282 F. 185 | 6th Cir. | 1922
On April 29, 1921, the Bacon Bros. Company, a corporation organized under the laws of Ohio, appellee in No. 3725, filed its bill in the court below against a large number of individuals, alleged to be, respectively, officers, trustees, members of board of appeal, members of executive board, or members generally of the United Brotherhood of Maintenance of Way Employees and Railway Shop Laborers, which is a voluntary, unincorporated association, having its principal office and place of business at Detroit, Mich. Neither of the defendants was a citizen or a resident of the district of suit, nor was either of them found therein. They were sued “in their respective capacity as representatives of said United Brother
In September, 1919, the Brotherhood duly adopted a constitution providing for its engaging in a co-operative plan for- the purchase from manufacturers, and the distribution to members of the Brotherhood, of clothing, shoes, and other merchandise; its general convention making provision for the creation of a co-operative department. Accordingly, on or about January 8, 1920, for the purpose of engaging in the manufacture (among other things) of gloves and mittens (which was plaintiff’s then business), the Brotherhood purchased from plaintiff certain real estate, buildings, and equipment in Toledo, Ohio, at a price of $90,214.62 (all of which was duly paid, except $10,440.83, the title being taken in the name of trustees for the Brotherhood, who still hold the same); also materials for the manufacture of gloves and mittens at a price of $105,297.75 (fully paid for in cash), as well as finished merchandise at a price of $218,054.89, which was not paid for, under an agreement that the factory should be operated by one of the Bacons, who was plaintiff’s secretary and treasurer, for a term of five years, the Brotherhood bearing the operating expenses of the factory and providing sufficient funds, to be kept on deposit in Toledo banks, for the purpose. A minimum manufactured product of $1,000,-000 in value was contemplated, one half (or so muchjhereof as it could use) .to be retained by the Brotherhood for sale to its members, the other half to be taken by plaintiff and paid for on the basis of 5 per cent, above the cost of production.
On or about June 30, 1920, it was agreed between plaintiff and the Brotherhood that the previous agreement be terminated, that the Brotherhood be relieved from all its obligations under its agreement with said Bacon, plaintiff assuming all' liabilities and expenses incurred in the operation of the plant from January 8, 1920, to Tanuary 1, 1921, and agreeing to furnish to the Brotherhood membership such goods as plaintiff might then be manufacturing, or might thereafter manufacture at any time within the next 10 years, at cost of production plus '5 per cent.; also to supply the membership with certain articles of clothing not then manufactured by plaintiff, and other articles which it might thereafter undertake to furnish, also at manufacturer’s prices plus 5 per cent.; the Brotherhood agreeing to use its good offices to place the Brotherhood membership in touch with plaintiff, to the end that it might obtain such patronage; that for the purpose of advising the membership as to the articles which could be so purchased, and the facilities for obtaining them, the Brotherhood should set aside one page of its monthly publication for publishing, during the life of the agreement, information necessary for advising the membership in the premises. The Brotherhood accordingly sold and transferred to plaintiff all materials and all manufactured products.and proceeds resulting from the operation of the factory from January 8, 1920, at an agreed price, fully paid. Plaintiff executed a release of the balance due on the purchase price of the real estate, in consideration of which plaintiff was to have possession of the factory and the right to operate it until January 1, 1921; assumed and paid all expenses in connection with the operation of the factory from January 8, 1920, to January 1, 1921 (excepting $10,000, which had been furnished by the Brotherhood for that purpose); assumed all outstanding obligations and contracts, and itself operated the factory (obviously on its own account) until January 1, 1921, thereby paying out moneys, relinquishing claims and assuming or relinquishing liabilities or indebtedness in the aggregate of $475,000 above offsets and credits, as well as surrendering its right under the initial contract with respect to the purchase of one-half the merchandise manufactured by the Brotherhood.
