259 F. 76 | 6th Cir. | 1919
(after stating the facts as above).
It is said that an appearance for the purpose of testing jurisdiction over the subject-matter is a waiver of any lack of personal jurisdiction, and that the board, by its appearance at this time before the referee, has subjected itself to this result. It may be assumed that, after an appearance for the purpose of contesting jurisdiction over the subject-matter, just as it is after an appearance to contest the general merits, it. is too late to deny any personal privilege of choice of forum; but the rule does not apply here. Although the paper filed with the referee purported to challenge the jurisdiction of the court on the subject-matter named, this challenge must be interpreted with reference to the facts. The District Court for the Northern District of Ohio could hear and decide such a controversy, if the board were properly served within the district; as a court of bankruptcy, circumstances could arise which would give it jurisdiction; the challenge, therefore, whatever its form, was, in the end, a claim that jurisdiction could not be exercised against the consent of the board, and was accompanied by an express refusal to consent beyond a stated limit. Indeed, whether a quasi municipal corporation could consent to be sued in a foreign state is a question which challenges attention. At least, its consent must be clear. The board did not join in submitting to the court any matter of' the power of the court to hear the question of liability against it under the contract, nor did it ask or receive the opinion of the court thereon. Its substantial attitude as to the matt.er was:
“Prior to the bankruptcy, there was a dispute between the bankrupt and us as to our respective rights under the contract. This dispute has taken form in litigation in Michigan. We cannot be sued and we are unwilling to be sued anywhere else, but, as the bankruptcy court has jurisdiction to direct its receiver to assume and carry on the contract, we will attend before the referee, put the situation before him, and make some concessions to aid him in deciding whether or not to give such instructions, or whether to leave the contract and equipment in our hands for completion by us; but it shall be expressly understood that we do not submit ourselves to the jurisdiction of that court with reference to any claim against us for damages under the contract.”
We do not know of any principle or precedent which would justify treating such a denial of jurisdiction and express refusal to be sued on that cause of action in this court as being, nevertheless, an admission of jurisdiction and a consent to be sued. It goes without saying that there was no intent on the part of the referee in bankruptcy to mislead the board, but for the trustee and the bankruptcy court to accept whatever benefit there was in the agreement in question, and
The trial court was largely influenced in its conclusion by the thought that the board could not be heard to deny the jurisdiction of the court to enforce the very contract which the board had made with the court through its officer. Just how far the court may have personal jurisdiction over a nonresident to enforce a contract made with its receiver or trustee, which contract has been by both parties submitted to the court for approval, we need not decide. We do not find that the rights sought to be enforced and the wrongs sought to be redressed by the receiver (as to liability) had substantial basis in the contract of October, 1917. This contract made no vital change in the existing rights of the parties. There had already been a breach, and the party guilty thereof was liable to the other party in damages. After the effort to have the receiver assume and carry out the contract failed, the parties then made an arrangement, the sole purpose of which was to minimize the damages in the interest of whichever party might eventually be found liable. In place of the legal rules for determining damages under those circumstances, the parties substituted some voluntary arrangements. Indeed, it is doubtful whether they made any very substantial change in the obligations which the law would or might have imposed. Any breach of this later contract is wholly incidental to the underlying breach. We cannot conceive an assessment of damages for violating the contract of October 20 which would not be inextricably confused with the original liability and the original damages. To permit jurisdiction which might rest upon the enforcement of such an incidental contract to neutralize lack of jurisdiction as to the'main underlying question, would be to merge the principal thing in the incidental.
It follows that the bankruptcy court is without jurisdiction to entertain the controversy as to how much is due from one party to the other for damages for breach either of the original contract or of the incidental one of October 20. We do not find this subject and that of the equipment so interdependent that power to hear and decide upon one necessarily includes the other.
■■ The order under review should be set aside, and should be modified as indicated in this opinion. The petitioner will recover costs.