Riverdale Cotton Mills v. Alabama Georgia Manufacturing Company

• Citation: 198 U.S. 188,49 L.Ed. 1008,25 S.Ct. 629
• Decision Date: 08 May 1905
• Docket Number: No. 194,194
• Parties: RIVERDALE COTTON MILLS, Petitioner , v. ALABAMA & GEORGIA MANUFACTURING COMPANY and Huguley Manufacturing Company
• Court: United States Supreme Court

198 U.S. 188

25 S.Ct. 629

49 L.Ed. 1008

RIVERDALE COTTON MILLS, Petitioner,

v ALABAMA & GEORGIA MANUFACTURING COMPANY and Huguley Manufacturing Company.

No. 194.

Argued April 5, 6, 1905.

Decided May 8, 1905.

On February 7, 1866, an act passed the Alabama legislature incorporating five persons named, their associates and successors, as 'The Alabama & Georgia Manufacturing Company.' On March 21, 1866, the Georgia legislature incorporated the same individuals under the same name, 'The Alabama & Georgia Manufacturing Company.' The purposes of the two corporations were identical. Among others, the use of the water power of the Chattahoochee river, the boundary line between Alabama and Georgia, was contemplated, and the Georgia act specifically authorized the corporation 'to carry on any of the business and manufactures, or any branch or branches of the same, in this state, that said charter authorizes them to engage in or carry on in the state of Alabama.' On January 2, 1884, the Alabama & Georgia Manufacturing Company executed a trust deed, conveying property, situate partly in Georgia and partly in Alabama, but practically only a single plant, to J. J. Robinson, W. C. Yancey, and W. T. Huguley, as trustees, to secure the payment of sixty-five thousand dollars of the mortgage bonds. There is nothing in the trust deed to indicate whether it was executed by the Alabama corporation or the Georgia corporation, except it be the mention of West Point, Georgia, as the location of the company's office.

On February 28, 1890, the Huguley Manufacturing Company was incorporated under the laws of the state of Alabama, and subsequently acquired by purchase all the property included within the trust deed. Default having been made in the payment of interest on the bonds, Robinson, one of the trustees, and a citizen of Alabama, on January 21, 1891, filed a bill of foreclosure in the circuit court of the United States for the northern district of Georgia against the Alabama & Georgia Manufacturing Company, the Huguley Manufacturing Company, each of which was alleged to have been created under the laws of the state of Georgia, and a resident and citizen of that state, and against W. T. Huguley, also averred to be a citizen of the state of Georgia, and all three residing within the northern district of Georgia. In the bill the plaintiff alleged that Yancey, one of the trustees, was dead; that Huguley, the other trustee, was interested adversely to the bondholders, and that plaintiff was, therefore, the only one authorized to bring the suit. A vast amount of litigation concerning the property has followed the commencement of this foreclosure suit, as partially appears from the following references: Robinson v. Alabama & G. Mfg. Co. (1891) 48 Fed. 12, (1892) 51 Fed. 268, (1893) 6 C. C. A. 79, 13 U. S. App. 359, 56 Fed. 690, (1894) 67 Fed. 189, (1896) 19 C. C. A. 152, 30 U. S. App. 683, 72 Fed. 708, (1898) 89 Fed. 218; Huguley Mfg. Co. v. Galeton Cotton Mills (1899) 36 C. C. A. 236, 94 Fed. 269, (1899) 175 U. S. 726, 44 L. ed. 339, 20 Sup. Ct. Rep. 1022; Riverdale Cotton Mills v. Alabama & G. Mfg. Co. (1901) 111 Fed. 431; Huguley Mfg. Co. v. Galeton Cotton Mills (1902) 184 U. S. 290, 46 L. ed. 546, 22 Sup. Ct. Rep. 452; Re Huguley Mfg. Co. (1902) 184 U. S. 297, 46 L. ed. 549, 22 Sup. Ct. Rep. 455; Alabama & G. Mfg. Co. v. Riverdale Cotton Mills (1904) 62 C. C. A. 295, 127 Fed. 497.

