In re Chicago, R. I. & P. Ry. Co

• Decision Date: 28 February 1921
• Docket Number: No. 24,24
• Citation: 65 L.Ed. 631,255 U.S. 273,41 S.Ct. 288
• Parties: In re CHICAGO, R. I. & P. RY. CO
• Court: U.S. Supreme Court

255 U.S. 273

41 S.Ct. 288

65 L.Ed. 631

In re CHICAGO, R. I. & P. RY. CO.

No. 24.

Argued Dec. 13, 1920.

Decided Feb. 28, 1921.

Messrs. Lawrence Maxwell and William L. Day, both of Cleveland, Ohio, for petitioner.

Messrs. George D. Welles, of Toledo, Ohio, and Thurlow M. Gordon, of New York City, for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

The Chicago, Rock Island & Pacific Railway Company, commonly called the Rock Island, filed in this court a petition in which it alleged that the District Court of the United States for the Northern District of Ohio, Western Division, was undertaking to proceed against it personally in a suit therein pending; that the Rock Island had not voluntarily become a party to the suit, had not been served with process, and could not, under section 51 of the Judicial Code (Comp. St. § 1033), be made a party without its consent, since it was organized under the laws of Illinois and Iowa, and was not a citizen or resident of Ohio; and it prayed for a writ of prohibition, or in the alternative a writ of mandamus, to prevent the court from proceeding further against it. The suit in which it is sought to proceed personally against the Rock Island is one brought by an Indiana stockholder of the Toledo, St. Louis & Western Railroad Company, an Ohio corporation, for the appointment of a receiver for that corporation. The particular proceeding by which the personal liability is asserted is a cross-bill which was filed by the Toledo Company against the Rock Island after the appointment of the receiver, and after the Rock Island had appeared before a special master for the purpose of protecting its interests in an issue of the Toledo Company's its interests in an issue of the Toledo Company's case is now before us on the petition and return. The main questions argued here were whether upon the facts there stated the Rock Island had become a party to the suit and subjected itself generally to the jurisdiction of the court; and, if it had not, whether the case is one which entitles the petitioner to either of the extraordinary remedies applied for.

There is a well-settled rule by which this court is guided upon applications for a writ of prohibition to prevent a lower court from wrongfully assuming jurisdiction of a party, of a cause, or of some collateral matter arising therein. If the lower court is clearly without jurisdiction, the writ will ordinarily be granted to one who at the outset objected to the jurisdiction, has preserved his rights by appropriate procedure and has no other remedy. Ex parte Rice, 155 U. S. 396, 15 Sup. Ct. 149, 39 L. Ed. 198. If, however, the jurisdiction of the lower court is doubtful (In re Muir, 254 U. S. 522, 41 Sup. Ct. 185, 65 L. Ed. ——, decided by this court January 17, 1921), or if the jurisdiction depends upon a finding of fact made upon evidence which is not in the record (In re Cooper, 143 U. S. 472, 506, 509, 12 Sup. Ct. 453, 36 L. Ed. 232, or if the complaining party has an adequate remedy by appeal or otherwise (Ex parte Tiffany, 252 U. S 32, 37, 40 Sup. Ct. 239, 64 L. Ed. 443; Ex parte Harding, 219 U. S. 363, 31 Sup. Ct. 324, 55 L. Ed. 252, 37 L. R. A. [N. S.] 392), the writ will ordinarily be denied. Tested by this rule, the case presented by the petition and the return does not entitle the Rock Island to this extraordinary remedy.

The original bill filed against the Toledo Company in the Northern District of Ohio, Western Division, alleged, among other things, that it had defaulted on an issue of $11,527,000 collateral trust gold bonds, secured by stock of the Chicago & Alton Railroad Company held by the Central Trust Company of New York, as trustee for the bondholders. These bonds were divided into two classes having somewhat different rights and interests. A single bondholders' committee was formed to protect both classes of bonds. Of the A bonds $6,480,000 were outstanding, and of these $5,248,000 were deposited with the committee,—$400,000 of them by the Rock Island. Of the B bonds $5,047,000 were outstanding, all of which were deposited with the committee by the Rock Island. The special master was directed to ascertain and report the amount, character, lien and priority of all claims, and creditors were notified to present before him their respective claims duly verified, or to file bills of intervention. The bondholders' committee then filed a petition, The bondholders' committee then filed a petition, collusive, and, in the alternative, that judgment be rendered for the committee in the amount of the face value of the bonds held by it, aggregating $10,295,000 and accrued interest. To that petition an answer in the nature of a cross-bill was filed by the plaintiff, who prayed that the committee's petition be held to be an intervention, that the receiver be directed to defend against the bonds held by the committee, and that these bonds be ordered surrendered if found to be invalid. By leave of court, the committee withdrew its petition, and sought its relief by a dependent bill. An order was thereupon entered, making the committee a party defendant to the original bill, with leave to answer and file a cross-bill. This it did; and the Central Trust Company also filed a cross-bill to foreclose the lien on the Chicago & Alton stock held as security for the collateral trust bonds. An order was then made referring the case, on the issues raised by the several pleadings, to the special master to take testimony and report.

At the beginning of the taking of testimony before the special master the appearances of counsel were formally noted by the master, among others, as follows:

'Lawrence Maxwell, Esq., and J. P. Cotton, Esq., appearing for the bondholders' committee, Mr. Maxwell appearing to represent the interest of the Rock Island Company, and Mr. Cotton...