77 F. 43 | U.S. Circuit Court for the District of Northern California | 1896
(orally). This is a proceeding for the punishment of the respondents for contempt of the authority of this court, by resisting the provisions of an injunction issued in this case by Judge Beatty on Feb. 24,1896. The original action was brought Jan. 4,1896, to seóure a judgment and decree of this court adjudging, among other things, that the complainant was the duly elected, qualified, and acting agent of the defendant, the California National Bank of San Francisco, and as such exclusively entitled to have and receive in his custody and under his control all the moneys and property of said bank, and to collect the outstanding indebtedness due to said bank, whether the same be evidenced by open accounts, bills, notes, or judgments of record, to the end that the affairs of the bank might be wound up, its property converted into money, and its money distributed among its shareholders, as provided by the national bank
It appears that on the 14th day of January, 1889, the comptroller of the currency, after an examination into the condition of the California National Bank of San Francisco, declared the corporation insolvent, under section 1 of the act of congress authorizing the appointment of receivers of national banks, and for other purposes,, approved June 30, 1876, and thereupon appointed Smith P. Young receiver to take
It appears further that after the entry of the judgment in the superior court, as before mentioned, Stateler, as agent of the bank, petitioned the court for an order requiring Chetwood to turn over to him the $27,500 received by Chetwood in that action. The superior court refused to malee that order, and Stateler appealed to the supreme court of the state, where the order of the superior court was reversed, the supreme court holding that where an action brought by a stockholder in a national bank in behalf of the corporation while in the hands of a receiver, has terminated, an agent of the corporation elected to succeed the receiver, as provided by law, and charged with the duty of controlling and disposing of its assets and of distributing the proceeds, is entitled to receive the proceeds of such action, less reasonable allowance to the plaintiff for his costs, disbursements, and attorney's fees. Some question was raised in the supreme court concerning the regularity and validity of the proceedings of the shareholders which resulted in the election of Stateler as agent of the bank, and the assignment to him by the comptroller and the receiver of the assets of the corporation; hut the court held that Stateler being de facto the agent, and presenting his commission from the comptroller, reciting his appointment and the regularity of the proceedings attending it, the question of the regularity of his appointment was not to be raised upon collateral a(tack in that action. 45 Pac. 854.
There are two petitions, in the form of affidavits, before the court, charging the respondents with the violation of the injunction issued out of this court on February 24; 1896. Both of these petitions are signed by T. K. Stateler. The first, after referring to the injunction, sets forth that on the 19th day of September, 189(5, the said John Chetwood, Jr., caused to be tiled in the superior court of the city and county of San Francisco, state of California, in an action then pending therein, entitled “John Chetwood, Jr., Plaintiff, vs. The California Kational Bank of San Francisco, et al., Defendants,” and numbered 30,052 on the files of said court, a notice that on the 25th day of September, 1896, at 10 o’clock a. m., he would apply to said court to make an allowance out of the funds on deposit in said court to the credit of the above-entitled action to him for alleged costs, disbursements, expenditures, attorney’s and counsel fees claimed to
The first order to show cause relates to the action of respondents with respect to the case just described in the state court, and the petition now under consideration has particular reference to the action of Chetwood in seeking to secure an order of the superior court making him an allowance out of the fund of $27,500, in the custody of the court, for Ms costs, disbursements, expenditures, and for attorney and counsel fees on account of services rendered and to be rendered by him. This action was specifically prohibited by the injunction'in this case granted by Judge Beatty on February 24, 1896. The re- ■ spondent contends that he was entitled to make that application to the superior court because of the provision contained in the judgment of the supreme court reversing the order of the superior court, “with directions to the trial court to enter the order prayed for, after making reasonable allowance to plaintiff, Chetwood, for Ms costs, disbursements, and attorney’s fees in the said action, as contemplated by law.” It was, however, in direct conflict with the terms of the injunction issued out of this court. Moreover, it do.es not appear that the supreme court had been advised of the fact that Chetwood had already been allowed and paid out of the fund in the superior court the sum of $560.16 for expenses claimed to have been incurred by him in prosecuting the action in the superior court, and