To carry out its obligation under this last agreement of June 30, 1920, plaintiff agreed with a shoe manufacturer (operating a nonunion factory) to have distributed among the Brotherhood membership shoes made by such manufacturer, in accordance with the agreement between plaintiff and the Brotherhood. This arrangement was made with the consent and approval of the Brotherhood’s representatives, with the understanding that the manufacturer would, if the agreement proved mutually agreeable, unionize his factory—the shoes meanwhile manufactured by him for distribution among the Brotherhood’s membership to have impressed thereon a facsimile of the Brotherhood’s Grand Seal, in lieu of the union label. Plaintiff also, through
The bill further alleges that the purpose of the executive board in sending out this circular was to wreck the co-operative plan and agreement by preventing the Brotherhood membership from ordering merchandise from plaintiff, and inducing the belief that such plan was a fraudulent scheme promulgated by plaintiff to induce them to purchase from plaintiff goods which they otherwise would not have so purchased, and to believe that the plan violated the Brotherhood’s constitution and was without authority, while in fact the truth was in
The bill also charged that the Brotherhood was engaged in dissipating its properties; that it had sold many of them for less than had been offered to it by other persons; that there was grave danger that its assets would be so dissipated and lost as to destroy its ability to pay its just debts, including its indebtedness to plaintiff; that it intends to remove beyond the jurisdiction of the court such property therein as is movable for the purpose of defrauding plaintiff as a creditor, and' for depriving the court of jurisdiction thereof, and that the Brotherhood was about to incumber its real estate and other immovable property within the jurisdiction of the court in fraud of plaintiff’s rights; also that the Brotherhood has on deposit in Detroit and elsewhere large amounts of cash, and has in its possession negotiable securities of large value which plaintiff believes are about to be sent out of the United States for the purpose of placing them out of plaintiff’s reach and out of the jurisdiction not only of the court below, but of all other courts in the United States. The bill asked relief by way of rescission of the contract of June 30, 1920, an accounting with respect to the amounts due plaintiff, the decreeing of a vendor’s lien upon the real estate and a manufacturer’s lien upon the personalty; a sale of the same to satisfy liens; a decree for the balance remaining unpaid; supplementary proceedings to collect such balance, and, pending final hearing, injunction restraining the removal of property from the jurisdiction of the court, receivership of all the Brotherhood property within the district, ancillary receivership proceedings in other jurisdictions, and general relief» This completes our summary of the contents of the bill.
On the nepct day defendants, appearing, as stated, for the sole purpose of filing and making motion, and in terms expressly saving their exceptions to the denial of the motions to quash and dismiss before referred to, moved to dismiss the bill for lack of , equity, absence of right to rescind the contract of June 30, 1920, and for other reasons, and in connection therewith made answer (under like protest of non-waiver, etc., as in the case of the motion to dismiss just referred to), denying plaintiff’s right to rescind the contract referred to, the existence of vendors’ or manufacturers’ liens, and any and all liability asserted, and challenging in detail the prominent equities relied upon by plaintiff. On February 15, 1922, plaintiff filed an amendment and supplement to its bill of complaint, alleging the dissipation by defendants of large sums of money belonging to the Brotherhood, the withholding from the latter’s Co-operative Department of large sums due that department, the transferring of Brotherhool real estate to a new corporation, the making of deposits of Brotherhood funds in a Canadian bank, the fact of suit in Michigan against the Brotherhood and three of the defendants alleging misappropriation of funds, the likelihood of other similar suits, a decrease in the Brotherhood’s membership, the danger of its insolvency, an alleged deposit of about $88,000 of Brotherhood funds in a certain bank of Cleveland, Ohio, the name under which the deposits were carried being unknown. It prayed for
On February 24th defendants moved to vacate the restraining order and to quash the order to show cause upon the receivership application, likewise appearing solely and specially for that purpose. The court set this motion for hearing on March 13th, continuing the restraining order until that date, and making like orders and continuances until March 25th, meanwhile, on March 24th, overruling the motion to vacate the restraining order of February 15, 1922, and to quash the order to show cause made on that date in the receivership application, and appointing a special master to take testimony in support of and in opposition to the motion for appointment of receiver, the evidence on the respective sides to be produced by given dates, and the master’s report to be filed by April 20th. The master was expressly authorized to take testimony, not only in the Northern district of Ohio, but “elsewhere in the United States.” The restraining order was continued in effect until the filing of the master’s report and the action of the court thereon. The appeal in No. 3725 (taken' March 31, 1922) is from the orders of March 11th and March 14th, 1922, continuing the restraining order, and from the order of March 24, 1922, overruling the motion to dissolve the same, all of which relate “solely to the moneys in the Cleveland Bank, jurisdiction over which was sought under the amendment and supplement to the bill filed February -15, 1922. The relief asked in the mandamus case, No. 3713 (petition filed April 5, 1922), relates solely to the proceeding for receivership over all the Brotherhood’s assets and property in the Northern district of Ohio, including the deposits in the Cleveland bank (instituted under the amendment and supplement of February 15, 1922) and to the action with reference to ancillary receiverships elsewhere in the United States.
