90 F. 84 | U.S. Circuit Court for the District of Northern Ohio | 1898
(after stating the facts). Technically, perhaps,this motion should he decided solely upon the answer of the garnishee, which is not at all full in its statement of the facts, though it sufficiently appears by that document that the defendants are citizens of New York and nonresidents in Ohio, while the railroad company is only a Michigan corporation. But even that is not stated in the answer of the garnishee, but rather stands upon the agreement of counsel in argument that it is not incorporated in Ohio as it might be in both states. We find the fact to be that it is solely a Michigan corporation. It seems to be conceded by counsel for the motion that the shares of stock would be leviable either in Michigan, the corporate domicile of the company, or in-New York, the residence of the owners of the shares. Apart from any authoritative adjudication on the subject, it is not very clear, considering the nature of shares of corporate stock, if it be leviable in New York, why it may not likewise be leviable in Ohio, or any other state, if service could be had upon the garnishee company. Merely because the debtors in execution or attachment reside in New York, and because that state may be taken as the situs of the shares for some of the purposes of ownership, such as the peculiar nature of the property permits, — as, for example, bequest by will or distribution after death intestate, or for taxation, and the like, — it does not follow that the shares may be subjected to the process of execution or attachment in that state, any more than other tangible or intangible personal property the debtors might own which happened, in fact, to be within the boundaries of the state of Michigan; wherefore the ultimate logic of the doctrine contended for by counsel for the motion must be that shares of stock are leviable only in the state where the company has its corporate domicile, or else in any state where there can be service on the company. Public policy would seem to favor the former rule, particularly as to quasi public corporations, and those which, like railroads, are practically perpetuated in their existence in one way or another. It would be a convenience and source of safety to have one place only to which all might resort to effectuate by sale under judicial process any enforced change of title or ownership of the shares. If that should require the plaintiff here to go first to New York for his judgment, and then to Michigan for another judgment, it would only be a result common to legal procedure; and the same'result that would be found necessary if the same debtors owned other property located in Michigan. . Perhaps one suit in Michigan, the corporate domicile, furnished by a law of that state authorizing nonresidents to be sued as to any property located there, might suffice. The case of Jellenik v. Mining Co., 82
Even if it should result that shares in a corporation in another state than that in which the debtor resides cannot lie subjected to execution or attachment for his debts, because there can be no personal service of summons on and judgment against him in that state upon which to base an execution, and that no attachment could be made effectual, that should not influence the courts in deciding such questions as this, for the reason that they can neither legislate nor impress a different qualify upon property than it possesses inherently from the sources of its creation or origin. One must deal with the corporation itself in some form to subject shares of stock to judicial process against their owners, and it may be difficult to And the corporation for that purpose elsewhere than in the corporate domicile, particularly since the latest decisions of the supreme court seem to establish that it can have only one domicile or habitation for the purposes of suits against it, so far as federal jurisdiction is concerned, at least. Railroad Co. v. James, 161 U. S. 545, 563, 16 Sup. Ct. 621; Railroad Co. v. Steele, 167 U. S. 659, 17 Sup. Ct. 925; U. S. v. Northwestern Exp. Stage & Transp. Co., 164 U. S. 686, 689, 17 Sup. Ct. 206; Steamship Co. v. Kane, 170 U. S. 100, 106, 111, 18 Sup. Ct. 526; Railway Co. v. Gonzales, 151 U. S. 496, 14 Sup. Ct. 401; Shaw v. Mining Co., 145 U. S. 444, 12 Sup. Ct. 935; In re Keasbey, 160 U. S. 221, 229, 16 Sup. Ct. 273. Under the existing judiciary act, the plaintiff, being an inhabitant of Ohio, might have brought this suit in this court originally, but he would have required personal service to reach the defendants. Having sued them in (he state court, he might attach any property of theirs found in Ohio, and the question is whether his attachment has found their shares of stock in a Michigan corporation in Ohio. If it has nol, they may move here to discharge the service made in the state court. Railway v. Brow, 164 U. S. 271, 17 Sup. Ct. 126.