The second order to show cause relates first to the petition of Ohetwood, Knapp, Thompson, Vanderslice, Holt, and others, presen! ed to the Honorable Stephen J. Field, associate justice of the supreme court of the United States, for a writ of error from the supreme court of the stale of California to the supreme court of the United Stales to review the judgment of the supreme court of this state in reversing the judgment secured by Ohetwood against Thomas, and, for the purpose of said writ of error, made the California National Bank the plaintiff in error,' and Richard P. Thomas and John Chetwood, Jr., the defendants in error. The names of Knapp and Thompson were signed to that petition as attorneys for the said bank. The second order to show cause relates also to a petition presented by John Chetwood, Jr., and E. GL Knapp to the Honorable W. II. Beatty, chief justice of the state of California, for a writ of error to the supreme court of the United States to review the order of the supreme court of the state of California, which directed the fund in the superior court to be turned over to Stateler, as the agent of the bank, and, for the purpose of obtaining that writ, entitled the proceeding:
‘Tlie California National Bank of San Francisco and John Chetwood, Jr., Representing Stockholders, Plaintiffs in “Error, vs. T. K. Stateler (Agent), S. I*. Young (Receiver), Robert A. Wilson, Richard R. Thompson, and Richard P. Thomas, Defendants in Error.”
In that petition, E. GL Knapp was represented as the attorney for said bank. It appears that the attorney of record for the bank, in the superior court, in said suit of Chetwood v. California National Bank of San Francisco et al., has at all times been II. I). Talcott, Esq., but that the bank did not appear on either of said appeals in the supreme court of the state, nor was any petition for a rehearing ever filed on either of said appeals by said bank, or by any one else in the name of the bank, and that Stateler has given no authority to any one to represent said bank, but, prior to the issuance of the writs of error mentioned, caused his attorney to notify the attorneys for Chetwood that if any attempt was made by him, or the officers of the bank, or their attorneys, to further delay the turning over of said fund to the complainant in this case, as the agent of the bank, it would be considered by him an open contempt
There is a rule of law, with respect to contempt of court, which determines that if the person charged comes into court, and purges himself of contempt by an affidavit showing that he did not do any of the things charged against him, or that he had no notice that he was violating the order of the court, the order to show cause will be discharged, because it is said that, the accused having fully purged himself of contempt, the court will go no further. If, in his affidavit, he has stated any fact that is denied and made a matter of issue, that issue must be tried elsewhere, because the court is not authorized to try any question of fact in this character of proceedings. Therefore, in this.case the court must accept these affidavits made by the respondent as true. It may be, however, that the affidavits on the part of the respondent disclose a case where the court would say that a contempt had been committed, notwithstanding the affidavit, because the facts set forth in the affidavit did not meet fully the facts set forth in the papers on the order to show cause. In this case Mr. A. W. Thompson shows by his affidavit that he is not an attorney in these cases, that he has had nothing whatever to do with them, and that the use of his name has been practically unauthorized, although he does not quite go that far. He says he has been ready to sign an order of substitution whenever he should be advised of the name of the person who was to take his place. But he says he has not acted in the matter, has given no authority to act in the matter, and knows nothing about these proceedings, or about the injunction. I must accept that affidavit as true. Therefore the order to show cause in his case must be discharged.
Mr. Mitchell: Both orders?
The Court: Yes; both orders in the case of Thompson.
With respect to Mr. Vanderslice,. he also, by his affidavit, sets up that he does not know anything about these proceedings. Therefore I shall discharge the order to show cause in his case, on the second order.
With respect to this feature of the case, I will refer to the case of Pettibone v. U. S., 148 U. S. 197, 13 Sup. Ct. 542. It was a case which arose in Idaho. The parties were indicted for a conspiracy to violate an injunction which had been issued by a United States court. ■ The same principle of law would obtain with respect to an order to show cause why respondent should not be punished for a contempt of court. It appears that the parties who had violated the injunction had not been notified of the order of the court. The court says:
• “Tlie combination to commit an offense against the United States was averred to consist of a conspiracy against the state, and the completed act*51 to Rave been in pursuance of such conspiracy; but the pleader carefully avoided the direct averment that the purpose of the confederation was the interruption of the courts of justice in the United States court. iNor did the indictment charco that the defendants were ever served with process, or otherwise brought into court, or that they were ever in any manner notified of the issue oi' the writ, or of the pendency of any proceedings in the circuit court.”
