General Inv. Co. v. Lake Shore & M. Sou. Ry. Co.
260 U.S. 261 (1922)

Annotate this Case

U.S. Supreme Court

General Inv. Co. v. Lake Shore & M. Sou. Ry. Co., 260 U.S. 261 (1922)

General Investment Company v. Lake Shore

& Michigan Southern Railway Company

No. 34

Argued October 6, 1922

Decided November 27, 1922

260 U.S. 261

Syllabus

1. A motion by a defendant to quash service of process may be made in and entertained by the district court after removal of the cause,

Page 260 U. S. 262

though previously made and overruled in the state court before removal. P. 260 U. S. 267.

2. Service on a foreign railway corporation in a state where it had no railroad or office, upon a person not its agent, held void. P. 260 U. S. 268.

3. A petition of removal filed in a state court, with or without reservations as to jurisdiction, is a special appearance, and leaves the validity of attempted service of process open to question in the district court. P. 260 U. S. 268.

4. An objection to the validity of service of process made by special appearance in the state court and renewed in like manner in the district court after removal held not waived by a stipulation that evidence directly relating to it and used on the first hearing, might be used on the second. P. 260 U. S. 269.

5. The filing of a brief, subscribed by solicitors as "solicitors for the defendants," held to have been on behalf of the one defendant duly served, and not to have been intended or to have operated as a general appearance for another defendant not duly served. P. 260 U. S. 270.

6. The restriction (Jud.Code, § 51) that no suit shall be brought in the district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant does not affect the general jurisdiction of the court over the particular cause as defined by § 24, but merely establishes a personal privilege of the defendant which he may waive, and does waive by entering an appearance without claiming it. P. 260 U. S. 272.

7. Under Jud.Code, §§ 28, 29, permitting removal of causes to the district court "for the proper district," the proper district is that one which includes the county or place where the suit in the state court is pending at the time of the removal. P. 260 U. S. 274.

8. In providing for removal of suits arising under the federal Constitution or laws " of which the district courts . . . are given original jurisdiction by this title," § 28 of the Judicial Code (like § 2 of the Judiciary Act of 1888) refers to the general jurisdiction conferred by § 24, and not to the venue provision of § 51 (see supra, par. 6). P. 260 U. S. 276.

9. A suit arising under the federal Constitution or laws may therefore be removed to the "proper district" (embracing the seat of the state court) by a defendant who is not an inhabitant of that district, and who consequently could have objected to the venue under Jud.Code § 51. P. 260 U. S. 279.

10. No change in the meaning of the Judiciary Act of August 13, 1888, was intended or wrought by the rearrangement of its parts in the Judicial Code. P. 260 U. S. 278.

Page 260 U. S. 263

11. Like § 51 Jud.Code, the special provision as to venue made by § 12 of the Clayton Act respecting suits under antitrust laws does not affect the general jurisdiction of the district courts, but allows the defendant a personal privilege which he may waive. P. 260 U. S. 279.

12. A suit against two railroad companies -- one having lines within and without, and the other lines without, the state of suit -- to enjoin them from entering into consolidation and to dissolve the consolidation if consummated pendente lite is a suit in personam to which the provisions of Jud.Code § 57 for special service of process in local suits directly relating to specific property do not apply. P. 260 U. S. 279.

13. The office of a supplemental bill is to introduce matters occurring after the filing of the original bill, or not then known to the plaintiff (Equity Rule 34), but not to shift the right in which the plaintiff sues or change the character and object of the suit. P. 260 U. S. 281.

14. Application to file a supplemental bill is addressed to the sound discretion of the court. P. 260 U. S. 281.

15. Where a decree of the district court dismissing a bill was affirmed by the circuit court of appeals as to part of the bill, but as to the remainder was reversed upon the ground that, as to that part, the dismissal was erroneously based on a supposed defect of parties, held that, upon the return of the case, other objections to the remaining part which might have been, but were not, urged or considered on the appeal could be considered by the district court and by the circuit court of appeals on a second appeal. P. 260 U. S. 284.

16. In a suit by a shareholder to prevent two corporations from carrying out an agreement for a consolidation alleged to be unlawful, which was subject to ratification by their shareholders, held that one of the corporations, which held shares of the other, was an indispensable party as to so much of the bill as sought to enjoin it from voting them and to enjoin the other from permitting it so to do, but not as to so much as sought to enjoin the other from entering into or consummating the proposed consolidation. P. 260 U. S. 285.

17. Under § 16 of the Clayton Act, c. 323, 38 Stat. 730, a private suit to enjoin a violation of that act or of the Sherman Anti-Trust Act can only be brought in a federal court. Such a suit cannot be brought in a state court. P. 260 U. S. 286.

