1. A suit to recover land and funds in charge of a receiver of a
court of Alaska created by laws of Congress is removable from a
state to a federal court under Judicial Code § 28 and § 33, as
amended August 23, 1916. P.
270 U. S.
441.
2. Where a suit was removable on the face of the bill, and the
removal is not challenged, removal may be presumed to have been
rightly taken although, due to omission by stipulation of the
removal papers from the transcript, the ground on which removal was
actually sought and allowed does not affirmatively appear. P.
270 U. S.
440.
3. Authority from a court to its receiver to appear, defend, and
make counterclaim in a suit against him in another court is
equivalent to leave to the plaintiff to bring the suit. P.
270 U. S.
441.
4. Acts induced by duress which operate only on the mind and
fall short of physical compulsion are not void, but voidable only.
P.
270 U. S.
444.
5. It is prerequisite to equitable relief cancelling a contract
that the election to disaffirm be exercised promptly after
cessation of the duress, the degree of promptness depending largely
upon the effect of delay upon those whose rights are sought to be
divested. P.
270 U. S.
444.
6. Unexplained delay of more than three years
held
fatal to suit to set aside a deed for duress where the defendants
were left in ignorance of plaintiff's intention, and were
necessarily prejudiced. P.
270 U. S. 445.
298 F.. 689 affirmed.
Appeal from a decree of the circuit court of appeals which
reversed a decree of the district court favorable to the appellant
in her suit to set aside a deed upon the ground of duress, and for
recovery of rents, etc.
Page 270 U. S. 440
MR. JUSTICE STONE delivered the opinion of the Court.
The appellant brought suit in the Superior Court of San
Francisco County, California, for the surrender and cancellation of
a deed of land and to recover money received by the appellee Noyes,
a receiver acting under the appointment of an Alaska court and
deposited by him with the appellee bank as rents derived from the
land conveyed and as proceeds of the sale of part of it. The
conveyance was made by appellant to receivers, predecessors in
office of the appellee Noyes, appointed by the District Court for
the District of Alaska. Relief was sought on the ground that the
conveyance had been procured by duress. The cause was removed to
the United States District Court for Northern California, and trial
in that court resulted in a decree for the plaintiff. On appeal to
the circuit court of appeals, the decree was reversed on the ground
that the suit was barred by laches. 298 F. 689. The case comes to
this Court on appeal. Judicial Code, § 241, before Act of February
13, 1925.
The jurisdiction of the district court was not challenged in the
circuit court of appeals, nor is it challenged here. The petition
for removal from the state court to the district court and the
motion to remand, made and denied in the latter, are not shown in
the record. They were omitted from the transcript made up on
appeal
Page 270 U. S. 441
to the circuit court of appeals, because the parties had so
stipulated under Rule 75 of the Equity Rules then in force (226
U.S.Appendix, p. 23) relating to the reduction and preparation of
transcripts on appeals in suits in equity. It therefore does not
affirmatively appear on what ground the removal to the district
court was sought, allowed, and sustained. But an examination of the
bill, which is set forth in the record, shows that the purpose of
the suit was to recover land and funds then in charge of the
receiver of a court in Alaska which was created by laws of
Congress, and derived its powers and authority from those laws.
Such a suit was removable under § 28 of the Judicial Code, as
supplemented by the amendment of § 33 by the Act of August 23,
1916, c. 399, 39 Stat. 532.
Matarazzo v. Hustis, 256 F.
882, 887-889;
see Texas & Pacific Ry. Co. v. Cox,
145 U. S. 593,
145 U. S. 603;
Board of Commissioners v. Peirce, 90 F. 764. The alleged
right to recover grew out of transactions between the plaintiff and
the receivers within the Territory of Alaska with reference to land
located in Alaska, in all of which the receivers were acting in
virtue of authority conferred on them as officers of the Alaska
court.
Rouse v. Hornsby, 161 U. S. 588,
161 U. S. 590.
As all this is apparent from the face of the bill, and as the
removal is not challenged here, we think the presumption should be
indulged that the removal was rightly taken, and that the district
court had jurisdiction.
