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    IRON CLIFFS CO v. NEGAUNEE IRON CO, 197 U.S. 463 (1905)

    U.S. Supreme Court

    IRON CLIFFS CO v. NEGAUNEE IRON CO, 197 U.S. 463 (1905)

    197 U.S. 463

    IRON CLIFFS COMPANY, Cleveland Cliffs Iron Company, William G. Mather, and Murray M. Duncan, Plffs. in Err.,
    v.
    NEGAUNEE IRON COMPANY, Edward N. Breitung, and Mary Kaufman.
    No. 173.

    Argued March 9, 10, 1905.
    Decided April 3, 1905.

    This case was begun in the circuit court of the state of Michigan by the defendants in error, the Negaunee Iron Company, Edward N. Breitung, and Mary Kaufman, against the Iron Cliffs Company, the Cleveland Cliffs Iron Company, William G. Mather, and Murray M. Duncan. The defendants in error, plaintiffs in the court below, claimed to be the owners of certain premises upon which there was an outstanding lease purporting to run for a term of ninety-nine years from its date, September 17, 1857, made by Charles Harvey to the Pioneer Iron Company. As the controversy in this court centers about this lease, the allegations of the bill in respect thereto may be noticed. It is alleged that the interest conveyed by Harvey on the 17th day of September, 1857, to the Pioneer Iron Company was for the sole purpose of mining and quarrying at its own expense such ores and marble as might be found on the premises, subject to the qualification that the said company should not quarry, mine, or remove any ore from said [197 U.S. 463, 464]   lands, except such as it could actually convert into merchantable iron in its own furnaces and forges, being the furnaces and forges then being constructed or about to be constructed by the said company at Negaunee. Complainants allege that at the time of the filing of the bill they were, and for more than fifteen years theretofore had been, in the actual and exclusive possession of all the lands described in the bill, and the ore and marble thereon, claiming to be the exclusive owners thereof. That said Pioneer Iron Company, in the month of September, 1859, erected two certain ore furnaces at Negaunee, instead of one furnace, as contemplated at the time of the execution of the grant or lease by Harvey to the Pioneer Iron Company.

    That said Pioneer Iron Company carried on the business of manufacturing iron at its said furnaces from the time they were constructed until about the 1st day of January, 1866. That said Pioneer Iron Company, in carrying on its said business, procured no iron from the premises, or any portion of the premises described in said lease executed by the said Charles T. Harvey to the said Pioneer Iron Company, but procured all of their ore for the manufacturing of iron from other lands.

    Complainant alleges that on the 1st day of January, 1866, the Pioneer Iron Company ceased to do business, and has not since that time manufactured or operated under the lease, but, on the contrary, at and from the date aforesaid abandoned the same. On the 10th day of March, 1866, the Pioneer Iron Company entered into an agreement with and leased to the Iron Cliffs Company for the period of ten years its entire real and personal property situated in the county of Marquette, Michigan, consisting of all its iron works, buildings, lands, and property rights. That after making said lease and agreement with the Iron Cliffs Company the said Pioneer Iron Company made and filed no reports as required by the laws of the state of Michigan.

    The prayer of the bill is--

    One of the defendants, Murray M. Duncan, answering separately, took issue upon the allegations of the bill, and denied specially that the Pioneer Company is dissolved, or any of its rights or property under the lease or conveyance terminated, and avers that the said Pioneer Iron Company is still the owner of the property rights and interests granted and conveyed; admits that he, as an agent of the said company, has actively engaged in conducting operations on some of the lands covered by the conveyance, for the purpose of discovering iron ore to be used in the furnaces of the Pioneer Iron Company, and that if ore sufficient in quantity and quality is discovered on the premises the said Pioneer Iron Company intends immediately to purchase the right to the surface, as required in the agreement, and intends to continue explorations until it finds ore on said lands for the use of its furnaces, or discovers the nonexistence of such ore; and further says that he has no personal interest in the lands set forth in the bill, but in all his actions is merely the agent of the Pioneer Iron Company, and not the agent of any other corporation or person whatsoever.

