Sherman Nat. Bank of New York v. Shubert Theatrical Co., 238 F. 225

Sherman Nat. Bank of New York v. Shubert Theatrical Co.

238 F. 225 | S.D.N.Y. | 1916

LEARNED HAND, District Judge

(after stating the facts as above). [1] Dittenhoefer, who has procured an injunction against the.payment of the deposit, is a citizen of New York, and so is the plaintiff. Disregarding for the time being any questions of the equity of the bill, this situation, therefore, raises the question of the constitutional jurisdiction of this court. That the bill is, from the standpoint of equity, zn original bill, must of course be admitted, but that does, not determine its jurisdictional status, which may none the less be ancillary. Minnesota Co. v. St. Paul Co., 2 Wall. 609, 633, 17 L. Ed. 886. It is true that most cases of ancillary jurisdiction arise when some property has.come into the custody of this court, or at least when some suit is pending in which it may assume possession at any time. Wabash R. R. Co. v. Adelbert College, 208 U. S. 54, 28 Sup. Ct. 182, 52 L. Ed. 379. Such, indeed, is the explanation of cases like Freeman v. Howe, 24 How. 450, 16 L. Ed. 749, Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27, 28 L. Ed. 145, and Pacific R. R. v. Mo. Pac. Ry., 111 U. S. 505, 4 Sup. Ct. 583, 28 L. Ed. 498. It is in my judgment the explanation even of Dewey v. West Fairmont Gas Coal Co., 123 U. S. 329, 8 Sup. Ct. 148, 31 L. Ed. 179, where the bill lay in aid of execution out of this court, the power to exercise possession through its marshal being the equiva- ' lent of possession itself. None of these cases helps the plaintiff, unless personal jurisdiction over the obligor alone brings “property” into court, even though the true obligee may not be also before it, a possibility upon which the very equity of the bill depends. It'is true that in bankruptcy it has been decided that personal jurisdiction over the obligor puts the bankrupt’s “property” into court. In re San Antonio Land & Irrigation Co. (D. C.) 228 Fed. 990; In re Berthoud (D. C.) 231 Fed. 529. And if. that rule be of general application, then there is “property” in court here. If so, it would seem to follow that, under section 57 of the Judicial Code, this bill would lie against nonresident-obligees, which seems to me a strong position.

I do not mean to rest quite upon that theory, for the question here really turns upon the word “controversies,” as used in section 2 of article 3 of the Constitution, as defined by section 24, subd. 1, of the Judicial Code (Comp. St. 1913, § 991 [1]). The “controversy” at least involves, not only the liability of the obligor, but whether the plaintiff is the obligee. The plaintiff, .by asserting that he is the obligee, has necessarily invited a decision which must determine the identity of the obligee, at least negatively, and the complete determination of that question is all that .the bill of interpleader seeks to secure, because the court will in the action decide something positive about the identity of the obligee, even were it to decide that among all possible obligees the plaintiff is not one, though it may fail to decide which is the actual, among all putative obligees. In a question of constitutional jurisdiction it should accept the complete determination of that question, as the fvhole of the “controversy” at-stal« in the action; it should not cut too fine. Suppose section 274b of the Code, as added by act March 3, 1915, c. 90, 38 Stat. 956, included the addition of codefend-ants in actions at law, as perhaps it does; the defendant could bring in all other putative obligees as codefendants. Yet that would be only *229because the procedure had become more elastic. Now, it cannot be that the constitutional jurisdiction of this court over the “controversy” depends upon the mere form of the remedy. Such bills as these are the equivalent, originated for that very purpose, of the greater procedural freedom of equity. They merely draw in the whole controversy for a single decision which the rigidity of legal procedure does not allow. Yet the power of the court to deal with the subject-matter in both cases is necessarily conferred by the Constitution and is not formally determined.

