Upon the authority of
Pennsylvania v. Williams, ante,
p.
294 U. S. 176,
held, that the Federal District Court for Pennsylvania had
jurisdiction of a suit brought by nonresident shareholders for the
appointment of receivers to liquidate an insolvent building and
loan association
Page 294 U. S. 187
and for an injunction, but that, in the exercise of a proper
discretion, upon the showing made by the state Secretary of
Banking, it should have relinquished its jurisdiction in favor of
that officer.
72 F.2d 517 reversed.
Certiorari, 293 U.S. 548, to review a decree affirming a decree
of the District Court appointing permanent receivers to liquidate
an insolvent building and loan association and enjoining others
from interfering with the property.
MR. JUSTICE STONE delivered the opinion of the Court.
This case comes here on certiorari, directed to the Court of
Appeals for the Third Circuit, which was granted to resolve the
questions of public importance also involved in No. 394,
Pennsylvania v. Williams, just decided,
ante, p.
294 U. S. 176.
On March 31, 1933, certain citizens of New Jersey, shareholders
in the Christian A Fisher Building & Loan Association, a
Pennsylvania corporation, filed their bill of complaint against the
Association in the District Court for Eastern Pennsylvania. The
bill alleged the requisite diversity of citizenship and
jurisdictional amount; that the Association was insolvent; that its
assets might be dissipated and sacrificed in the efforts of
creditors to realize payment of their claims from its property, and
prayed the appointment of receivers and an injunction. Thereafter,
the Secretary of Banking, acting under the Banking Act of the
Commonwealth of Pennsylvania of June 15, 1923, P.L. 809, after due
hearing, found the Association
Page 294 U. S. 188
to be insolvent, and on April 8, 1933, he issued and filed his
certificate, taking possession of the association and appointing a
special deputy agent to assist in the liquidation of its business
and property. The state Secretary of Banking, petitioner here, was
substituted as defendant in the pending suit, and filed an answer
in which he set up the action taken by him and prayed that the bill
of complaint be dismissed. After a hearing upon bill and answer,
the district judge entered his decree appointing permanent
receivers, respondents here, and enjoining all persons from taking
possession of, or interfering with, the property of the defendant.
The decree was affirmed by the Court of Appeals for the Third
Circuit. 72 F.2d 517.
For reasons stated at length in
Pennsylvania v. Williams,
supra, we conclude that the district court acquired
jurisdiction of the cause upon the filing of the bill of complaint
in that court.
See also No. 431,
Penn General Casualty
Co. v. Pennsylvania ex rel. Schnader, Attorney General,
decided this day,
post, p.
294 U. S. 189. But
we think that, upon the bare showing in a shareholder's bill that
the defendant corporation was insolvent, the court would have been
well within the exercise of a proper discretion had it declined the
appointment of receivers and directed a dismissal of the bill for
want of equity. In any event, the allegations of the answer that
the possession and control of the assets of the defendant by the
Secretary of Banking pursuant to statute will result in the
preservation of the assets of the defendant and the proper
distribution of funds realized from their liquidation are not
challenged. The considerations which should have induced the
district court, in the proper exercise of its discretion, to
relinquish jurisdiction in
Pennsylvania v. Williams,
supra, should have led to the same result here.
The decree will be reversed, and the cause remanded. The
district court will direct that all assets and property
Page 294 U. S. 189
in the possession of the receiver be, with all convenient speed,
surrendered to the Secretary of Banking, the receivers retaining
only sufficient of the assets of the defendant association to pay
their reasonable fees and any obligations lawfully incurred by
them. Jurisdiction will be retained by the district court only for
that purpose and for the purpose of promptly discharging the
receivers and settling their accounts, after which the suit will be
dismissed.
Reversed.