Grosch v. Central Vannina, Inc.

HamxltoN, Judge,

delivered tbe following opinion:

On April 21, 1914, tbe bill to enforce a claim for oils wás filed in tbis court at ten minutes after 12 o’clock, noon, and upon consideration tbe court made an order ex parte appointing receivers, and about 3 o’clock in tbe afternoon process was served upon tbe defendant and tbe receivers took charge of tbe property. Tbe defendant company then immediately appeared specially in tbis court and filed a plea to tbe jurisdiction, alleging that prior jurisdiction bad been obtained by a local court.

Meanwhile, somewhat corresponding steps were being taken in tbe insular district court at San Juan. About twenty minutes before 12 o’clock, noon, of tbe same day, a petition was filed in tbis local court by Sues, de Abarca S. en O., as a common creditor, seeking to enforce a debt against tbe Central Van-nina, and also asking a receivership. It is claimed that process upon tbis petition was served upon tbe defendant at 12 o’clock, and certainly before 1 o’clock, and defendant before 2 p. m. filed an answer confessing tbe petition. Shortly after 2 o’clock in tbe afternoon tbe local court made an order appointing an hour tbe next day, so that that court might “proceed to appoint a receiver.” When, on tbe next day, it was called to tbe attention of the local court that tbe Federal receivers were already in charge, tbe local court suspended action until tbe Federal court should act. Such is tbe present situation.

These steps were taken in each court with entire ignorance of what was going on in the other court until the Federal receivers took possession as above. The steps taken are not only parallel in point of time, but interlock so as to make it a somewhat intricate problem to determine which court first took jurisdiction.

1. The pleading immediately before this court is what is called a plea to the jurisdiction filed by the defendant, the Central Vannina. Has this court, therefore, jurisdiction?

Jurisdiction is defined as the power to hear and determine a cause. Bouvier’s Law Dict., s. v.; Crignon v. Astor, 2 How. 338, 11 L. ed. 290; Hnited States v. Arredondo, 6 Pet. 709, 8 L. ed. 554. It involves ordinarily the question of person and subject-matter. If the subject-matter is within the powers conferred by law upon the court, the court has jurisdiction thereof, and in ordináry suits it is also necessary that the court have jurisdiction of the parties, that is, that the plaintiff and defendant must be within the territorial limits of the court. A suit ordinarily is not within the range of action of a court until both jurisdictions are acquired, to wit, of the parties and of the subject-matter.- There can be no question that this court has jurisdiction in this case of the complainant, who is a German citizen, the defendant, which is a local corporation, and of the subject-matter, which is the marshaling of the assets of a corporation temporarily in difficulties, for the purpose of preserving them, and, if insolvency appear, of making pro rata distribution. This all follows from the constitution of a Federal court of equity. The bill was duly filed, duly served, receivers duly appointed, and the property is in their charge. It is difficult to see in what element the jurisdiction •of this court is wanting. Certainly none bas been called to tbe attention of tbe court- Tbe plea sets up, however, that proceedings bave been begun in another court, but this would be immaterial. Tbe same matter may be pending even between tbe same parties in different courts, or even in tbe same court. Tbe only result would be that in tbe latter instance tbe defendant would bave the right to compel tbe plaintiff to elect, and in any case tbe courts would see that there is only one execution. It bas been expressly held that tbe same proceeding may be pending both in tbe United States and tbe state courts. Crilmour v. Ewing, 50 Eed. 656. Tbe plea therefore is bad.

2. For tbe purpose of expediting matters, tbe court was willing, however, to consider this plea as a motion, or as expressed in any other form which would properly raise tbe question whether this court should go on under tbe circumstances, and it will therefore proceed to discuss that question.

3. In tbe argument it was alleged that this court bad no right to appoint receivers ex parte. This, however, is incorrect. This is common practice in a pressing case. Bouvier’s Law Diet., s. v. A bill was filed in this case and upon tbe showing made it was thereupon determined by tbe court that receivers should be appointed and they were accordingly appointed. They qualified at once and went into possession of tbe property. Whether tbe case was such as to justify an ex parte appointment is a matter for tbe discretion of this court, and this court sees no reason to‘change its ruling as to that point.

4. Tbe proceeding set up in tbe plea or motion seems to bave been brought by some other creditor against this defendant, and this defendant within an hour after service filed an answer admitting tbe allegations of that petition and consenting to a receivership. The allegations of insolvency and the like being thus admitted, it is difficult to see in wbat way this defendant is injured by the appointment of receivers in this court. The only ground for such a contention would be that the defendant has the right to choose receivers. He certainly has no right to choose as between the courts, and he has no more right to choose as between receivers. The object of a receivership is to take the property out of the hands of a defendant who is unable to administer it properly. Friendly receiverships are discouraged by law.

5. The defendant, therefore, cannot raise the question which he seeks to raise as between the jurisdictions of the two courts. So that the question of conflict of jurisdiction, if there be any, can only be presented by the party plaintiff or by some officer representing the other court. This court certainly has jurisdiction of the res and cannot turn it adrift. If both of these proceedings are of the same character, they must be either in rem or in personam. If in personam, it is immaterial what is done in another court. If both are in rem, the court first acquiring possession will be preferred. Heidritter v. Elizabeth Oil Cloth Co. 112 U. S. 294, 28 L. ed. 729, 5 Sup. Ct. Rep. 135. And until this point shall come up in some proper way, this court will retain possession of the res. The defendant being unable to take care of it by its own confession, the property would otherwise be left for a scramble of creditors. This court will not permit such a result. Having jurisdiction of the parties, the subject-matter, and the possession of the res, it will, through its receivers, retain possession until shown in some proper way that the possession should go elsewhere. There are at present no representatives of another jurisdiction. If there should be such, and they should appear, the court will hear their application fully. Anything which might be said at this time as to rights of such officers who have not been appointed would be obiter dictum,. A court will not decide as to issues and parties not before it.

All the court will say at present is that its officers are in proper possession of the property, and should proceed to carry out the previous orders of this court. The plea is overruled, and, regarded as a motion, it .is denied.