The analogous question of personal jurisdiction has been dealt with in a harmonious way. Thus, if personal jurisdiction exist over the obligor, it will support such judgment determining the identity of the obligee as the local forms may provide. This is true of taxation. Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439; Liverpool, etc., Co. v. Orleans Assessors, 221 U. S. 346, 31 Sup. Ct. 550, 55 L. Ed. 762, L. R. A. 1915C, 903. It is true, also, to discharge the obligor by payment under garnishment proceedings. Chicago, etc., Ry. v. Sturm, 174 U. S. 710, 19 Sup. Ct. 797, 43 L. Ed. 1144; Harris v. Balk, 198 U. S. 215, 25 Sup. Ct. 625, 49 L. Ed. 1023, 3 Ann. Cas. 1084. Notice is not even necessary if the local law so provides (B. & O. R. R. v. Hostetter, 240 U. S. 620, 36 Sup. Ct. 475, 60 L. Ed. 829), because the extent of the estoppel is strictly a matter of that law (N. Y. Life Ins. Co. v. Dunlevy, 241 U. S. 518, 36 Sup. Ct. 613, 60 L. Ed. 1140). The last case turns, I think, wholly upon the condition of the Pennsylvania law, though it must be confessed that this is not certain, if all the language be considered.

These cases rest upon the principle that the power to compel the obligor to pay must include the power to protect him in his payment and the successful obligee in his proceeds. It is exactly analogous to the incidental powers of a court which has custody of a res. Having awarded possession, the court must have power to protect both him who has delivered and him who has received. In each case the effective exercise of the power itself involves as an incident its validity against others. In the case of constitutional jurisdiction over choses in action, the same principle applies as to the territorial jurisdiction over the person in cases of choses in action, and to the constitutional jurisdiction in possessory suits. The court cannot completely protect the results of its judgment at law in a case such as this, without recourse to that procedural entirety that courts have devised to that end. True, jurisdiction is given only to the District Court, but that court is the same, whether it sits in equity or at law; each side of its jurisdiction contributes to a complete judicial competency in accordance with the customary limitations of the law. It may be urged that consistently section 57 of the Judicial Code should be held to apply, but that raises a quite separate question; i. e., whether the conferred procedural machinery comprises all the instances to which the constitutional jurisdiction might extend. This case does not raise that question.

There has been only one case of such ancillary jurisdiction divorced from any possessory element, so far as I have found, and that is a decision of Mr. Justice Clifford in Stone v. Bishop, 4 Cliff. 593, Fed. Cas. *230No. 13,482 (1878), a case of a true interpleader. Unfortunately the point of jurisdiction seems not to have been argued, and the authority relied on (Freeman v. Howe, supra), with deference, scarcely supported the ruling. However, it must be taken as a decision, and from a high authority in such matters, that the jurisdiction exists, because the facts required the ruling. The attempted distinction of the defendant between a true interpleader and a bill like this is irrelevant, touching the question of constitutional jurisdiction. I therefore decide that the bill will lie in point of jurisdiction.

[2] As to enjoining any suits in the state courts, the question is not ' free from doubt, yet I think that, if the federal jurisdiction first attach,. as here, section 265 of the Judicial Code (Comp. St. 1913, § 1242) does not apply. The case is quite different if the jurisdiction of this court first arise from the bill of interpleader itself. If, however, as I have said, the jurisdiction in the interpleader be ancillary, and depend upon a more liberal interpretation of “the matter in controversy,” obviously it would be absurd to hold that the very purpose of the bill might be defeated through section 265. It may be urged that the bill would lie in the state court as well, and perhaps it might; but, to say the least, the efficacy of such a bill to restrain the action at law already pending in this court is doubtful. I do not rely so much on dicta like Peck v. Jenness, 7 How. 612, 625, 12 L. Ed. 841, and Riggs v. Johnson County, 6 Wall. 166, 196, 18 L. Ed. 768, as upon the well-settled rule in posses-sory suits and its applicability here, if once it be assumed that the “controversy” may include the determination of the actual obligee.