    The Iron Cliffs Company and Cleveland Cliffs Iron Company and William G. Mather answer together, taking issue upon the allegations of the bill, admitting the existence of the lease of the Pioneer Iron Company, and aver that the entering and explorations on the lands were made and have been carried on by the Pioneer Iron Company, and deny that the charter of said company has expired; admit that said company through its agents has continued to carry on the operations begun by the Pioneer Iron Company under the direction of William G. Mather, as one of the officers of said company, and deny any interest in the matter set forth in the bill except as some or all of them may be stockholders or officers in the Pioneer Iron Company.

    After issue joined and proofs taken, the bill of complaint was amended so as to charge that the defendants claim and pretend [197 U.S. 463, 468]   that under the provisions of number 142 of the Public Acts of 1889, and under number 60 of the Public Acts of 1899 of the state of Michigan, said Pioneer Iron Company has been reorganized, and that by reason of said act such reorganized company had the right to mine ore under the said lease. The defendants answered the amendment, and admitted that in April, 1901, the Pioneer Iron Company had caused to be filed in the office of the secretary of state and in the office of the clerk of Marquette county certain perfected articles of incorporation of the said company in renewal of the original organization of said company, and under said reorganization, as well as previous filings, claimed to be a valid corporation. The record discloses that certain articles of association undertaking to reorganize the Pioneer Iron Company were adopted October 18, 1889, and filed in the office of the secretary of state, April 8, 1900, and amended articles were filed on April 8, 1901

    And, raising a Federal question, William G. Mather made the following answer:

    Upon hearing, the circuit court, after setting forth certain findings, entered the following decree:

    This decree, upon appeal, was affirmed by the supreme court of Michigan. 96 N. W. 468.

    From this judgment a writ of error was sued out to this court.

    Messrs. James H. Hoyt, Elihu Root, and Hoyt, Dustin, & Kelley for plaintiffs in error. [197 U.S. 463, 470]   Messrs. Scott W. Shaull, Benton Hanchett, Arch B. Eldredge, H. F. Pennington, and Charles R. Brown for defendants in error.

    Mr. Justice Day delivered the opinion of the court:

    The Federal question, from which alone this court can take jurisdiction, is alleged to arise from the adverse decision made upon the answer of William G. Mather, setting up, in substance, that in proceeding to determine the case and render a decree without the presence of the Pioneer Iron Company as a party defendant in the action the said company and Mather, as a stockholder therein, were deprived of property without due process of law, in violation of the 14th Amendment to the Constitution of the United States. It is elementary that, unless such Federal right set up in the state court was denied the plaintiff in error, this court has no jurisdiction. An examination of the opinion and decision of the supreme court [197 U.S. 463, 471]   of Michigan shows the court held, among other things, that the lease to the Pioneer Iron Company and the rights acquired thereby were appurtenant to the furnaces then existing upon the lands, and that it acquired no right to mine more ore than was necessary to supply such furnaces. That, as the right to mine the ore under the lease was appurtenant to the blast furnaces erected and intended to manufacture the iron so mined, the abandonment and destruction of the furnaces destroyed the right to mine the ore under the lease. The Pioneer Company, after the execution of the ninety-nine-year lease, having found ore in nonpaying quantities, had abandoned explorations, and for forty-three years had made no attempt to mine on the lands. That in 1866 the Pioneer Iron Company conveyed to the Iron Cliffs Company, for a period of ten years, all its iron works, buildings, lands, and property rights. The Iron Cliffs Company afterwards became the owner of all the stock of the Pioneer Company, and thereafter carried on the furnace business. That the Pioneer Iron Company was regarded as merged in the Iron Cliffs Company, and never thereafter made or filed any reports as required by the laws of the state of Michigan. That the complainants and those under whom they claim right and title, beginning about the year 1870, spent large sums of money in exploring and developing the lands and opening valuable mines thereon, and that the rights thus acquired, with the knowledge of those in interest, had worked an estoppel of any claim of right under the lease. For these, among other reasons, the supreme court affirmed the decree of the circuit court.

    It is apparent that the questions decided in the state supreme court were of a non-Federal character, and give no right of review here unless it is true that in this judgment the Pioneer Iron Company has been concluded and its property rights taken without giving it an opportunity of being heard in the case. It is fundamental that no person can be deprived of property rights by any decree in a case wherein he is not a party. Not being made a party to the suit, the rights of the [197 U.S. 463, 472]   Pioneer Iron Company cannot be affected in any way by the decision of the court. Finley v. Bank of United States, 11 Wheat. 304, 307, 6 L. ed. 480; New Orleans Waterworks Co. v. New Orleans, 164 U.S. 471, 480 , 41 S. L. ed. 518, 523, 17 Sup. Ct. Rep. 161.

