Whelan v. Enterprise Transp. Co.

• Decision Date: 20 July 1908
• Docket Number: 405.
• Citation: 164 F. 95
• Parties: WHELAN v. ENTERPRISE TRANSP. CO.
• Court: U.S. District Court — District of Massachusetts

164 F. 95

WHELAN v. ENTERPRISE TRANSP. CO.

No. 405.

United States Circuit Court, D. Massachusetts.

July 20, 1908

Albion L. Millan and Morse & Friedman, for intervening creditor Van Raalte.

Brandeis Dunbar & Nutter, for Beadleston and Woez.

Dickinson & Dickinson and Saml. Williston, for receiver.

LOWELL Circuit Judge.

The receiver, appointed by this court, filed a petition in this court which, by the stipulation of parties, may be taken to be the equivalent of a plenary suit in equity ancillary to the principal receivership suit. The petition set out that the defendant Paige, an insurance agent, had collected payment under insurance policies for certain losses suffered by the corporation.

The sums thus collected he refused to turn over to the receiver alleging that he was entitled to keep them and apply them in satisfaction of his claim against the corporation for unpaid premiums advanced to it by him. This last-mentioned claim he has duly filed in the principal suit, seeking payment thereof from the estate. To the petition, treated as a bill in equity of some sort, he has demurred, upon the ground that the proceeding by way of petition denies him his right of jury trial. He also urges that the receiver has an adequate remedy at law. The receiver admits that his claim against Paige is not in its nature cognizable in equity. He makes the following contention in support of his petition:

That in White v. Ewing, 159 U.S. 36, 15 Sup.Ct. 1018, 40 L.Ed. 67, the appointment of a receiver in a proceeding of which the federal court has rightly taken jurisdiction was held to give to that court jurisdiction to collect, by way of proceedings in equity, all claims of the receiver against the corporation's debtors. In other words, that the due appointment of a receiver by a court of equity gives to that court jurisdiction to proceed in equity to collect any and all of the receiver's claims, though against persons not parties to the original bill. Counsel for Paige contends, on the other hand, that White v. Ewing must be taken to hold that the jurisdiction conferred upon the Circuit Court by the receiver's appointment is conferred upon that court generally, and not upon the Circuit Court only as a court of equity. Paige admits the jurisdiction of the Circuit Court to enforce this claim by way of a common-law suit, and bases his demurrer to the petition solely upon the procedure in equity sought by this petition, and upon its consequent denial of jury trial. The receiver, in effect, asserts that, as the proceedings originated in equity, they must remain equitable. He does not deny that a court of equity may frame issues for trial at law and send them to a court of law for trial. That is a well-recognized function of a court of equity. He does deny that the jurisdiction of a court of equity can extend the jurisdiction of a court of law in a manner unknown to the principles of English chancery. Hence he contends that the proceedings to collect the receiver's claims, termed ancillary in White v. Ewing, must necessarily be equitable.

Paige is not satisfied to seek a jury trial from the chancellor's discretion, though he is ready to meet it in a federal court. His contention, in effect, is this: If the receiver here brings an action at law against Paige, he needs no justification for the form of this action. He alleges money had and received by Paige to his use. A court of law is the proper forum for the receiver's recovery. So far all is clear. To maintain his action at law in the Circuit Court as Paige asserts that he may, not only must the receiver have a claim enforceable in an action at law, but the federal court, as such, must have jurisdiction to entertain the action. We thus pass from the general principles of the common law and from the practice of the English Court of Chancery to the nature and limits of federal jurisdiction.

In our jurisprudence, the courts of common law and of equity are interdependent. Neither is complete without the other. Legal remedies may be ineffective or too harsh, unless strengthened or softened by the more flexible procedure of equity.

The judgments of a court of law must sometimes be modified by a court of equity. Now if federal jurisdiction, once attached at law, did not at the same time attach for some purposes in equity, and vice versa, our federal courts would be less efficient instruments of justice than other courts of English speaking people. Accordingly, the Supreme Court held, in Dunn v. Clarke, 8 Pet. 1, 8 L.Ed. 845, that the Circuit Court had jurisdiction to restrain, without regard to citizenship, the devisee of a plaintiff from enforcing a judgment obtained by the latter at law. 'The injunction bill is not considered as an original bill between the same parties as at law.' 8 Pet. 3, 8 L.Ed. 845. Yet in the purview of an English Court of Chancery such a bill would undoubtedly be original. Minnesota Co. v. St. Paul Co., 2 Wall. 609, 633, 17 L.Ed. 886. It was ancillary only quo ad federal jurisdiction. Home Ins. Co. v. Virginia-Carolina Chem. Co. (C.C.) 109 F. 681, 686.

The principle that, where a federal court acquires jurisdiction of a controversy by proceedings either at law or in equity, it acquires jurisdiction of the controversy for the purpose of further proceedings both at law and in equity, was further established by the cases referred to in White v. Ewing. Thus it was said, in Krippendorf v. Hyde, 110 U.S. 276, 287, 4 Sup.Ct. 27, 32, 28 L.Ed. 145:

'The form of the proceeding, indeed, must be determined by the circumstances of the case. If the original cause, in which the process has issued or the property or fund is held, is in equity, the intervention will be by petition pro interesse suo, or by a more formal but

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