We recognize that property in charge of a receiver is in the
custody of the court by which he was appointed and under which he
is acting, and that, as a general rule, other courts cannot
entertain a suit against the receiver to recover such property
except by leave of the court of his appointment.
Lion Bonding
Co. v. Karatz, 262 U. S. 77,
262 U. S. 88-89.
But the record shows that, shortly after this suit was begun, the
court in Alaska expressly authorized the receiver to appear in the
suit and to make defense
Page 270 U. S. 442
and present a counterclaim in it. This was the full equivalent
of granting leave to bring the suit. That the order was made
shortly after, instead of before, the suit was begun is not
material.
Jerome v. McCarter, 94 U. S.
734,
94 U. S. 737;
Board of Commissioners v. Peirce, supra, 765-766. The
plaintiff contended, and the district court held, that even if
there had been no such leave, the suit could be maintained under
the legislative permission given in § 66 of the Judicial Code; but
we need not consider that question.
On January 5, 1911, the District Court for Alaska appointed
receivers for the Washington-Alaska Bank, a Nevada banking
corporation engaged in business in Fairbanks, Alaska. The husband
of the appellant had been the president, director, and manager of
the bank from its incorporation. In February, 1911, the appellant,
then residing in Los Angeles, California, went with her husband to
Fairbanks to assist in the liquidation of the bank's business, its
assets and affairs being then in the hands of the receivers. Six
weeks later, after consultation with their attorney, appellant and
her husband tendered to one of the depositors of the bank, as
trustee for the unpaid depositors, a deed conveying real estate of
the husband and real estate which was the separate property of the
appellant, located in Alaska. Acceptance of the deed was refused on
the ground that, by it, criminal prosecution of the husband and
enforcement of his civil liability might be prejudiced or waived.
Later, a similar deed was tendered to the receivers and rejected by
them for the same reasons. Appellant and her husband then filed a
verified petition in the court in which the receivership was
pending, praying that the receivers be directed to accept the trust
deed and expressing the desire to prevent the commencement of legal
proceedings against them by the receivers and to pay all the
depositors of the bank in full. The court made an order authorizing
the receivers, as
Page 270 U. S. 443
such, to accept the deed and administer the trusts created by it
in connection with their duties as receivers.
The deed was executed by appellant and her husband on March 18,
1911, and was separately acknowledged by appellant, the certificate
of acknowledgment stating that she executed it voluntarily, and
that "she did not wish to retract it." The receivers took
possession of the property in Alaska; they and later their
successor, the appellee, Noyes, received the rents from it and the
proceeds of sale of some of the land, and the fund now in dispute
was derived from the administration of the trust.
Within a week after executing the conveyance, appellant departed
from Alaska with her husband and returned to her residence at Los
Angeles. More than three years later, on November 16, 1914, she
instituted suit in the Alaska court against the receivers to set
aside the conveyance of her separate property on the ground that it
had been procured by duress. The case was not brought to trial, and
after more than three years, on August 1, 1918, she consented to a
nonsuit, having in the meantime, on July 24, 1918, commenced the
present suit.
The district court below held that appellant's conveyance had
been procured by duress. This conclusion was based on findings
that, during the period of appellant's sojourn in Alaska in 1911,
threats or "suggestions" were made to her (which it appears were
made by two women depositors of the bank and by others who are
unidentified) that her children would be kidnapped and her husband
and herself subjected to personal violence; that, under the
circumstances, these threats aroused in her a reasonable fear for
the safety of her children, her husband and herself, and induced
the execution of the deed to the receivers.
We turn aside from the objections pressed upon us that the
evidence was insufficient to establish duress and that in neither
pleading nor proof is it suggested that the
Page 270 U. S. 444
receivers or the great majority of the creditors of the bank
were parties to or aware of the alleged duress.
See Fairbanks
v. Snow, 145 Mass. 153. Nor need we consider any of the
numerous defenses interposed, except the acquiescence of appellant
in her deed, and her delay in asserting her rights, which, in the
circumstances, are decisive of the case.
Appellant's cause of action is necessarily founded upon the
assertion of the rightful and effective exercise of the power to
disaffirm her conveyance, which arose as soon as she was relieved
from the compulsion of the alleged duress. Acts induced by duress
such as is here relied on, which operates only on the mind and
falls short of actual physical compulsion, are not void in law, but
are voidable only at the election of him whose act was induced by
it.