It is obvious that the District Court has not acquired a jurisdiction over the persons of defendants authorizing the orders here assailed by the appeal and petition for mandamus respectively, unless the action taken by defendants amounted to a general appearance. The service outside the jurisdiction of the court of the notice to appear and plead, given under section 57 of the Tudicial Code, made effective a jurisdiction to determine the existence of the asserted vendor’s lien against the real estate and the claimed manufacturer’s lien against the personalty; and to enforce the same by subjecting the property to such liens, if established. But the subject-matter of the orders here in question is not limited to an enforcement of these claimed liens, but includes an effort to obtain personal decree for the balance of the two asserted liens so far as not satisfied out of the
As to the motion to set aside service, the objection seems to be not only that defendants were not entitled to have the service set aside, but that the motion included an effort to escape the effect of the restraining and receivership orders, so asking relief on the merits and thereby submitting their persons to the jurisdiction. We think this contention not good. We say this in recognition of the broad rule that a defendant by invoking the exercise of the court’s jurisdiction by affirmative acts in recognition thereof, as by a motion to dismiss on the ground that the bill did not state a cause of action, or by asking relief on the merits, and before or in connection with making motion to set aside the service, will be deemed to have appeared generally, and so to have waived lack of personal jurisdiction. General Investment Co. v. L. S. & M. S. Ry. Co. (C. C. A. 6) 250 Fed. 160, 164, 162 C. C. A. 296; Dahlgren v. Pierce (C. C. A. 6) 263 Fed. 841, 846; Railroad Co. v. Morey, 47 Ohio St. 207, 24 N. E. 269, 7 L. R. A. 701. It is the general rule that the appearance of a defendant in court for the sole purpose of objecting, by motion, to the jurisdiction of the court over his person, is not an appearance in the action or a waiver of any defect in the mode or manner by which such jurisdiction is obtained. Smith v. Hoover, 39 Ohio St. 249.
The restraining order, which was the subject of the motion, was not in terms confined to the real and personal property on which the vendor’s and manufacturer’s liens were claimed, but related to all of the movable property belonging to the Brotherhood and within the court’s jurisdiction. The same is true of the receivership order. The motions to set aside service of order of appearance, restraining order and receivership order were properly linked together. All depended upon the same lack of personal jurisdiction. While but for the attempt to carry the permanent and temporary relief beyond that provided by section 57 the motion to set aside service, etc., would not have been
It seems equally plain that such effect was not worked by the mere fact that the motion was too broad. That defendants were entitled to have the service set aside only in part did not necessarily convert their appearance for that sole purpose into a general appearance. The test is not whether defendants were entitled to have their motions allowed. The question is whether by making the motions they appeared generally.
“The question of general appearance is one of intent, actual or implied, and where the whole purpose of defendant’s application to the court is to set aside an order because it has been made without personal jurisdiction over him, the conduct which will make the motion unavailing and destroy its basis must be clear and unequivocal.” Dahlgren v. Pierce, supra, 263 Fed. at page 846. And see Citizens Savings, etc., Co. v. Ill. Cent. R. R. Co., 205 U. S. at page 59, 27 Sup. Ct. 425, 51 L. Ed. 703.
Here defendants disclaimed in the most solemn manner all intention of entering appearance except for filing and presenting that motion ; they protested that the court had no jurisdiction over them “in their individual or representative capacities.” Nothing could be clearer than an intent not to appear generally. See in this connection Board of Commissioners v. Keil (C. C. A. 6) 259 Fed. 76, 81, 170 C. C. A. 144. The fact that the court had not directed that the restraining order be served upon defendants is not significant, especially in view of our understanding that counsel had filed a praecipe for copies of the order for service upon defendants in connection with the service of the order for appearance, etc. Nor is it important that what is called an order to show cause was in reality merely a setting of the application for hearing and notice of motion.
