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228 U.S. 137
HENRY L. BOGART, Townsend Lawrence, and Anita Lawrence, as Executors of Walter B. Lawrence, Suing on Behalf of Themselves and Other Stockholders, etc., Appts.,
SOUTHERN PACIFIC COMPANY et al.
Argued March 5, 1913.
Decided April 7, 1913.
[228 U.S. 137, 138] Messrs. H. Snowden Marshall, James A. O'Gorman, A. J. Dittenhoefer, and David Gerber for appellants.
[228 U.S. 137, 139] Mr. Arthur H. Van Brunt for the Southern Pacific Company, the Houston & Texas Central Railroad Company, and the Central Trust Company.
Mr. Frederick Geller for the Farmers Loan & Trust Company.
[228 U.S. 137, 141] Messrs. Tompkins McIlvaine and Woodhull Hay for the Metropolitan Trust Company.
Mr. Justice Day delivered the opinion of the court:
This is a direct appeal from a decree of the United States circuit court for the eastern district of New York upon the ground that the jurisdiction of the circuit court is in issue under 5 of the circuit court of appeals act (26 Stat. at L. 826, chap. 517, U. S. Comp. Stat. 1901, p. 488), and a certificate to that effect has been sent to this court.
The suit was originally brought in the New York supreme court for the county of Queens by Walter B. Lawrence, who has since died, and for whom the appellants have been substituted, against the Southern Pacific Company, Frederick P. Olcott, Central Trust Company of New York, Farmers's Loan & Trust Company, Metropolitan Trust Company of the City of New York, the Houston & Texas Central Railroad Company (which we will call the 'railroad company'), and the Houston & Texas Central Railway Company (which we will call the 'railway company'). Upon the petition of the [228 U.S. 137, 142] Southern Pacific Company, Olcott, and the railroad company, the case was removed to the United States circuit court. Lawrence alleged in his complaint that he was a stockholder of the railway company, of which the Southern Pacific Company owned a majority of the stock; that the railway company became involved in various foreclosure suits, to which it set up certain defenses claimed by Lawrence to be valid and sufficient; that the Southern Pacific Company entered into a certain reorganization agreement, whereby, in consideration of the withdrawal of the defenses, which was procured by the Southern Pacific Company, the mortgages were foreclosed and all the property of the railway company bought in by defendant Olcott, who transferred the lines of railroad, rolling stock, etc., to the defendant railroad company, organized pursuant to the agreement; that new bonds were issued by the railroad company to retire the old bonds, and the lands of the railway company, purchased by Olcott, were conveyed to the three trust companies under the new mortgages, defendants herein, as further security for the bonds; and that under the plan the Southern Pacific was given more favorable terms than the minority stockholders in the matter of receiving the benefits of the reorganization agreement, and that consequently all the stock of the railroad company was taken over by the Southern Pacific Company. Lawrence prayed that the Southern Pacific Company be decreed trustee of all benefits received under the plan, and for an accounting, and prayed that the trust companies convey the surplus arising from the sale of land, after the bonds have been liquidated, to the railway company, and for certain other relief.
After the removal of the case to the circuit court, a motion was made to remand to the state court, which was overruled. Thereafter the defendants the Southern Pacific Company, Olcott, and the railroad company filed [228 U.S. 137, 143] a plea in which it was set up that the railway company was a necessary and indispensable party to the suit; that it was beyond the jurisdiction of the court, and could not be brought in by process, and without its presence no decree could be rendered in the case, and therefore prayed that the bill be dismissed. Special pleas were filed by the Central Trust Company of New York, the Farmers' Loan & Trust Company, and the Metropolitan Trust Company of the City of New York.
Thereafter another motion to remand was made. This motion was based upon the ground that the circuit court could not get jurisdiction over the railway company, but that the state court from which it was removed could acquire jurisdiction over all the parties. This motion was also denied by the court.
