Burnrite Coal Briquette Co. v. Riggs, 274 U.S. 208 (1927)
Case details
Citation
274 U.S. 208
Full caption
BURNRITE COAL BRIQUETTE COMPANY v. RIGGS ET AL.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
May 2, 1927
BURNRITE COAL BRIQUETTE COMPANY v.
RIGGS ET AL.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.
No. 227. Argued March 11, 14, 1927.—Decided May 2, 1927.
1
The objection to the bringing of a suit, dependent on diversity of citizenship, in the District Court in a State of which neither party is a citizen, goes to the venue, and may be waived by general appearance and other action. P. 211.
2
A federal District Court may, under its general equity powers independently of any state statute, entertain a bill of a stockholder against the corporation for the appointment of at least a temporary receiver in order to prevent threatened diversion or loss of assets through gross fraud and mismanagement of its officers. P. 212.
3
The fact that a bill seeking appointment of a receiver of a corporation is brought in a State other than that of the incorporation may lead the court to decline to interfere as a matter of comity or for want of equity; or it may require the court to limit the scope of the relief granted. But the fact of incorporation under the laws of another State does not preclude jurisdiction. P. 212.
4. Where a receiver is appointed in a stockholder’s suit by a federal court having jurisdiction, and the appointment is held on review to have been wrongly made, the court may, in the exercise of its judicial discretion, require that the receivers’ charges be paid either by the corporation or by the unsuccessful plaintiff. P. 214.
5. And where a court, in the exercise of jurisdiction, has erroneously appointed a receiver, the acquiescence of the defendant may influence the court, in its discretion, to make the receivership expenses a charge upon the fund. P. 214.
6. A decree of the Circuit Court of Appeals reviewing a decree of the District Court which appointed receivers, and directing a dismissal of the bill “ for want of jurisdiction,” does not become the law of the case so as to require this Court, upon review of a second appeal from a decree allowing the receivers’ expenses, to assume that the dismissal of the bill directed was properly for want of jurisdiction. P. 215.
6 F. (2d) 226, affirmed.
Certi orari (269 U. S. 547) to a decree of the Circuit Court of Appeals which affirmed one of the District Court allowing receivers’ expenses against a corporation in a stockholder’s suit. See also 291 Fed. 754.
Messrs. James J. Lynch and George W. C. McCarter with whom Mr. Robert H. McCarter was on the brief, for petitioner.
Mr. Merritt Lane, with whom Mr. Joseph L. Smith was on the brief, for respondents.
Mr . Just ice Brandeis delivered the opinion of the Court.
This suit was brought in the federal court for New Jersey against the Burnrite Coal Briquette Company, a Delaware corporation, by Riggs, a stockholder. The bill charged gross mismanagement; prayed for the appointment of a receiver to conserve the assets; and asked, that “ if deemed advisable ” the court “ proceed under the statutes of the State of New Jersey . . . and that the
55514°—28------ 14
receiver be given all the powers and be charged with all the duties imposed upon such a receiver by the statutes.” Upon the filing of the bill, receivers were appointed, action by the corporation was enjoined, and an issue of receivers’ certificates was authorized, all ex parte. After an elaborate hearing upon an order to show cause, the receivers were continued until final hearing. Upon final hearing, the charges of mismanagement were sustained and the receivership was again ordered continued,
“ with all the powers vested in them by previous orders by this court made, and with all of the powers conferred upon receivers by an act of the State of New Jersey, entitled, ‘An act concerning corporations,’ revision of 1896, its amendments and supplements thereto, and that the receivers continue to operate the business of said defendant corporation upon a re-organization or re-adjustment of the affairs of said corporation or such disposition as may be hereafter directed to be made of the affairs of said corporation by this court.”
