When the jurisdiction of a Circuit Court of the United States
depends on diverse citizenship, its decree is made final by the Act
of March 3, 1891, c. 517, 26 Stat. 826.
When an action or suit is commenced by a receiver, appointed by
a circuit court to accomplish the ends sought and directed by the
suit in which the appointment was made, such action or suit is
regarded as ancillary, so far as the jurisdiction of the circuit
court, as a court of the United States, is concerned, and where the
jurisdiction of the main suit is predicated on diversity of
citizenship and the decree therein in the circuit court of appeals
therefore becomes final, the judgment and decrees in the ancillary
litigation are also final.
The suits in which this receiver was appointed were in the
nature of creditors' bills, and the only ground of federal
jurisdiction set up in them was diversity of citizenship, and as,
if the decrees therein had been passed upon by the circuit court of
appeals, its decision would have been final, the same finality
attaches to the decree of the circuit court of appeals in this
suit.
Ball and Pettit filed their bill in the Circuit Court of the
United States for the Northern District of Illinois alleging that
Ball was a citizen of Indiana and that Pettit was a citizen of
Wisconsin, and that defendants were citizens of Indiana and
Illinois, which suit was discontinued as to Ball, leaving Pettit, a
citizen of Wisconsin, the sole complainant. Pope was appointed, in
substitution for one Fish, receiver of the
Page 173 U. S. 574
Chicago & South Atlantic Railroad Company of Illinois, the
order containing, among other things, the following:
"And it is further ordered that the defendant, the said Chicago
& South Atlantic Railroad Company or whoever may have
possession thereof, do assign, transfer, and deliver over to such
receiver, under the direction of Henry W. Bishop, a master in
chancery of this court, all the property, real and personal,
wheresoever found in this district, and all contracts for the
purchase of land, and all other equitable interests, things in
action, and other effects which belonged to or were held in trust
for said defendant railroad company or in which it had any
beneficial interest, including the stock books of said railroad
company, in the same condition they were at the time of exhibiting
the said bill of complaint in this cause except as far as
necessarily changed in the proper management of said road or in
which it now has any such interest, and that said defendant,
Chicago & South Atlantic Railroad Company deliver over in like
manner all books, vouchers, bills, notes, contracts, and other
evidences relating thereto, and also the stock books of said
railroad company."
"And it is further ordered that the said receiver have full
power and authority to inquire after, receive, and take possession
of all such property, debts, equitable interests, things in action,
and other effects, and for that purpose to examine said defendant,
its officers, and such other persons as he may deem necessary, on
oath, before said master, from time to time."
Afterwards a further order was entered
nunc pro tunc as
follows:
"And now comes the receiver, Charles E. Pope, of said Chicago
& South Atlantic Railroad Company, and on his application it is
ordered and directed that said receiver have full power and
authority to bring and prosecute any and all necessary suits for
the collection of any claims, choses in action, and enforcement of
any and every kind and nature, and to defend all suits and actions
touching the rights or interests of the property or effects of any
kind in his possession or under his control as receiver. This order
to be entered now as of the date of his appointment and
qualification as receiver. "
Page 173 U. S. 575
Soon after, Pettit filed his bill in the Circuit Court of the
United States for the District of Indiana, averring that he was a
citizen of the State of Wisconsin, against
"the said Chicago & South Atlantic Railroad Company, a
corporation organized under the laws of the State of Indiana and
State of Illinois, by the consolidation of an Illinois corporation
of the same name of defendant herein and an Indiana corporation
known as the Chicago & South Atlantic Railroad Company of
Indiana."
Pope was appointed receiver on that bill, the order being
similar in its terms to that entered in the Circuit Court for the
Northern District of Illinois. After such appointment, and on July
12, 1881, Pope, as receiver, filed his bill of complaint in the
Circuit Court for the District of Indiana seeking to recover
certain property and property rights held and claimed by certain of
the defendants, which appellant claimed belonged to the Chicago
& South Atlantic Railroad Company, and to the ownership of or
right to which he had succeeded as such receiver.