Andrews v. Connolly, 145 F. 43, 46;
Miller v.
Davis, 52 Colo. 485, 494;
Eberstein v. Willetts, 134
Ill. 101;
Fairbanks v. Snow, supra; Miller v. Lumber Co.,
98 Mich. 163;
Oregon & P. R. Co. v. Forrest, 128 N.Y.
83. If there was duress here, appellant, as soon as she was
relieved from its operation, was in a position either to disaffirm
her conveyance or to allow it to stand undisturbed as the free and
formal disposition of her rights. If her choice was to disaffirm,
it might have been evidenced by suit timely brought or by any other
action disclosing her purpose to those who would be affected.
In that situation, she was subject to the requirement of equity
that an election to disaffirm and to recall the legal consequences
of an act which has operated to alter legal rights by transferring
them to others must be exercised promptly.
Andrews v.
Connolly and other cases cited
supra, show how this
requirement is applied in cases of duress. The principle has a like
application where the right is founded on fraud.
Upton,
Assignee v. Tribilcock, 91 U. S. 45,
91 U. S. 54-55;
Wheeler v. McNeil, 101 F. 685;
Blank v. Aronson,
187 F. 241.
Page 270 U. S. 445
What promptness of action a court may reasonably exact in these
circumstances must depend in large measure upon the effect of lapse
of time without such disaffirmance upon those whose rights are
sought to be divested. The appellant formed the intention of taking
proceedings to set aside her conveyance immediately on her return
to Los Angeles in April, 1911. This intention remained undisclosed
for more than three years until she brought suit in the district
court of Alaska in November, 1914. There is no evidence that the
threats of violence were renewed after she left Alaska, or that
they operated to prevent the prompt exercise of her election when
she had returned to her home in Los Angeles. Her husband was
brought to trial upon criminal charges growing out of his
administration of the affairs of the bank, and criminal proceedings
were concluded in December, 1912, or in 1913. During the period
from April, 1911, until November, 1914, appellant, who was
represented in Alaska by counsel and by an attorney in fact, was
aware that the receivers, and later the appellee Noyes, none of
whom was shown to have had any knowledge of the alleged duress,
were engaged in the administration of the trust created by
appellant's conveyance under an order of the court obtained on her
petition. During that period, she made no effort to advise the
court or the receivers of the alleged duress or of her intention to
disaffirm her deed.
By the provisions of the deed, the grantees were given
unrestricted power of sale of the property after November, 1914,
but it was expressly provided that sales might be made in the
meantime by the united action of the grantors and grantees, and the
proceeds paid to the grantees under the trust provisions of the
deed. Appellant joined with her husband and the appellee receiver
in a sale of one of the plots of her separate property, the
conveyance being executed in her behalf by her attorney
Page 270 U. S. 446
in fact and the proceeds being paid to the appellee in November,
1911. This unexplained delay of more than three years in exercising
appellant's asserted right to disaffirm her conveyance, while the
appellee and his predecessors were left in ignorance of her
intention to assert it, and her affirmative action as well, in
recognizing the validity of her deed and the authority of the
appellee under it, establish conclusively her election to allow her
conveyance to stand as the unrevoked and effective agency for the
disposition of her rights.
The case is not one which requires us to consider the effect of
mere delay in bringing suit to enforce a claim of which appellees
had notice, with the consequent opportunity to protect themselves,
in some measure, from the prejudice which would otherwise result
from mere lapse of time, as in
Simmons Creek Coal Co. v.
Doran, 142 U. S. 417, and
Southern Pacific Co. v. Bogart, 250 U.
S. 483, relied upon by appellant. Nor have we to do with
a situation where complainant's silence did not mislead or
prejudice the defendants, as in
Northern Pacific Railway Co. v.
Boyd, 228 U. S. 482,
also relied upon. Here, the very existence of the appellant's right
depends upon the timely exercise of her election to disaffirm the
deed. Delay in its exercise was necessarily prejudicial to her
grantees, for they were entitled to and did rely and act upon the
authority of her deed, and their defense, under the circumstances,
was necessarily impeded and embarrassed by the lapse of time during
the period in which they were left in ignorance of appellant's
claim.
