Smith v. Government of Canal Zone

• Decision Date: 20 March 1918
• Docket Number: 3150.,3209
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: SMITH v. GOVERNMENT OF CANAL ZONE et al. SAME v. CORRIGAN et al.

249 F. 273

SMITH v. GOVERNMENT OF CANAL ZONE et al.

SAME v. CORRIGAN et al.

Nos. 3209, 3150.

United States Court of Appeals, Fifth Circuit.

March 20, 1918

Felix E. Porter, of Ancon, C.Z., and Edwin T. Merrick, Philip Gensler, Jr., and Ralph J. Schwarz, all of New Orleans, La for appellant and plaintiff in error.

Theodore C. Hinckley and Stevens Ganson, both of Panama, R.P., for appellees and defendants in error.

Before PARDEE, WALKER, and BATTS, Circuit Judges.

WALKER Circuit Judge.

By an appeal and by a writ of error J. Budd Smith (who will be referred to as the appellant) presents for review two judgments or decrees, one rendered in a suit brought against him by J. A. Corrigan and others (who will be referred to as the appellees), and the other in proceedings following a motion made by the appellees that the appellant be required to show cause why he should not be committed for contempt for an alleged violation by him of a temporary writ of injunction issued in the first-mentioned suit at the time it was brought. If it is to be regarded that there were two cases instead of one, they are so related as to make it convenient if not necessary, to consider them together. The following is a summary of so much of what is disclosed as needs to be set out:

The appellant was a citizen of New Jersey and had his domicile there, but for the greater part of the time during several months prior to April 9, 1917, he was a temporary resident of the republic of Panama, being there as the business representative of the Beneficial Loan Society, which had its principal place of business at Newark, N.J., and had business dealings with the Continental Banking & Trust Company; the latter being located and engaged in business in the city of Panama. Early in February, 1917, the Continental Banking & Trust Company was adjudged bankrupt by a Panama court, which appointed a temporary receiver of its property and assets; that court assuming custody and jurisdiction of the bankrupt's estate. The appellant did not at any time live in the Canal Zone, or engage in business or own property there. Some time prior to April 9, 1917, while he was temporarily in the Canal Zone, he was served there with process in a suit brought by one Cornet against him in the district court of the Canal Zone. Some question is made as to the validity of that service, but that question is not a material one in this case. At the request or direction of his counsel in that case the appellant on April 9, 1917, went from Panama into the Canal Zone to be present in the district court to give testimony, if necessary, on the hearing of a motion proposed to be made by his counsel for such an allowance of time for taking depositions as was required to secure the testimony of witnesses living in the United States. While the appellant was in the office of the clerk of the district court, awaiting the convening of the court, the marshal came in and handed to him the summons, complaint, and a restraining order or temporary injunction in a suit brought in the district court on that day by the appellees against him. That suit was brought by the appellees in behalf of themselves and all other creditors and persons interested in the liquidation of the affairs of the Continental Banking & Trust Company who may wish to come in and be parties to the suit, the complaint alleging that the appellees were creditors of that company, and praying the setting aside of described deeds to lands in Panama made to appellant by that company shortly before its bankruptcy, and that the appellant be restrained and enjoined from selling, conveying, or incumbering the lands so deeded to him. The temporary injunction or restraining order mentioned enjoined the appellant from selling, conveying, transferring, or in any wise incumbering the property mentioned in the deeds described in the complaint.

Following the happening of the incident just mentioned the appellant was in the district court room when his counsel made the contemplated motion, but was not examined as a witness, the motion being granted by the court, without the occasion arising for adducing testimony of the appellant. On April 18th the appellant by his attorney filed a motion to dissolve the restraining order. The motion stated that the attorney appeared in appellant's behalf for the purpose of denying the jurisdiction of the court, and the grounds stated raised only the question of the right or jurisdiction of the court to make or enforce the order sought to be dissolved, and submitted no question going to the merits of the suit. On April 30th following the appellant by the same attorney moved the court to set aside the abovementioned service of the summons, complaint, and restraining order, on the ground that it was made while appellant was attending court in connection with the case of Cornet against him. The introductory words of that motion were:

'Comes now the above-named defendant by Felix E. Porter, his attorney, and, without in any manner waiving the jurisdiction of this court, moves the court,' etc.