    But it is urged that, notwithstanding the Pioneer Iron Company is not a party to the record, its rights are necessarily adjudged in the decision, which affects the lease granted to it, and under which the defendants in their answer claim to act. But we cannot concede this proposition. It may be answered primarily that the Pioneer Iron Company cannot thus be denied its rights. The affirmative relief granted to the complainant must be on the case made in the bill, its amendment, and the testimony supporting the allegations therein made. The bill proceeds upon the theory that under the laws of the state of Michigan the charter of the Pioneer Iron Company had expired in 1887,-thirty years from the date of its organization; and there was the most careful avoidance, in the pleadings of the complaint, of any recognition of the existence as a going corporation of the Pioneer Iron Company. It was charged in the bill that its corporate existence had ended, and, so far from making it a party, the complainants refrained from recognizing it as an existing corporation, and the relief sought was against the corporations and persons named and made defendants in their own right, and not as agents of the Pioneer Iron Company, but who were alleged and found to be using the name of that corporation as a cover for wrongful acts of their own. The mere fact that the defendants sought to justify their acts as agents of the Pioneer Iron Company would not warrant the court in awarding a decree against that company or its agents, neither being made a party to the record. Nor, in our opinion, did the judgment rendered have this effect. In the case of Tindal v. Wesley, 167 U.S. 204 , 42 L. ed. 137, 17 Sup. Ct. Rep. 770, where a suit was brought in South Carolina to recover possession of certain real property in that state, one of the defendants answered that he had no personal interest in the property except as secretary of the state of South Carolina, in which capacity alone he had ac- [197 U.S. 463, 473]   quired the control of the property. It was argued that in that event the suit could not be maintained, because it was in fact an action against the state within the meaning of the 11th Amendment, and the judgment of the court concluded the state. To this contention this court, speaking by Mr. Justice Harlan, made answer:

    So in this case, notwithstanding the answer of the defendants justifying as agents of the Pioneer Iron Company, the bill made neither the company nor any agent of it as such a party to the proceedings. The mere fact that the claim is made that the Pioneer Iron Company will be concluded can have no effect upon it so long as it has not submitted its rights to adjudication by voluntary proceedings on its part, or been brought into court by proper process. It is true the defendants claim the charter of the company has been renewed, and that it is still a going corporation. It is conceded that at the date of its origin the Constitution of the state of Michigan prohibited the organization of corporations for a period greater than thirty years. That the supreme court of Michigan did [197 U.S. 463, 474]   not intend to adjudicate that the Pioneer Iron Company if reorganized was concluded by the decree of the circuit court, is shown by the language used in the conclusion of its opinion:

    But it is said the supreme court affirmed the decree of the lower court, in which the defendants were enjoined in a representative capacity, and that this includes them as agents of the Pioneer Iron Company, and that when the agents of the company are enjoined the decree amounts to a judgment against the corporation which they represent. But in view of the pleadings, as already stated, and the claim made and insisted upon by the complainants that there was no Pioneer Iron Company in existence, we think the language in the decree has reference to the injunction and order against the corporations and individuals made defendants and their attorneys, solicitors, and agents, in their representative capacity, that is, [197 U.S. 463, 475]   as representing the defendants in any of the ways mentioned. The decree was rendered after finding in favor of the complainants' theory of the case, and had the effect to require the defendants to the bill, their agents and attorneys, to vacate the premises, and enjoined them from further mining thereon. It is utterly inconsistent with the proceedings and the decree to enlarge the judgment so as to include agents of the Pioneer Iron Company. If it should hereafter be insisted that the rights of that company or its agents are concluded, a Federal question might arise if such effect shall be given to the decree in this action. In our view of this case there is nothing in the proceedings or decree in anywise conclusive of the rights of the Pioneer Iron Company, if it is held to be a living corporation, or any of its duly authorized agents acting in its behalf.

    We therefore find that no Federal question arises upon this record. The proceedings in this court will be dismissed for want of jurisdiction.

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