The pleas to the jurisdiction were heard upon an agreed statement of facts, from which it appears that the railway company was incorporated under a special act of the state of Texas, which contained no limitation upon its corporate existence, and prior to 1885 had operated certain railroads in Texas; that the railway company's property was sold under the foreclosure decree for $7,000,000 less than the amount decreed to be due, and that the deficit was unpaid and uncollectible; that the reorganization had been accomplished; that since the foreclosure sale the railway company has owned no property and has had no place of business in the state of New York; that no meeting of the stockholders or directors has been held since 1890, and that while there are three surviving directors, none of them visit the state of New York upon the company's business. The circuit court held that the railway company was an indispensable party to the suit, and, unless it could be served with process within five days from the date of entering the order, a final decree should be entered dismissing the bill, which was thereafter done. [228 U.S. 137, 144] The circuit court made a certificate upon which to bring the case here, containing the following questions:
Appeals may be taken directly to this court from the circuit court under 5 of the circuit court of appeals act in any case in which the jurisdiction of the circuit court is in issue, and it is provided that in such cases the question of jurisdiction alone shall be certified to this court for decision. The question intended to be thus brought to this court by direct appeal is well settled to be the jurisdiction of the court as a Federal Court. Questions of general jurisdiction, applicable as well to to state as Federal tribunals, are not included in such review. Louisville Trust Co. v. Knott, 191 U.S. 225 , 48 L. ed. 159, 24 Sup. Ct. Rep. 119; Courtney v. Pradt, 196 U.S. 89 , 49 L. ed. 398, 25 Sup. Ct. Rep. 208; Fore River Shipbuilding Co. v. Hagg, 219 U.S. 175 , 55 L. ed. 163, 31 Sup. Ct. Rep. 185.
The question cannot be brought into the record by certificate if not really presented, and whether so presented this court will determine for itself. R. J. Darnell v. Illinois C. R. Co. 225 U.S. 243 , 56 L. ed. 1072, 32 Sup. Ct. Rep. 760.
The question to be decided is whether the case was dis- [228 U.S. 137, 145] missed for the want of jurisdiction in the circuit court as a Federal court; for if it be found that the case was dismissed because of the decision of a question not peculiar to the Federal jurisdiction, and involving only a general question of procedure in equity, this court need not consider it. From what has been stated it is apparent that the case was duly removed because of diverse citizenship, and what was done afterwards was in pursuance of the jurisdiction thus acquired. The defendants, the Southern Pacific Company, Olcott, and the railroad company, by plea claimed that the cause should not proceed because the railway company was an indispensable party to the suit. This, it is contended, presented a question of the jurisdiction of the court as a Federal court, and the dismissal of the suit was the denial of such jurisdiction.
Section 737 of the Revised Statutes (U. S. Comp. Stat. 1901, p. 587) provides:
Equity rule 47 is to the same effect.
While the statute and rule just quoted, to the extent to which they go, are, of course, controlling, neither the rule nor the statute undertakes to define what is an indispensable party, but each merely undertakes to formulate principles already controlling in courts of equity, and applicable as well to other courts as to those of Federal origin. The statute was originally passed in 1839 (5 Stat. at L. 321, chap. 36, U. S. Comp. Stat. 1901, p. 587), and rule 47 of equity practice as adopted by this court, is only a declaration of the effect of the act of Congress. The statute and rule came before this court in Shields v. Barrow, 17 How. 130, 15 L. ed. 158, and, speaking of them, Mr. Justice Curtis, delivering the opinion of the court, said (p. 141):
In other words, it was declared by this court that the rule as to indispensable parties, without which the court could not proceed to a decree, is equally applicable to all courts of equity, whatever may be their structure as to jurisdiction, and rests upon the broad principle that no court can adjudicate directly upon a person's rights unless such person is actually or constructively before the court.
What the court really did in the present case was, first, to entertain jurisdiction of the suit upon the removal; and then, applying the general principle that a suit cannot be proceeded with in the absence of an indispensable party, to dismiss it because the railway company was an indispensable party to the present suit, and had not been served, and had not appeared or waived service, as would have been the requirement in any court of equity reaching the same conclusion.
Nor does the decision embodied in the fourth paragraph of the certificate and shown in the decision of the court make a question of jurisdiction of the court as a Federal court. As therein embraced the decision was that the cause should be dismissed for want of jurisdiction, and not [228 U.S. 137, 148] that it should be remanded to the state court. This decision was to the effect that the court, having reached the conclusion, in the exercise of jurisdiction, that an indispensable party was not upon the record, ordered a dismissal of the action. This did not involve a decision of the jurisdiction of the court as a Federal tribunal.
We therefore are of the opinion that in no aspect in which the jurisdictional question was presented to this court is it reviewable by a direct appeal to this court from the circuit court. The present appeal is therefore dismissed.
[ Footnote 1 ] 29 Sup. Ct. xxxi.