The judgment of the circuit court of appeals is
Affirmed
MR. JUSTICE BRANDEIS, with whom MR. JUSTICE SANFORD concurs,
dissenting.
In my opinion, the decree of the circuit court of appeals should
be reversed with directions to the district
Page 270 U. S. 447
court to remand the case to the state court, or this Court
should, in its discretion, order that copies of all papers in the
district court relating to the removal be filed here, so that we
may determine whether the lower courts have properly exercised
jurisdiction.
Compare order issued February 1, 1926, in
Whitney v. California.
The determination of the jurisdiction of the courts below is one
of the essential functions of this Court.
Cochran v. Montgomery
County, 199 U. S. 260,
199 U. S.
270.
"On every writ of error or appeal, the first and fundamental
question is that of jurisdiction, first of this Court and then of
the court from which the record comes. This question the Court is
bound to ask and answer for itself, even when not otherwise
suggested, and without respect to the relation of the parties to
it."
Mansfield, Coldwater & Lake Michigan Ry. Co. v.
Swan, 111 U. S. 379,
111 U. S. 382;
Chicago, Burlington & Quincy Ry. Co. v. Willard,
220 U. S. 413,
220 U. S. 419;
Baltimore & Ohio R. Co. v. City of Parkersburg,
268 U. S. 35. The
record must show affirmatively "the fact on which jurisdiction
depends. It is not sufficient that jurisdiction may be inferred
argumentatively, from its averments."
Brown v.
Keene, 8 Pet. 112,
33 U. S. 115;
Hanford v. Davies, 163 U. S. 273,
163 U. S. 279.
If the jurisdictional facts appear affirmatively somewhere in the
record, the case need not be dismissed merely because the pleadings
fail to show them.
Robertson v. Cease, 97 U. S.
646,
97 U. S. 648;
Realty Holding Co. v. Donaldson, 268 U.
S. 398,
268 U. S. 400.
Amendment of the pleadings to conform to the facts shown by the
record may be allowed either in the lower courts or in this Court.
Norton v. Larney, 266 U. S. 511,
266 U. S. 516.
The record before this Court, which consists of 742 printed pages
and several unprinted documents, includes everything which was
before the circuit court of appeals, but not the whole record
before the district court.
Page 270 U. S. 448
What parts were omitted does not appear. The essential
jurisdictional facts are not shown in the pleadings or elsewhere in
the record.
The record in this Court shows a bill of complaint to have a
conveyance of real estate in Alaska annulled on the ground of
duress and to have paid to the plaintiff moneys alleged to have
been deposited in the Wells Fargo Nevada National Bank of San
Francisco by one Noyes, claiming to act as receiver of a Nevada
corporation. These funds are alleged to be the proceeds of a part
of the real estate. The complaint is entitled "Superior Court of
the California." The record shows next an answer filed in the
Federal Court for the Northern District of the state. All
subsequent proceedings prior to the appeal were had in that federal
court. From these facts, it may merely be surmised that the suit
was begun in the state court and before answer removed to the
federal court. But the record does not contain the petition for
removal, nor any of the other papers ordinarily incident thereto.
There is no reference to a removal in any order or decree, in any
opinion, in the evidence, nor in any other paper or clerk's entry.
The complaint did not allege the citizenship of the plaintiff. An
amendment to the complaint, filed in the federal court two years
later, states that the plaintiff has at all times been a citizen of
California. The defendants named are the Wells Fargo Bank and one
Noyes, the latter being joined both individually and as receiver
appointed "not lawfully" by an Alaska court for a Nevada
corporation. No allegation discloses the citizenship of Noyes. It
does not appear anywhere in the record whether an ancillary
receiver of the Nevada corporation was ever appointed in
California.
A multitude of questions remain unanswered in this state of the
record. Thus, we are left to conjecture whether all the defendants
joined in the petition for removal [
Footnote 1]
Page 270 U. S. 449
and, if not, by whom removal was sought, [
Footnote 2] on what ground removal was sought,
whether that ground was good in law, and whether it was
substantiated by the facts appearing of record, [
Footnote 3] from what court removal was
sought, [
Footnote 4] what
action the court and the respective parties took, and whether,
indeed, there was a proper petition for removal filed in time.
