44 F. 663 | U.S. Circuit Court for the District of Northern Ohio | 1890
In this cause an application was made on behalf of the Wabash Railroad Company on the 2ñth of October, 1890, asking for an order to be made requiring Reuben T. Potterf to show cause why he should not be restrained from prosecuting an action at law against the petitioner in the common pleas court of Defiance county, Ohio. In that application the petitioner alleged that it was a corporation organized under the laws of Ohio, and became the purchaser of the property of the Wabash, St. Louis & Pacific Railway Company, foreclosed and sold in proceedings in the circuit courts of the United States for the several districts in the states of Illinois, Indiana, and Ohio. The petitioner further represents that in September, 1890, the said Reuben T. Potterf instituted an action against the petitioner, the Wabash Railroad Company, in the common pleas court of Defiance county, Ohio, to recover damages for a tort committed by John McNulty while he was receiver operating the railroad property foreclosed in the above proceedings under the order and direction of this court. It appears from the papers filed in connection with this application that the said Reuben T. Potterf is the owner of certain real estate in the town of Defiance, Ohio, adjacent to the property of the Wabash Railroad Company. In his petition filed in the state court the plaintiff alleges that he improved the real estate described in his petition by building thereon a suitable dwelling-house, barn, cistern, and outhouses, and constructed thé .same with reference to the grade of a certain highway running on the south-westerly side of said premises, and with reference to the grade as the same.had been main
“The court orders the delivery of such receivership assets, papers, and property to the Wabash Railroad Company on the express condition that the last-named corporation agrees to pay, satisfy, and fully discharge all the debts and liabilities of such receivership of every kind now remaining unpaid, and that it may further defend in the name of such receiver all litigated claims or demands against such receivership now pending in this or other courts, and will fully abide by and pay any and all judgments and recoveries, together with costs, which may be rendered in any of such actions or litigations, and always protect and save harmless the said receiver from such claims or any of them.”
This order was made by this court after the confirmation of the sale theretofore made, and the conditions therein required to be performed by the purchaser were substantially and in fact a part of the consideration exacted from such purchasers for said railroad property. This court authorized the receiver to deliver to the said purchaser all of the assets and property in his hands, upon the condition that said purchaser would save harmless the said receiver from all claims of every kind that might be preferred against him. It is therefore clearly the duty of this court to see that such purchaser is not required to pay or satisfy any claim or judgment of any kind that would not be a proper and just liability of said receiver. If this court had not discharged said receiver upon the conditions recited in the order, releasing him from further responsibility-in connection with this property, it would have retained the assets, books, and vouchers in his hands, and adjusted all the liabilities incurred by him as receiver, by and through the proceedings customary
The promise and agreement of the purchaser constituted an additional consideration, and thereby added to said fund, as we have before stated; but in good faith to said purchaser it is the duty of this court to sift, scrutinize, and finally determine what‘claims shall be paid, and wdiat claims shall be rejected. In order to do this satisfactorily this court should require all parties who assert any claim against such fund, or who claim any right to recover against said purchaser because of the stipulation and covenant made in this court, to establish such claim in this tribunal by proceedings usual in this class of cases. But if the said Potterf were permitted to prosecute his action in the state court, and recover' a. judgment thereon, he rvould have a right to satisfy said judgment out of any property subject to levy in the hands of the purchaser, the Wabash Railway Company; whereas, under the covenants and agreements made in-this court between the court and the purchaser, placing upon said covenants the legal construction hereinbefore given, any claim he might have against the receiver was to be satisfied out of the fund arising from the sale of this mortgaged property. While counsel in arguing the case assured, the court that they expected, in case they recovered a judgment', to come to this court, and ask to have it allowed and paid by the purchaser on this covenant, to which reference has been made, yet there is no legal barrier which would prevent the plaintiff from satisfying such judgment by levy and sale of subsequently acquired property in the hands of the purchaser. This places him in a more advantageous legal position than he occupied with a claim against the receiver, which could be satisfied only out of the fund or property in the receiver’s control. '
But it is further contended by counsel that the Wabash Railway Company cannot now ask for this stay of proceedings because it entered its appearance in the state court, and thereby conceded its jurisdiction. The appearance entered by the counsel for the said railway company would not have prevented it from asking the state court to remove said case, to this court,if the citizenship of the parties and the amount involved had been such as to justify such a request, and I do not think it prevents the said railway company from asking the relief it now demands. The jurisdiction of the court of common pleas, so far as the residence of the parties is concerned, is undisputed. It is because of the subject-matter of said contention that this court acquires jurisdiction. The exact character and nature of the suit were only developed by the motions made by the counsel for the defendant in the state court after the original suit was instituted; and when, the pleadings properly revealed the actual basis upon^which the plaintiff founded his action .the petitioner at once invoked the jurisdiction of this court to restrain said proceedings because of the nature thereof. For these reasons I think the order here-