The amended bill on which the cause was heard stated that,
"Your orator, Charles E. Pope, who is receiver of the Chicago
& South Atlantic Railroad Company, and who is a citizen of the
State of Illinois, brings this, his amended bill of complaint,
leave therefor having been granted by this honorable court,
against"
certain companies and individuals, severally citizens of the
states of Indiana, Ohio, New York, and Kentucky; that he was
appointed receiver of the Atlantic Company by the Circuit Court of
the United States for the Northern District of Illinois, and also
receiver by the circuit court of Indiana, and that he was
authorized by the express orders of both courts appointing him
receiver, "to bring all suits necessary and proper to be brought to
recover possession of said estate and effects and to enforce all
claims," etc.
The cause went to hearing, and a money decree was rendered by
the circuit court in favor of Pope, receiver, against appellee,
which appellee was adjudged by that decree to pay. An appeal having
been prosecuted to the Circuit Court of Appeals for the Seventh
Circuit, a motion was made to dismiss the appeal for want of
jurisdiction, and the motion overruled.
Page 173 U. S. 576
On final hearing, the decree of the circuit court was reversed
by the circuit court of appeals with instructions to dismiss the
amended bill. The opinion of the circuit court of appeals was filed
June 12, 1897. 80 F. 745. Thereafter a petition for a rehearing was
filed and denied. Subsequently, Pope, receiver, applied to this
Court for a writ of certiorari, which application was denied March
7, 1898. 169 U.S. 737. On March 23, Pope moved the circuit court of
appeals for leave to file a second petition for rehearing, and the
motion was overruled. Pope then applied to the circuit court of
appeals for an appeal to this Court, which was granted, and, the
appeal's having been docketed, this motion to dismiss was made, and
duly submitted.
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the court.
If the decree of the circuit court of appeals was made final by
the Act of March 3, 1891, this appeal must be dismissed, and it was
so made final if the jurisdiction of the circuit court depended
entirely on diverse citizenship.
The circuit courts of the United States have original
jurisdiction of suits of a civil nature at law or in equity, by
reason of the citizenship of the parties, in cases between citizens
of different states, or between citizens of a state and aliens,
and, by reason of the cause of action, "in cases arising under the
Constitution or laws of the United States, or treaties made or
which shall be made under their authority," as, for instance, suits
arising under the patent or copyright laws of the United States.
Press Publishing Co. v. Monroe, 164 U.
S. 105.
Diversity of citizenship confers jurisdiction irrespective of
the cause of action. But if the cause of action arises under
Page 173 U. S. 577
the Constitution, or laws, or treaties of the United States,
then the jurisdiction of the circuit court may be maintained
irrespective of citizenship.
The circuit court undoubtedly had jurisdiction of this suit on
the ground of diversity of citizenship, not only because that fact
existed in respect of complainant and defendants, but because the
suit was ancillary to those in which the receiver was appointed.
When an action or suit is commenced by a receiver, appointed by a
circuit court to accomplish the ends sought and directed by the
suit in which the appointment was made, such action or suit is
regarded as ancillary so far as the jurisdiction of the circuit
court as a court of the United States is concerned, and we have
repeatedly held that jurisdiction of these subordinate actions or
suits is to be attributed to the jurisdiction on which the main
suit rested, and hence that where jurisdiction of the main suit is
predicated on diversity of citizenship and the decree therein is
therefore made final in the circuit court of appeals, the judgments
and decrees in the ancillary litigation are also final.
Rouse
v. Letcher, 156 U. S. 47;
Gregory v. Van Ee, 160 U. S. 643;
Carey v. Houston & Texas Railway Co., 161 U.
S. 115. It is true that
Rouse v. Letcher and
Gregory v. Van Ee were proceedings on intervention, but
Carey v. Houston & Texas Railway Co. arose on an
original bill in the nature of a bill of review. In that case, we
took occasion to quote from the opinion of Mr. Justice Miller in
Minnesota Company v. St. Paul
Company, 2 Wall. 609, in which the distinction is
pointed out between supplemental and ancillary and independent and
original proceedings, in the sense of the rules of equity pleading,
and such proceedings "in the sense which this Court has sanctioned
with reference to the line which divides the jurisdiction of the
federal courts from that of the state courts."
