FRANK v. WEDDERIN et al., 68 F. 818

PARDEE, Circuit Judge, after stating the facts as above, delivered the opinion of the court It was admitted on the hearing by the counsel for the defendants in error that, under the laws of the state of Louisiana, the voluntary dissolution of the Taylor Brothers Iron Works Company, Limited, if otherwise complete, did not take effect against creditors of the corporation until record was made of the dissolution in the mortgage office, which was on January 6, 1893.

The record shows that, prior to the application of the elected liquidators to the state court, the attachments in the cases of the Prentiss Tool & Supply Company and the Niles Tool Works against the Taylor Brothers Iron Works Company, Limited, had been sued out in the United States circuit court, and had been levied on the property in controversy. We take it, then, that all questions of the validity of the original levy and of the proper custody of the property in the circuit court of the United States at the time of the contended dissolution of the corporation are eliminated from this case. In Railroad Co. v.

Gomila, 132 U. S. 478, 10 Sup. Ct. 155, if was declared: “The jurisdiction of a court of the United States, once obtained over property by bc’ng brought within its custody, continues until the purpose of the seizure is accomplished, and cannot be impaired or affected by any legislation of the state, or by any proceedings subsequently commenced in a state court.” In Louisiana a corporation cannot avail itself of the provisions of the act relative to the voluntary surrender of property. Jeffries v. Iron Works Co., 15 La. Ann. 19.

We know of no law in Louisiana, and counsel have suggested none, by which the voluntary dissolution of a corporation operates in any court a dissolution of attachments previously levied.

This brings us to the question whether the defendants in error (plaintiffs in the circuit court) are estopped by the judgment provoked by them in the circuit court in the cases of the Prentiss Tool & Supply Company, the Mies Tool Works, and the Cleveland Forge & Iron Company, against the Taylor Brothers Iron Works Company, Limited ; that is to say, to the question whether the defendants in error made themselves parties in those suits.

The record shows that, thinking they had an interest in the subject-matter of the suits, they voluntarily appeared and suggested'their interest; that they prayed for the dissolution of the attachments and the dismissal of the suits; that they were heard by the court, and introduced witnesses on their own behalf; and that, when judgment was rendered adverse to their demands, they abided the decision, whereby it became final. If they are, as they still claim to be, the liquidators of the Taylor Brothers Iron Works Company, Limited, they had an interest in the suits and a right to make a defense. In Robbins v.

Chicago, 4 Wall. 657, it is said: “Conclusive effect of judgments, respecting the same cause of action, and between the same parties, rests upon the just and expedient axiom that it is for the interest of the community that a limit should he opposed to the continuance of litigation, and that the same cause of action should not he brought twice to a final determination. Parties in that connection include all who are directly interested in. the subject-matter, and who had a right to make a defense, control the proceedings, examine and cross-examine witnesses, and appeal from, the judgment.

Persons not having those rights substantially are regarded as strangers to the cause; but all who are directly interested in the suit, and have knowledge of its pendency, and who refuse or neglect to appear and avail themselves of those rights, are equally concluded by the proceedings.” See, also, Chicago v. Robbins, 2 Black, 418. To the same effect are Cromwell v. County of Sac, 94 U. S. 351; Chamberlain v. Preble, 11 Alen, 370; Tredway v. Railroad Co., 39 Iowa, 663.

It is true that in their motion to dissolve the attachment the defendants in error say that they appeared in the circuit court for the sole purpose of protecting their possession and control of the assets and property of said company, and not intending to make themselves parties thereto, and in such motion they did move the court that they “be allowed by the court to appear solely for the conservatory purpose of moving to dissolve the attachment herein issued on the ground,” etc.; and it may be conceded that a limited appearance was all that the defendants in error intended; but, as a matter of fact, they presented all the issues that they wished, and made all the defense to the suit that they cared to make.

We understand that a limited appearance is permissible in a casev where a person comes into a cause for the sole purpose of objecting to the sufficiency of original process, or to decline the jurisdiction of the court on account of some personal privilege or exemption. To extend the rule much further would be to permit parties in the case to test the court upon the sufficiency of defenses that might be made, and yet not bind the parties by the decision thus provoked.

