Martin v. JAMES B. BERRY SONS'CO., 3126.

• Decision Date: 23 May 1936
• Docket Number: No. 3126.,3126.
• Citation: 83 F.2d 857
• Parties: MARTIN et al. v. JAMES B. BERRY SONS' CO., Inc., et al.
• Court: U.S. Court of Appeals — First Circuit

83 F.2d 857 (1936)

MARTIN et al. v. JAMES B. BERRY SONS' CO., Inc., et al.

No. 3126.

Circuit Court of Appeals, First Circuit.

May 23, 1936.

Roger L. McCarthy, of Providence, R. I. (Ira Lloyd Letts, of Providence, R. I., on the brief), for appellants.

Arthur M. Allen, of Providence, R. I. (William A. Gunning and Noel M. Field, both of Providence, R. I., and J. V. Frampton, of Oil City, Pa., on the brief), for appellees.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

WILSON, Circuit Judge.

This appeal involves also three other appeals from decrees of the federal District Court for Rhode Island dismissing the bills of complaint of the four plaintiffs; and by agreement of the parties the four appeals are to be determined on the record in the suit of Manuel Luiz Martin; the allegations and prayers being the same in each suit.

The defendant company, hereinafter referred to as the Berry Company, is a Pennsylvania corporation, but was registered and doing business in the state of Rhode Island, and had been engaged in constructing on its premises in Tiverton in said state the foundation for a storage tank for oil, on which the Graver Tank & Manufacturing Company erected an 80,000-barrel storage tank.

Each of the plaintiffs is alleged to have been engaged in equipping the premises of the Berry Company with a pipe line to be used in connection with the storage tank, when the tank, having been filled with salt water from the nearby bay, collapsed and severely injured the plaintiffs.

The bills of complaint, originally brought in the superior court for Providence county in the state of Rhode Island, each alleged that the collapse of the tank was due to the negligence of the Berry Company; that the only property of the Berry Company within the state of Rhode Island consisted of indebtedness owed to it by the Pennsylvania Petroleum Products Company, a Rhode Island corporation, and "evidenced by notes, or trade acceptances, held by the Berry Company beyond the State of Rhode Island"; that on information and belief each plaintiff alleged that the Berry Company is about to transfer the negotiable instruments to compel the plaintiffs to resort to a foreign jurisdiction to obtain satisfaction of any judgments it might secure against the Berry Company in the state of Rhode Island.

The prayers of each bill are, in effect, that the Berry Company be restrained and enjoined from transferring its claim against the Pennsylvania Petroleum Products Company; that the Pennsylvania Petroleum Products Company be restrained from paying the Berry Company the said notes, or trade acceptances; that the assets of the Berry Company in the hands of the Pennsylvania Petroleum Products Company be declared subject to and subjected to any judgment which the plaintiffs may recover in this action at law against the Berry Company; and that the Pennsylvania Petroleum Products Company be ordered to pay to the plaintiffs out of such funds the amount of any judgment they may obtain in such action.

On application to the state court restraining orders were issued against the defendants on an ex parte hearing on October 2, 1935, upon the filing of the bills.

On motion of the Berry Company the four equity cases were removed from the state court to the federal District Court for the District of Rhode Island.

It appears from the record that on the same day as the bills of complaint were filed in the state court actions at law were begun in the state court by the plaintiffs against the Berry Company for negligence, and service was duly made on an agent of the Berry Company in the state of Rhode Island, which suits were removed to the district court for Rhode Island and are now pending in that court, but in which no trial or judgment has been had.

The amount the plaintiffs seek to recover in the four suits totals $75,000; the ad damnum in each case exceeding $3,000.

The Berry Company, within the time limited by statute, filed in each equity suit a motion to dismiss, which, under Federal Equity Rule 29 (28 U.S.C.A. following section 723), has the force and effect of a demurrer.

