250 F. 292 | D.N.J. | 1918
The Bethlehem Steel Company, a corporation of the state of Pennsylvania (hereinafter called the Bethlehem Company), was made a party defendant, pursuant to the prayer of the supplemental bill filed in this cause. It appears specially for the sole purpose of objecting to the jurisdiction of the court, and moves to quash the service of the subpoena, whereby it was brought into the suit, upon the ground that the action is brought in a district where neither the plaintiff nor itself is a resident or inhabitant.
The original bill was filed May 2, 1916, by Joseph H. Brandt, a citizen and resident of Pennsylvania, against the Pennsylvania Steel Company of New Jersey, a citizen of New Jersey (hereinafter called the New Jersey Company), and its officers and directors. The Bethlehem Company was not made a defendant, for the reason, alleged in the hill, that it could not “properly be brought in this jurisdiction.”
On May IS, 1916, Clarence IT. Venner, a stockholder of the New Jersey Company and a citizen ^id resident of New York, was permitted to intervene as a parly plaintiff.’ On May 23, 1916, Brandt withdrew, and the bill was dismissed as to him. Venner has since been the sole plaintiff. On the same date this court denied plaintiff’s motion for a preliminary injunction, which action was affirmed by the Circuit Court of Appeals on June 30, 1916. See 233 Fed. 407, 147 C. C. A. 343. As between the parties to the original bill, there was diversity of citizenship, the requisite amount in controversy, and in-habitancy of the defendants in this district, to give this court jurisdiction.
To determine the questions of jurisdiction here raised, a correct understanding of the cause of action and the relation of the parties thereto, as stated by the two bills, is necessary. On May 23, 1916, when the preliminary injunction was denied, the original bill, as amended, in substance alleged that the New Jersey Company was about to accept a proposal made by the Bethlehem Company (a direct competitor) to dissolve and liquidate under the New Jersey corporation laws, and convey all the assets owned by it and its subsidiaries to the Bethlehem Company; that such proposed sale and dissolution were ultra vires, in derogation of plaintiff’s rights under the common law, general rules of equity, the statutes and public policy of New Jersey, in violation of that state’s corporation and anti-trust laws,- and also in violation of the -anti-trust laws of the United States, known as the Sherman and Clayton Acts. It prayed to enjoin such dissolution and the sale of assets, either directly or indirectly, to the Bethlehem Company or to any other person.
In the supplemental bill, filed May 14, 1917 (nearly a year after this court’s denial of the preliminary injunction was affirmed), in substance it is alleged that, since the refusal of this court to grant a preliminary injunction, “the transaction complained of in the bill of complaint, varying somewhat in detail, but not in substance or in its object as outlined in the original bill,” had been consummated; that a New Jersey corporation, known as the Bethlehem Steel Corporation (hereinafter called the Bethlehem Corporation), acting in conjunction with the defendants or some of them, organized a corporation known as the Penn-Mary Company, under the laws of Pennsylvania, for the sole purpose of acquiring the assets of the New Jersey Company and its subsidiaries; that said assets v;ere Ifeereafter conveyed to the Penn-Mary Company, and that the latter company, on or about July 1, 1916, leased all the tangible property so acquired to the Bethlehem Company, which is now in possession of the same; that the entire capital stock of the Penn-Mary Company is owned by either the Bethlehem Company or the Bethlehem Corporation, and that the latter owns all the capital stock of the Bethlehem Company, and controls and dominates its operations; that the organization of the Penn-Mary Company was a mere device to disguise the transaction, and that the sale was as originally planned and in the interest of the Bethlehem Corporation, its subsidiaries, and the individual defendants in the original bill; that
Unless some statutory regulation other than that contained in section 51 of the Judicial Code (Act March 3, 1911, 36 Stat. 1101) authorizes this disputed service, it cannot be maintained merely because a federal question is involved, for that section provides that, except in certain cases (federal questions not being included within the exceptions), “no civil suit shall be brought in any District Court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant.” Macon Grocery Co. v. Atlantic Coast Line R. Co., 215 U. S. 501, 30 Sup. Ct. 184, 54 L. Ed. 300; Male v. Atchison, Topeka & Santa Ec Ry. Co., 240 U. S. 97, 36 Sup. Ct. 351, 60 L. Ed. 544; Newell v. Baltimore & O. R. Co. (C. C. W. D. Penn.) 181 Fed. 698; Southern Pac. Co. v. Arlington Heights Fruit Cc. (C. C. A. 9) 191 Fed. 101, 111 C. C. A. 581;. Pennsylvania R. Co. v. Swift (D. C. E. D. Penn.) 242 Fed. 92.
Section 4 of that act makes it the duty of the United States district attorney, under the' direction of the Attorney General, to institute suits in equity to prevent violations of the act. No private person is expressly authorized to bring these suits, and no one other than a United States attorney may bring the suit authorized in that section. Minnesota v. Northern Securities Co., 194 U. S. 48, 24 Sup. Ct. 598, 48 L. Ed. 870; Paine Number Co. v. Neal, 244 U. S. 459, 37 Sup. Ct. 718, 61 L. Ed. 1256. Section 7 authorizes any person “injured in his business or property * * * by reason of anything forbidden or declared to be unlawful” by that act to sue and recover threefold damages. Obviously such suits include only actions at law. Fleitmann v. Welsbach Co., 240 U. S. 27, 36 Sup. Ct. 233, 60 L. Ed. 505.