18. Want of jurisdiction in a state court is not cured by removal of the cause to the federal court. P. 260 U. S. 288.

Page 260 U. S. 264

19. A decree dismissing a bill for want of jurisdiction should be without prejudice. P. 260 U. S. 288.

20. When a private individual, in virtue of a minute interest in the stock of a railroad corporation acquired after it entered into an agreement looking to consolidation with other companies, seeks to enjoin it from entering the consolidation as contrary to the policy of the state respecting control of parallel competing lines, but shows by his .allegations that the control complained of has long existed, practically, through stock ownership, and exhibits no objection on the part of the state or the other shareholders, he must show in his bill with precision and certainty in what respects the law is about to be violated. and clearly and positively that substantial and irreparable injury will result to his private rights. P. 260 U. S. 288.

269 F. 235 modified and affirmed.

This suit in equity was begun in the Court of Common Pleas of Cuyahoga County, Ohio, to enjoin a proposed consolidation of the New York Central and Hudson River Railroad Company, the Lake Shore and Michigan Southern Railway Company, and nine other companies, not identified in the bill, and to secure other relief of an incidental nature. The suit was brought by the General Investment Company, a Maine corporation, and the New York Central and Hudson River Railroad Company, the Lake Shore and Michigan Southern Railway Company, the Central Trust Company, and three individuals, called the Read Committee, were named as defendants.

The principal ground on which the proposed consolidation was assailed was that it would contravene the Sherman Anti-Trust Act and the Clayton Act, both laws of the United States. There were also charges that it would be contrary to the constitution and laws of Ohio and other states, but the general tenor of the bill made it evident that these charges were to be taken as of secondary importance. The plaintiff's right to sue was based on allegations that it was a stockholder in the New York Central Company and the Lake Shore Company and, as such,

Page 260 U. S. 265

would be subjected to irreparable loss and damage should the consolidation be effected.

Process was duly served on the Lake Shore Company and there was a purported service on the New York Central Company, but there was neither service on nor appearance by the other defendants. The New York Central Company, appearing specially for the purpose, promptly challenged the validity of the service on it by moving to set the same aside, but the state court overruled the motion.

In due time, the two railroad companies caused the suit to be removed into the District Court of the United States for the Northern District of Ohio. The plaintiff objected to this and reserved an exception to the order allowing it. The removal was sought and allowed on the ground that the suit, according to the claim made in the bill, was one arising under the laws of the United States, and of which the district courts of the United States are given original jurisdiction. Diversity of citizenship was shown, but not specified as a ground for removal.

Shortly after the removal, the New York Central Company, again appearing specially for the purpose, sought and obtained in the district court another hearing on its objection to the purported service on it, and, on that hearing, the objection was sustained and the service set aside. 226 F. 976. Afterwards, motions by the plaintiff to remand the suit to the state court, to direct special service on the New York Central Company and other defendants in the mode provided in § 57 of the Judicial Code, and for leave to file a supplemental bill and make new parties defendant were severally overruled. And lastly, a motion by the Lake Shore Company, the only defendant then before the court, to dismiss the suit was sustained on the ground that the New York Central Company was an indispensable party, had not voluntarily appeared,

Page 260 U. S. 266

and was not within the reach of the court's process.

From the decree of dismissal, the plaintiff appealed to the circuit court of appeals. That court upheld the rulings setting aside the service on the New York Central Company, denying the motion to remand to the state court, declining to direct special service on the New York Central Company and other defendants, and refusing leave to file a supplemental bill and make new parties. It also sustained the decree of dismissal as to much of the bill, with the qualification that it be without prejudice, and reversed it as to other parts of the bill to which that court thought the Lake Shore Company was the only necessary defendant. 250 F. 160.

When the cause was returned to the district court, the plaintiff, complying with a direction that the bill be made certain in a particular in which the circuit court of appeals deemed it uncertain, so amended it as to show the date on which the directors of the Lake Shore and other companies adopted the agreement for the proposed consolidation. The Lake Shore Company then moved that the bill, as left by the decision of the circuit court of appeals, be dismissed on the grounds (a) that, insofar as it was directed to securing an injunction against alleged or threatened violations of the Sherman Anti-Trust Act or the Clayton Act, the plaintiff had no right or standing to maintain it, or, if having such a right or standing, could not bring it in a state court, as was done, and (b) that, insofar as it was directed against alleged or threatened violations of state constitutions or laws, it did not show a right in equity to the relief sought or any part thereof. This motion was sustained, and a decree of dismissal entered. The plaintiff again appealed to the circuit court of appeals, and that court affirmed the decree, but without prejudice to the institution in a proper court of a new suit based only on infractions of state

Page 260 U. S. 267

constitutions or laws. 269 F. 235. A further appeal brings the case here.

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