89 F. 24 | U.S. Circuit Court for the District of Western North Carolina | 1898
This is a motion for an injunction. In order to understand the questions involved in it, a statement of facts is necessary: The Western North Carolina Railroad Company was incorporated under the laws of the state of North Carolina. Its road ran from Salisbury to Asheville, and thence it had two branches, —one known as the “Murphy Branch,” to Murphy, N. C.; the other from Asheville to Paint Rock, N. C. On the 2d September, 1884, this corporation executed two bonds to the Central Trust Company of New York, — one in the sum of $3,000,000, and the other in the sum of $1,020,000, — each payable on 1st July, 1914, in gold coin; interest thereon payable in like coin on the 1st days of January and July in each year, at the rate of 6 per cent, per annum. On the same day, to secure the said bonds, the railroad company executed to the said Central Trust Company its mortgage or deed of trust, whereby it
The first objection is that the case of the Central Trust Company against the Western North Carolina Bailroad has ended, and is no longer alive, so that this court cannot pass any order therein. It is said that the decree confirming the sale is a final decree, which ends the case. An inspection of the decree itself militates against this view. “And the court,” says the order, “accepts the Southern Bail-way Company as the purchaser of, all and singular, the railroad property and franchises sold under the decree in this cause, and holds it obligated as such purchaser to complete and fully to pay its said bid, and to comply with all the orders of this court heretofore entered, or hereafter from time to time to be entered, by it, obligatory on such, purchaser.” And so the decree in many other places distinctly declares the cause and the purchaser under its jurisdiction open to the entry and enforcement of such orders as may from time to time become necessary. If the purchaser, under the clauses quoted, is held bound to the court to obey its orders, surely the purchaser has a corresponding right to call upon the court for its aid against what has been done in opposition to its orders. One of the obligations of the purchaser is to hold subject to the first mortgage; and in argument it has been claimed that the purchaser has, as between itself and the North Carolina Bailroad Company, become the principal, as far as the debt under this mortgage is concerned, and the North Carolina Bailroad Company a surety. The Central Trust Company, the first mortgagee, is a party to that suit. So long as the first mortgage remains open and unsatisfied, the cause cannot be said to have ended. Under this decree the purchaser was made liable for all claims against the Western North Carolina Bailroad Company, or the receivers, existing at the date of the sale, and affecting the corpus of the property sold. These claims required investigation, examination, and proof; and, so long as any of them remained or remains unsettled, the case was and is open.
It is urged, with a wealth of authority, that the decree in this casé affirming the sale was “a final decree.” These words, “a final decree,” are technical. They determine when an appeal to a higher court will lie. No case should go, up by piecemeal. No case can
“Wlien a decree decides the right to and possession of property in contest, and the party entitled to have it carried immediately into execution, it is a final decree, although the court below retains possession of so much of the decree as may be necessary for adjusting accounts between the parties.”
The case of Ray v. Law, 3 Cranch, 179, only decides that a decree of foreclosure of a mortgage is so far final that it can be appealed from. And this was the same result in Whiting v. Bank, 13 Pet. 9, although clearly there was much for the court below to do. Another illustration is found in the language of the supreme court in Re Farmers’ Loan & Trust Co., 129 U. S. 213, 9 Sup. Ct. 266; Mr. Justice Miller speaking for the court:
“The doctrine that after a decree which disposes of a principal subject of litigation, and settles the rights of the parties in regard to that matter, there may subsequently arise important matters requiring the judicial action of the court in relation to the same property and some of the same rights litigated in the main suit, making necessary substantivo and important orders and decrees, in which the most material rights of the parties may be passed upon, and which, when they partake of the nature of final decisions of those rights, may he appealed from, is well established by decisions of this court.”
