Mercantile Trust & Deposit Co. of Baltimore v. Roanoke & S. Ry. Co.

• Citation: 109 F. 3
• Parties: MERCANTILE TRUST & DEPOSIT CO. OF BALTIMORE v. ROANOKE & S. RY. CO. et al.
• Decision Date: 12 February 1901
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

109 F. 3

MERCANTILE TRUST & DEPOSIT CO. OF BALTIMORE v. ROANOKE & S. RY. CO. et al.

United States Circuit Court, W.D. Virginia.

February 12, 1901

Geo. E Sipe, Jos. I. Doran, and Watts, Robertson & Robertson, for petitioner.

S Hamilton Graves, Thos. W. Miller, and John M. Hart, for Castle Rock Min. Co. and Thos. Lewis, receiver.

PAUL District Judge.

This is an application of the Norfolk & Western Railway Company hereinafter called the 'Railway Company,' by petition for injunction, to restrain the further prosectuion of an action at law instituted in the circuit court of Roanoke county, Va., wherein Thomas Lewis, receiver of the Castle Rock Mining Company, hereinafter called the 'Mining Company,' a corporation organized under the laws of Virginia, is plaintiff and the railway company is defendant. The petitioner grounds its prayer for this relief on the contention that the cause of action asserted in the state court is the claim of the mining company that its alleged rights under a certain contract have been violated in the removal from its premises by the railway company of certain chattels embraced in the property, franchises, and assets administered in this cause, and acquired by the petitioner under conveyance directed by this court, with the consequent protection against adverse claims provided in the deed of conveyance and the decree directing the same, wherein jurisdiction was retained by this court for the determination of such adverse claims, and upon the further ground that the plaintiff in the action at law has, by his petition in this cause, concurrently pending in the circuit court of the United States for the Eastern district of Virginia acknowledged and invoked the jurisdiction of the federal court in this cause to determine the rights of the railway company as to the property in controversy, and therefore that such jurisdiction of this court cannot be ousted, but should be protected and enforced by the usual injunctive process. To this petition Thomas Lewis, receiver of the mining company, has filed a demurrer; and the mining company and Thomas Lewis, receiver, have also filed their answer. Depositions have been taken and numerous exhibits filed.

