1. Where receivers of a corporation, appointed by a state court,
file a suit against it in the federal court in another State in
which they seek an ancillary receivership and are the only actors,
there is no federal jurisdiction on the ground of diversity of
citizenship if one of them and the corporation are citizens of the
same State, and, in this regard, it is immaterial that the bill, in
its caption, names as
Page 293 U. S. 238
sole plaintiff the plaintiff in the original suit, and that
diversity of citizenship existed between him and the corporation.
P.
293 U. S.
242.
2. A suit by primary receiver, appointed by a state court, for
an ancillary receivership in a federal court, is an original,
independent bill, which cannot be entertained by the federal court
in the absence of diversity of citizenship or other independent
ground of federal jurisdiction. P.
293 U. S.
243.
3. Lack of federal jurisdiction cannot be waived or overcome by
agreement of the parties. P.
293 U. S.
244.
69 F.2d 233 reversed.
Certiorari to review an interlocutory decree sustaining an order
appointing ancillary receivers.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
International Re-Insurance Corporation is organized under the
laws of Delaware. It had a place of business and real and personal
property in California. On April 19, 1933, the Court of Chancery of
Delaware appointed Arthur G. Logan of that State, Carl M. Hansen of
Pennsylvania, and George De B. Keim of New Jersey, primary
receivers of all its property. The statutes of Delaware purport to
vest in receivers so appointed title, as
quasi-assignees,
to all property, wherever located, except real estate not situated
within the State. R.S. Del. § 3884. The order appointing the
primary receivers authorized them to apply in other jurisdictions
for the appointment of ancillary receivers. On the day of their
appointment, they filed in the federal court for Southern
California a petition or bill praying that ancillary receivers be
appointed
Page 293 U. S. 239
of property there located. The prayer was granted
ex
parte. W. H. Comstock of California and De B. Keim were
appointed ancillary receivers. And an order issued enjoining all
persons from interfering with their possession and control.
On the same day, E. Forrest Mitchell, the Insurance Commissioner
of California, filed, in the Superior Court of that State, a
petition praying that he be placed in the possession of the
property and business of the Corporation. That court entered
immediately an order temporarily enjoining the Corporation from
disposing of its property in California, and ordered the Insurance
Commissioner to take possession thereof. Its license to transact
the business of workmen's compensation insurance in California had
been revoked by the Commissioner prior to the appointment of the
primary receivers.
Service was promptly made of the orders issued by the two
courts. A dispute arose as to the exact times of the filing of the
several proceedings; of the entry of the orders; of the service
thereof, and of taking possession. To resolve the controversy, the
Insurance Commissioner filed in the federal court, on May 2, 1933,
a motion to vacate its order appointing the ancillary receivers; to
dissolve the restraining order, and to dismiss the petition of the
primary receivers. The motion alleged that, before the federal
court assumed to act, the California court had acquired
jurisdiction and the Insurance Commissioner had actually taken
possession of the Corporation's property. It charged, among other
things, that the petition of the primary receivers on which the
appointment of the ancillary receivers had been made did not state
facts sufficient to give the court jurisdiction of the subject
matter or of the parties, and that both the order of appointment
and the restraining order were therefore invalid.
Page 293 U. S. 240
At the hearing of the motion, it was admitted that "the
situation presented is within the California statute providing for
proceedings against delinquent insurance companies;" that the
California assets of the Corporation
"were in the possession of the Insurance Commissioner at the
time of the appointment and qualification of the receivers
appointed by the district court;"
and that the proceeding brought by the primary receivers had
been filed a few minutes before the Insurance Commissioner made his
application to the state court. On these facts, the District Court
held that, since the proceeding brought by the primary receivers
was "first filed in this Court, jurisdiction of the
res is
in the district court." Upon a rehearing had on additional
affidavits, the court reaffirmed its denial of the motion to vacate
the order appointing the ancillary receivers.