How did (he shares of stock become located in Ohio, and subjected to the quite absolute dominion of the laws of that state over any prop
The company is liable to process by garnishment, undoubtedly; but when it answers that the defendant in attachment is one of its shareholders it might as well have said that it had in its hands the property of the defendant debtor, but that it was held by the company within the state of Michigan, and not within the state of Ohio, — locomotives, let us say, used wholly within the state of Michigan, or within the state of New York, where the debtors reside, — if it be a proper ruling
It is not worth the; while; to become involved in any intricacies of consideration as to the situs of a de;bt. It is only in a very qualified and somewhat metaphysical sense lliat a corporation is a debtor to its shareholde;rs for their shares. The shareholders are the owners of the corporation, not its creditors, in relatiem to this matter of seizing the shares as property. The corporate property is not subject to seizure as their property for many reasons; and to- reach the individual interests of the shareholders for the purpose® of taxation, descent and distribution, and attachment and execution, and other purposes to he imagined, peculiar methods are to be adopted, and "the situs of the shares may shift according to these needs, respectively. For the purpose of compulsory action to reduce the shares of any individual owner to money by judicial seizure and sale, almost necessarily you must act both upon the shareholder and the company, either jointly or in consecutive relation, and it is not enough to answer this necessity, which is founded in our rules of jurisprudence for giving notice before execution, to seize only the company by process of garnishment. It would embarrass its business to require'the company constantly to look after the individual ownership of its shareholders in its shares, and they really have no duty in respect of this, except, perhaps, at its corporate domicile, where its shares are dealt with by it and the law. livery consideration, it seems to me, of public policy and private justice to the parties concerned, requires
Garnishment, at law, as to shares of stock, is not the same thing as-garnishment of a debt owing by the company, or of property held by it in hand; and equitable attachment by garnishment, or analogous procedure, to that end, would, in the ordinary nature of equitable proceedings, require personal service on all the parties in interest, or such substituted service that it would not be appropriate where the principal defendant and the equitable garnishee were both out of the jurisdiction. Elsewhere than in the home state of the owner or the corporation, except in this qualified way that the garnishee corporation maybe served with process, there could be no substituted process satisfactory to a court of equity, or a court of law proceeding with equitable remedies. Notice is essential in a court of equity to some one whom the court can control. That service is qualified by the fact that the shares of stock are not in the garnishee’s hands or under its control elsewhere than in the state of its creation, because by the laws-of that state alone the shares also are created; and, owing to that peculiar creation, they are regulated and governed howkere else as-to all their incidents, including that of alienation, by judicial process, as by other methods. The service is not qualified by any restrictive effect to reach only suits concerning .its own business, for the-company may be garnished generally, as to all people, in Ohio; but Ohio cannot, or at least has not undertaken by the attachment laws, to administer the laws of Michigan in relation to shares of stock in Michigan corporations. And the alienation of the shares as against the-
It must be conceded that notice to the company’s agent in Ohio that the defendant’s shares had been attached would qua notice he as effectual if the Ohio agent did his duty as if lodged at the home office in Michigan. It would get there by a more roundabout route, that is all. And we know it has been as effectual here, for the garnishee defendant appears and sets up the defense for its shareholders just as
The elaborate and very able opinion of Vice Chancellor Pitney in Insurance Co. v. Chambers (N. J. Ch.) 32 Atl. 663, is in full accord with the opinion here expressed as to the essential difference between the garnishment of a debt owing by a foreign corporation and its shares of stock. While disapproving very vigorously the ruling of the New York courts that debts owing by a corporation cannot be attached by garnishment served upon the agents of the company in a state where it has no corporate existence, and is only doing business, he approves with equal emphasis the holdings of those courts that the shares of stock cannot be so attached. Plimpton v. Bigelow, 93 N. Y. 592, 29 Hun, 362; Straus v. Glycerine Co., 46 Hun, 216; Id., 108 N. Y. 654, 15 N. E. 444; Douglass v. Insurance Co., 138 N. Y. 209, 33 N. E. 938. And he remarks, in commenting on this point, that “stock in a corporation cannot be levied upon by an ordinary execution against the holder, except by special statutory provisions; and it would be most unjust
It also must be conceded that after notice and publication in another state a judicial sale of the shares by the sheriff or other officer would be, in fashion and substance, just like a sale of the same kind in the home state of the corporation as against a nonresident member, for that is one way the purpose of appropriation may be accomplished, and, perhaps, a sufficiently effectual way of doing it; the purchaser at judicial sale being thus armed with the title to compel a transfer of the stock in the books. But, again, that does not meet the objection of want of dominion over the thing appropriated; not any more than if the state of Ohio should do the same thing as to tangible property or even land of the nonresident debtor situated in another state,
The case of Miller v. U. S., 11 Wall. 268, 294, abundantly illustrates the difficulties of seizing stocks by mesne or final process elsewhere than in the home state of the corporation by showing the difficulty of doing it there, as pointed out by the opinions and dissenting opinions, which are very instructive on this subject of seizing shares of stock by judicial process. That, too, was a case of Michigan stocks, and it appears they are not to be attached in that state by mesne process, unless the law has been changed since that time. It was done in that case by garnishment notice at the home office perforce of an act of congress acting within the state of Michigan. What was- said by the Sixth circuit court of appeals, through Mr. Circuit Judge Taft, in speaking of a statute of Michigan which said that "any corporation, domestic or foreign, may be garnished under this act” (How. Ann. St. Mich. § 8086), well applies here:
“At all events, there is nothing in the garnishee statute of Michigan expressly requiring a foreign corporation to submit to a judgment in garnishment in such a case. And the mere provision that such corporation shall be generally subject to garnishment is not to be interpreted as imposing a liability, power to impose which is rendered doubtful by the considerations already stated.” Reimers v. Manufacturing Co., 17 C. C. A. 230, 70 Fed., at page 575.
