Johnson v. Manhattan Ry Co Boehm v. Same

• Decision Date: 29 May 1933
• Docket Number: Nos. 711 and 721,s. 711 and 721
• Citation: 53 S.Ct. 721,289 U.S. 479,77 L.Ed. 1331
• Parties: JOHNSON v. MANHATTAN RY. CO. et al. BOEHM v. SAME
• Court: U.S. Supreme Court

289 U.S. 479

53 S.Ct. 721

77 L.Ed. 1331

JOHNSON

v MANHATTAN RY. CO. et al.

BOEHM

v. SAME.

Nos. 711 and 721.

Argued and Submitted April 18, 19, 1933.

Decided May 29, 1933.

[Syllabus from pages 479-481 intentionally omitted] Mr. Charles Franklin, of New York City (Messrs. Alfred C. B. McNevin, Herbert Goldmark, and Leonard H. Goldenson, all of New York City, on the brief), for petitioner Johnson.

Mr. Louis Boehm, of New York City (Messrs. Harry Shulman, of New Haven, Conn., and Samuel Zeiger, Harry M. Edelstein, and Elliot S. Benedict, all of New York City, on the brief), for petitioner Boehm.

Mr. Nathan L. Miller, of New York City (Messrs. William W. Miller, Carl M. Owen, and Harold J. Gallagher, all of New York City, on the brief), for respondents Victor J. Dowling and others.

Mr. Harold McCollom, of New York City (Mr. Edward Cornell, of New York City, on the brief), for respondent Central Hanover Bank & Trust Co.

Mr. Cloyd Laporte, of New York City, for respondent Committee for the Protection of the Holders of Ten-Year 6 Per Cent. Gold Notes of Interborough Rapid Transit Co.

Mr. John W. Davis, of New York City (Mr. Edwin S. S. Sunderland, of New York City, on the brief), for respondents Committee Acting for Interborough Rapid Transit Company 7 Per Cent. Secured Notes and others.

Messrs. Charles E. Hughes, Jr., and Allan S. Hubbard, both of New York City, for respondent William Roberts.

Mr. Paxton Blair, of New York City (Messrs. Boykin C. Wright and Clifton Murphy, both of New York City, on the brief), for respondents Van S. Merle-Smith and others.

Messrs. James L. Quackenbush and Louis S. Carpenter, both of New York City (Mr. J. Osgood Nichols, of New York City, on the brief), for respondent Interborough Rapid Transit Co.

Messrs. Charles H. Tuttle and Paris S. Russell, both of New York City (Messrs. Breed, Abbott & Morgan and W. K. Petigrue, all of New York City, on the brief), for respondent American Brake & Shoe Foundry Co.

Messrs. Arthur J. W. Hilly, Edgar J. Kohler and Frank E. Carstarphen, all of New York City, filed brief for the City of New York as amicus curiae.

[Argument of Counsel from page 482 intentionally omitted] Mr. Justice VAN DEVANTER delivered the opinion of the Court.

These cases exhibit an acute controversy between the Senior Circuit Judge of the Second Circuit and the District Judges of the Southern District of New York respecting the authority of a judge specially assigned to that district—particularly the Senior Circuit Judge when so assigned—to entertain an application for the appointment of receivers in a suit in equity.

Among the rules of the District Court for that district was one whereby a particular trust company was designated as a standing receiver in bankruptcy, and effect was given to that rule in all bankruptcy proceedings. There was no such rule respecting receivers in suits in equity, and the District Judges all regarded themselves as free in appointing such receivers to select any individual or trust company deemed competent and suitable for the particular task. But not infrequently they selected as an equity receiver the trust company which was designated by rule as a standing receiver in bankruptcy proceedings. The nature and importance of the equity receiverships for which a trust company was selected are not clearly disclosed in this record, but it is reasonably apparent that in no instance was the receivership at all comparable in scope or importance with the railroad receivership with which the present litigation is concerned.

In 1930, the Senior Circuit Judge, acting under 28 U.S.C. § 22 (28 USCA § 22), and reciting that the public interest required it, assigned himself to hold at any time a session or sessions of the District Court for that district, for the purpose of trying causes and entertaining and disposing of any matter which might come before him.