In substance, the motions to dismiss the equity suits were predicated on the following facts: (1) That it did not appear from the bills of complaint that any judgment had been obtained against the Berry Company by the plaintiffs, and that the plaintiffs had exhausted their legal remedies; (2) that the bills contained no allegation that the Berry Company is insolvent or had absconded, and had left the jurisdiction of the state so that it could not be served with process; (3) that it appeared in the bills that it was, in effect, an attempt to levy equitable attachment upon assets exempt from attachment under the Rhode Island statutes; (4) that it did not appear from the bills that any judgment obtained against the Berry Company in the law actions were uncollectible, unless the promissory notes, or trade acceptances, were made available to the plaintiffs, or that the Berry Company was about to make a conveyance of its assets in fraud of its creditors, or otherwise perpetrate a fraud. The motions to dismiss were granted after a full hearing and filing of briefs on February 7, 1936.

The appeal in each case is based on the following assignment of error, the first assignment as to jurisdiction of the district court being waived, viz.: Because the defendant Berry Company is a foreign corporation; that its only property or property rights within the jurisdiction of the court consisted of indebtedness owed to it by the Pennsylvania Petroleum Products Company and evidenced by negotiable promissory notes, or trade acceptances, which it averred were about to be transferred by the Berry Company for the purpose of removing them from the jurisdiction of the court and compel the plaintiffs to resort to a foreign judgment for satisfaction.

It may be noted in passing, however, though no point is made of it in argument and we do not decide the case on that ground, that there is an allegation in each complaint which may be inconsistent with its right to invoke the aid of a court of equity, viz.: That the plaintiffs were, when injured, lawfully on property owned by and under the control of the defendant situated in the town of Tiverton in the state of Rhode Island, which it does not appear was not subject to be levied on in satisfaction of any judgment obtained against it.

The complainants rely on the general equity powers of the federal courts to supply a remedy where the complainants have no plain, adequate remedy at law, and the rule that the adequate remedy at law, in order to deprive an equity court of jurisdiction, must be as complete, prompt, and efficient as that provided in equity. While these are general statements as to the jurisdiction of courts of equity, with the development of equity jurisprudence, the field between law and equity has come to be more definitely defined. There must first be a recognized ground of equity jurisdiction, though the method of affording relief is not confined to hard and fast rules.

This is not a creditor's bill, though it seeks to reach property not attachable at law. If it were, it must be alleged that the plaintiffs had exhausted their legal remedies by recovering judgment and alleging a return of an execution nulla bona, unless it is alleged that the defendant is insolvent or is a nonresident, or has absconded and service cannot be made on it. 15 C.J. 1388, § 16; Smith v. Ft. Scott Railroad Co., 99 U.S. 398, 401, 25 L.Ed. 437; National Tube Works Co. v. Ballou, 146 U.S. 517, 13 S.Ct. 165, 36 L.Ed. 1070; Scott v. Neely, 140 U.S. 106, 110, 11 S.Ct. 712, 35 L.Ed. 358; Blundon et al. v. Guy et al., 60 App.D.C. 318, 53 F.(2d) 930, 931; Webster v. Clark, 25 Me. 313, 314; Ginn v. Brown, 14 R.I. 524; First National Bank of Shreveport v. Randall, 20 R.I. 319, 38 A. 1055, 78 Am.St.Rep. 867.

The only grounds on which the plaintiffs rely in these unusual proceedings is that their tort actions are not an adequate, prompt, and efficient remedy, inasmuch as the indebtedness of the Pennsylvania Petroleum Products Company evidenced by negotiable promissory notes, or trade acceptances, is not attachable on legal process, and the plaintiffs allege that these promissory notes, or trade acceptances, are the only means of satisfying any judgment they may recover in their respective actions within the jurisdiction of this court, and that they are about to be transferred or negotiated, and as a result the plaintiffs may be compelled to resort to a foreign jurisdiction to obtain satisfaction of any judgment they may obtain at law.

It does not appear, however, that any judgment obtained against it could not be collected in the Pennsylvania courts in case it was not voluntarily satisfied; or that to be compelled to have recourse at law to secure satisfaction in Pennsylvania may not be equally as prompt and efficient as a resort to equity to sequester a debt due on promissory notes, or trade acceptances, to satisfy a judgment obtained at law...