trust Company, and the Metropolitan Trust Company of the City of New York.

Thereafter another motion to remand was made. This motion was based upon the ground that the circuit court could not get jurisdiction over the railway company, but that the state court from which it was removed could acquire jurisdiction over all the parties. This motion was also denied by the court.

The pleas to the jurisdiction were heard upon an agreed statement of facts, from which it appears that the railway company was incorporated under a special act of the state of Texas, which contained no limitation upon its corporate existence, and prior to 1885 had operated certain railroads in Texas; that the railway company's property was sold under the foreclosure decree for $7,000,000 less than the amount decreed to be due, and that the deficit was unpaid and uncollectible; that the reorganization had been accomplished; that since the foreclosure sale the railway company has owned no property and has had no place of business in the state of New York; that no meeting of the stockholders or directors has been held since 1890, and that while there are three surviving directors, none of them visit the state of New York upon the company's business. The circuit court held that the railway company was an indispensable party to the suit, and, unless it could be served with process within five days from the date of entering the order, a final decree should be entered dismissing the bill, which was thereafter done.

The circuit court made a certificate upon which to bring the case here, containing the following questions:

'1. Whether the circuit court had jurisdiction to proceed with the cause, and whether the circuit court had jurisdiction of the cause of action.

'2. Whether the Houston & Texas Central Railway Company was an indispensable party to the action.

'3. Whether, if the Houston & Texas Central Railway Company was an indispensable party to the action, and would not appear therein, and could not be served with process within the jurisdiction of the court, the court thereby lost jurisdiction of the cause of action so that it should dismiss the bill.

'4. Whether, if the Houston & Texas Central Railway Company was an indispensable party, and would not appear, and could not be served with process within the jurisdiction of this court, the cause should have been remanded to the state court, from whence it was removed.'

Appeals may be taken directly to this court from the circuit court under § 5 of the circuit court of appeals act in any case in which the jurisdiction of the circuit court is in issue, and it is provided that in such cases the question of jurisdiction alone shall be certified to this court for decision. The question intended to be thus brought to this court by direct appeal is well settled to be the jurisdiction of the court as a Federal Court. Questions of general jurisdiction, applicable as well to to state as Federal tribunals, are not included in such review. Louisville Trust Co. v. Knott, 191 U. S. 225, 48 L. ed. 159, 24 Sup. Ct. Rep. 119; Courtney v. Pradt, 196 U. S. 89, 49 L. ed. 398, 25 Sup. Ct. Rep. 208; Fore River Shipbuilding Co. v. Hagg, 219 U. S. 175, 55 L....