In June, 1932, at the suggestion of counsel in an intended suit in equity for the appointment of receivers for the Fox Theatres Corporation, the Senior Circuit Judge sought informally to persuade one or more of the District Judges that a trust company ought not to be selected as receiver, but failed to secure an acceptance of his view. Thereupon, acting under his assignment of 1930, he entertained the application for a receiver and appointed individual receivers.

This action of the Circuit Judge was followed a few days later by the adoption and promulgation by the District Judges of two new rules, known as 1-a and 11-a, effective July 1, 1932, and pparently designed to limit or restrict the action of assigned judges in that district. These rules will be set forth later on.

August 25, 1932, counsel representing the parties in an intended suit in equity by the American Brake Shoe & Foundry Company, against the Interborough Rapid Transit Company, informed the Senior Circuit Judge that an application for the appointment of receivers would be made in that suit, and laid before him an affidavit, entitled therein, alleging generally that a trust company or other corporation would not be a suitable receiver, and particularly that the defendant company's complicated and involved daily operations, its enormous staff of operating officials and employees, its contracts and relations with the city of New York, and the use of its facilities by the public, required that the receiver or receivers be a competent individual or individuals who could give constant and undivided attention to the matter. Thereupon the Senior Circuit Judge, conceiving that a District Judge might select a corporate receiver and that this would be unwise and should be prevented,¹ concluded to assign, and did assign, himself to hold a District Court for the Southern District, 'particularly to hear and determine all applications and proceedings' in the intended suit for a period beginning that day and continuing until the suit came to an end. This assignment, like that of 1930, recited that it was made under 28 U.S.C. § 22 (28 USCA § 22), and that the public interest required it.

The statute referred to in the two assignments provides:

Sec. 22. '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. * * *

'During the period of service of any judge designated and assigned under this chapter, he shall have all the powers, and rights, and perform all the duties, of a judge of the district, * * * to which he has been assigned (excepting the power of appointment to a statutory position or of permanent designation of newspaper or depository of funds).'

The new rules adopted by the District Judges declare:

'1-a. Any judge designated to sit in the District Court for the Southern District of New York, shall do such work only as may be assigned to him by the senior district judge.'

'11-a. All applications for the appointment of receivers in equity causes, in bankruptcy causes and any other causes (except a receiver in bankruptcy may be appointed by a referee as provided in the Bankruptcy Rules), shall be made to the judge assigned (meaning assigned by the District Judges in their division of business) to hold the Bankruptcy and Motion Part of the business of the court and to no other judge.'

Immediately after making the assignment last mentioned, the Senior Circuit Judge turned to 28 U.S.C. § 27 (28 USCA § 27), which declares:

'In districts having more than one district judge, the judges may agree upon the division of business and assign- ment of cases for trial in said district; but in case they do not so agree, the senior circuit judge of the circuit in which the district lies, shall make all necessary orders for the division of business and the assignment of cases for trial in said district.'

And he then made and signed the following order:

'And whereas, Martin T. Manton, a Circuit Judge of the Second Judicial Circuit of the United States designated and assigned to hold a District Court in the Southern District of New York in said Circuit, and acting as District Judge for the Southern District of New York in this Second Judicial Circuit, does not agree upon the division of business and assignment of cases for trial in the Southern District of New York, as provided in and pursuant to th rules of court for the Southern District of New York, heretofore adopted by the then United States District Judges for the Southern District of New York; it is hereby

'Ordered, adjudged and decreed that, for a period of thirty days beginning with this day, all applications for the appointment of receivers in equity causes in the Southern District of New York may be made not only to the district judge designated to hear such application pursuant to Rule 11-a of the General Rules of the District Court for the Southern District of New York, but also to Martin T. Manton, Circuit Judge designated to act as District Judge to hold a District Court for the Southern District of New York.'

That order was filed and entered in the District Court, and on August 26 the American Brake Shoe & Foundry Company filed therein its bill of complaint against the Interborough Rapid Transit Company, together with the affidavit before mentioned. The bill disclosed that the plaintiff was a simple contract creditor, suing on its own behalf and on behalf of all other creditors who might choose to join in the suit, and that the defendant was en- gaged as a public carrier in operating an extensive system of transportation within the city of New York and its environs; set forth with much detail that the defendant was in greatly embarrassed financial condition, had made default in the payment of taxes and other claims, and could not avoid making default in the payment of installments of interest and principal about to fall due upon bonds and other obligations...