It appears that the mining company in order to obtain better facilities for the shipment of ore from its premises, entered into a contract in writing on the 25th of April, 1893, with the Roanoke & Southern Railway Company and the Norfolk & Western Railroad Company for the construction of a branch railroad from a point on the main line of the Roanoke & Southern, the property and franchises of which were then leased to the Norfolk & Western Railroad Company, to the mines of the mining company, a distance of about three miles. This contract provided, inter alia, that the mining company should forthwith convey to the Roanoke & Southern Railway Company an unincumbered title to the right of way, and thereafter, with diligence, construct thereon the roadbed, including the grading, trestles, bridges, and culverts, preparatory for the superstructure. The latter, including rails, ties, switches, frogs, etc., was to be furnished and erected by the Roanoke & Southern Railway Company, called the 'lessor company,' with funds furnished by the Norfolk & Western Railroad Company, called the 'lessee company.' The branch, when completed, was to be operated by the lessee company by whom the cost of constructing the roadbed was to be refunded to the mining company, by the allowance to the latter of a rebate of 10 cents per ton on the freight originating on the branch line, and carried to or beyond the lines of the lessee company; and if the mining company, for a period of six months, continuously abandoned operations along the said branch, or failed to furnish business sufficient to defray the expenses of maintaining and operating the same, then the lessee company might after 90 days' notice and further default of the mining company, discontinue the operation of the branch, and remove the superstructure therefrom. The branch line was built and operated from September, 1893 to May, 1896, after which latter date no ore was mined or shipped. The conveyance of right of way required by the contract was never made. The property and franchises of the lessor company and of the lessee company having passed into the hands of receivers in these foreclosure proceedings,-- the former in February, 1895, and the latter in May, 1896-- the receivers of the lessee company continued in possession of the Castle Rock branch and operated the same till the cessation of shipments by the mining company. In November, 1896, the Norfolk & Western Railway Company acquired the property and franchises of the lessor company, which had been sold and conveyed under decrees in this cause; the same purchaser having previously acquired, through similar sale and foreclosure, the property of the lessee company. These proceedings for foreclosure were prosecuted contemporaneously in the Eastern and Western judicial districts of Virginia, apparently because of the situs of the mortgaged premises in both districts. In the cause thus concurrently pending in the circuit court of the United States for the Eastern district of Virginia, the mining company, on May 21, 1896, filed its petition of intervention, praying to be made a party complainant therein, and named as defendants the Mercantile Trust & Safe Deposit Company, trustee in one of the mortgages, the Norfolk & Western Railroad Company, and the Roanoke & Southern Railway Company, defendants. The contract of April 25, 1893, was set forth and relied on in support of certain demands, including the claim for balance due on account of cost of grading, etc., the roadbed of the Castle Rock branch. After process regularly awarded, the answer of F. J. Kimball and Henry Fink, receivers of the lessor and lessee companies, was filed on August 29, 1896. In June, 1896, and for a considerable period thereafter, negotiations between the mining company and a committee representing the Norfolk & Western Railway Company, then in process of organization, for the purchase of the foreclosed properties, were on foot, with a view to the further operation of the Castle Rock branch. And a proposition of the committee providing for a recognition of the contract of April, 1893, payment of the balance due the mining company on construction account, upon a modified basis of rebate, or percentage per ton of freight, and an immediate conveyance of an unincumbered right of way, appears to have been acceptable to the mining company. But the last stipulation as to right of way prevented this plan of settlement. It developed that the right to the right of way was incumbered by sundry liens, which, together with others afterwards accruing, rendered impossible a compliance with the covenants for clear title on the part of the mining company, against which latter company proceedings were instituted in chancery in the state court, and a decree entered for the sale of its property to satisfy certain of these liens. The negotiations thus rendered abortive were ultimately declared off; and the railway company, with the alleged intention of avoiding the complication of its property with the possible demands of a purchaser at a judicial sale of the Castle Rock lands, in January, 1897, began the removal of the rails, ties and other parts of the track superstructure from the Castle Rock branch, possession of which it then held, and had continued to hold after acceptance of the Roanoke & Southern property from the receivers of this court. Thomas Lewis was afterwards appointed receiver of the mining company, and subsequently instituted the action at law complained of. This outline of the facts brings us to the consideration of the questions now submitted to the court.

Sundry objections are raised by the demurrer, the first of which relates to the inhibition of section 720, Rev. St. U.S., against the granting of injunctions by federal courts to restrain proceedings in a state court. Repeated decisions have firmly established the principle that, where the injunctive process of a federal court is invoked to enforce its own judgment or protect its own jurisdiction, section 720 has no application. French v. Hay, 22 Wall. 250, 22 L.Ed. 857, and Dietzsch v. Huidekoper, 103 U.S. 494, 26 L.Ed. 497. In Fisk v. Railroad Co., 10 Blatchf. 520, Fed. Cas. No. 4,830, Judge Blatchford said:

'The provision of section 5 of the act of March 2, 1793, that a writ of injunction shall not be granted to stay proceedings in any court of a state, has never been held to have, and cannot properly be construed to have, any application, except to proceedings commenced in a state court before the proceedings are commenced in the federal court; otherwise, after suit brought in a federal court, a party defendant could, by resorting to a suit in a state court, defeat in many ways the effective jurisdiction and action of the federal court after it had obtained full jurisdiction of person and subject-matter. Moreover the provision of the act of 1793 (now section 720, Rev. St.) must be construed in connection with the provision of section 14 of the act of September 24, 1789, that the federal courts shall have power to issue all writs which may be necessary for the exercise of their respective jurisdictions. 1 Stat. 81, 82.'

Upon a former consideration of this question this court said (Fidelity Ins., Trust & Safe-Deposit Co. v. Norfolk & W. Ry. Co. (C.C.) 88 F. 820):

'In enforcing the provisions of this decree, and protecting its own jurisdiction, the court does not, as contended in the second substantial ground of demurrer, violate the provision of section 720 of the Revised Statutes of the United States, which inhibits the granting of an

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