290 F. 653 | 7th Cir. | 1923
(after stating the facts as above). The motion to dismiss the appeals should be denied. All defendants except the Plankinton Arcade Company are citizens of the state of Ohio. That Company is a corporation organized under the laws of Wisconsin and the plaintiff resides in Wisconsin. But the Plankinton Company is not an indispensable party. The relief sought by the plaintiff is a decree adjudging the stock deposit agreement void, enjoining all the defendants other than the Company from voting any stock in which plaintiff is interested, and enjoining the Company from “accepting, receiving, or permitting to be used, votes upon any of the stock” of said Company, in which plaintiff has any interest, except in compliance with plaintiff’s rights. The whole theory of -plaintiff’s bill is that the defendants other than the Company are conspiring to use his stock against his own. interests. An injunction against the alleged conspirators will adequately protect him, and the granting of the relief prayed against the corporation will in no wise increase the efficacy of a decree in his favor against the other defendants. No misconduct or cause of action of any character is alleged against the Company, and its rights are not attacked or in any way involved in this controversy between stockholders residing in Wisconsin ¿nd those and their privies residing in Ohio. Plainly the Company is not an indispensable party defendant and a separable controversy exists between the plaintiff and the defendants other than it, and between the plaintiff and the defendant George A. Harvey. Consequently the suit was properly removed upon the petition of George A. Harvey, and that of him and S. S. Harvey, and the court below had jurisdiction of the suit. Barney v. Latham, 103 U. S. 205, 26 L. Ed. 514. There the Supreme Court said:
“When the petition for removal was presented, there was in the suit, as framed by plaintiffs, a controversy wholly between citizens of different states; that is, between the plaintiffs, citizens, respectively, of Minnesota and Indiana, and the individual defendants, citizens of New York, Wisconsin, and Massachusetts. And since the presence of the land company is not essential to its full determination, the defendants, citizens of New York, Wisconsin, and Massachusetts, were entitled, by the express words of the statute, to have the suit removed to the federal court.”
Nor should the appeals be dismissed upon the ground that the orders of May 31, 1922, and July 15, 1922, are not orders granting or refusing to dissolve a temporary injunction, which are made appeal-able by paragraph 129 of the Judicial Code (Comp. St. § 1121). The orders were made after hearing. They added to the original temporary restraining order certain provisions, and took from the same certain others. From a perusal of the record it appears that the lower court after several hearings, and after considering fully the bill and affidavits, as well as the motions made and argument of counsel, deter-
Appellants contend that the court below was without jurisdiction of the defendants residing in Ohio other than the Harveys, for the reason that the action of plaintiff is in personam, and the Ohio defendants other than the Harveys could not properly be brought into court by service under section 57 of the Judicial Code (Comp. St. § 1039). That act is as follows:
“That when in any suit commenced in any Circuit Court of the United States to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of or found within the said district, or shall not voluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant or defendants to appear, plead, answer, or demur by a day certain to be designated, which order shall be served on such absent defendant or defendants, if practicable, wherever found, and also upon the person or persons in possession or charge of said property, if any there be. * * *
“But said adjudication shall, as regards said absent defendant or defendants, without appearance, affect only the property which shall have been the subject of the suit and under the jurisdiction of the court therein, within such district.”
Though the bill of complaint is verbose, and contains immaterial and irrelevant allegations, as well as numerous conclusions of the pleader, and is lacking in the essentials of clear direct averments of fact necessary to proper pleading, the court, after a careful scrutiny and analysis of it and the affidavits, finds such averments of fact as to say that the crucial point of the plaintiff’s case is that he claims that he owns certain shares of stock in the Plankinton Arcade Company, and an undivided interest in certain other shares, of which the defendants by an alleged illegal and fraudulent conspiracy are attempting to deprive him, or of dominion over which they are illegally and wrongfully depriving him, so that he is wrongfully prevented from voting same as his own stock, and that the defendant George A. Harvey is wrongfully in control of certain proxies therefor and threatens to vote same to the plaintiff’s irreparable injury, and that the other defendants have issued an unwarranted power of attorney, giving a majority of Harvey brothers the right to vote all stock, and threaten to vote or give George A. Harvey a proxy to vote all of said stock wholly regardless of plaintiff’s rights. The essence of plaintiff’s suit is the establishment of his right to the stock and its control and to remove a cloud or incumbrance therefrom, and incidentally to restrain the defendants from illegal interference therewith by voting the same or otherwise. Such a suit is in its nature one in rem, affecting property located in Wisconsin, shares of stock in a Wisconsin corporation.