This is a reference to the injunction.
“That this omission was advisedly made is apparent from the statement in the bill of exceptions that there was no evidence given on the trial showing. or tending to show, that the writ of injunction mentioned and set forth in tiie indictment was served upon the defendants, or either of them, or that they, or either of them, had any notice or knowledge of the issue thereof.”
The judgment of the court was that in view of the fact, among oiher things, that the defendants had no notice of the injunction, the judgment of the court below be reversed, and the cause remanded, with instructions to quash the indictment and discharge the defendants. The doctrine here announced is applicable to this case. In the case of Mr. Knapp, it appears by affidavit that he did not know of this injunction when he made application to the court for the allowance of money and the expenses to Ghetwood, and that, with respect to the first writ of error taken from the judgment of the supreme court of this state, he did not know at the time he made that application that; there was any injunction pending, or any injunction in the case that prevented him from taking that action. With respect to the second writ of (error, — the one signed by Chief Justice Beatty, of the supreme court of this state, • — Knapp does not deny that he knew of the existence of the order at that time. But, as I understand, Iris affidavit and his statement is that he did not know that the order would be construed as a prohibition against a writ of error in this case. While he knew of the order, he did not so construe it. He read the order as permitting the appeal; that he understood that, when the order said it did not prevent the carrying of that case to a final determination, it did not prevent him from talcing a writ of error in that case. Undoubtedly, the same argument would he based with respect to the first writ of error, that, if he had then known there was such an injunction, he would still have so construed it as permitting him to take a writ of error in that case.
With respect to the first order to show cause, and the first element of the second order, the proceedings against Mr. Knapp are discharged. That leaves the order against him involving the writ of error in the Stateler case, wherein lie admits, or does not deny, that he knew of the existence of the order, but thought it did not prevent him from taking an appeal in that case. Before proceeding further, I will indicate my views with respect to this case, although it does not necessarily enter into the determination of the contempt proceedings. but in order that counsel may understand my views concerning these cases.
In addition to the eases cited yesterday, there is another case in the supreme court of the United States which passes upon the statute cited by Mr. Campbell. Mr. Campbell referred to section 3 of the act of August 13, 1888, providing:
*52 “That every- receiver or manager of any property appointed by any court of the United States may be sued in respect of any act or transaction of bis in carrying on the business connected with such property, without the previous leave of the court in which such receiver or manager was appointed; but such suit shall be subject to the general equity jurisdiction of the court in which such receiver or manager was appointed, so far as the same shall be necessary to the ends of justice.”
This particular statute was cited to the court as giving the right to any -person to sue a receiver; that persons who had any claim against the receiver might sue him without applying for leave to the court of the United States in which the receiver was appointed, and he might prosecute that suit to final conclusion; and that, if this injunction prevented any one from availing himself of the provisions of this statute, the injunction was contrary to law, and was void; that in this case the right of these parties to prosecute this appeal not only was a right to carry the case to a final determination, growing out of the case, but was a right which was given to him by law. I do not sd understand this statute, and I find my view of it is confirmed by the supreme court of the United States in Re Tyler, 149 U. S. 164, 13 Sup. Ct. 785. This was a case where certain railroád property in the possession of a receiver of the United States circuit court, in a cause within its jurisdiction and protected by its injunction, was levied upon by Tyler, as sheriff of Aiken county, S. 0., under a tax execution or warrant issued by the county treasurer. The railroad company became subject to certain taxes in the states through which the road was operated. It was a provision of the law of the state that where taxes became delinquent an execution or warrant might be issued by the treasurer of the county where the property is located, and placed in the hands of the sheriff, and he was authorized to collect the taxes by the levy and sale of property. Tyler, the sheriff, was cited for contempt of court in interfering with the possession of the property by the receiver. There was a controversy concerning some portion of the taxes. The matter was brought up before the circuit court. Tyler was adjudged guilty of contempt of court. He applied to the supreme