[
Footnote 5] On this record, it
seems to me that this Court is without jurisdiction, and that the
lower federal courts were also.
Hegler v. Faulkner,
127 U. S. 482. As
stated in
West v. Aurora
City, 6 Wall. 139,
73 U. S. 142:
"It is equally fatal to the supposed right of removal that the
record presents only a fragment of a cause, unintelligible except
by reference to other matters not sent up from the state court and
through explanations of counsel."
"There are no presumptions in favor of the jurisdiction of the
courts of the United States."
Ex parte
Smith,
Page 270 U. S. 450
94 U. S. 455,
94 U. S. 456;
Bible Society v. Grove, 101 U. S. 610. We
may not assume that there was jurisdiction merely because two lower
courts have exercised it, apparently without protest. [
Footnote 6] We may not assume that
documents omitted from the appellate record by agreement under
Equity Rule 75 showed jurisdiction. The requirement that
jurisdictional facts be affirmatively shown cannot be dispensed
with.
Compare Hudson v. Parker, 156 U.
S. 277,
156 U. S. 284.
We may not indulge in conjecture as to the ground on which
jurisdiction was invoked. If we were at liberty to do so, what
appears in the fragmentary record before us would preclude our
sustaining jurisdiction. Jurisdiction could not be sustained on the
ground of diversity of citizenship, because the citizenship of the
principal defendant is not disclosed. Jurisdiction could not be
sustained under § 33, Judicial Code, as amended by the Act of
August 23, 1916, c. 399, 39 Stat. 532, as a civil suit against "any
officer of the courts of the United States for or on account of any
act done under color of his office or in the performance of his
duties as such officer" (
compare Matarazzo v. Hustis, 256
F. 882), because there is nothing to show that removal was sought
upon this ground, or that the requirements of the statute were
complied with (
compare Ex parte Anderson, 3 Woods 124;
Rothschild v. Matthews, 22 F. 6), or that there was "a
causal connection between what the officer has done" and his
asserted official authority.
See Maryland v. Soper, ante,
p.
270 U. S. 9.
Jurisdiction could not be sustained on the ground that the
proceeding is ancillary, because no receiver of the Alaska bank was
appointed in California, nor was its estate being administered
there,
Mercantile
Page 270 U. S. 451
Trust Co. v. Kanawha & Ohio Ry. Co., 39 F. 337;
compare Greene v. Star Cash & Package Co., 99 F. 656,
and the ancillary character of the suit furnishes no ground for
removal.
Gilmore v. Herrick, 93 F. 525.
Compare Byers
v. McAuley, 149 U. S. 608,
149 U. S.
618-620;
Shinney v. North American Savings &
Loan Bldg. Co., 97 F. 9. Jurisdiction could not be sustained
on the ground that the case is one "arising under the . . . laws of
the United States," because the mere fact that the defendant Noyes
is the reputed receiver of a state corporation appointed by a
federal court is not a ground for removal. [
Footnote 7]
Gableman v. Peoria, Decatur &
Evansville Ry. Co., 179 U. S. 335. The
record shows no other way in which the case arises under the laws
of the United States. There is no actual controversy as to any
federal matter.
Compare Niles Bement Pond Co. v. Iron Moulders'
Union Local No. 68, 254 U. S. 77,
254 U. S.
82.
Page 270 U. S. 452
[
Footnote 1]
Compare Wilson v. Oswego Township, 151 U. S.
56;
Hanrick v. Hanrick, 153 U.
S. 192;
Chicago, Rock Island & Pacific Ry. Co.
v. Martin, 178 U. S. 245,
178 U. S. 248;
Gableman v. Peoria, Decatur & Evansville Ry. Co.,
179 U. S. 335,
179 U. S. 337;
Independent Steamboat Co. v. City of New York,
115 U. S. 248;
Marrs v. Felton, 102 F. 775, 779;
Yarnell v.
Felton, 104 F. 161, 162;
Scott v. Choctaw, O. & G. R.
Co., 112 F. 180;
Miller v. Le Mars Nat. Bank, 116 F.