Krippendorf v.
Hyde, 110 U. S. 276,
Pacific Railroad v. Missouri Pacific Railway, 111 U.
S. 505, and other cases, were cited, the bill held to be
ancillary to the suit the decree in which was attacked, and the
rule laid down in
Rouse v. Letcher and
Gregory v. Van
Ee applied.
The suits in which this receiver was appointed were in the
Page 173 U. S. 578
nature of creditors' bills alleging an indebtedness due from the
Atlantic Company, the insolvency of that company, that certain
corporations had in their possession assets of the Atlantic
Company, and praying for the appointment of a receiver, the
marshaling of assets, the winding up of the Atlantic Company, and
the application of its assets to the payment of its debts. The only
ground of federal jurisdiction set up in the bills was diversity of
citizenship, and if the decrees therein had been passed on by the
circuit court of appeals, the decision of that court would have
been final under the statute. And as this suit was in effect merely
in collection of alleged assets of the Atlantic Company, it must be
regarded as auxiliary, and the same finality attaches to the decree
of the circuit court of appeals therein.
And this is true although another ground of jurisdiction might
be developed in the course of the proceedings, as it must appear at
the outset that the suit is one of that character of which the
circuit court could properly take cognizance at the time its
jurisdiction is invoked.
Colorado Central Mining Co. v.
Turck, 150 U. S. 138;
In re Jones, 164 U. S. 691;
Third St. & Suburban Railway Co. v. Lewis, ante,
173 U. S. 457.
Some further observations may be usefully added, although what
has been said necessarily disposes of the motion.
The receiver based his right of recovery on the alleged seizure
by one of the defendant companies of certain rights of way and
grading done thereon by the Atlantic Company under two specified
contracts, which seizure and appropriation were alleged to have
been fraudulently and forcibly made, and it was averred that
appellee, the Louisville, New Albany & Chicago Railroad
Company, acquired title thereto and possession thereof through its
consolidation with another of the defendant companies, which had
acquired its title and possession through the foreclosure of a
mortgage given by the company which had made the seizure. The bill
nowhere asserted a right under the Constitution or laws of the
United States, but proceeded on common law rights of action. We
cannot accept the suggestion that the mere order of a federal
Page 173 U. S. 579
court, sitting in chancery, appointing a receiver on a
creditors' bill not only enables the receiver to invoke federal
jurisdiction, but to do this independently of the ground of
jurisdiction of the suit in which the order was entered, and
thereby affect the finality of decrees in the circuit court of
appeals in proceedings taken by him. The validity of the order of
appointment of the receiver in this instance depended on the
jurisdiction of the court that entered it, and that jurisdiction,
as we have seen, depended exclusively upon the diverse citizenship
of the parties to the suits in which the appointment was made.
The order, as such, created no liability against defendants, nor
did it tend in any degree to establish the receiver's right to a
money decree, nor to any other remedy prayed for in the amended
bill. The liability of defendants arose under general law, and was
neither created nor arose under the Constitution or laws of the
United States.
In
Bausman v. Dixon, 173 U. S. 113, we
have ruled that a judgment against a receiver appointed by a
circuit court of the United States, rendered in due course in a
state court, does not
per se involve the denial of the
validity of an authority exercised under the United States or of a
right or immunity specially set up and claimed under a statute of
the United States. That was an action to recover damages for
injuries sustained by reason of the receiver's negligence in
operating a railroad company of the State of Washington, though the
receiver was the officer of the circuit court, and we said:
"It is true that the receiver was an officer of the circuit
court, but the validity of his authority as such was not drawn in
question, and there was no suggestion in the pleadings, or during
the trial, or, so far as appears, in the state supreme court, that
any right the receiver possessed as receiver was contested,
although, on the merits, the employment of plaintiff was denied and
defendant contended that plaintiff had assumed the risk which
resulted in the injury, and had also been guilty of contributory
negligence. The mere order of the circuit court appointing a
receiver did not create a federal question under section 709 of the
Revised Statutes, and the receiver did not set up any right
derived
Page 173 U. S. 580
from that order which he asserted was abridged or taken away by
the decision of the state court. The liability to Dixon depended on
principles of general law applicable to the facts, and not in any
way on the terms of the order."