court of the United States, asking to be discharged on a writ of habeas corpus. In the supreme court of the United States the case was presented very strongly and ably by a number of distinguished lawyers, John Randolph Tucker being one of the attorneys for the petitioner. They set up the power of the state to collect taxes ; that it was a power that could not be interfered with by the United States; that, by the statutes of the state, it was provided that the collection of taxes should not be stayed or prevented by any injunction, writ, or order issued by any court, or judge thereof; that it was a sovereign power belonging to the state by reason of its sovereignty as a state; and that any restraint or any action on the part of any court in preventing the state to satisfy its claims for taxes would be a direct assault on the independent sovereignty of the state. It is a very strong case, — there- is no question about it,— where a sheriff, holding the warrant of the treasurer, which is substantially the warrant of the state, is authorized to collect taxes due to the state. It is true that there was some- controversy as to
“No rule is better settled, than that, when a court has appointed a receiver, his possession is the possession of the court, for the benefit of the parties to the suit and all concerned, and cannot be disturbed without the leave of the court, and that if any person, without leave, intentionally interferes with such possession, he necessarily commits a contempt of court, and is liable to punishment therefor [citing a number of eases]. Ordinarily the court will not allow its receiver to be sued couching the property in his charge, nor for any malfeasance of the parties or others, without its consent; and while the third section of the act of congress of March 3, 3887” [Oils is the statute referred to in the argument yesterday as permitting suits against the receiver], “now permits a receiver to be sued without leave, it also provides that ‘such suit shall be subject to the general equity jurisdiction of the court in which such receiver or manager was appointed, so far as the same shall he necessary to the ends of justice.’ Neither that, nor the second section, which provides that the receiver stall manage the property ‘according to the valid laws of the state in which such property shall be situated,’ restricts the power of the circuit court to preserve property in the custody of ilie law from external attack. In this case, instead of issuing an attachment against the petitioner at once for forcibly seizing, the rolling stock of this railroad under the circumstances appearing upon the face of the record, the court adopted the course of serving him with a rule to show cause, and with an order restraining him in the. meantime from interference with the property. The petitioner refused to release1 the property upon request of the receiver, and persisted in his attempt to hold possession thereof by force, in disregard of the order of the court. The general doctrine that property in the possession of a receiver appointed by a court Is in custodia legis, and that unauthorized interference with such possession is punishable as a contempt, is conceded, but it is contended that this salutary rule has no application to the collection of taxes. Undoubtedly, property so situated is not thereby rendered exempt from the imposition of taxes by the government within whose jurisdiction the property is, and the Hen for taxes is superior to all other liens whatsoever, except judicial costs, when the property is rightfully in the custody of the law; but this does not justify a physical invasion oí such custody, and a wanton disregard of the orders of the court in respect of it. The maintenance of the system of checks and balances characteristic of republican institutions requires the co-ordinate departments of government, whether federal or state, to refrain from any infringement of Hie independence of each other, and the possession of property by the judicial department cannot be arbitrarily encroached upon, save In violation of this fundamental principle. The levy of a tax warrant, like Ills' levy of an ordinary fieri facias, sequestrated the property to answer the exigency of the writ; but property in the possession of the receiver is already in sequestration, already held in equitable execution, and, while the lien for taxes must he recognized and enforced, the orderly administration of justice requires this to be done by and under the sanction of the court.' It is the duty of the court to see io it that this is done, and a seizure of the property against its will can only be predicated upon the assumption that the court will fail in the discharge, of iis duly. — an assumption carrying a contempt upon its face.”
I cannot; imagine a stronger case, or stronger language, declaring the exclusive possession of the receiver, and that parties must, not: interfere with the receiver. If they have any claim against, the property, they must go into the court where the receiver is appointed. If they have any actions against (he receiver, they must go there with. them. If they have claims of any character against the receiver, they mnst go to the court having possession of the
.Mr. Mitchell: Thomas’ appeal?
