1. A decree of the district court refusing leave to file a bill
of intervention upon the theory that there is no basis on which the
court, as a federal tribunal, could adjudicate the matter presented
by it rests on a jurisdictional ground, and is appealable directly
to this Court under Jud.Code § 238. P.
264 U. S.
557.
2. Where, in the progress of a suit in a federal court, property
has been drawn into the court's custody and control, third persons
claiming interests in or liens on the property may be permitted to
come into that court for the purpose of setting up, protecting, and
enforcing their claims, although the court could not consider their
claims if it had not impounded the property. P.
264 U. S.
558.
3. But this rule does not apply where the court has not
impounded the property in question, but has merely adjudicated a
controversy concerning it and retained jurisdiction of the suit to
insure obedience to its decree. P.
264 U. S.
559.
Affirmed.
Appeal from a decree of the district court refusing leave to
file a petition of intervention for want of jurisdiction. The
appeal was first taken to the circuit court of appeals, and was
transferred to this Court under Jud.Code § 238a.
See the
opinion of the circuit court of appeals reported in 284 F. 837.
Page 264 U. S. 555
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This is an appeal from a decree of the District Court for the
Western District of Texas refusing leave to file a bill proffered
as a petition of intervention in a designated suit in that court.
The appeal was taken to the circuit court of appeals, and was by
that court transferred here according to § 238a of the Judicial
Code, c. 305, 42 Stat. 837, on the ground that it should have been
taken directly to this Court under § 238, 284 F. 837.
The suit in which intervention was sought already had been
prosecuted to a final decree, but the decree contained a provision
whereby jurisdiction was retained for limited purposes, one of
which will be hereinafter shown. The suit arose out of conflicting
claims asserted under the will of Peter McClelland, Sr., a resident
of McLennan County in the Western District of Texas, who died in
1886 seized of valuable real property in that county. The will put
the property in a so-called spendthrift trust, of which Peter
McClelland, Jr., the testator's son and only child, was the
beneficiary. Through an order of the state court in McLennan
County, John K. Rose, a citizen of Texas, became the substituted
trustee under the will, and as such was holding the property and
administering the trust when the suit was begun. The son, who was a
citizen of California, was the plaintiff, and the substituted
trustee and the testator's collateral kin were the defendants.
Diverse citizenship was the sole basis of the district court's
jurisdiction. The object of the suit was to obtain a construction
of the will, to have that construction made binding on the trustee,
and to establish the son's ownership, subject to the trust, of all
the property as against the collateral kin. The proceedings and the
decree are shown in
McClelland v. Rose, 208 F. 503, 222 F.
67, and 247 F. 721, and
Rose v. McClelland, 241 U.S. 668.
The decree determined that the trust was to continue
Page 264 U. S. 556
for the natural life of the son; that the trustee was to hold
the property, collect the rents, and make discretionary advances to
the son during that period, and that the son was the true and sole
owner, subject to the trust, of all the property. One paragraph of
the decree read as follows:
"It is further ordered, adjudged, and decreed by the court that
the said John K. Rose, as substitute trustee aforesaid, may,
without further order of this Court, make from time to time such
advances to the said plaintiff, Peter McClelland, Jr., not to
exceed the net revenues and income from the said estate, as he may
think right and proper, but no portion of the corpus of the said
estate shall be delivered to, or be surrendered over during the
lifetime of the plaintiff to the said plaintiff, or his vendees,
except upon the further order of this court, and this court hereby
retains jurisdiction of this cause to the end that it may, from
time to time as occasion may require, exercise its power of
direction and control over said trustee in this respect."
The persons who sought to intervene were creditors of the son
and were citizens of Texas. They had brought an action on their
claim in the state court for McLennan County, had caused a writ of
attachment to be issued in that action and levied on part of the
real property in the possession of the trustee, and had prosecuted
the action to a judgment directing that the son's interest in the
attached property be sold to satisfy their claim. The son had not
been served with process in that action, nor had he appeared
therein, so the judgment had no force save such as may have arisen
from the attachment. Afterwards, in a suit by the trustee against
the attaching creditors and the sheriff, the same state court
granted a permanent injunction against a sale under the judgment --
the grounds assigned for granting the injunction being that the
son's interest in the property could not be
Page 264 U. S. 557
sold to pay his debts while he was living, and that the trustee
was entitled to prevent such a sale in the son's lifetime, even
though there was no purpose to disturb the trustee's possession or
the administration of the trust. On an appeal to the Court of Civil
Appeals, that decision was affirmed,
Hoffman v. Rose, 217
S.W. 424, and an application for a further review was denied by the
supreme court of the state.