The Clayton Act (38 Stat. 730), in important respects, enlarges both the jurisdiction of the federal court and the rights of private litigants therein, as to matters forbidden by the Sherman and Clayton Acts. Section 4 of the Clayton Act is similar to section 7 of the Sherman Act, but by the insertion of the words “or has an agent” in the venue clause, the plaintiff,, in some circumstances, has additional districts in which to bring his suit to those permitted by section 7 of the Sherman Act. However, suits founded on this section, like those based on section 7 of tire Sherman Act, are confined to actions at law. Section 12 of the Clayton Act (Comp. St. 1916, § 8835k) deals only with tha venue of proceedings against corporations, and perhaps affords the plaintiff additional districts wherein he may sue that class of defendants. Section 16 of that act provides that:
“Any person * * * shall be entitled to sne for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the anti-trust laws, * * * when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings. * * * ”
The suits covered by this latter section are limited'to those seeking preventative relief; i. e., injunction “against threatened loss or damage.” Fleitmann v. Welsbach Co., 240 U. S. 27, 36 Sup. Ct. 233, 60 L. Ed. 505; Union Pac. R. Co. v. Frank, 226 Fed. 906, 141 C. C. A. 510. No other equitable suits, at the instance of private parties are expressly authorized by the Clayton Act; and, as the relief sought in the present supplemental bill is not of a preventative character but to annul a consummated transaction, none of the venue provisions of the Sherman or Clayton Acts is available to him under that bill. To obtain that character of relief in a federal court,, the plaintiff must bring his suit in the district, whereof the defendant is an inhabitant, as provided by section 51 of the Judicial Code. The service of process upon the Bethlehem Company cannot be sustained on the ground that the supplemental bill presents a federal question.
The purpose of the present supplemental bill, undoubtedly, is to aid the original suit; but, according to its own allegations, so far as it affects the status of the Bethlehem Company to the suit, its relation to the controversy is substantially now what it was at the time the original bill was filed. At that time, according to the original bill’s allegations, it had made an offer to purchase the assets of the New Jersey Company and its subsidiaries, upon condition that the former dissolve, and the purpose of the bill was to prevent that purchase and dissolution.
At the filing of the supplemental bill both the sale and dissolution had been effected. The title was taken by the Penn-Mary Company, a corporation organized during the pendency of the original suit, which leased the premises in question to the Bethlehem Company. The capital stock of this purchasing company is owned either wholly by the Bethlehem Company, or by it in conjunction with the Bethlehem Corporation, and the latter, a Ñew Jersey company, owns all the capital stock of the Bethlehem Company. The supplemental bill treats this change in acquiring title and possession of the New Jersey Company’s assets as a mere subterfuge, and charges that it is a substantial' car
The original bill alleged the noninhabitancy of the Bethlehem Company in this district as the reason for its not making that company a defendant to that bill. On principle, as nothing has transpired pen-dente lite that changes substantially the relation of the Bethlehem Company to the alleged wrongdoing made the basis for filing of the original bill, it cannot now be made a party to that suit in ancillary proceedings. No case has been cited, nor have I been able to find any, whose teachings would justify the holding of this supplemental bill as an ancillary one.
• A different result would obtain, had this court ever taken possession of the New Jersey Company’s assets, because the possession of the res draws to the court full control over any matters affecting such property. Whether a final decree made by this court, if it be in favor of the plaintiff, may or may not be enforced against the Bethlehem Company by process issuing directly out of this court, is a question of little moment on this motion. If it may, the plaintiff can await that event. If not, other proceedings are available for that purpose. A purchaser of property pendente lite is as conclusively bound by the results of the litigation as if he'had from the outset been a party thereto. Tilton v. Cofield, 93 U. S. 163, 23 L. Ed. 858; Lacassagne v. Chapuis, 144 U. S. 119, 125, 112 Sup. Ct. 659, 36 R. Ed. 368; Hargrove v. Cherokee Nation (C. C. A. 8) 129 Fed. 186, 190, 63 C. C. A. 276. But, because one not a party may be so bound, that fact alone will not justify making him a party by ancillary proceedings before final decree. Merriam v. Saalfield, supra.
The original plaintiff in this proceeding had his choice of courts. He chose the one Which, because of the venue restrictions established by Congress, excluded the Bethlehem Company from being made a party in the original suit without its consent. The intervening plaintiff chose to continue that suit thus restricted. The latter, having exercised his choice, is bound by the limitations, when invoking ancillary jurisdiction before a final decree has been entered in the original suit, just as'fully as the original plaintiff was in filing the original bill, where, as here, the transaction complained of in the supplemental bill is, according to its own allegations, substantially the same as that com-' plained of in the original bill.
The motion to quash is granted.
15 Sup. Ct. 266, 39 L. Ed. 341.