In Nougué v. Clapp, 101 U. S. 551, there had been a decree for foreclosure in a state court. A bill was filed in the United States circuit court by a stockholder in the debtor corporation, upon the ground that the decree was obtained by fraud. The language of the opinion, mutatis mutandis, is curiously applicable to this case:
“A circuit court of the United States cannot revise or set aside a final decree rendered by a state court, which had complete jurisdiction of the parties and subject-matter, upon the ground that the decree was obtained by fraud,where the injured party has had an opportunity to apply to the state court to reverse the decree. The plaintiff is a party to the foreclosure suit, as a shareholder in the old corporation. The state court is still open to listen to the complaint of the corporation and its shareholders. The decree of foreclosure, though final in one sense, as determining the respective rights of the parties to the property in question, is still, in its nature, interlocutory, and is open to review by the court, upon petition or motion in the cause, or by*28 bill of review for good cause shown. Story, Eq. Pl. § 421, and note; Evans v. Bacon, 99 Mass. 213; Pub. St. Mass. C. 151, § 12. Tlie plaintiff bas therefore an ample and complete remedy for all his alleged grievances in tlie state court, and there is no occasion for his application to this court for relief by bill in equity. The decree of foreclosure, therefore, now in full force and unrevoked, is a bar to- this suit.”
These views, so well expressed, are conclusive of this branch of the case, and require nothing more to be said. This case is still within the control of this court.
The complainant has brought these questions up by supplemental bill. “This may be done [i. e. use of a supplemental bill] as well after as before a decree, and the bill may be in aid of the decree, that it be carried fully into execution. * * *” Mitf. Eq. PI. pp. 75, 76, par. 62.
This whole subject is discussed in the case of Root v. Woolworth, 150 U. S. 401, 14 Sup. Ot. 136, on a similar objection made before the court to a bill filed to carry into effect its own decree. This decree had been rendered and filed. It related to the title to land. Subsequently an assignee of the prevailing party brought his bill in the United States circuit court, alleging that his rights under the decree were disregarded and denied. It was held to be ancillary to the original proceedings, and supplementary to the decree rendered therein. The right of the court to carry into effect its own orders and decrees is asserted and maintained. In the course of the opinion the learned justice adopts the language of a case quoted:
‘‘The title held by the mortgagor passes under the decree to the purchaser upon the consummation of the sale by the master’s or sheriff’s deed. As against all parties to the suit, the title is gone; and as the right to the possession, as against them, follows the title, it would be a useless and vexatious course to require the purchaser to obtain such possession by another suit. Such is not the course of procedure adopted by a court of equity.”
But the jurisdiction does not depend alone on the supplemental bill. If it be treated as an original, bill, it is ancillary in its character, growing out of, dependent upon, and in aid of the original bill. See Clarke v. Mathewson, 12 Pet. 120; Fost. Fed. Prac. 28, 29. This question will be discussed in connection with the other objection, that the bill seeks to enjoin proceedings in a state court. The original bill was filed against parties among whom was. the Western North Carolina Railroad, a corporation. The issues in the case were the existence of the mortgage, the validity of the mortgage, the debt due under the mortgage, and the right to a foreclosure and sale. With respect to the mortgage, it was distinctly averred that it was authorized, made, executed, and delivered in all respects in conformity with law. All these issues were decided in favor of the complainant, and were finally and forever adjudicated as between the parties and their privies. The Western North Carolina represented each and every of its stockholders. They were not necessary or proper parties to the suit. The corporation fully represented each of them. Railroad Co. v. Howard, 7 Wall. 392. If there existed any reason why it did not or could not represent the stockholders, or any of them, on proper showing any stockholder could have been permitted to intervene and protect his interest. Nothing
“After (lie plaintiff removed to a proper court of tlie United Stales a sub in replevin brought in a stale court, tlie latter proceeded to try it and render judgment for a retorno hnhendo. An action having- (hereupon been brought in a slate court against him and his sureties on the replevin bond, they filed their bill in the circuit court of the United States, praying that- plaintiff in the action he enjoined from further prosecuting it. The circuit court properly granted the prayer of the bill.”