Nor are we able to see that the obtaining (on the hearing of the motion to set aside service) of leave to amend the motion by inserting the name of a defendant not originally included in the notice worked a general appearance. Such action was directly germane to the motion to set aside service. Neither this motion, nor the motions, to set aside service of the restraining and receivership orders, in-, voiced the jurisdiction of the court upon the merits or upon any subject inconsistent with the motion under consideration. If our conclusion as to the effect of the first motion is correct, clearly the subsequent motions to dismiss and the answer upon the merits did not amount to a general appearance. After defendants had done all they could to avoid personal jurisdiction, they were at liberty to present meritorious defenses, and without losing the benefit of the formal motions, so long as they persisted in their protests against personal jurisdiction.
It results from these views that petitioners are entitled to the relief asked in the mandamus proceeding, No. 3713, setting aside
There remains the question whether the bill of complaint should be dismissed. Such dismissal could properly be made upon the reversal of the injunctive orders, if it clearly appeared that plaintiffs could not, in any event, obtain relief under the bill upon the merits, notwithstanding the court below had jurisdiction over the subject-matter. The reason most strongly urged by defendants for a dismissal of the bill is that no case is stated entitling plaintiff to a rescission of the agreement of June 30, 1920, not only because no such breach by defendants is shown as would entitle plaintiff to rescind, but because defendants cannot be placed in statu quo. If plaintiff’s right to relief of some kind depended entirely upon the issuing of the circular we have referred to, much might be said in favor of the justice of some at least of the complaints therein made. But the bill goes farther, in the assertion that other officers, as well as .local lodges, failed and refused to give plaintiff their good offices, and to co-operate with plaintiff in accordance with the agreement of Tune 30, 1920. We cannot say, from the bill, that this allegation may not be made good. Likewise we are unable to say with confidence, from the allegations of the bill alone, that the plaintiff may not be able to establish,by proof one or more of its propositions here relied upon as supporting the right to rescind or to avoid the effect of the contract of Tune 30, 1920, as to the personal property—for example, that plaintiff is not shown to have accepted the Brotherhood’s mere promise to perform the agreement of June 30, 1920, as satisfaction per se of its indebtedness to “plaintiff on account of which its asserted manufacturer’s lien was claimed—in connection with the asserted importance, as consideration for the contract of June 30, 1920, of the agreement for the Brotherhood’s good offices and the asserted inadequacy of remedy by suit for damages; nor, generally, that the court below, which has jurisdiction over the asserted manufacturer’s lien, may not, under the case as developed by testimony, be able to make a decree giving plaintiff some proper relief.
The relief, however, available to plaintiff under the bill is narrow. We think it plain that the alleged vendor’s lien upon the real estate cannot be restored. The indebtedness for which the lien was claimed was fully and separately paid and discharged, not merely in money or by the making of an executory promise, but by a lease
We, however, think we should not dismiss the bill, but that we should, without consideration on our part of the ultimate merits, leave ' the questions presented by the pleadings, both of fact and of law (except so far as passed upon in this opinion) to the final decree below. We take it for granted that the District Judge, upon being advised of our views as to the rights of petitioners in No. 3713, will promptly set aside the orders assailed therein and thus make unnecessary the issue of mandamus. • •
In No. 3725, the orders in question are reversed, and the record remanded to the District Court, with directions to take further proceedings consistent with this opinion.
Plaintiff also had the right to take, on the same basis, whatever of its 1 share the Brotherhood failed to take.
“Buy all articles through your local secretary or mail order directly to United Brotherhood of Maintenance of Railway Employees and Railway Shop Laborers, Oo-operative Department, Box 186, Toledo, Ohio.” “Watch these pages for new articles which will be added to the list of factories already controlled by our Grand Lodge.” “Buy all your shoes, gloves, overalls, jumpers, etc., from Co-operative Department of the Grand Lodge.”
This interpretation of the order in which motions were made not only seems to accord with the record, including the formal order of denial, but is in direct accordance with the unchallenged statement of defendants’ counsel in brief.
Appellees’ brief suggests also a liability in damages for breach of the contract.