From this judgment, the Insurance Commissioner appealed to the
Court of Appeals. There, he contended that the original
proceedings, in which the primary receivers petitioned for the
appointment of ancillary receivers, was not a bill of complaint,
and was insufficient to confer jurisdiction upon the District
court,
cf. McCandless v. Furlaud, 68 F.2d 925 [
Footnote 1]; that the subsequent
amendments purporting to state a cause of action against the
corporation were inoperative to sustain the jurisdiction of the
federal court because they were not filed until after the state
court had acquired possession of the property, and that the bill,
even as amended, did not state a cause of action in which a valid
order appointing ancillary receivers could be made.
The Court of Appeals, in an elaborate opinion, affirmed the
judgment of the District Court, 69 F.2d 233, 237. It did not pass
upon the Commissioner's contention that the
Page 293 U. S. 241
ancillary appointment could not be made upon the bill as it was
originally filed, because it held that the subsequent amendments
related back to the commencement of the proceedings. It overruled
his objection that the bill failed to allege that the Corporation
was insolvent or that the complainant in the primary suit was a
judgment creditor on the ground that any such defects were cured by
the amendments or waived by the Corporation's answer. It held that
the rule of
Booth v.
Clark, 17 How. 322, did not prevent the appointment
of ancillary receivers, because here, the primary receivers did not
ask that they themselves be appointed ancillary receivers, and did
ask specifically that the "rights of creditors in the foreign
jurisdiction be safeguarded." It concluded that the state and
federal courts had concurrent jurisdiction of the subject matter,
and that the federal court was entitled to exercise its
jurisdiction because of the prior filing in it of the proceedings
for the appointment of ancillary receivers.
Although the Court of Appeals discussed also questions of
federal jurisdiction and venue, it did not refer specifically to
the fact that a lack of diversity of citizenship appeared
affirmatively, on the amended pleadings, one of the primary
receivers as well as the Corporation being a citizen of Delaware.
Nor was this fact relied upon by the Insurance Commissioner in his
petition for certiorari or in oral argument here. He prayed for the
writ solely on the ground that the Court of Appeals should have
decided that "the original bill filed in the District Court was
insufficient to state a cause of action or to confer jurisdiction,"
and that the amendments thereto filed after the commencement of the
suit in the state court could not operate to cure the defects of
the original bill. But, as the lack of diversity of citizenship
appears upon examination of the record, we have no occasion to pass
upon the contentions made. The order appointing the
Page 293 U. S. 242
ancillary receivers must be set aside because the District Court
lacked federal jurisdiction of the cause.
First. If the jurisdiction of the District Court must
rest on diversity of citizenship, it fails because one of the
plaintiffs is a citizen of the same state as the defendant.
Hooe v. Jamieson, 166 U. S. 395. The
proceeding in the District Court was entitled "Bertha E. Maurer v.
International Re-insurance Corporation," and that title has been
used in all later proceedings in that court, in the Court of
Appeals, and in this Court. If Bertha E. Maurer had actually been
the plaintiff, there would have been diversity of citizenship, for
she is a citizen of New Jersey. But, in fact, Bertha E. Maurer was
not a party to the application for the appointment of the ancillary
receivers, was not later made a party to the suit, and has not
appeared at any stage of the proceedings. Her name was used,
doubtless, because she was the plaintiff in the suit against the
Corporation brought in the Court of Chancery of Delaware in which
the primary receivers were appointed. [
Footnote 2] The application in the case at bar for the
appointment of ancillary receivers was made by and in the name of
the primary receivers. They sue as
quasi-assignees
claiming to be entitled to the possession of the balance of the
California property after its administration by the District Court
of California. In the original application filed April 19, 1933,
they called themselves petitioners. In the amendments filed six
days later, the application is called a "bill of complaint." It is
so designated in the answer of the Corporation, filed at the same
time. We necessarily treat the primary receivers as the
plaintiffs.
