Sullivan v. Algrem

• Decision Date: 03 March 1908
• Docket Number: 2,669.
• Citation: 160 F. 366
• Parties: SULLIVAN et al. v. ALGREM et al.
• Court: U.S. Court of Appeals — Eighth Circuit

160 F. 366

SULLIVAN et al. v. ALGREM et al.

No. 2,669.

United States Court of Appeals, Eighth Circuit.

March 3, 1908

Thomas C. Hennings and Robert F. Walker, for appellants.

Claud D. Hall (Herbert S. Hadley, Atty. Gen., State of Missouri and Jones, Jones, Hocker & Davis, Solicitors for Wm. L Watkins, supervisor and receiver, on the brief), for appellees.

Before SANBORN and ADAMS, Circuit Judges, and PHILIPS, District Judge.

SANBORN Circuit Judge.

This is an appeal from an order of the court below whereby it appointed a receiver of the property of the Home Co-operative Company, an unincorporated association, owned and operated by William B. Sullivan, and issued the usual injunction in such cases.

The reason for the appeal is that a receiver of this property had previously been appointed by the circuit court of St. Louis county and had taken possession of a part of the property, an injunction had issued from that court, and a similar suit for the same purpose had been commenced against the same defendants, and a restraining order had been issued in another court of the state of Missouri, before this suit was commenced.

The business of the Home Company was to issue contracts to their holders to purchase homes for them at future times on numerous mysterious conditions, and one plain condition that the holders should pay certain sums of money to the company monthly. On June 10, 1907, Algrem and Cameron, the appellees here, holders of some of these contracts, exhibited their bill in the court below against William B. Sullivan, William B. Sullivan, trustee, William L. Watkins, and three other defendants who were never served with process, and who will accordingly be treated as strangers to this suit henceforth, for the appointment of a receiver of the Home Company, the customary injunction, and the sale of its property, and the distribution of the proceeds thereof to its creditors and contract holders. An order to show cause why the injunction should not issue, returnable on June 18, 1907, was served on the defendants, and Sullivan filed a return with which he presented a transcript of the proceedings in a similar suit in the circuit court of St. Louis county, Mo. The state of Missouri filed an intervening petition. Sullivan insisted in the court below, and still insists, that that court had no jurisdiction to appoint a receiver of this property or to enjoin the defendants from disposing of it, because it was in the legal custody of the courts of Missouri, one of which had appointed a receiver of it. The state, on the other hand, prayed that Watkins, the receiver appointed by the state court, should be appointed by the court below, and that court appointed him.

Counsel for the appellees interpose many objections to Sullivan's return to the order to show cause, which in our view of this case are not material, because all that is necessary to its determination appears upon the face of their bill. The question here is not whether this suit was barred or abated by the fact that there was another action pending between the same parties for the same cause, or concerning the same property, and the discussion and determination of that issue are respectfully declined. The only question in this case is, was the property of the Home Co-operative Company withdrawn, at the time the order challenged by the appeal was made, for the time being from the jurisdiction of the court below by the prior acquisition of jurisdiction and legal custody of it by one of the courts of the state of Missouri. The bill discloses these facts: On July 3, 1903, Herman H. Wehrs, who alleged that he was a holder of one of the Home Company's contracts, brought a suit for a receiver of its property, for an injunction, for the sale of the property, and the application of its proceeds to the payment of its contract holders and creditors, in the circuit court of St. Louis county, against William B. Sullivan and William B. Sullivan as the Home Company. Sullivan appeared and consented, Francis A. Tillman was appointed receiver, the usual injunction was issued and Sullivan delivered to the receiver, pursuant to the order of the court, property estimated to be worth $60,000.

On April 21, 1906, that court removed Tillman and appointed the defendant Watkins receiver of the company and its assets, in his official capacity as Supervisor of Building and Loan Associations of the State of Missouri. Sullivan appealed to the Supreme Court of Missouri from an order of that court refusing to vacate the order appointing Watkins, and a supersedeas appeal bond was given by him and accepted by the court. At the time this appeal was taken that court made an order that all creditors and contract holders of the Home Company who desired to avail themselves of the benefits of that suit might do so and might be heard therein. The complainants averred in this bill that they were informed, believed, and charged that Wehrs never was a contract holder, that he had been paid the amount claimed on his contract, that his suit was instituted and maintained by Sullivan for the latter's use and benefit, and that Wehrs had tried to dismiss and had dismissed it. The bill shows that on May 1, 1907, two other contract holders exhibited another bill in another court of the state of Missouri against the defendants in the suit in hand, in behalf of themselves and all other contract holders and creditors of the Home Company, for a receiver of the property of that company, an injunction, the sale of its property, and the distribution of the proceeds thereof among its creditors and contract holders, that process was served in that suit on Sullivan and Watkins, that the court restrained them in that suit from transferring or disposing of the property of the company, ordered them to show cause on May 6, 1907, why it should not issue the injunction and appoint the receiver sought, and that the judge of that court was subsequently temporarily restrained from proceeding in that court and ordered to show cause before the Supreme Court of Missouri why he should not be permanently prohibited from proceeding further therein. This was the state of the case presented to the court below by the bill, and conceding, as counsel for the appellees contend, but not deciding, that Sullivan's return was so irregular and insufficient, that it presented no facts and no denials which the court below could, or this court can, consider, it is difficult to perceive how the United States Circuit Court could have lawfully acquired or exercised any jurisdiction over the property in question until the state courts renounced or surrendered their custody of it.

The legal custody of specific property by one court of competent jurisdiction withdraws it, so far as necessary to accomplish the purpose of that custody, until that purpose is completely accomplished from the jurisdiction of every other court. The court which first acquires jurisdiction of specific property by the lawful seizure thereof, or by the due commencement of a suit in that court, from which it appears that it is, or will become, necessary to a complete determination of the controversy involved, or to the enforcement of the judgment or decree therein, to seize, charge with a lien, sell, or exercise other like dominion over it, thereby withdraws...