Sherman Nat. Bank of New York v. Shubert Theatrical Co.

• Decision Date: 05 December 1916
• Docket Number: 13,286.
• Citation: 238 F. 225
• Parties: SHERMAN NAT. BANK OF NEW YORK v. SHUBERT THEATRICAL CO. et al.
• Court: U.S. District Court — Southern District of New York

238 F. 225

SHERMAN NAT. BANK OF NEW YORK v. SHUBERT THEATRICAL CO. et al.

No. 13,286.

United States District Court, S.D. New York.

December 5, 1916

The bill is in the nature of a bill of interpleader, for which the plaintiff claims no original jurisdiction, but only jurisdiction ancillary to an action at law, now pending in this court, in which the defendant herein, Shubert Theatrical Company of New Jersey is plaintiff, and itself is defendant. The allegations regarding the citizenship of the various parties are most inadequate, and, in view of the presumptions against jurisdiction obtaining in this court, they must be taken as though they were as follows: The plaintiff is a citizen of New York; the Shubert Theatrical Company of New Jersey is a citizen of New Jersey; Lee Shubert and Jacob J Shubert are citizens of New York; the Shubert Theatrical Company of New York is a citizen of New York; Irving M Dittenhoefer, as trustee in bankruptcy of Liebler & Co., is a citizen of New York; the Welden National Bank of St. Albans Vt., is a citizen of Vermont. In fact, no allegations of the citizenship of any of the individual defendants are alleged in the bill, but the facts probably correspond with the presumption of law.

The bill asserts that in the month of March, 1912, Liebler & Co. a firm composed of Theodore A. Liebler and George C. Tyler, were indebted to the plaintiff in the sum of $25,000, composed of three notes theretofore executed, and were indebted to the Welden National Bank of St. Albans in the sum of $15,000, composed of three notes for $5,000 each. On the 15th day of March, 1912, Liebler & Co. executed to the plaintiff and to the Welden National Bank of St. Albans, as security for the payment of these notes, a joint assignment of one-half of the interest of such firm in all its share, under a contract hereafter mentioned, in the profits of Shubert Theatrical Company of New York from the production of a play called 'The Blue Bird,' during the seasons of 1912-1913 and 1913-1914. Such notes were renewed from time to time, and on the 4th day of December, 1914, there were due substantial sums of money to both the plaintiff and the Welden National Bank of St. Albans. Irving M. Dittenhoefer in 1915 was chosen trustee in bankruptcy of Liebler & Co., who became bankrupt on December 4, 1914. The profits of Liebler & Co. arose from an agreement on October 17, 1910, with Shubert Theatrical Company of New York, by which it agreed to pay to Liebler & Co. one-half its own profits from its presentation of 'The Blue Bird.' During the month of November, 1911, the defendants Lee Shubert and Jacob J. Shubert opened an account with the plaintiff, which contained profits arising from the production of 'The Blue Bird' under the agreement between them and Liebler & Co. On December 7, 1914, Dittenhoefer, the bankruptcy receiver of Liebler & Co., served on the plaintiff a certified copy of an order of this court restraining all persons from paying over any funds in which Liebler & Co. claimed interest, and demanded that plaintiff hold all such sums in its possession. The plaintiff refuses to pay to Lee Shubert, Jacob J. Shubert, or any one else, the sums remaining in said account, and on August 2, 1915, the defendant Shubert Theatrical Company of New Jersey, whose connection with the other defendants is now shown, began the action at law in this court upon the deposit, which is mentioned at the outset, and which is still pending. The bill concludes with the allegations that Dittenhoefer, as trustee, has a claim upon the funds; that Lee Shubert and Jacob J. Shubert have the right to draw checks upon the deposit, and the plaintiff has received no release or authorization from either of them to pay the balance; that the Shubert Theatrical Company of New York claims some right to the deposit, as does the Welden National Bank of St. Albans, Vt.; that the plaintiff claims an interest in it by virtue of such assignment; that it is impossible in the action at law to obtain a judgment or decree settling the rights of all the parties hereto.