Page 293 U. S. 243
Second. Apparently this lack of diversity jurisdiction
was regarded as immaterial by the Court of Appeals on the ground
that the suit was an ancillary one. For the opinion states:
"Finally, it has been held that an ancillary suit in a federal
court does not depend on diverse citizenship." This position is
adopted in the brief of the primary receivers, but the contention
is unsound. Where the jurisdiction of a Federal District Court is
based upon diversity of citizenship, proceedings therein in
intervention being ancillary, the jurisdiction rests upon that of
the main cause.
Cincinnati, I. & W. R. Co. v. Indianapolis
Union Ry. Co., 270 U. S. 107. The
same rule is applicable to sustain jurisdiction of independent
suits which are ancillary to an original suit in the same court.
White v. Ewing, 159 U. S. 36.
Whether the rule may ever be applied to a suit brought in a federal
court of another district, and whether a suit for the appointment
of ancillary receivers in another federal district is an ancillary
suit within the meaning of the rule, does not appear to have been
decided by this Court. [
Footnote
3] We need not decide either question now. For the rule can
have no application where primary receivers appointed by a state
court bring a suit for the appointment of ancillary receivers in
the federal court for another State. Obviously such an application
is not ancillary to any proceedings in any federal court. It is an
independent original bill. Being such, it cannot be sustained when
diversity of citizenship
Page 293 U. S. 244
does not exist, and no other ground of federal jurisdiction is
shown.
Third. Unlike an objection to venue, lack of federal
jurisdiction cannot be waived or be overcome by an agreement of the
parties. An appellate federal court must satisfy itself not only of
its own jurisdiction, but also of that of the lower courts in a
cause under review. [
Footnote
4]
Mansfield, C. & L.M. Ry Co. v. Swan,
111 U. S. 379,
111 U. S. 382.
Hence, the failure of the Insurance Commissioner to claim, in his
petition for certiorari, that the order of the District Court was
void for lack of federal jurisdiction of the suit, and his failure
otherwise to call to the attention of this Court the lack of
diversity of citizenship, are immaterial. The Court of Appeals
pointed out that, under Judicial Code, § 274c, where
"jurisdiction of the district court is based upon the diverse
citizenship of the parties, and such diverse citizenship in fact
existed at the time the suit was brought, . . . though defectively
alleged, either party may amend at any stage of the proceedings and
in the appellate court upon such terms as the court may
impose."
But, in the case at bar, the admitted facts preclude such an
amendment. Diversity of citizenship confessedly did not exist.
The judgment is reversed, and the cause is remanded to the
District Court with directions to dismiss the bill for want of
federal jurisdiction.
Reversed.
[
Footnote 1]
For disposition of the case by this Court,
see ante, p.
293 U. S. 67.
[
Footnote 2]
Similarly, in
McCandless v. Furlaud, ante, p.
293 U. S. 67, the
petition for the appointment of ancillary receivers filed by the
primary receivers in the federal court for Southern New York, bore
the title of the suit in the federal court for Western Pennsylvania
which appointed them.
[
Footnote 3]
In
Raphael v. Trask, 194 U. S. 272,
194 U. S. 278,
it is intimated that the jurisdiction of a federal court cannot be
based upon an original suit in another federal court. Some of the
lower courts have so held.
Winter v. Swinburne, 8 F. 49,
where the subject was fully discussed.
Compare United States v.
Pedarre, 262 F. 839;
Sullivan v. Swain, 96 F. 259.
But see Bluefields S.S. Co. v. Steele, 184 F. 584, 587.
Compare Trustees System Co. of Pennsylvania v. Payne, 65
F.2d 103,
and Walker v. United States Light & Heating
Co., 220 F. 393, which concern requisites of equity, rather
than federal, jurisdiction.
[
Footnote 4]
The order appointing ancillary receivers attacked in
McCandless v. Furlaud, ante, p.
293 U. S. 67, on
the ground that the court was without federal jurisdiction, had
been entered not in the suit there under review, but in a separate
proceeding in the same court.