So in French v. Hay, 22 Wall. 250. A case was properly removed from a state court under one of the acts of congress relating to removals into the circuit court of the United States. A complainant, getting a decree in a state court, sent the transcript into another state, and sued the defendant on it there. The circuit court into which the case is removed may enjoin the complainant from proceeding in any such or distant court until it hears the case; and if, after hearing, it annuls the decree of the state court, and dismisses it, as wanting equity, the decree may make the injunction perpetual. The court says:
*30 “This bill is not an original one. It is auxiliary and dependent in its character, — as much so as if it were a bill of review. The court, having jurisdiction in personam, had power to require the defendant to do or to refrain from doing anything beyond the limits of its territorial jurisdiction which it might have required to be done or omitted within the limits of such territory. Having the possession and jurisdiction of the case, that jurisdiction embraced everything in the case, and every question arising which could be determined in it, until it reached its termination, and the jurisdiction was exhausted. While the jurisdiction lasted, it was exclusive, and could not be trenched upon by any other tribunal. The court below might, upon a cross bill, and perhaps upon motion, have given the relief which was given by the interlocutory and the final decree in the case before us.”
So, in President, etc., v. Merritt, 59 Fed. 7, a federal court which has obtained jurisdiction may enjoin a party from prosecuting in a state court a subsequent action which will defeat or impair the same, notwithstanding section 720, Sev. St.
It is said, however, that this matter has been decided by the supreme court of North Carolina, that it involves the construction of a state statute, and that the supreme court has held that the purchase by the Southern Railway Company of the property and franchises of the Western North Carolina Railroad Company is null and void. This court, without question, follows the decisions of the supreme court of North Carolina in the construction of the state statutes in matters of local concern. But unfortunately in the present case it has not the aid of such construction. The case of James v. Railroad Co. (N. C.) 28 S. E. 537, has not the far-reaching effect which is claimed for it. The single question in that .case was, does the Western North Carolina Railroad Company still exist as a corporation, and as such owing duties to the state? And that question is decided in the affirmative. This bill, filed by stockholders and creditors, goes further, and seeks to secure a declaration that the proceedings in foreclosure in this court, the sale thereunder, the purchase at such sale, and the deed in pursuance thereof, are null and void, and then seeks to sequester all the property so purchased for the benefit of the stockholders and creditors of the Western North Carolina Railroad Company. The case of James v. Railroad Co. cannot be quoted as authority for these positions. The Southern Railway Company was not á party to the suit, nor could its rights and interests be adjudicated in that case. The court decided the question immediately before it. And, so far as the Western North Carolina Railroad Company and its responsibilities are concerned, this decision is final. Notwithstanding that it has lost all of its property, including its franchise, under which' it operated the railroad and received its tolls and fares (Code N. C. § 671), it has not freed itself from its obligations to the state (Id. § 676). But, as to any other matter or thing contained in the opinion of the learned justice who delivered it, all these are obiter, — listened to with all the respect the composition of the court demands, but of authority nowhere. The Western North Carolina Railroad Com-, pany was created a corporation by the legislature of that state in the exercise of a sovereign power. This sovereign power made of several persons a single entity, and conferred on them the franchise of acting as one person. This new person, creature of the law, and existing through the grace of and at the will of the sovereign, was then
It has been urged that the purchaser, the Southern Railway Company, is a corporation of the state of Virginia, and can neither purchase nor hold a railroad in North Carolina. With regard to the purchase, the sections of the Code relating to the subject made no discrimination between natural persons and corporations as purchasers of corporate property. Code, §§ 671-675, 697. The word “person” is used, and this means both natural and artificial persons. A corporation is a person, within the meaning of the fourteenth amendment, and is under its protection. Santa Glara Co. v. Southern Pac.
Let an injunction issue against the defendants in this suit, and all others who go in with them in the proceeding complained of, in accordance with the prayer of the bill, to remain of force until the further order of this court.