The Court: Yes; in the Thomas appeal case, by Mr. Chetwood; but that he is not authorized to use the name of the bank in that appeal. My present impression is that I am not depriving Mr. Chetwood of any opportunity to test any question that might arise between him and any other party involved in that case, in the supreme court. It is not my purpose to interfere with the final determination of the issues involved in that case, in whatever court may have jurisdiction, but I do not think he is entitled to use the name' of the bank in that appeal.
With respect to the Stateler case, I am not quite so clear. It seems to me that the same principle that I have announced in the case just referred to, if applied in the Stateler case, will accomplish all that the court now thinks is within its jurisdiction, namely, that with respect to the Stateler case the name of the bank cannot be
Mr. Mitchell: Is your honor aware that that writ of error to review the Stateler case operates as a supersedeas, and ties this fund up in the state court indefinitely?
Mr. Knapp: Not indefinitely; only until it is decided.
Mr. Mitchell: That money should be brought: here and distributed by this court.
The Court: If that case is prosecuted only between the parlies remaining in that case, and it does not prosecute an appeal on behalf of the bank, I do not see why (hat money is not left there to be disposed of, and brought into this court.
Mr. Mitchell: It cannot be. The state court has made the order, and the law is plain. The law provides that on the filing of the petition for a writ of error, the citation, and the copy of the writ, in the clerk’s office of the court: whose action is to be reviewed, the writ shall operate as a supersedeas, and stay all execution. The very object of this matter is to keep that fund from jheing tied up. The writ of error was obtained simply to test the question of Mr. Stateless election. The assignment of errors is attached to the second order to show cause.
Mr. Knapp: If your honor please—
The Court: Waif a moment. I do not want to bring on another argument. Who are the parties in that case? I suppose all the parties are the same, all the way through?
Mr. Mitchell: No; they have changed (hem. In the original case in the superior court the parties were John Chetwood, Jr., plaintiff, the California. National Bank of San Francisco, a corporation, S. P. Young, receiver, R. P. Thomas, A. W. Thompson, and Robert A. Wilson, defendants. That was the condition on the appeal to the supreme court, — Thomas appealing from the judgment; Stateler, from the order of July 8th refusing to turn the fund over to him. To get the writ of error out, this is the way it: -was done. The title of the case, on Thomas’ writ of error, is, "The California National Bank of San Francisco, a Corporation, Plaintiff in Error, against R. P. Thomas and John Chetwood, Jr., Defendants in Error.” On the Stateler writ of error, it is entitled this way: "The California National Bank of San Francisco and John Chetwood, Jr.,
Mr. Knapp: Here is the second writ of error, and the first citation. On the first citation we have indorsed an application to amend.
Mr. Mitchell: This is the first time that Mr. Stateler was made a party to any action. He was not a party to the suit before; never was made a party; never succeeded Mr. Young; never substituted. This is the title of the case in the supreme court of the state of California (handing book to the court). °
Mr. Knapp: May I call your honor’s attention to the writ of error itself? I think your honor will see that that case can be continued in the name of Mr. Ohetwood alone, and leave the bank out. (Counsel reads.)
_ The Court: The trouble, I see now, is this: that, in these injunction proceedings here, Mr. Chetwood was commanded to refrain from interfering in the matter of the distribution of this money. The injunction is as follows:
“The respondent Ohetwood is restrained and enjoined from commencing any further suits to collect any outstanding debt due said bank, whether the same be evidenced by open accounts, bills, notes, or judgments, or otherwise, or from in any way whatever taking or attempting to take any control or possession of any of the funds or assets or property of the said bank, and from settling and allowing, or attempting to settle or allow, any attorney’s charges, or any other fees, expenses, or costs growing out of, or which it may be claimed grew out of, any past litigation in this matter.”
I have already determined that the respondents cannot have any allowance made out of that fund in the superior court. That fund properly belongs here. It seems to me that, if I allow Chetwood to prosecute this writ of error, I practically set aside and contradict the other order that the respondents shall do nothing with it. That is to say, if I should hold that they should not prosecute that case simply in the name of the bank, I would allow them to go on with that case to the supreme court, although I have already, in these other proceedings, indicated that they should have nothing to do with it. If I am going to be consistent, if my first order is properly founded on the jurisdiction of the court, it certainly ought to restrain the respondent from prosecuting that suit at all.