The answer of the Shubert Theatrical Company of New Jersey, after certain traverses, alleges for a first defense that on February 23, 1909, Liebler & Co. and the Shubert Theatrical Company of New York entered into an agreement, by which Liebler & Co. agree for five years to present all their plays in theaters controlled by the Shubert Theatrical Company of New York, with certain exceptions, commencing September 1, 1909, in consideration of which Shubert Theatrical Company of New York would assume one-half the expenses of a certain operatic tour, to be undertaken by one Pietro Mascagni, under an agreement with Liebler & Co., and to share in a contract between one Bessie Abbott and Liebler & Co., under which she was to appear in an opera called 'Ysobel.' The statements of Liebler & Co. to Shubert Theatrical Company of New York at the time of the contract were that Bessie Abbott would appear in such opera for $1,000 a week, and that Mascagni would give his services in connection with the opera for $10,000. In the year 1910 Lee Shubert learned that these statements were intentionally false, and demanded back all the money he had advanced to Liebler & Co. for losses they claimed to have sustained on such tour, and rescinded the contract of the Shubert Theatrical Company of New York with them. Such moneys amounted to the sum of $34,665.20, and they were liable for $25,000 in addition. Yet in October, 1910, the Shubert Theatrical Company of New York promised Liebler & Co. to give them a one-half interest in the profits and losses of 'The Blue Bird,' on condition that Liebler & Co. should continue booking their plays at the Shubert Theater for five years. On the 10th day of May, 1911, Liebler & Co. asked the Shubert Theatrical Company to pay $25,000, the balance still due under the contract of February, 1909, but told the Shubert Theatrical Company of New York that they intended to book their plays with Klaw & Erlanger. Thereupon the Shubert Theatrical Company of New York procured the discount of the note of Liebler & Co. for $25,000 with the Hudson Trust Company, and charged the same against the interest in 'The Blue Bird,' but agreed that, if Liebler & Co. should carry out the agreement to book their plays, he would divide the profits of 'The Blue Bird' for the season ending June, 1912, and would deduct the $25,000 borrowed from the Shubert Theatrical Company's share. In March, 1912, apparently for the second time, Liebler & Co. refused to book their plays with the Shubert Theatrical Company of New York. For a second defense, the answer alleges that an action was brought by Liebler & Co. against Lee Shubert for an account of the profits of 'The Blue Bird,' which action was dismissed. For a third defense, that this court is without jurisdiction.

The cause comes up on a motion by the plaintiff to enjoin the defendants from instituting any actions at law against it, and to strike out all the defenses of the answer of the Shubert Theatrical Company of New Jersey.

Rutgers Bleecker Miller and John Kirkland Clark, both of New York City, for complainant.

William Klein, of New York City, and Simon Fleischmann, of Buffalo, N.Y., for defendant Shubert Theatrical Co., of New Jersey.

James N. Rosenberg, of New York City, for defendant Dittenhoefer.

LEARNED HAND, District Judge (after stating the facts as above).

Dittenhoefer who has procured an injunction against the payment of the deposit, is a citizen of New York, and so is the plaintiff. Disregarding for the time being any questions of the equity of the bill, this situation, therefore, raises the question of the constitutional jurisdiction of this court. That the bill is, from the standpoint of equity, an original bill, must of course be admitted, but that does not determine its jurisdictional status, which may none the less be ancillary. Minnesota Co. v. St. Paul Co., 2 Wall. 609, 633, 17 L.Ed. 886. It is true that most cases of ancillary jurisdiction arise when some property has come into the custody of this court, or at least when some suit is pending in which it may assume possession at any time. Wabash R.R. Co. v. Adelbert College, 208 U.S. 54, 28 Sup.Ct. 182, 52 L.Ed. 379. Such, indeed, is the explanation of cases like Freeman v. Howe, 24 How. 450, 16 L.Ed. 749, Krippendorf v. Hyde, 110 U.S. 276, 4 Sup.Ct. 27, 28 L.Ed. 145, and Pacific R.R. v. Mo. Pac. Ry., 111 U.S. 505, 4 Sup.Ct. 583, 28 L.Ed. 498. It is in my judgment the explanation even of Dewey v. West Fairmont Gas Coal Co., 123 U.S. 329, 8 Sup.Ct. 148, 31 L.Ed. 179, where the bill lay in aid of execution out of this court, the power to exercise possession through its marshal being the equivalent of possession itself. None of these cases helps the plaintiff, unless personal jurisdiction over the obligor alone brings 'property' into court, even though the true obligee may not be also before it, a possibility upon which the very equity of the bill depends. It is true that in bankruptcy it has been decided that personal jurisdiction over the obligor puts the bankrupt's 'property' into court. In re San Antonio Land & Irrigation Co. (D.C.) 228 F. 990; In re Berthoud (D.C.) 231 F. 529. And if that rule be of general application, then there is 'property' in court here. If so, it would seem to follow that, under section 57 of the Judicial Code, this bill would lie against nonresident obligees, which seems to me a strong position.

I do not mean to rest quite upon that theory, for the question here really turns upon the word 'controversies,' as used in section 2 of article 3 of the Constitution, as defined by section 24, subd. 1, of the Judicial Code (Comp St. 1913, Sec. 991 (1)). The 'controversy' at least...