After hearing evidence on the motions they were overruled on May 10th. The evidence adduced proved the truth of the ground stated in support of the motion to set aside the service. That the court did not find otherwise is shown by the following statement made by the trial judge:

'Mr. Smith came into court on a certain matter in connection with the Cornet case. He came voluntarily, thinking that he might be needed, according to the testimony of his counsel, Mr. Porter, for the purpose of asking for a continuance for the purpose of taking depositions. I cannot say that he was here under any compulsion or restraint or here by reason of his appearing as a party litigant.'

On May 21st the same attorney filed an answer for the appellant, the answer expressly stating that the attorney came--

'without in any manner waiving the jurisdiction and the validity of service in this cause, heretofore denied.'

On May 23d the court, on motion of appellees, made an order that appellant on May 26th appear and show cause why he should not be attached for contempt for an alleged violation by him of the above-mentioned temporary writ of injunction. On May 26th the marshal returned this order 'not served'; the return stating that:

'The defendant J. Budd Smith cannot be located in the Canal Zone.'

On May 29th the case against the appellant was called for trial in the district court, and the appellant's attorney then stated that the appellant was a resident of the republic of Panama and moved the court--

'to issue an order of exemption of the said Smith from the service of any process or from arrest while coming to, departing from, or in attendance upon this court for the purpose of the trial herein.' This motion was denied, an exception being reserved. What the court did immediately following the action just mentioned is shown by the following statement in its minutes for the same day:

'And on motion of the counsel for the plaintiffs herein the case is set for trial at 2 o'clock this afternoon, whether the defendant is in attendance or not. And the defendant's attorney consents under protest to go to trial without the presence of the defendant Smith.'

At the time appointed and without the appellant being present, the trial of the case was entered upon, resulting in the rendition, on May 29th, of a decree perpetuating the preliminary injunction issued when the suit was brought, ordering the appellant to execute to the receiver appointed by the court of Panama in the above-mentioned bankruptcy proceeding conveyances to the lands described in the deeds which the complaint prayed to have annulled, and ordering the appellant to account to such receiver for all rents, issues and profits of the properties described in those deeds. On July 31, 1917, the appeal by appellant from that decree was allowed upon his giving bond, approved on the same day by the judge of the district court, with the condition:

'That if the said J. Budd Smith shall prosecute his said appeal to effect, and shall answer all damages and costs that may be awarded against him, if he fails to make his plea good, then the above obligation to be void; otherwise, wise, to remain in full force and virtue.'

On June 21, 1917, J.

. Corrigan, one of the appellees, made an affidavit charging the commission by the appellant of a 'misdemeanor of contempt of court as defined and made punishable by the terms and provisions of section 131, paragraph 2, of the Penal Code of the Canal Zone,' the affidavit showing that the charge made was based upon appellant's alleged disobedience of the above-mentioned temporary injunction by conveying and transferring to one Wallace, on May 11, 1917, all the property covered by the deeds mentioned in the complaint in that suit. On the same day the court issued its bench warrant for the arrest of the appellant and that he be brought before the district court to answer the charge made by the affidavit. On June 23d this warrant was returned not served. On the same day an alias bench warrant was issued. On the application made to public authorities of the republic of Panama for the extradition of the appellant to answer the above-mentioned criminal charge made against him in the Canal Zone his extradition was ordered by a Panama court. On September 4, 1917, while, as a result of the extradition proceedings, the appellant was in jail at Ancon, Canal Zone he was for the first time served with a citation to show cause why he should not be attached for the above alleged civil contempt. He was brought before the court on September 7th. His counsel duly made the objections that the court was without jurisdiction to try the appellant on the charge of...