[3] In point of equity I think the bill will support the usual injunction against further prosecution of the action at law. True, the plaintiff has an interest in the fund, an interest which cannot be computed, perhaps, without an account; but that is the very distinction of a bill in the nature of a bill of interpleader. Pacific, etc., Bank v. Mixter, 124 U. S. 721, 729, 8 Sup. Ct. 718, 31 L. Ed. 567; Groves v. Sentell, 153 U. S. 465, 485, 14 Sup. Ct. 898, 38 L. Ed. 785; Hayward v. McDonald, 192 Fed. 890, 113 C. C. A. 368; McNamara v. N. Y. Life Ins. Co., 114 Fed. 910, 52 C. C. A. 530. The defendant urges that such a bill will lie only when the plaintiff’s claim upon the fund is itself equitable, but the meaning of this rule has been misunderstood. There is no reason why the plantiff should not have a bill in the nature of interpleader, though his partial claim be of legal cognizance, provided the plaintiff’s (at law) right to a jury trial of that claim be preserved. In Aleck v. Jackson, 49 N. J. Eq. 507, 23 Atl. 760, Vice Chancellor Green entertained the bill in such case, but allowed the original action at law to proceed. In Provident Savings Life Assur. Soc. v. Loeb (C. C.) 115 Fed. 357, the plaintiff’s legal interest seems to have been left for general adjudication in the suit.

In the strict case of a bill of interpleader the decree discharges the plaintiff upon his paying the fund into court; the only issue is of the right to interplead, the decree directs the defendants to interplead, and, when they had done so, takes up the issues between them. This cannot be done in a bill like this. .The plaintiff has attempted to set up its interest in the deposit, and until that has been decided the amount pay*231able into court cannot be decided. If this controversy were allowed to be settled in the action, it would be settled only as between the parties thereto, and it must be settled again between the other parties. Therefore, for the present at least, the action must be enjoined. If the issues under the plaintiff’s claim are legal issues, they may be sent to a jury to determine at the proper time under rule 23 (198 Fed. xxiv, 115 C. C. A. xxiv) if any party wishes. Meanwhile the parties must prepare and serve their counterclaims against each other under rule 31 (198 Fed. xxvii, 115 C. C. A. xxvii). Thus, if Dittenhoefer has any claim against either of the Shubert Theatrical Companies, he may file and serve it; and so, also, the Welden National Bank of St. Al-bans. If either of the Shubert Theatrical Companies has any claim against the plaintiff, Dittenhoefer, or the Welden National Bank of St. Albans, it may do the same. Similarly, if there is a contest between'them as to the title to the deposit. The same rule applies to the Shuberts personally. The defendants and the plaintiff will reply under rule 31 to these counterclaims. At the end of this period, the cause may go on the calendar for trial.

The motion of the plaintiff to strike out the defenses is granted. The second defense has no conceivable relevancy to the suit; the third is a mere point of law, which I have overruled. The first defense is so confused that, after considerable effort, I have been unable to learn what the purpose of the pleader really is. Apparently he means to allege, first, that the Shubert Theatrical Company of New York has a claim in deceit against Diebler & Co., which it can set off against Diebler & Co.’s claim for. damages; second, that Liebler & Co. broke the contract under which it was to receive one-half the profits of “The Blue Bird.” Evidence bearing upon these two defensive pleadings is so jumbled together that no one can know what the “ultimate facts” really are. Each would be a good defense to so much of the bill as sets up the plaintiff’s claim to the fund, but as they stand they violate rule 30 (198 Fed. xxvi, 115 C. C. A. xxvi).

Under rule 20 (198 Fed. xxiv, 115 C. C. A. xxiv) I may require a , “further and better statement,” and it is under that rule that I strike out the defense, and require the defenses to be so stated, and not the evidence upon them.

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