Johnson v. Manhattan Ry. Co.

• Decision Date: 13 October 1932
• Citation: 1 F. Supp. 809
• Parties: JOHNSON v. MANHATTAN RY. CO. et al.
• Court: U.S. District Court — Southern District of New York

1 F. Supp. 809

JOHNSON v. MANHATTAN RY. CO. et al.^*

District Court, S. D. New York.

October 13, 1932.

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Charles Franklin, of New York City (Herbert Goldmark and Leonard H. Goldenson, both of New York City, on the brief), for complainant.

Louis Boehm, of New York City, for intervener Lillian Boehm.

Lloyd Paul Stryker, of New York City, for Holders of Ten-Year 6 Per Cent. Gold Notes Committee of Interborough Rapid Transit Co.

Breed, Abbott & Morgan, of New York City (Charles H. Tuttle, Winfred K. Petigrew, and Paris S. Russell, all of New York City, of counsel), for defendant American Brake Shoe & Foundry Co.

Hughes, Schurman & Dwight, of New York City (Charles E. Hughes, Jr., and Allen S. Hubbard, both of New York City, of counsel), for defendant William Roberts, receiver of Manhattan Ry. Co.

Chadbourne, Stanchfield & Levy, of New York City (William D. Guthrie, William Wallace, and J. Arthur Leve, all of New York City, of counsel), for defendants Dowling and Murray, receivers of Interborough Rapid Transit Co.

James L. Quackenbush, of New York City, for defendant Interborough Rapid Transit Co.

Arthur J. W. Hilly, Corp. Counsel, of New York City (F. E. Carstarphen, Edgar J. Kohler, and Harry Hertzoff, all of New York City, of counsel), for defendant New York City.

Cotton, Franklin, Wright & Gordon, of New York City (Clifton Murphy and B. C. Wright, both of New York City, of counsel), for Protective Committee of Manhattan Consolidated 4's.

Lawrence Berenson, of New York City, for complainant in action entitled Barber v. Manhattan Elevated R. R. Co., the Interborough Rapid Transit Co. and receivers of Interborough Rapid Transit Co.

Dills, Muecke & Schelker, of New York City (Duane R. Dills, of New York City, of counsel), for defendant Manhattan Ry. Co.

Elon S. Hobbs, of New York City, for independent security holders who have not filed their securities with Protective Committee, but have filed petition.

Marshall & Wehle, of New York City (Louis B. Wehle, of New York City, of counsel), for Protective Committee for Manhattan Ry. Co. 7 Per Cent. Guaranteed Stock.

Davis, Polk, Wardwell, Gardiner & Reed, of New York City (Edwin S. S. Sunderland, of New York City, of counsel), for 7 Per Cent. Noteholders' Committee and 5 Per Cent. Bondholders' Committee, both committees of Interborough Rapid Transit Co. securities.

John J. Curtin, of New York City (George H. Stover, of New York City, of counsel), for Transit Commission.

Davies, Auerbach & Cornell, of New York City (Harold C. McCollom, of New York City, of counsel), for Central Hanover Bank & Trust Co.

The following members of the bar appeared on the argument of these motions and submitted oral arguments or briefs therein:

Charles Franklin and Louis Boehm, both of New York City, on behalf of the complainant in equity 71 — 153, and Lillian Boehm, intervener.

William D. Guthrie and William Wallace, both of New York City, for receivers of Interborough Rapid Transit Co.

Charles E. Hughes, Jr., and Allen S. Hubbard, both of New York City, for William Roberts, receiver of the Manhattan Ry. Co.

Charles H. Tuttle, Winfred K. Petigrue, and Paris S. Russell, all of New York City, for American Brake Shoe & Foundry Co., complainant in equity 70 — 364.

Lloyd P. Stryker, of New York City, for Committee of Noteholders of Ten-Year 6 Per Cent. Gold Notes of Interborough Rapid Transit Co.

Elon S. Hobbs, of New York City, pro se and representing independent holders of securities.

Edwin S. S. Sunderland, of New York City, for 7 Per Cent. Noteholders' Committee and 5 Per Cent. Bondholders' Securities.

Harold C. McCollom, of New York City, for Central Hanover Bank & Trust Co.

WOOLSEY, District Judge.

These motions are granted to the extent here indicated:

A (1) The counsel for the moving parties may present to me for signature an order providing for the consolidation of the cause of American Brake Shoe & Foundry Company v. Interborough Rapid Transit Company, Manhattan Railway Company, Intervener, equity No. 70 — 364, with this cause of Johnson v. Manhattan Railway Company, equity No. 71 — 153, under the following short caption: "In the matter of the Interborough-Manhattan Receivership Proceedings."

