State of Texas v. Palmer

• Decision Date: 03 December 1907
• Docket Number: 1,721.
• Parties: STATE OF TEXAS et al. v. PALMER et al.
• Court: U.S. Court of Appeals — Fifth Circuit

158 F. 705

STATE OF TEXAS et al. v. PALMER et al.

No. 1,721.

United States Court of Appeals, Fifth Circuit.

December 3, 1907

R. V Davidson, D. W. Doom, T. W. Gregory, and G. W. Allen (Jewel P. Lightfoot, Jno. W. Brady, Gregory, Gregory & Batts, Allen & Hart, and D. H. Doom, on the brief), for appellants.

S. B Cantey, E. B. Perkins, H. O. Head, and John D. Johnson, for appellees.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge.

This is a suit in equity brought by Bradley W. Palmer, a citizen of Massachusetts, against the Waters-Pierce Oil Company, a corporation organized under the laws of Missouri. The appeal to this court is from two decrees of the Circuit Court-- one an interlocutory decree appointing a receiver, and the other a decree refusing to vacate the order appointing the receiver. The case involves questions relating to the jurisdiction of the courts of the state of Texas and to the custody and control of the property of the Waters-Pierce Oil Company, which can be best stated after briefly showing the proceedings in the state courts and in the Circuit Court.