Mr. Mitchell: Is your honor aware .that they ask to have it adjudged by the supreme court that this money shall not come to your honor’s receiver?
The Court: That is the point.
Mr. Mitchell: It sets the injunction aside, and all this work of months will have been for nothing.
The Court: My opinion is that the respondents will have to abandon the writ of error in the Stateler case.
The. judgment of the court is that Mr. Knapp has been guilty of contempt of court in the Stateler case, in taking the writ of error; but in view of all the matters that have been set forth, and in view
I will call attention to the fact that in one of these cases there is a form of order which might be well followed in this case, which goes a little further than the contempt. It indicates what the respondents must further do.
Mr. Mitchell: In the Tyler case?
The Court: Yes. The judgment of the court is that Mr. Chetwood, the respondent, has been guilty of contempt of court in the two matters involved in the second order, and that with respect to that, in view of all the matters that are presented here, he will be required to pay the costs of these proceedings.
In regard to the first case, there is a feature that commends itself a little more to the favorable consideration of the court, as Mr. Chetwood has indicated he withdrew the proceedings a few days after the court refused to modify the injunction. Still, it was a technical contempt of court. I ought to say that Mr. Chetwood came to me, apparently in good faith, and asked me the meaning of the order. Upon being informed, he went immediately out to the superior court, and appears to have withdrawn the application, so tliat that is merely a technical violation of the order of the court.
Mr. Mitchell: Your honor’s order will be that Mr. Chetwood is guilty both as to the first and second order to show cause, and sentenced to pay the costs of the proceedings?
The Court: Yes.
Mr. Mitchell: They amount to nothing. It is only a technical matter, anyhow. AÚ I have desired in this matter, was to have your honor do just what you have done; to have this fund brought to this court and distributed, and have the litigation in reference to that fund ended. As regards the fight between Mr. Chetwood and Mr. Thomas, that can go on for the balance of the generation. I understand that your honor says they shall not use the name of the bank, even in that matter, because it is a violation of the injunction. In preparing this order, which your honor has signified is the judgment of this court, I will follow the Tyler case, and the Rhode Island case which I rea,d yesterday. It will be ordered that this writ of error be dismissed. I ask that your honor follow closely that decision in the Rhode Island case, and give them a definite time in which to dismiss it, because, until that writ of error is dismissed, I cannot gel: any action from the state court as to the funds.
The Court: I will make it 20 days.
Mr. Knapp: It can hardly be done in so short a time. The record must be sent there.
Mr. Mitchell: It can be dismissed to-day. The authorities are all one way on that. They do not have to wait until the record is filed in the clerk’s office to dismiss the writ of error. Mr. Poster, in his Practice, sets down how that is done.
The Court: I will give them 20 days.
Mr. Mitchell: Within what time will your honor require them to produce the evidence of that dismissal to your honor?
Mr. Knapp: Twenty days in which to make the dismissal?
The Court: No; to produce the evidence of it.
Mr. Knapp: We will have 10 days after that, or 5 days, any way.
Mr. Mitchell: Why cannot it be dismissed now, and then give them 20 days to produce the evidence of it?
The Court: I will not require them to do that now, but they must dismiss it, and in 20 days produce the evidence of it.
Mr. Mitchell: The order will so specify?
The Court: Yes.
Mr. Mitchell: Both these gentlemen are officers of this court. I suppose it is distinctly understood that when this proceeding is dismissed, and an application made to the superior court of the state, there will be no further obstacle thrown in the way of turning this money over to your honor’s receiver? '
The Court: I do not know that I can go any further than I have. You can endeavor to get them to agree that they will behave themselves, perhaps. In the second proceeding Mr. Holt has not been served, I understand?
Mr. Mitchell: It can be dismissed as to Mr. Holt. There is an order to show cause, returnable yesterday, and continued until today.
The Court: That is withdrawn, I understand?
Mr. Knapp: Yes; mainly because Mr. Thompson repudiated it.
The Court: That ends that.