The Court of Appeals reversed the decree entered upon the final hearing and directed that the bill be dismissed for want of jurisdiction. The decision was not rested upon the ground that a State cannot enlarge the remedial right to proceed in a federal court sitting in equity, see Pusey & Jones v. Hanssen, 261 U. S. 491; nor upon the ground that a State cannot modify the substantive rights of a stockholder as against a foreign corporation merely because it happens to have property within the State. Compare Maguire v. Mortgage Co., 203 Fed. 858. The reversal was placed solely upon the ground that the corporation had been found by the District Court solvent at the time of the filing of the bill; that the statute of New Jersey, as interpreted by its courts, conferred no power upon its own courts to appoint receivers of foreign corporations unless they were insolvent; and that the p. 211jurisdiction of the federal court was determined by that of the state courts. 291 Fed. 754.
After the coming down of the mandate, directing dismissal for want of jurisdiction, the District Court allowed the account of the receivers who had been active during a period of nearly two years; directed payment by the corporation of the receivers’ obligations then outstanding, their expenses, the costs, and compensation for their own services and those of their counsel, amounting in all to nearly $80,000; declared these amounts a lien upon the corporation’s property; and ordered that, in default of payment, the property be sold to satisfy the charges. Upon a second appeal, that decree was affirmed by the Court of Appeals. 6 F. (2d) 226. The corporation contended that since the District Court was held to be without jurisdiction, it had no power to allow the account and order the payment out of the fund. Lion Bonding and Surety Co. v. Karatz, 262 U. S. 640, 642. This Court granted a writ of certiorari. 269 U. S. 547.
The main question for decision is whether, in view of the Court of Appeals’ direction to dismiss the bill for want of jurisdiction, it was error to allow thereafter the receivers’ account and direct the payment. There was an objection to the jurisdiction, which, if it had been seasonably taken, must have prevailed. Camp n . Gress, 250 U. S. 308. The plaintiff was a citizen of New York; the defendant a Delaware corporation; the federal jurisdiction rested wholly on diversity of citizenship; and neither party was a citizen of New Jersey. Thus, there was a sound objection to the venue. If that objection had been duly made, and had been insisted upon, an error of the lower court in overruling it could not justify charging the corporation now with payment of any charge on account of the receivership. But that objection to the jurisdiction, being to the venue, could be waived. p. 212Central Trust Co. v. McGeorge, 151 U. S. 129; Kreigh v. Westinghouse & Co., 214 U. S. 249, 252-253. And, before it was taken by the answer, it had been waived by a general appearance and other action. This was conceded.
The reversal with direction to dismiss for want of jurisdiction, ordered on the first appeal, was put upon an entirely different ground. The Court of Appeals held that there was lack of ♦jurisdiction of the subject matter. It assumed that the jurisdiction of the federal court was dependent upon the state statute. This was error. A federal district court may, under its general equity powers independently of any state statute, entertain a bill of a stockholder against the corporation for the appointment of at least a temporary receiver in order to prevent threatened diversion or loss of assets through gross fraud and mismanagement of its officers.1 There were allegations in the bill adequate to support a suit of that character; and there was nothing in the bill inconsistent with its being entertained as such. The only reference in the bill to the state statute was in one of its eleven prayers. After the waiver of the objection to the venue, there was federal jurisdiction over the parties and of the subject matter; and there was equity jurisdiction.
The fact that a bill seeking appointment of a receiver of a corporation is brought in a State other than that of the incorporation may lead the court to decline to interfere as a matter of comity or for want of equity; or it may require the court to limit the scope of the relief p. 213granted.2 But the fact of incorporation under the laws of another State does not preclude jurisdiction.3 If the dismissal directed by the Court of Appeals on the first appeal was proper (as to which we have no occasion to express an opinion), it must be justified on the ground that, in view of the facts, the District Court erred in its judgment in appointing and continuing the receivers. Compare Chicago Title & Trust Co. v. Newman, 187 Fed. 573, 576. In other words, the dismissal must rest on the ground that there was want of equity, not on lack of jurisdiction.
1
See Dodge v. Woolsey, 18 How. 331, 341-344; Zeckendorj v. Steinfeld, 225 U. S. 445, 459; Citizens’ Savings & Trust Co. v. III. Cent. R. R. Co., 205 U. S. 46; Clark v. National Linseed Oil Co., 105 Fed. 787; New Albany Waterworks Co. v. Louisville Banking Co., 122 Fed. 776; Callins v. Williamson, 229 Fed. 59.