We are told by counsel that the precise question has not been decided by the Ohio courts. Counsel disagree as to whether debts due by nonresident garnishees can be attached in Ohio by service when the garnishee is found in Ohio; but it may be conceded that they may when the garnishee has a business residence here, and yet it does not appear that shares of stock also may be seized, since they stand on a different footing from debts. The case of National Bank of New London v. Lake Shore & M. S. Ry. Co., 21 Ohio St. 221, was the seizure of shares in an Ohio corporation, and establishes that, where the nonresident debtor owns such shares, they may be subjected by garnishment under the above statutes. So, in Norton v. Norton, 43 Ohio St. 509, 3 N. E. 348, as to the shares of an absconding debtor in an Ohio corporation; but this is only an affirmance of the doctrine of Miller v. U. S., 11 Wall. 268, that garnishment notice is an appropriate way
The case of Winslow v. Fletcher, 53 Conn. 390, 4 Atl. 250, oifed by plaintiff, is in favor of the ruling here made, though in that case neither of (he parties was a resident of Connecticut, except tine garnishee. But I have endeavored to show that the mere residence' of the plaintiff does not increase the power of the state in the premises. It is (.he presence in the state of the .defendant, or the thing he owns, which is the essential element of control, and not the presence of the plaintiff, where the state malees no discrimination, and allows all plaintiffs, whether resident or nonresident, equal access to its courts, as most states do, even for the purposes of appropriation by attachment of tiie property of a debtor found within the state. In that case a Massachusetts creditor sought to reach shares of stock in an Indiana bank belonging to his Indiana debtor, in the hands of a Connecticut garnishee, holding them as a pledge. It was held that he must go to Indiana, “where, in contemplation of law, the stock is situated. By-coming here (hey can only succeed upon the theory that in some sense the slock is located in this state. Such a theory is inconsistent with a familiar and well-settled rule that stock in a corporation, for the purposes of an attachment, has its situs where the corporation is located.” It is further said that the sale of stock in another state
In Miller v. Hooe, 2 Cranch, C. C. 622, Fed. Cas. No. 9,573, a District of Columbia garnishee answered that he held property of the defendant debtor under his control at his mill in Virginia, just across the line; and the court held that it was not liable to the process.
In the case of Pinney v. Nevills, 86 Fed. 97, it was decided by the circuit court of Massachusetts, upon the authorities cited, that shares of stock in a foreign corporation are not subject to attachment under the statutes of Massachusetts. .Mr. Circuit Judge Colt says: “The general rule of law is that shares of stock in a foreign corporation, owned by nonresidents, are not the subject of attachment.”
I must confess that there is difficulty in dealing with the logical bearing of the fact that a large part of the corporate property is in Ohio, and that, if this corporation is amenable to suit in Ohio by general process, which is notice to it for all purposes of process, and may be garnished as to things in its hands and under its control as domestic corporations may be, notice about its shares delivered in Ohio is quite as effectual qua notice as if delivered in Michigan, for the excitation of its own action in the premises; that, after such notice, it may do practically, as to those shares, either by way of notice to its shareholder or by way of its dealing with them, anything it mighhdo if the same notice were lodged across the line, and that there is a good deal of barren technicality about the situs of such property, and its shifting from one place, to another, as may be convenient for the uses that may happen to be wanted for a situs for it. Yet I am convinced that the soundest principles of public policy, private justice, and international or interstate comity and obligation require that shares of stock shall be subjected, in invitum, as against an owner not served with process personally, only in the state which created the stock, and regulates its incidents by its own laws, and has the sole right to declare how and under what circumstances it shall be liable to judicial process operating alone upon the stock, and not upon the owner. If I am wrong about this ruling, and it puts unauthorized restrictions upon the statutes of Ohio, it is satisfactory to know that a mandamus will compel this court to take the jurisdiction. Motion granted.