On May 2, 1901, the Alabama & Georgia Manufacturing Company of Alabama and the Huguley Manufacturing Com- pany of the same state filed their bill in the chancery court of the first district of the northeastern division of the state of Alabama, in which they alleged that the plaintiff the Alabama & Georgia Manufacturing Company was at one time the owner of the property included within the trust deed hereinbefore referred to; that it executed that deed to the parties named as trustees; that a foreclosure suit was commenced by one of the trustees, J. J. Robinson, in the United States circuit court for the northern district of Georgia; that the parties named as defendants therein were the Alabama & Georgia Manufacturing Company, alleged to be a corporation organized under the laws of Georgia, the said Huguley Manufacturing Company, and W. T. Huguley. The bill set out with some detail the proceedings in the circuit court of Georgia, but alleged that they were null and void so far as concerns the title of the plaintiffs in that suit. The bill sought to redeem the property described from the lien of the bonds and trust deed. On June 10, 1901, this petitioner, a corporation which had acquired all the title to the property described in the trust deed, passing under the foreclosure proceedings hereinbefore referred to, filed in the circuit court for the northern district of Georgia an ancillary bill to restrain the further prosecution of the suit in the state court in Alabama. A temporary injunction was issued, which, on final hearing, was made perpetual. Thereupon defendants took an appeal to the circuit court of appeals for the fifth circuit, which reversed the decree of the circuit court, and ordered that the case be remanded to that court with instructions to dismiss the bill. The case was then brought here on certiorari.

Messrs. Louis D. Brandeis, Thomas H. Watts, and William H. Dunbar for petitioner.

Messrs.Marion Erwin,John T. Morgan, John M. Chilton, William S. Thorington, and Robert Porter Shick, for respondents.

Mr. Justice Brewer delivered the opinion of the court:

For over ten years from January 21, 1891, the date of the filing of the original bill, litigation was carried on in the circuit court of the United States for the northern district of Georgia, and in appellate courts, in the foreclosure of a trust deed executed by the Alabama & Georgia Manufacturing Company. In the course of that litigation decrees were entered and reversed, sales were made and set aside, possession of property was transferred and retransferred, accountings had as to the proceeds of property in possession, and when it seemed that at last litigation was at an end, the foreclosure consummated, and the title established in the purchaser, we are told that it all amounted to nothing; that parties, lawyers, and courts have been spending their time and labor in simply beating the air, the title to the property conveyed by the trust deed being exactly where it was before the litigation commenced, and the party which had acquired possession by that litigation subject to an obligation to account as a mortgagee in possession.

Upon what is this contention based? The respondents say that the property conveyed by the trust deed was all in Alabama, although the deed recites that part of it was in Georgia; that it originally belonged to the Alabama company; that that company executed the trust deed, although the resolution incorporated in the trust deed purports to have been passed at a meeting of the directors, held at the office of the company in West Point, Georgia; that the Alabama company was not made a party to the foreclosure proceedings, and could not have been, because the plaintiff was a citizen of Alabama, and making the Alabama company a defendant would have ousted the court of jurisdiction; that the subsequent owner of the property, another Alabama company, was also not made a party to those proceedings, and that therefore they were res inter alios acta, and in no way binding upon either Alabama company. It is also insisted by the respondents that the so- called ancillary bill filed by the petitioner was not, in any sense of the term, an ancillary, but in fact an original bill, and that under Rev. Stat. § 720, U. S. Comp. Stat. 1901, p. 581, the Federal court had no power to restrain the further proceedings in the state chancery court.

Prima facie, the United States circuit court had jurisdiction of the foreclosure bill. Diverse citizenship was alleged and admitted, and the relief sought was the foreclosure of a trust deed covering property partially in Georgia and partially in Alabama. The bill in the state court challenged the decree in the United States circuit court, denied its efficacy to transfer title, on the ground that the Alabama & Georgia Manufacturing Company (the grantor in the trust deed, and the original owner of the property) and the Huguley Manufacturing Company (a purchaser and subsequent owner) were both corporations of Alabama, and citizens of the same state with the plaintiff, whereby a case was presented of which the Federal courts could not take jurisdiction. The specific allegations were these:

'That a corporation known as the 'Alabama & Georgia Manufacturing Company,' alleged to be a corporation organized under the laws of Georgia only, and said Huguley Manufacturing Company, together with the said W. T. Huguley, were the sole defendants to said bill, said W. T. Huguley being made defendant as cotrustee, alleged to be interested adversely. The Alabama & Georgia Manufacturing Company, originally chartered and organized as a corporation under said act of the general assembly of the state of Alabama, never has been made a defendant thereto, and never appeared as a party to said cause, the president of said corporation, to wit, W. H. Huguley, himself likewise a citizen and resident of the county of Chambers, state of Alabama, never having been served with notice either of said alleged default of interest, as expressly required under the terms of the trust deed, or notice of said suit of foreclosure against said Alabama & Georgia Manufacturing Company. No attempt was made, by either direct or ancillary proceedings, to subject the property lying in the state of Alabama to this suit. A portion of the property was erroneously described in the said mortgage as lying within the county of Harris, in the state of Georgia, while the orators aver that all of said property was and is situated within the county of Chambers, in the state of Alabama.

'The...