The District Court, assuming erroneously that it was without jurisdiction of the cause, based the order of payment solely on a supposed exception to the rule which denies to a court lacking jurisdiction the power to allow receivers’ charges. According to the supposed exception, a party who has acquiesced and has thereby joined in misleading the court into an erroneous exercise of jurisdiction, may not complain when he is, thereafter, saddled with the charges. And he will be held to have acquiesced, despite a challenge of the jurisdiction, if his challenge was placed wholly upon an untenable ground; for, by objecting only on the untenable ground, he may have misled the court as much as if he had not objected at all. The trial court rested its finding of acquiescence on the fact that, while vigorously opposing continuance of the p. 214receivership on other grounds, the corporation did not intimate a lack of jurisdiction until months after the appointment; that, aside from failing to object to the venue, it failed to appeal from the decree continuing the appointment of the receivers, when the case was heard upon the order to show cause; and that it stood by in silence while the receivers were borrowing and spending money upon its property, thus taking the benefit of their action. The assumption of the District Court in matter of law and its finding of fact were affirmed by the Court of Appeals.
2
See Leary v. Columbia River Nav. Co., 82 Fed. 775; Sidway v. Missouri Land Co., 101 Fed. 481; Parks v. Bankers’ Corporation, 140 Fed. 160; Pearce v. Sutherland, 164 Fed. 609; Maguire v. Mortgage Co., 203 Fed. 858. 8 Compare Central Trust Co. v. McGeorge, 151 U. S. 129; Lewis v. American Naval Stores, 119 Fed. 391; Scattergood v. American Pipe Co., 249 Fed. 23; Ward v. Foulkrod, 264 Fed. 627; Kynerd v. McCarthy, 3 F. (2d) 32; See & Depew, Inc. v. Fisheries Products Co., 9 F. (2d) 235. Compare also, North American Land Co. v. Watkins, 109 Fed. 101.
We have no occasion to determine whether a federal district court which appoints a receiver in a case in which it necessarily lacks jurisdiction of the subject matter, so that jurisdiction cannot be acquired by acquiescence, may nevertheless impose upon the corporation, because of acquiescence, the usual charges incident to a receivership. For in the case at bar, the District Court had throughout jurisdiction of the subject matter. It is settled that where a receiver is appointed in a stockholders’ suit by a federal court having jurisdiction, and the appointment is held on review to have been wrongly made, the court may, in the exercise of its judicial discretion, require that the receivers’ charges be paid either by the corporation or by the unsuccessful plaintiff.4 See Palmer v. Texas, 212 U. S. 118, 132; Lion Bonding and Surety Co. v. Karatz, 262 U. S. 640, 642. Compare Atlantic Trust Co. v. Chapman, 208 U. S. 360. And where a court, in the exercise of jurisdiction, has erroneously appointed a receiver, the acquiescence of the defendant may influence the court, in its discretion, to make the receivership expenses a charge p. 215208 Syllabus.
4
See Ferguson v. Dent, 46 Fed. 88, 96-99; Clark v. Brown, 119 Fed. 130; Beach v. Macon Grocery Co., 125 Fed. 513; In re Lacov, 142 Fed. 960; In re T. E. Hill Co., 159 Fed. 73; In re Aschenbach Co., 183 Fed. 305; In re Wentworth Lunch Co., 191 Fed. 821; In re Wilkes-Barre Light Co., 235 Fed. 807; In re Independent Machine Corp., 251 Fed. 484. No. 362. Argued March 3, 1927.—Decided May 2, 1927. 1- A continuing order for naval supplies made during the late war by direction of the President, under Acts of March 4 and June 15, 1917, examined and held to be not an offer to purchase but a command, acceptance of which “ subject to conditions ” specified, did
upon the fund.5 It was well within the discretion of the District Court to charge the fund in the case at bar.
We have no occasion to consider the contention, made as to a part of the charges, that they were incurred after the acquiescence had ceased and, hence, do not fall within the supposed exception above referred to. For the waiver of the objection to venue conferred upon the District Court complete jurisdiction of the cause, and the power to impose upon the corporation payment of the receivers’ charges does not rest on acquiescence. There is no serious contention that any particular charge allowed was, in its nature or in amount, improper, or that in allowing it as a charge against the fund there was an abuse of discretion.