It was after these proceedings that the creditors sought to
intervene in the suit in the district court. They set forth in
their proffered bill all that was done in the state court,
including the attachment and judgment and the subsequent
injunction, and also alleged that, by the attachment and judgment,
they had acquired a lien on the attached property which was in no
way avoided or affected by the injunction; that, by the prior
proceedings in the district court, the property had been drawn into
that court's custody and control, and thereby effectually
impounded; that they had no means of enforcing their lien during
the life of the son save through the interposition and aid of the
district court; that the lien probably would be lost unless that
court recognized and protected it, and that to postpone its
enforcement until after the death of the son would not be
equitable. The relief prayed was that the lien be recognized and
protected, and the remainder interest of the son in the attached
property be ordered sold under the lien to satisfy their claim.
In refusing leave to file the bill, the district court put its
decision on the ground that it was without jurisdiction to
entertain the bill, in that (a) the bill was not ancillary or
dependent in the sense that it could be entertained in virtue of
the jurisdiction acquired in the earlier suit, and (b) the
citizenship of the parties and the nature of the matter presented
were not such that the bill could be dealt with as an original and
independent bill.
As leave to file the bill was not refused as a matter of
discretion, but on the theory that there was no basis on
Page 264 U. S. 558
which the court, as a federal tribunal, could proceed to an
adjudication of the matter presented, it is apparent that the
petitioning creditors were shut out on a jurisdictional ground in
the sense of § 238 of the Judicial Code, and so were entitled to
bring that ruling here for review by a direct appeal.
The record makes it plain, and counsel agree, that there was an
absence of jurisdictional requisites for dealing with the bill as
an original and independent bill; so we come at once to the
question whether it could be entertained as an ancillary or
dependent bill
It is settled that where, in the progress of a suit in a federal
court, property has been drawn into the court's custody and
control, third persons claiming interest in or liens upon the
property may be permitted to come into that court for the purpose
of setting up, protecting, and enforcing their claims, although the
court could not consider or adjudicate their claims if it had not
impounded the property. Power to deal with such claims is incident
to the jurisdiction acquired in the suit wherein the impounding
occurs, and may be invoked by a petition to intervene
pro
interesse suo or by a dependent bill. But, in either case, the
proceeding is purely ancillary.
Oklahoma v. Texas,
258 U. S. 574,
258 U. S. 581;
Minnesota Co. v. St. Paul
Co., 2 Wall. 609,
69 U. S. 632;
Krippendorf v. Hyde, 110 U. S. 276,
110 U. S. 281;
Compton v. Jesup, 68 F. 263, 279;
Sioux City Co. v.
Trust Co., 82 F. 124, 128;
Minot v. Mastin, 95 F.
734, 739; Street, Fed.Eq. Pr. §§ 1229, 1245-1247, 1364.
The proffered bill shows that it was drafted to obtain the
benefit of that rule, and, if its allegations were all that could
be considered, there might be good ground for thinking it could be
entertained in virtue of the jurisdiction acquired in the earlier
suit. But the bill did not rightly state the nature and effect of
the proceedings in that suit, and, of course, the district court
could not accept a mistaken description or characterization of
them,
Page 264 U. S. 559
but was required to give effect to what its own records
disclosed. The pleadings, orders, and decree in that suit, which
were before the court at the time, are set forth in the present
record, and they show that the property was not impounded in that
suit. The trustee, who was holding the property and administering
the trust, was not an appointee of the district court, but of the
state court of McLennan County. The district court had not taken
over the administration of the trust, nor had it otherwise drawn
unto itself the custody and control of the property. It had
determined a controversy between the son, on the one hand, and the
trustee and the collateral kin, on the other, respecting the nature
and duration of the trust; had adjudged that, subject to the trust,
the son was the true and sole owner of the property and that the
collateral kin had no interest therein; had prohibited the trustee
from delivering or surrendering any part of the corpus of the
estate to the son or his vendees during his lifetime except on its
order, and had retained jurisdiction of the suit to the end that it
might compel full adherence to that prohibition. But it did not
acquire or assume any other power of direction or control over the
property, nor did it withdraw the son's remainder interest in the
property from the reach of process issuing from other courts. The
petitioning creditors evidently proceeded on this view throughout
the proceedings in the state court, for they not only caused a part
of the property to be attached under process issued from that
court, but sought to have the son's remainder interest in it sold
under such process without asking the leave of the district court.
True, the sale was prevented by an injunction, but that was because
the state court which granted the injunction was of opinion that,
under the provisions of the will, such a sale during the son's life
would be inadmissible and ineffectual, and not because it regarded
the property as impounded by the proceedings in the district court.
Only after they had
Page 264 U. S. 560
met with that decision in the state court did the creditors
conclude to resort to the district court. Even if that decision was
wrong, as they seem to think, it did not change or affect the
situation in the district court.
In our opinion, the bill could not be entertained as an
ancillary or dependent bill.
Judgment affirmed.