551, 553;
Heffelfinger v. Choctaw, O. & G. R. Co., 140
F. 75;
Consolidated Independent School Dist. v. Cross, 7
F.2d 491.
[
Footnote 2]
Compare Bacon v. Rives, 106 U. S.
99;
Salem Trust Co. v. Manufacturers' Finance
Co., 264 U. S. 182,
264 U. S. 189;
Turk v. Illinois Central R. Co., 218 F. 315.
[
Footnote 3]
Compare Woolridge v. McKenna, 8 F. 650, 677, 678;
Mayer v. Denver, T. & Ft.W. R. Co., 41 F. 723;
Gates Iron Works v. Pepper & Co., 98 F. 449;
Yarnell v. Felton, 104 F. 161, 163.
But see Canal
& Claiborne Streets R. Co. v. Hart, 114 U.
S. 654,
114 U. S.
660.
[
Footnote 4]
Compare Noble v. Massachusetts Ben. Assn., 48 F.
337.
[
Footnote 5]
Compare People's Bank v. Calhoun, 102 U.
S. 256;
Manning v. Amy, 140 U.
S. 137;
First Nat. Bank of Parkersburg v.
Prager, 91 F. 689.
[
Footnote 6]
It is true that, although no party can by his conduct prevent
dismissal by this Court when the absence of jurisdiction is
discovered,
Parker v. Ormsby, 141 U. S.
81, mere irregularity in the removal may be waived where
the suit might originally have been brought in the federal court,
Baggs v. Martin, 179 U. S. 206.
[
Footnote 7]
Following the decision of this Court in
Texas & Pacific
Ry. Co. v. Cox, 145 U. S. 593,
which upheld the right of removal from a state court of a suit
against a receiver of a federal corporation appointed by a federal
court, some lower courts, neglectful of the qualification implicit
in the fact of federal incorporation, permitted removal generally
in suits against receivers appointed by federal courts.
Central
Trust Co. v. East Tennessee v. & G. Ry. Co., 59 F. 523,
528;
Jewett v. Whitcomb, 69 F. 417;
Landers v.
Felton, 73 F. 311;
Keihl v. City of South Bend, 76 F.
921;
Lund v. Chicago, R.I. & P. Ry. Co., 78 F. 385
(involving, however, a federal corporation);
Board of
Commissioners v. Peirce, 90 F. 764;
Pitkin v. Cowen,
91 F. 599;
Gilmore v. Herrick, 93 F. 525;
Winters v.
Drake, 102 F. 545, 550;
Pendleton v. Lutz, 78 Miss.
322, 328. Other lower courts, recognizing that limitation and also
the distinction with respect to receivers of national banks,
Grant v. Spokane Nat. Bank, 47 F. 673, refused to permit
removal in suits against receivers appointed only in exercise of
the general equity jurisdiction of federal courts, confident that
this Court would upon occasion uphold the limitation,
Shearing
v. Trumbull, 75 F. 33;
Marrs v. Felton, 102 F. 775;
Chesapeake, Ohio & S.W. R. Co.'s Receivers v. Smith,
101 Ky. 707. This Court, after holding in
Bausman v.
Dixon, 173 U. S. 113,
173 U. S. 114,
that "the mere order of the Circuit Court appointing a receiver did
not create a federal question," held in
Gableman v. Peoria,
Decatur & Evansville Ry. Co., 179 U.
S. 335, that no removal could be allowed solely on the
ground of the receiver having secured his appointment from a
federal court. That case and the limitations it established have
since been consistently recognized and followed.
Pepper v.
Rogers, 128 F. 987;
New York v. Bleecker St. & F.F. R.
Co., 178 F. 156;
Wrightsville Hardware Co. v. Woodenware
Mfg. Co., 180 F. 586;
Dale v. Smith, 182 F. 360;
American Brake & Shoe Foundry Co. v. Pere Marquette R.
Co., 263 F. 237;
State v. Frost, 113 Wis. 623, 647.
The principle of the decision, as there stated by the Court, 179
U.S.
179 U. S. 338,
gives effect to the avowed legislative policy underlying the
enactment of the Act of March 3, 1887, c. 373, 24 Stat. 552, as
amended and reenacted in § 66, Judicial Code.