The contention that the first decision of the Circuit Court of Appeals directing dismissal of the bill for want of jurisdiction had become “ the law of the case ” and that, therefore, this Court must assume that the dismissal of the bill directed was properly a dismissal for want of jurisdiction, is groundless. Messenger v. Anderson, 225 U. S. 436, 444; Diaz v. Patterson, 263 U. S. 399, 402; Davis v. O’Hara, 266 U. S. 314, 321.
Affirmed.
LIGGETT & MYERS TOBACCO COMPANY v. UNITED STATES.
CERTIORARI TO THE COURT OF CLAIMS.
Argument for Petitioner. 274 U. S.
not make a contract; therefore, the property delivered under it was taken by eminent domain. P. 220. 2. For property not paid for when taken, just compensation includes the value at that time, with enough more, measurable by interest, to produce the equivalent of full value paid at the taking. Id. 61 Ct. Cis. 693, reversed.
Certior ari to a judgment of the Court of Claims allowing a recovery less than the petitioner’s claim, for tobacco products furnished the Government during the war.
Mr. Chester A. Gwinn, with whom Mr. Adrian C. Humphreys was on the brief, for petitioner.
The owner is not limited to the value of the property at the time of the taking but is entitled to such addition as will produce the full equivalent of that value paid contemporaneously with the taking. Interest at a proper rate is a good measure by which to ascertain the amount so to be added. Seaboard A. L. Ry. v. United States, 261 U. S. 299; Brooks-Scanlon Corp. v. United States, 265 U. S. 106; United States v. Benedict, 261 U. S. 294; United States v. Rogers, 255 U. S. 163.
Petitioner’s property was taken by the United States through the exercise of its right of eminent domain. American Smelting & Ref. Co. v. United States, 259 U. S. 75; Atlantic Ref. Co. v. United States, 59 Ct. Cis. 108; Seaboard A. L. Ry. v. United States, supra; Brooks-Scanlon Corp. v. United States, supra.
Since Congress has no power to limit the right to just compensation guaranteed by the Fifth Amendment, § 177 of the Judicial Code does not apply to this case. Brooks-Scanlon Corp. v. United States, supra; United States v. Benedict, supra; Seaboard A. L. Ry. v. United States, supra; Monongahela Nav. Co. v. United States, 148 U. S. 312; United States v. New York, 160 U. S. 598; Plymouth Coal Co. n ~. Pennsylvania, 232 U. S. 531.
215 Argument for the United States.
Assistant Attorney General Galloway, with whom Solicitor General Mitchell was on the brief, for the United States.
The question presented is whether under the circumstances of this case there was a taking or requisition under the power of eminent domain, or a voluntary sale under contract. It must be conceded that the question is not settled by the decision in the case of American Smelting Co. v. United States, 259 U. S. 75. In that case the order for merchandise did not state that compliance with it was obligatory, and made no reference to statutes authorizing the United States to requisition property, as did the naval order in the present case. The order in that case also specified a price for the copper, and the Smelting Company not only agreed to deliver it as specified in the order, but agreed to the price fixed. The view that in the present case there was no requisition or taking under the power of eminent domain rests on the contention that where an “ obligatory ” order or requisition is issued under a statute authorizing the exercise of the power of eminent domain, the property owner to whom it is directed may not voluntarily deliver the property in obedience to the order, but must require the United States to come and take it, and that if he does indicate an “ acceptance ” or willingness to comply with the order, except as to the price suggested, and thereafter voluntarily delivers the merchandise to the United States, he has made a contract which limits him to the value as of the date of delivery without interest thereon to the date of payment, whereas if he had stood fast and refused to comply with the order in any particular, and required the government to send and seize his property, he would place himself in the better position of being entitled, in addition to the value as of the date of the taking, to interest thereon to the date of payment.
The conclusion reached by the Court of Claims is not so obviously correct as to remove the question from the p. 218field of reasonable debate. The question is one of importance affecting constitutional rights of citizens. Other cases involving the same problem are pending.