(2) After the order of consolidation thus granted is signed and filed, counsel for the moving parties may present to me for signature a further order providing that all the orders made by Judge Manton in this court in the cause of American Brake Shoe & Foundry Co. v. Interborough Rapid Transit Co. (Manhattan Ry., Intervenor); equity No. 70 — 364, dealing both with the Interborough Rapid Transit Company and the Manhattan Railway Company, be vacated and set aside as wholly void and of no juridical effect.

The order which I am asked to sign must, however, contain a provision that its operation is suspended for a period of twenty days to enable the defendants herein to appeal from this decision if they are so advised.

B (1) I deny the motions, without prejudice, in so far as they request the appointment of new receivers at the present time, but, if no appeal is taken within twenty days, or if, after the decision in such appeal as may be taken within that time, my decision is affirmed, a new application for such appointment may be made in pursuance of General Rule 11-a of this court to the judge at that time assigned to hold the bankruptcy and motion part of the business of this court.

(2) I deny, for want of jurisdiction, these motions in so far as they request me to vacate the orders made and signed on August 25, 1932, by Judge Manton as senior Circuit Judge, because I can only deal with the effect of these orders in this court. This I have hereinafter done.

(3) I have already denied the application of the petitioners to have these motions heard by the eight judges of the District Court sitting en banc.

I. This proceeding involves important questions of federal court administration which are, I believe, of first impression. The validity and effect of orders of designation and division of business made by Hon. Martin T. Manton, as the senior Circuit Judge of the Circuit Court of Appeals for this circuit, are challenged by the plaintiffs.

It may be appropriate, although it should be unnecessary, to remark in limine that the situation out of which this challenge arises was not created or contributed to in any way by the United States District Court for the Southern District of New York or by any judge thereof.

II. As a preface to the statement of the facts, I think it would be helpful to express my views as to the relation between the Circuit Court of Appeals and the District Court under the Judicial Code, now contained in title 28 of the United States Code (28 USCA), for that will give a background against which the facts must be seen and the appropriateness of the relief sought by the complainant determined.

Section 18 of the Judicial Code (title 28, United States Code, § 22 28 USCA § 22), provides under the heading, "Circuit Judge Designated to Hold District Court — Powers," inter alia: "The Chief Justice of the United States, or the circuit justice of any judicial circuit, or the senior circuit judge thereof, may, if the public interest requires, designate and assign any circuit judge of a judicial circuit to hold a district court within such circuit."

Section 118 of the Judicial Code (title 28, United States Code, § 213 28 USCA § 213) deals with Circuit Judges, and, after prescribing their number in each circuit and their appellate duties, provides, inter alia: "Nothing in this section shall be construed to prevent any circuit judge holding district court or otherwise, as provided by other sections of the Judicial Code."

Section 120 of the Judicial Code (title 28, United States Code, § 216 28 USCA § 216) deals with the judges who may sit in the Circuit Court of Appeals, and provides that the District Judges may sit in that court when enough appellate judges are not available.

In addition to the provisions cited, there are also the provisions contained in title 28, United States Code, § 47 (28 USCA § 47), and in title 28, United States Code, § 380 (28 USCA § 380), involving, respectively, suits challenging orders of the Interstate Commerce Commission and suits in which it is alleged that a state statute is unconstitutional, and providing for the convening of a three-judge court, containing at least one Circuit Judge, to hear such causes.

It is observable, however, by reading the provisions of title 28, United States Code, "Judicial Code and Judiciary," that, although by the provisions above mentioned the organization of the federal courts is made very plastic, so far as the use of their judicial personnel is concerned, the District Courts and the Circuit Courts of Appeals are distinct courts, that the former are the only instance courts, and that the latter have appellate jurisdiction only.

Each court has, of course, its own intramural administrative problems arising in connection with the arrangement and dispatch of the business which comes before it. When the District Court is functioning within its lawful ambit, these problems constitute what I may perhaps properly call its domestic economy, and are solely its own concern.

Control over its business is an inherent right of any body of judges which constitutes a court. If those judges are going to function at their best, they must, within the law, be masters in their own house, for the wisest outsider, it may safely be assumed, cannot possibly be so aware of the problems which face them as are the judges who are carrying the heavy responsibility of doing the court's business from day to day.

This obvious fact is explicitly recognized by title 28, United States Code, § 731 (28 USCA § 731), which gives the District Courts power to make rules of practice, and implicitly recognized also by section 23 of the Judicial Code, title 28, United States Code, § 27 (28 USCA § 27) which...