On September 26, 1906, the state of Texas brought suit in the district court of Travis county, Tex., to forfeit the permit of the Water-Pierce Oil Company to do business in that state and to recover of it penalties for violations of the Texas anti-trust statutes. On June 1, 1907, judgment was rendered for the state, canceling the company's permit. Verdict and judgment were also rendered in favor of the state and against the company for $1,623,900. On the same day, after the rendition of the judgment, the state presented to the district court an application for the appointment of a receiver of all the property of the company situated in Texas, and for an injunction to prevent the company's removing its property from the state. To show the need of a receiver and an injunction, it was alleged that the charter of the company had been forfeited by legal proceedings in Missouri; that the judgment in favor of the state of Texas cannot be collected outside of the state, and that the property of the company in the state is not sufficient to pay the judgment; that the property is in part movable property, and, if carried out of the state, could not be secured to satisfy its judgment; that the state has a lien on the company's property to secure the judgment by virtue of the act of the Legislature of Texas approved April 11, 1907; that the judgment of forfeiture prevented the company from doing business in the state; and that it was necessary, to protect the rights of the state, that the business of the defendant should continue, at least temporarily. This application for a receiver and an injunction being presented to the judge of the district court, he ordered, on June 1, 1907, that notice be given the company, and that it be set down for hearing June 8, 1907. On June 10th, the hearing having been passed to that day, the court granted the application for an injunction and for the appointment of a receiver, but did not name a receiver. On June 13th, Robert J. Eckhardt was named as the receiver, and his bond fixed at $250,000. The company gave notice that it would appeal, and, on June 15th, the district court fixed $100,000 as the amount of the bond which the company was required to give to supersede the order appointing the receiver. The company was in court contesting these orders. On June 19th, Eckhardt gave bond, which was approved, and he qualified as receiver. He did not take actual possession of the company's property. On the day last named, June 19, 1907, the company appealed to the Court of Civil Appeals from the order of the district court appointing the receiver, giving the required supersedeas bond. The Court of Civil Appeals, on October 23, 1907, handed down an opinion and entered judgment affirming the decree of the district court appointing Eckhardt receiver. Waters-Pierce Oil Company v. State of Texas (Tex. Civ. App.) 105 S.W. 851. The judgment of forfeiture of the company's permit was rendered, as we have said, and the judgment for $1,623,900 entered on June 1, 1907; and on June 15th, the company appealed from that judgment, giving a supersedeas and appeal bond, approved on that day, for $3,275,000. On this appeal we are not advised that there has been any decision. On June 19, 1907, Bradley W. Palmer filed the original bill in this case in the Circuit Court of the United States for the Eastern District of Texas against the Waters-Pierce Oil Company. For the purposes of this decision, it is only necessary to show some of the leading features of the bill and the object of the suit. The complainant sues as a stockholder of the company, owning 100 shares, and avers that the corporation owns both real and personal property situated in Texas which exceeds $1,000,000 in value. The bill recites elaborately and in detail the proceedings in the District Court of Travis county, Tex., which we have briefly stated. It copies, in part, the anti-trust laws of the state of Texas, averring that they are, in certain respects, in conflict with the Constitution of the United States. It is alleged that the laws of Texas did not authorize the judgment for the amount of penalties as entered in the state court, nor authorize the appointment of a receiver of the property of the oil company by the state court. It is further alleged that an appeal was taken by the company from the order appointing a receiver to the Court of Civil Appeals, the company giving a supersedeas bond, and that the judgment was superseded, and that the judgment and all things incident thereto were removed to the Court of Civil Appeals. The appeal from the penalty judgment to the Court of Civil Appeals is also described. These appeals, it is alleged, superseded the appointment of the receiver. The business and property of the company is described, and facts are alleged tending to show why the United States court should appoint a receiver. The prayer is for the appointment of a receiver to take possession of all the company's property in Texas; that the business of the company may be wound up and its property sold; that the receiver be authorized to manage and operate the property, etc. The Waters-Pierce Oil Company waived service of subpoena on June 19, 1907, and admitted the averments of the bill, and on the same day the Circuit Court appointed Chester B. Dorchester receiver, with the usual powers and authority of receivers in such cases. The decree provides that other parties interested may intervene, and, on June 19th, H.C. Pierce intervened, alleging he was a stockholder, and repeating, in substance, the averments of the original bill, and asking for the same relief. On the next day Dorchester qualified and gave bond as receiver. On June 21, 1907, the state of Texas and Robert J. Eckhardt, the receiver appointed by the district court of Travis county, applied to the Court of Civil Appeals, reciting the action of the several courts herein, and asked that court for relief against the receiver appointed by the United States court, and that the state court would make such orders as would protect and preserve its jurisdiction. The Court of Civil Appeals considered the application and handed down an opinion June 28, 1907 (Waters-Pierce Oil Company v. State of Texas (Tex. Civ. App.) 103 S.W. 836), and pursuant to its opinion, the court made an order directing Eckhardt, as receiver, in conjunction with the state of Texas, to appear before the Circuit Court of the United States for the Eastern District of Texas, 'and there, by suits, pleas, and applications, urge and insist upon the rights of the state and the jurisdiction of this court in and to and over the property in controversy, and to ask for such orders, decrees, and judgments as they may deem necessary and proper, and to appeal and perfect such appeals and writs of error as they may deem proper and necessary. ' On July 1, 1907, the state of Texas and Robert J. Eckhardt, as receiver, applied to the United States Circuit Court, stating the foregoing facts, and moved the court to set aside and annul its orders in reference to the receivership, and that Chester B. Dorchester be discharged as receiver and instructed to return the property of the company to the custody and control of the state courts, and that the jurisdiction of the state courts be recognized. On July 15th, the Circuit Court refused to grant the prayer of the state of Texas and Eckhardt. The order recites as a fact that Robert J. Eckhardt has never taken nor had actual possession of any of the property of the Waters-Pierce Oil Company under the order appointing him receiver, and that Chester B. Dorchester has actual possession under the order appointing him receiver, and the application is overruled without prejudice to any further application that may be made. The appeal to this court by the state of Texas and Eckhardt, as receiver, is taken from the order of June 19, 1907, appointing Chester B. Dorchester receiver, and from the order of July 15, 1907, refusing to vacate the order appointing Dorchester receiver. The making of each order is assigned as error.

The first question presented by the record is whether or not the proceedings in the district court of Travis county, Tex., were such as to confer on it exclusive jurisdiction of the property involved. And, if that question is answered in the affirmative, the second question is whether or not such exclusive jurisdiction was lost by the superseding of the order of the state court appointing a receiver.

The district court of Travis county is a court of general jurisdiction of both law and equity cases. The suit brought by the state of Texas in that court against the Waters-Pierce Oil Company was for the...