Wall v. Parrot Silver & Copper Co., 244 U.S. 407 (1917)

The claim upon which the appellants come into this court by direct appeal is that the statutes of Montana p. 410referred to are unconstitutional because they provide for a sale of all the property of the corporation upon a favorable vote of less than all (not less than two-thirds) of the shares of the capital stock of the corporation and that dissenting stockholders must accept an award of the value of their stock made as of the date of sale. Such an award in this case, it is claimed, would be based upon a valuation of the assets of the company after they had been fraudulently depleted and depreciated and without its being possible in such a proceeding to add anything to the value of their stock on account of the damage which the persons in control of the defendants by their fraudulent conduct had done to the property of the Parrot Company, and thereby to the value of the appellants’ stock prior to the sale. This, it is contended, would result in taking the property of the appellants without just compensation and in violation of the “due process of law” and of the “equal protection of the laws” clauses of the Fourteenth Amendment to the Constitution of the United States.

An examination of this record leads us to fully agree with the trial court in its conclusion that the appellants failed utterly to sustain their allegations that the property of the Parrot Company was fraudulently dissipated and depreciated through the management of the defendants p. 411prior to the sale or that the sale made was in any respect fraudulent. Upon this conclusion the judgment of the District Court might well be affirmed, for the reason that where fraud is charged in a bill or set up in an answer, and is denied, the party making the charge will be confined to that issue, and also for the reason that where the claimed constitutional question on which a direct appeal to this court is based is pleaded as resulting from the carrying into effect of a fraudulent scheme, when such charge of fraud fails the asserted constitutional question ought not to be considered. French v. Shoemaker, 14 Wall. 314; Eyre v. Potter, 15 How. 42; Chicago, Burlington & Quincy Ry. Co. v. Babcock, 204 U. S. 585, 593.

This record does not call upon us to examine into this challenge of the validity of these statutory provisions, similar as they are to those of many other States and of a seemingly equitable character, for the reason that the appellants by their action in instituting a proceeding for the valuation of their stock, pursuant to these statutes, which is still pending, waived their right to assail the validity of them. Great Falls Mfg. Co. v. Attorney General, 124 U. S. 581; Electric Co. v. Dow, 166 U. S. 489; Pierce v. Somerset Railway, 171 U. S. 641; Leonard v. Vicksburg, p. 412Shreveport & Pacific R. R. Co., 198 U. S. 416, 422. They cannot claim the benefit of statutes and afterwards successfully assert their invalidity. There is no sanctity in such a claim of constitutional right as prevents its being waived as any other claim of right may be.

Upon the ground that the American Locomotive Company, a corporation created under the laws of New York, p. 413was carrying on business in the State of New Hampshire and amenable to the jurisdiction of the courts of that State, the petitioner, the Park Square Automobile Station, a Maine corporation, commenced its suit for breach of contract against the American Locomotive Company in a New Hampshire state court. In such court after service upon it the Locomotive Company prayed a removal of the cause not to the District Court of the United States for the District of New Hampshire, but to the District Court of the United States for the Southern District of New York, and its prayer to this effect was denied by the state court. Some time thereafter the prayer for removal was renewed, modified however by asking that the removal be ordered to the District Court of the United States for the Northern District of New York on the ground that the corporation was an inhabitant of that district and had its principal place of business there. This request being also denied, the Locomotive Company, executing a bond for removal, filed the record in the District Court of the United States for the Northern District of New York. The Automobile Company thereupon moved to remand, not on the ground that the case was not a removable one, but because it was solely entitled to be removed to the proper district, that is, from the state court in New Hampshire to the United States District Court of that State. This motion having been overruled (222 Fed. Rep. 979), the case was brought directly here upon the theory that the alleged error resulting from the refusal to remand was susceptible of being reviewed although no final judgment had been entered in the cause. At this term the writ of error taken for the purpose stated was dismissed because there was no final judgment, 243 U. S. 633, and thereupon on petition to that effect a rule to show cause why a mandamus should not be granted directing the District Court to reverse its ruling refusing to remand the cause was allowed and on a return of the p. 414District Court to that rule the subject is before us for consideration.

It is not disputable that the proposition thus relied upon is well founded and hence absolutely debars us from reviewing by mandamus the action of the court below complained of, whatever may be our conviction as to its clear error, Ex parte Harding, 219 U. S. 363; Ex parte Roe, 234 U. S. 70, unless it be that by some exception the case is taken out of the reach of the control of the cases referred to. It is insisted that this case is such an exceptional one, first, because of the clearly erroneous construction of the statute upon which the court below based its assertion of jurisdiction and the strange result which arose from that construction, that is, the removal of a case pending in the state court of New Hampshire to a district court in the State of New York, and second, because of the grave wrong which would result from forcing the petitioner to p. 415try its case in the State of New York at great inconvenience and expense as a preliminary to securing a review of the question of jurisdiction,—an expense and inconvenience which would be saved if by review now by means of a writ of mandamus the removal statutes be given their natural meaning and thus the wrong and confusion arising from their misconstruction would be avoided. And, in support of the exceptions thus asserted, reliance is placed on expressions contained in the opinion in Ex parte Harding, 219 U. S. 363, 373, by which it is contended they are sustained.

But conceding that the error which the proposition attributes to the ruling below is manifest, the conclusion drawn from the opinion in Ex parte Harding is obviously a mistaken one. Indisputably in that case the court was called upon to consider in a two-fold aspect some contrariety of views manifested in decided cases, first, as to the power to correct an unwarranted exercise of jurisdiction by way of proceedings in mandamus in a case where no method of review of such question was otherwise provided, and second, the right to resort to mandamus in disregard of and as a substitute for express and positive statutory regulations pointing out the method by which such review could be had. Bearing this in mind, it is plain that the language relied upon in Ex parte Harding related to the first class and established the doctrine that even in a case where no means of review were provided by statute, the writ of mandamus could be used only in exceptional cases calling for an exceptional remedy. But this did not in the slightest degree qualify or limit the comprehensive rule which was established as to the second class to the effect that, where statutory methods of review of questions of jurisdiction were provided for, they could not be disregarded, and therefore that there was no power to override the statutory provisions by resorting to the writ of mandamus. And the whole subject will be made p. 416very clear by a consideration of the opinion in Ex parte Roe, 234 U. S. 70, which gave effect to and applied the rule laid down in Ex parte Harding.