Holmes County, Miss., v. Burton Const. Co.

• Decision Date: 05 April 1921
• Docket Number: 3652.
• Citation: 272 F. 565
• Parties: HOLMES COUNTY, MISS., v. BURTON CONST. CO.
• Court: U.S. Court of Appeals — Fifth Circuit

272 F. 565

HOLMES COUNTY, MISS., v. BURTON CONST. CO.

No. 3652.

United States Court of Appeals, Fifth Circuit.

April 5, 1921

E. F Noel, of Lexington, Miss., for appellant.

J. G Holmes, of Yazoo City, Miss., for appellee.

Before WALKER, BRYAN, and KING, Circuit Judges.

KING Circuit Judge.

Holmes county entered into a contract with Burton Construction Company and W. F. Allen to build certain public roads. Said contract called for the giving of a bond for its faithful performance. The National Surety Company executed its bond guaranteeing such performance. The contract was partly performed. The Construction Company and Allen on December 24 1917, brought suit against the county averring that they had abandoned the contract because of certain breaches thereof by the county and seeking to recover damages, principally prospective profits.

Under certain peremptory instructions from the court the jury found a verdict for the plaintiffs. This court held that said instructions were erroneous, that no breach permitting the abandonment of the contract had occurred, that certain items claimed by plaintiffs were not proper, and remanded the case for a new trial. 267 F. 769.

Holmes county brought suit on the bond given by Burton Construction Company and Allen as principals and the National Surety Company as surety, in the chancery court of Holmes county, to recover on such bond because of the alleged failure of said Construction Company and said Allen, to perform said contract, to the damage of the county in a large amount which was alleged to constitute a breach of said bond. The suit was dismissed, by the county, as to the Construction Company and Allen, and thereafter proceeded against the National Surety Company as sole defendant, as permitted by a Mississippi statute. In said suit a decree pro confesso was taken, which was reversed by the Supreme Court of Mississippi for defective service on the National Surety Company and the case remanded to the chancery court. 120 Miss. 706, 83 So. 8. An answer was filed by the National Surety Company in the early part of 1920.

The case in said chancery court, being subject to trial at a term beginning May 17, 1920, Burton Construction Company, on April 27, 1920, filed a bill in the United States District Court for the Southern District of Mississippi, seeking to enjoin Holmes county from prosecuting said suit on said bond, on the ground that it involved the same controversy and subject-matter as was involved in the suit previously brought by said Construction Company and Allen against said county in said United States District Court.

The county answered said bill, moving in said answer to dismiss the same on several grounds, particularly insisting that the injunction sought would be in violation of Judicial Code, Sec. 265 (formerly Rev. St. Sec. 720 (Comp. St. Sec. 1242)), forbidding any court of the United States to grant an injunction to stay proceedings in the courts of a state, except where authorized by any law relating to proceedings in bankruptcy; also because the case sought to be enjoined is not between the same parties as that pending in said United States District Court; also because the bill sets forth no case entitling the complainant to the relief sought and there is no equity on the face of said bill.

On the hearing the court granted a preliminary injunction, with leave to the defendant Holmes county to take steps to make said National Surety Company a party defendant to the consolidated actions at law brought by Burton Construction Company and Allen in said United States District Court, to which action, granting such leave, the Burton Construction Company excepted and had its exceptions allowed. Holmes county prosecutes this appeal, assigning error in the granting of said preliminary injunction, and also in overruling said motion to dismiss said bill of complaint.

We think that the court should have denied said injunction and sustained the motion to dismiss said bill for want of equity. Even if the suit in the state and federal courts had been between the same parties, being purely an action in personam, involving, neither in its progress nor in the judgment sought, the control or disposition of any property, the pendency of the suit in the United States court would not, in the absence of special circumstances, furnish ground for an injunction of the state court suit. It has been held that a prior suit in a state or federal court in the same state furnishes no ground for a plea in abatement to a second suit in the court of the other jurisdiction. Stantion v. Embry, 93 U.S. 548, 23 L.Ed. 983; Gordon v. Gilfoil, 99 U.S. 168, 25 L.Ed. 383; Hunt v. N.Y. Cotton Exchange, 205 U.S. 322, 339, 27 Sup.Ct. 529, 51 L.Ed. 821.

The rule as to injunction from a state or federal court, forbidding the prosecution of suits in the other, is thus stated by the United States Supreme Court:

'The general rule is that state courts cannot enjoin proceedings in the courts of the United States, and this was held at a very early day, in reference to a judgment of the Circuit Court (McKim v. Voorhies, 7 Cranch, 279, 281); while, on the other hand, it was determined that the Circuit Court would not enjoin proceedings in a state court, and any attempt of that kind was forbidden by act of Congress (Diggs v. Wolcott, 4 Cranch, 179; Act of March 2, 1793, c. 22, Sec. 5, 1 Stat. 333, 335). ' Moran v. Sturges, 154 U.S. 256, 267, 14 Sup.Ct. 1019, 1022 (38 L.Ed. 981).

In a case where a bill in equity was filed in the United States Circuit Court to enjoin the progress of two suits at law in said court, on the ground that a suit between the same parties, involving the same subject-matter (i. e., the right to recover the proceeds of two policies of insurance), had previously been instituted and was pending in a court of New York, the bill was dismissed as stating no ground for injunction. The court said:

'The case in the New York Supreme Court, therefore, involved the same controversy as that exhibited in the two Maryland suits; and the complainant here and Whitridge are parties in each. Alike in the bill and in the action at law, it is a vital question whether the insurers are liable for the sums insured by the policies of January, 1872, and whether they are liable to Whitridge as assignee of Brune. * * * But the difficulty in the appellant's way is that, when this case was heard in the court below, the record of the New York case exhibited no final decree. * * * All that appeared, then, was that a bill in equity was pending in a foreign jurisdiction, when the appellee's suits at law were brought to enforce the payment of the policies to Mrs. Barry, rather than to Brune or his assignee, and that both the present complainant and the present defendant were parties to that bill.

'This, we think, was not sufficient to justify the injunction for which the appellant prayed. At law, the pendency of a former action between the same parties for the same cause is pleadable in abatement to a second action, because the latter is regarded as vexatious. But the former action must be in a domestic court; that is, in a court of the state in which the second action has been brought. Maule v. Murray, 7 T.R. 470; Buckner v. Finley, 2 Pet. 586; Browne & Seymour v. Joy, 9 Johns. (N.Y.) 221; Smith et al. v. Lathrop et al., 44 Pa.St. 326.

'The rule in equity is analogous to the rule

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