Thompson v. Terminal Shares, 279.

• Decision Date: 09 April 1936
• Docket Number: No. 279.,279.
• Citation: 14 F. Supp. 459
• Parties: THOMPSON v. TERMINAL SHARES, Inc., et al.
• Court: U.S. District Court — Western District of Missouri

14 F. Supp. 459

THOMPSON v. TERMINAL SHARES, Inc., et al.

No. 279.

District Court, W. D. Missouri, St. Joseph Division.

April 9, 1936.

Jerome N. Frank, of New York City, and Ernest A. Green (of Green, Henry & Remmers), of St. Louis, Mo. (J. Porter Henry, of St. Louis, Mo., on the brief; Culver, Phillip, Kaufmann & Smith, of St. Joseph, Mo., of counsel), for plaintiff.

Godfrey Goldmark, of New York City, and I. N. Watson, Henry N. Ess, and Elton L. Marshall, all of Kansas City, Mo., for trustee Guaranty Trust Co. of New York.

Richard L. Douglas, of St. Joseph, Mo., Henry L. Jost, of Kansas City, Mo., and William B. Cockley, of Cleveland, Ohio, for trustees Alleghany Corporation, John P. Murphy, Henry A. Marting, and John J. Murray.

David W. Peck, of New York City, and I. N. Watson, Henry N. Ess, and Elton L. Marshall, all of Kansas City, Mo., for trustee Marine Midland Trust Co. of New York.

OTIS, District Judge.

This proceeding was instituted in the (state) circuit court of Buchanan county, Mo., whence it was removed to this court on the petition of certain of the defendants, including defendant Terminal Shares, Inc. No personal service was had on the defendant Terminal Shares, Inc., a non-resident of the state of Missouri. It was sought to bring that defendant within the jurisdiction of the state court by attachment of personal property situated within the jurisdiction of the circuit court and by the service provided for in section 739 of the Revised Statutes of Missouri for 1929 and companion sections (Mo.St.Ann. § 739 et seq., p. 959 et seq.). In this court the named defendant has moved to vacate the order for substituted service, to quash service of process thereon, to quash the publication ordered by the state court, to vacate and set aside the order for the issuance of the attachment, and to quash the writs of attachment and writs of garnishment and the service thereof.

How the motion should be ruled depends on whether the petition is of such a nature as will support a writ of attachment and the service here attempted.

Although the petition is in 478 printed pages, sufficiently for present purposes it may be thus epitomized: Plaintiff is the trustee in bankruptcy of the Missouri Pacific Railroad Company. On December 31, 1930, the railroad company entered into written contracts with Terminal Shares, Inc., for the purchase from it of certain described personal property (shares of stock in certain corporations and other personal property). Upon the agreed purchase price ($15,965,201) the railroad company has paid $3,200,000. None of the property purchased has been delivered to the purchaser. The contracts of December 31, 1930, are void or voidable (facts are pleaded supporting this conclusion). The prayer of the petition is that the contracts be rescinded; that an equitable lien in the personal property described in the contracts be declared; that that lien be enforced; and that certain injunctive orders be made pending final hearing.

1. This petition is for relief in equity. In an equitable proceeding under Missouri law as construed by the Supreme Court of Missouri writs of attachment will not issue. State ex rel. v. Blair, 238 Mo. 132, 142 S.W. 326; Gage v. Gates, 62 Mo. 412; Lackland v. Garesche, 56 Mo. 267. See, also, opinions of Missouri Courts of Appeals: Beyer v. Trust Co. et al., 63 Mo. App. 521; Brumback v. Weinstein et al., 37 Mo.App. 520; Bachman v. Lewis et al., 27 Mo.App. 81; Atwood v. Hale et al., 17 Mo.App. 81. The Court of Appeals for the Eighth Circuit has so interpreted the opinions of the Missouri courts, Lafkowitz et ux. v. Jackson, 13 F.(2d) 370, as has also this court, German v. Universal Oil Products Co., 6 F.Supp. 53.

Recognizing the construction placed on the Missouri attachment statute by the Missouri courts, although expressing the opinion that the Supreme Court of Missouri might now rule otherwise, learned counsel for the plaintiff make a somewhat desperate effort to bring this case within the rule.

That, in the preparation of their encyclopedic petition, they had not the slightest intention of stating a cause of action at law, is obvious. They even christened the petition "A petition in equity to enforce equitable lien for injunction or other equitable relief." The prayer asks only for equitable relief. Indicia of a proceeding in equity are on every page of the petition. In the brief, however, they assert that (presumably all unintentionally and purely accidentally on their part, and they are very learned counsel) they really buried in the petition at least the makings of a cause of action at law. Conceding that such a cause of action, if any, is commingled with the cause of action in equity, they assert that diligent analysis of the voluminous petition will discover it. By a major operation penetrating into the very bowels of the petition they have turned up, they say, a cause of action at law which they thus describe: "There can be no doubt that under the facts set forth in plaintiff's petition * * * a cause of action at law for the recovery of the $3,200,000 wrongfully received by defendants from the plaintiff's cestui que trust, the Missouri Pacific Railroad, has been stated. * * *"

Certainly this is grasping at a straw.

While the Missouri Code abolishes formal distinctions between causes of action at law and in equity, the real distinctions still exist. "The distinction between law and equity is as naked and as broad as ever." Magwire v. Tyler et al., 47 Mo. 115, 128, 129. "Under our the Missouri judicial system the distinction between law and equity is as clearly observed as it is under the systems in vogue in those states in which separate courts are held for the disposal of equity cases." State ex rel. v. Evans, 176 Mo. 310, 317, 75 S.W. 914, 915.

"Whether a cause arising in the state circuit court is to be judged to be an action at law or a suit in equity must depend on the facts of the case * * * the substance of the controversy must control the decision of the question. If the pleader in his petition, * * * has, through misconception of the nature of the cause, added something inconsistent with its true nature, such * * * will not change its character in respect to the question as to its being an action at law or a suit in equity." State ex rel. v. Evans, supra, 176 Mo. 310, loc. cit. 317, 75 S.W. 914, 915.

The suggestion that certain facts, which clearly and necessarily are alleged for the purpose of stating a cause of action in equity, should first be isolated, then segregated, then lifted out of the context of the petition, and so separately considered and thereafter ruled as constituting a cause of action at law, when a cause of action at law never was intended to be stated, when no legal relief is prayed, is a suggestion that cannot seriously be entertained.

2. The validity of the service sought to be obtained by the plaintiff in this case depends on whether the petition states a cause of action included among those to which such substituted service is restricted by section 739, R.S.Mo.1929 (Mo.St. Ann. § 739, p. 959). Under that statute such service may be had "in suits * * * for the enforcement of * * * liens against * * * personal property, and in all actions * * * in equity, which have for their immediate object the enforcement * * * of any lawful right, claim or demand * * * against any * * * personal property within the jurisdiction of the court."

The question then is, Does this petition state a cause of action for the enforcement of a lien against personal property? Counsel for plaintiff claim it does.

The contentions are: (1) The Missouri Pacific was vendee and Terminal Shares, Inc., was vendor in contracts for the purchase of personal property; (2) the personal property was of such a character as that the vendee would be entitled to a decree of specific performance of the contracts; (3) the vendee in a contract for the purchase of personal property of such a character as that an action for specific performance will lie to enforce the contract has, from the inception of the contract, an equitable lien upon the personal property involved in the transaction.

The petition does...