Gordon v. Washington
295 U.S. 30 (1935)

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U.S. Supreme Court

Gordon v. Washington, 295 U.S. 30 (1935)

Gordon v. Washington

No. 549

Argued March 7, 1935

Decided April 1, 1935*

295 U.S. 30

Syllabus

1. Under the banking laws of Pennsylvania the Secretary of Banking is authorized to take over any banking business which is in an unsafe and unsound condition. After filing in his office a certificate of possession, and in the office of the prothonotary a certified copy thereof, the Secretary has the status of an equity receiver responsible to the court in which such certificate of possession is filed. In respect of mortgage pools operated by banks taken over, provision is made for their administration by the Secretary until such time as a substitute fiduciary is appointed by the court. Pursuant to these laws, the Secretary came into possession of the property of a state bank, including mortgage pools. Subsequently, owners of participation certificates in the mortgage pools brought suits in the federal district court, praying the appointment of a receiver and the usual injunction. No other remedy was sought. No charge of misconduct, neglect, or mismanagement was made against the Secretary. The District Court nevertheless appointed receivers, whereupon the Secretary petitioned to vacate the orders, alleging that his management of the pools was in accordance with the laws of the State and had been in the interest of the participants.

Held:

(1) The suits for the appointment of receivers, the requisite diversity of citizenship and jurisdictional amount being shown and unchallenged, were within the jurisdiction of the District Court. Pennsylvania v. Williams,294 U. S. 176. P. 295 U. S. 35.

(2) The appointment of receivers, under the circumstances, was an abuse of discretion and should have been promptly set aside on the application of the Secretary. Pennsylvania v. Williams,294 U. S. 176; Gordon v. Ominsky,294 U. S. 186. P. 295 U. S. 36.

(3) A finding of the District Court that nothing had been done by the Banking Department to provide the means for an active,

Page 295 U. S. 31

intelligent, and responsible administration of the mortgage pools, was without support in the record. P. 295 U. S. 39.

2. The phrase " suits in equity " in § 11 of the Judiciary Act of 1789 refers to suits in which relief is sought according to the principles applied by the English court of chancery before 1789, as they have been developed in the federal courts. P. 295 U. S. 36.

3. A federal court of equity should not appoint a receiver where the appointment is not ancillary to some form of final relief which is appropriate for equity to give. P. 295 U. S. 37.

4. A federal court, even in the exercise of an equity jurisdiction not otherwise inappropriate, should not appoint a receiver to displace the possession of a state officer lawfully administering property for the benefit of interested parties except where it appears that the procedure afforded by state law is inadequate, or that it will not be diligently and honestly followed. Pennsylvania v. Williams,294 U. S. 176; Gordon v. Ominsky,294 U. S. 186. P. 295 U. S. 39.

73 F.2d 577 reversed.

Certiorari, 293 U.S. 553, to review a decree affirming a decree of the District Court denying motions of the Secretary of Banking of Pennsylvania to dismiss bills of complaint and to vacate the appointment of receivers for property which was in his possession under the banking laws of the State.

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