That was indeed a writ of error to a state court, but the
reasoning is applicable here. Pope was appointed receiver by an
interlocutory order of the circuit court in the exercise of its
general equity powers. He did not occupy the position of a receiver
of a corporation created under federal law, as in
Texas &
Pacific Railway v. Cox, 145 U. S. 593, or
of a marshal of the United States, as in
Feibelman v.
Packard, 109 U. S. 421, or
of a receiver of a national bank, as in
Kennedy v.
Gibson, 8 Wall. 498. Nor did his cause of action
originate or depend on the order of appointment, or assignments
made to him by the Atlantic Company pursuant to that order. Nor was
any right claimed by him by virtue of his order of appointment or
of his deeds of assignment denied or alleged to have been denied.
The decrees of the circuit court and of the circuit court of
appeals dealt solely with the alleged rights of the Atlantic
Company as against certain Indiana corporations. It is impossible
to hold that these orders of appointment were equivalent to laws of
the United States within the meaning of the Constitution.
We agree with counsel for appellee that
Provident Savings
Society v. Ford, 114 U. S. 635, is
in point in this aspect of the case. There it was ruled that
"the fact that a judgment was recovered in a court of the United
States does not, in a suit upon that judgment, raise a question
under the laws of the United States, within the meaning of the Act
of March 3, 1875."
That was a writ of error to the Supreme Court of the State of
New York to review a judgment of that court denying a motion for
the removal of the cause to the United States circuit court. Mr.
Justice Bradley delivered the opinion and, after pointing out that
the alleged grounds of removal were insufficient, remarked:
"It is suggested, however, that a suit on a judgment recovered
in a United States court is necessarily a suit arising under the
laws of the United States, as much so as if the plaintiff or
defendant were a corporation
Page 173 U. S. 581
of the United States, and hence that such a suit is removable
under the Act of March 3, 1875. It is observable that the removal
of the cause was not claimed on any such broad ground as this, but,
so far as the character of the case was concerned, only on the
ground that the defendant had a defense under Rev.Stat. ยง 739,
specifying what the defense was, and we have already shown that
that ground of removal, as stated in the petition, was
insufficient. But conceding that the defendant is now entitled to
take its position on the broader ground referred to, is it tenable
and sufficient for the purpose? What is a judgment but a security
of record showing a debt due from one person to another? It is as
much a mere security as a Treasury note, or a bond of the United
States. If A brings an action against B, trover or otherwise, for
the withholding of such securities, it is not therefore a case
arising under the laws of the United States, although the whole
value of the securities depends upon the fact of their being the
obligations of the United States. So if A have title to land by
patent of the United States, and brings an action against B for
trespass or waste committed by cutting timber, or by mining and
carrying away precious ores or the like, it is not therefore a case
arising under the laws of the United States. It is simply the case
of an ordinary right of property sought to be enforced. A suit on a
judgment is nothing more unless some question is raised in the case
(as might be raised in any of the cases specified) distinctly
involving the laws of the United States -- such a question, for
example, as was ineffectually attempted to be raised by the
defendant in this case. If such a question were raised, then it is
conceded it would be a case arising under the laws of the United
States. . . . Without pursuing the subject further, we conclude
with expressing our opinion that this last ground of removal, like
those already considered, was insufficient."
In
Cooke v. Avery, 147 U. S. 380,
jurisdiction was sustained on the ground that the plaintiff's title
was derived through the enforcement of a lien, the validity of
which depended on the laws of the United States and the rules of
the circuit
Page 173 U. S. 582
court, and their construction and application were directly
involved.
Appeal dismissed.
MR. JUSTICE BROWN took no part in the consideration and
disposition of this motion.