“The certificates are only evidence of the ownership of the shares, and the interest represented by the shares is held by the company for the benefit of*659 the true owner. As the habitation or domicile of the company is and must be in the state that created it, the property represented by its certificates of stock may be deemed to be held by the company within the state whose creature it is, whenever it is sought by suit to determine who is its real owner.” Jellenik v. Huron Copper Min. Co., 177 U. S. 1, 20 Sup. Ct. 559, 44 L. Ed. 647.
The appellants contend' that in view of the fact that in Wisconsin the uniform stock transfer act is in force, and under its provisions shares of stock can be transferred only by indorsement or equivalent writing, and cannot be attached or levied upon until actually seized, the case is taken out of the rule announced, and that under a correct interpretation of the statute the state of Wisconsin has fixed the situs of shares of stock at the residence of their owner. It may be true that the statute mentioned tends to give to shares of stock qualities partaking of those of commercial paper, but we do not agree that the effect of the statute is to change the situs of the shares, or to deprive the courts of Wisconsin from exercising jurisdiction over stock in a Wisconsin corporation owned by nonresidents. The language of the Supreme Court quoted above indicates the reason for holding that their situs is that of the corporation; that is, that shares of stock represent units or undivided interests in the corporate property, and must therefore have their situs with that of the corporation. They are nothing more than evidence of the holder’s title to a certain number of aliquot, undivided interests in the property and franchises of the corporation. The Wisconsin statute contains nothing irreconcilable with the proposition.
Appellant’s contention that the injunction granted relief in personam and therefore cannot be based upon service under section 57, which applies to actions in rem, is not well founded. This suit is in the nature of a suit to quiet title to personal property within jurisdiction of the court. The court has in its custody the res. It puts out its protecting hand and says to the defendants that the .plaintiff claims the res; that pending the determination of that claim the statu quo shall be maintained and the defendants restrained from using the res; that if they desire to contest the claim of the plaintiff to this property they shall come into court and do so. Incidental to its jurisdiction over the res, the court may use its power of injunction, not to prevent distinctly personal acts by the defendants, disconnected with the res, but to prevent defendants interfering with, disposing of, converting, injuring, or wrongfully using the res. The power to vote the stock is incidental to and is inseparable from the ownership of the stock. Fletcher, Enc. Corp. § 1656; 14 Corpus Juris, 898, § 1383; Lord v. Equitable Life Assurance Society, 194 N. Y. 212, 87 N. E. 443, 22 L. R. A. (N. S.) 420; Bigelow v. Calumet & Hecla Mining Co. (C. C. A. 6th Cir.) 167 Fed. 721, 94 C. C. A. 13; Luther v. C. J. Luther Co., 118 Wis. 112, 123, 124, 94 N. W. 69, 99 Am. St. Rep. 977; Dunn v. Acme Auto & Garage Co., 168 Wis. 128, 134, 135, 169 N. W. 297. Consequently the court may determine the ownership, and, pending that determination, restrain all acts conflicting with the owner’s muniments and incidents of ownership. Thus it may cancel contracts alleged to be fraudulent incumbrances upon plaintiff’s title; it may enjoin the performance of contracts alleged to be illegal incumbrances upon plaintiff’s title; it may, in short, make any order that is necessary to secure
These cases-are appeals from the order granting a temporary injunction and the order refusing to vacate or dissolve the same. The merits of the controversy between the parties are not before the court, except in so far as necessary to determine whether the- plaintiff by his bill and affidavits has made out a case sufficient to sustain the temporary injunction granted. Therefore we refrain from any expression which might in any way prejudge the rights and obligations of the parties, except in so far -as necessary to determine the exact point before the court.
It may be true that the plaintiff is not entitled to a decree adjudging the stock deposit agreement of .November 30, 1915, null and void, or to a decree finding that George A. Harvey has surrendered and abandoned all of his interests in and to and under the agreement of December 14, 1920. But, in view of the fact that the plaintiff avers that he is owner of many and part owner of many other shares of stock, and that he has fully complied with all of the provisions of the agreement of December 14, 1920; that he has paid all sums incumbent upon him to be paid under said agreement, and especially avers in one of his affidavits the payment of all sums mentioned in said agreement, and avers that the defendants in violation thereof have issued powers of attorney giving to a majority of the three Harveys the power to vote all of the stock deposited, including that in which the plaintiff holds a one-half interest and threaten to give George A. Harvey a proxy to vote the same, and that defendant George A. Harvey threatens to vote said shares under said power of attorney, or said proxy; and it appears from the agreement of December 14, 1920, that no power of attorney for the voting of said stock, in which plaintiff is interested, can properly be issued except a joint power of attorney to the plaintiff and George A. Harvey and S. S. Harvey, unless default has been made — the court is of the opinion that a prima facie case authorizing the injunction was made out. The plaintiff having expressly negatived any default on his part, the court cannot rightfully pass upon other questions involving the merits.
The orders of the court below will be affirmed, at the costs of the appellants.