Sherman Nat. Bank of New York v. Shubert Theatrical Co.
| Decision Date | 13 November 1917 |
| Docket Number | 23. |
| Citation | 247 F. 256 |
| Parties | SHERMAN NAT. BANK OF NEW YORK v. SHUBERT THEATRICAL CO. |
| Court | U.S. Court of Appeals — Second Circuit |
William Klein, of New York City (Simon Fleischmann and Martin Clark both of Buffalo, N.Y., of counsel), for appellant.
R. B Miller, of New York City (John Kirkland Clark, of New York City, of counsel), for appellee Sherman Nat. Bank.
Arthur W. Clements, of New York City, for appellee Welden Nat. Bank of St. Albans, Vt.
Rosenberg & Ball, of New York City (James N. Rosenberg and David W Kahn, both of New York City, of counsel), for appellee Dittenhoefer.
Before WARD, ROGERS, and HOUGH, Circuit Judges.
This is an appeal from an order of Learned Hand, J., granting an injunction pendente lite.
August 2, 1915, the Shubert Theatrical Company, a corporation of the state of New Jersey, brought an action at law in the United States District Court for the Southern District of New York against the Sherman National Bank, a corporation created under the laws of the United States engaged in business in the state of New York, to recover $11,938.20, the balance of an account, opened in November, 1911, designated 'Blue Bird Special,' upon which either Lee Shubert or Jacob J Shubert was entitled to draw checks and upon which a check for the balance was drawn by Lee Shubert and payment refused July 19, 1915.
The answer of the bank, filed in September, 1915, admitted the existence of the account and of the balance, but denied that it was opened by the plaintiff and set up certain defenses, which were afterwards more fully set out in the bill now to be mentioned. In May, 1916, the bank filed this bill in equity in the same court against the Shubert Theatrical Company of New Jersey, Lee Shubert, and Jacob J. Shubert, Irving M. Dittenhoefer, as trustee in bankruptcy of Liebler & Co., and the Welden National Bank of Vermont.
The bill alleged that the complainant and the defendant the Welden National Bank had each advanced money to Liebler & Co.; that on or about October 17, 1910, Liebler & Co. had entered into an agreement with the Shubert Theatrical Company of New York whereby they were to receive one-half the profits of 'The Blue Bird,' so long as it proved to be profitable; that in the month of November, 1911, Lee Shubert and Jacob J. Shubert opened an account with the bank, designated 'The Blue Bird Company Special' account, to be drawn on by either of them, and they then informed the complainant that the moneys deposited and to be deposited represented profits derived from the presentation of 'The Blue Bird' under an agreement made with Liebler & Co.; that on or about May 15, 1912, Liebler & Co. assigned to the complainant and the Welden National Bank as security for the moneys owed to them 50 per cent. of the profits coming to them from the presentation of 'The Blue Bird' during the seasons 1912-13 and 1913-14; that prior to their adjudication in bankruptcy both Liebler & Co. and the complainant had demanded of Lee and Jacob J. Shubert and the Shubert Theatrical Company of New York an accounting of the profits of 'The Blue Bird,' but neither of them nor any one else has ever furnished such an account.
On or about December 7, 1914, the defendant Dittenhoefer, as receiver in bankruptcy of Liebler & Co., served upon the complainant an order of the District Court in bankruptcy restraining it from paying out any funds in its possession in which the alleged bankrupts had or claimed any interest. On or about March 31, 1915, Liebler & Co. were adjudicated bankrupts, and Dittenhoefer, having been chosen trustee, confirmed the service of the order by specific notice.
The prayer for relief was that all parties be enjoined from instituting or prosecuting any suit on account of the said deposit against the complainant, and particularly that the action at law of the Shubert Theatrical Company of New Jersey be stayed; that the Shubert Theatrical Company of New York render an account of the profits of 'The Blue Bird' as between it and Liebler & Co.; that the court determine the rights of the various parties in and to the balance of the 'Blue Bird Special' account.
The answer of the Shubert Theatrical Company of New Jersey put the complainant on proof of its case. The answer of the Welden National Bank admitted the allegations of the bill and prayed for similar relief. The record is defective in failing to show the citizenship of the defendants not answering, or whether the subpoena was or was not served upon them, or whether they were or were not beyond the jurisdiction of the court.
In the case of a res within the jurisdiction of the court the interests of persons without the jurisdiction are determined and disposed of as provided in section 57 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1102 (Comp. St. 1916, Sec. 1039)). In the case of personal controversies, the rights of parties without the jurisdiction will not be prejudiced by the final decree in the cause. Equity rule 39 (198 F. xxix, 115 C.C.A. xxix).
The District Judge denied the defendant's motion to dismiss the complaint, and granted the complainant's motion for an injunction enjoining the defendant Shubert Theatrical Company of New Jersey from prosecuting the action in the District Court or any similar action in any other court.
The appellant relies for reversal on two grounds: First, it denies the constitutional jurisdiction of the court, because it says the suit is not ancillary to the action at law and there is a want of the required diversity of citizenship; second, it denies the equitable jurisdiction of the court, because the bill is not a bill of interpleader.
We are clearly of opinion that the bill is ancillary to the action at law and that the court has complete jurisdiction of the cause because of the diversity of citizenship in the action at law. As a pleading its allegations would constitute an original bill, and this court would have no jurisdiction of it as such for want of proof of diversity of citizenship. But it is filed, among other things, to stay the action at law and so is connected with and ancillary to it. The jurisdiction of this court over the action at law by virtue of the citizenship of the parties extends to the ancillary bill. Minnesota...
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