Messrs. Ira Jewell Williams, John H. Stone, and F. R. Foraker filed a brief as amid curiae, by special leave of Court.
Mr . Justi ce Butle r delivered the opinion of the Court.
Plaintiff brought this action to recover a balance claimed for tobacco products obtained from it for the Navy and Marine Corps between September 8, and November 23,1918. The Court of Claims found the value to be $483,504.30 and that in the same period the United States paid on account $423,893.96, and gave judgment for the difference, $59,610.34, without more. The plaintiff contends that the products were taken under the power of eminent domain and that it is entitled to such additional sum as will produce the equivalent of their value paid at the time of the taking; and that interest at a reasonable rate is the measure of the amount required to be added in order to make just compensation.
The sole question is whether the facts found constitute a taking by eminent domain. Plaintiff was engaged in the manufacture and sale of tobacco products. August 26, 1918, the Bureau of Supplies and Accounts of the Navy issued and delivered to it Navy order N-4128, stating that pursuant to the Act of March 4,1917 (39 Stat. 1168, 1193) and the Act of June 15, 1917 (40 Stat. 182) and under the direction of the President an order thereby was placed to furnish specified tobacco products for which provisional prices were named; that compliance was obligatory; that no commercial orders should be allowed to interfere with the delivery called for; that, as it was impracticable then to “ determine a reasonable and just compensation for the material to be delivered, the fixing of the price will be p. 219subject to later determination. You are assured of a reasonable profit under this order; and as an advance payment you will be paid the unit prices stated hereon, with the understanding that such advance payment will not be considered as having any bearing upon the price to be subsequently fixed. Any difference between the amount of such advance payment and the amount finally determined upon as being just and reasonable will be paid to you or refunded by you, as the case may be.” The document stated that the order must be accepted and filled in any event; that it was to be signed and returned by plaintiff; that deliveries were to be made as directed by a designated officer and bills sent to him bearing a certificate that the prices were those stated in the order; and that the conditions appearing on the reverse side of the order were made a part of it. These included printed portions of the above-mentioned Acts of Congress empowering the President in. time of war to place an order with any person for war material, of a kind and quantity being produced by him, as the necessities of the Government might require; declaring that “ compliance with all such orders shall be obligatory,” and that, whenever the United States shall requisition any war material ” it shall make just compensation therefor”; and authorizing the President to exercise this power through agencies to be determined by him. September 9, 1918, the Paymaster General of the Navy directed that any orders issued by the Quartermaster General of the Marine Corps should be executed and billed at the prices specified in order N-4128. And, October 14 and November 22 following, the order was further modified so as to call for additional tobacco products. Upon receipt of the order and each of the modifications plaintiff signed a statement thereon that it was “ accepted subject to the conditions” specified. The President had authorized the Secretary of the Navy, either directly or through any officer who, acting under the Secretary, had
Syllabus. 274 U.S.
authority to make contracts on behalf of the Government, to exercise all the power and authority vested in the President applicable to the production, purchase and requisitioning of war material.
Navy order N-4128 did not purport to be an offer to purchase; it commanded delivery of specified merchandise. Plaintiff’s consent was not sought; it was not consulted as to quantity, price, time or place of delivery. The Navy relied upon the compulsory provisions of the Acts of Congress and commanded compliance with the order. These Acts authorized the requisition of plaintiff’s property for public use. The President was empowered to take immediate possession of its plant to manufacture the tobacco products called for. Act of June 3, 1916, 39 Stat. 166, 213. And it is to be presumed that the plant would have been taken if plaintiff had refused compliance. The acceptance was not the closing of a contract; it was the expression of purpose to obey. And the order was a continuing one and operated to require delivery of the specified articles whether then on hand or thereafter to be produced.
The findings show that plaintiff’s property was taken by eminent domain; and its just compensation includes the additional amount claimed. Seaboard Air Line Ry. v. United States, 261 U. S. 299, 304; Brooks-Scanlon Corp. v. United States, 265 U. S. 106, 123.
Judgment reversed.