The original proceedings in the circuit court were on the law side of the court, and the practice there is according to the practice in like cases in the courts of Louisiana. In Louisiana the parties are competent to-waive, all matters of form. In Trescott v. Lewis, 12 La. Ann. 197, it is said: “It matters not that the proceeding by rule was irregular, since the party against whom it was taken, as a favor to his adversary, waived all questions of form, and joined issue on the merits. Here are all the elements of a suit at law, — actor, reus, et judex. The form of the proceeding is immaterial.

If proper parties join issue upon questions, either of law' or fact, before a competent court, they must abide by the decision.” A decision directly in point is Tyrrell v. Baldwin, 67 Cal. 1, 6 Pac. 867, where a judgment in a case entitled “McLeran v. McNamara,” purporting to be against Tyrrell’s grantors, Sarah and Charlie McDonald, was offered by Baldwin to defeat his title.

It appears that the McDonalds were not named as the defendants in the complaint, nor summoned as such, but that, some seven months after the complaint was filed, they voluntarily appeared, and hied answer, setting up defenses, but without any express leave of- court. The case was tried on this answer, and judgment rendered aginst the McDonalds. In reversing the decision of the lower court excluding the record of the judgment in evidence, (he supreme court says: “The voluntary appearance of a defendant is equivalent to personal service of the summons and a copy of the complaint upon him.

Appearance before being summoned confers jurisdiction equally with an appearance after being summoned. Under our practice, a person who is not named in tlie complaint, nor served with tlie summons, if he has an interest in the matter of the litigation, may become a party by obtaining leave of the court to file a complaint in intervention. Here the McDonalds, without objection, or opposition, Iiled an answer, in which they denied all the allegations of the complaint, and alleged that they were tlie owners and entitled to the possession, of a certain portion of the demanded premises.

They were permitted to do, without opposition and by tacit consent, that which they might have done by leave of court. But why ask leave of the court to do that which nobody objected to their doing? They invoked the judgment of the court upon (he issues raised by tbeir answer to the complaint, and they got it. Can they notv be heard to say that the judgment is a. nullity because they obtruded ihomselves into tlie action?

Their answer shows that they might properly have been made parties to it, and the record shows that they availed themselves of all the rights and privileges of which they could have availed themselves if they had been named and sued as defendants in the complaint. As soon as the answer was filed, the complaint, might have been amended by adding the names of the McDon-alds to those of the other defendants in the action The court held, upon review of the authorities, that a judgment thus rendered cannot be attacked collaterally, even if it might be reversed on appeal for irregularity.

See, also, 2 Black, Judgm. § 540.

It is, however, contended that although the defendants in error appeared in the circuit court in the attachment cases, there presented their matters of law and fact, introduced witnesses, were heard as before a jury, — all on matters tending to defeat the plaintiffs in the several cases, — yet the questions presented being collateral, and not going to the main issue of the indebtedness vel non, they had no right of appeal; and therefore the judgments denying their motions to dissolve the attachments and dismiss the suits were not binding, and can work no estoppel in the present suit, wherein exactly the same facts and the same title are set up.

It is very doubtful whether the right to appeal from a judgment cuts much figure in determining whether an estoppel results from such judgment. Sometimes the amount involved prevents a review of the judgment by a higher court, and sometimesi the estoppel itself results from the judgment of the appellate court. The matters presented by the defendants in error in the attachment cases went beyond collateral issues.

If they had been successfully established, the plaintiffs in attachment would have been denied the most valuable relief they sought, to wit, the appropriation of the attached property to the payment of their claims. It does not seem questionable that in such case the plaintiffs in attachment could have had the judgments of the circuit court reviewed on error.

The act of 1891, establishing circuit courts of appeal, was then, as now, in force; and by that act jurisdiction is given to the circuit courts of appeal to review final decisions of existing circuit courts in cases where the jurisdiction of the circuit court is founded, as it was in the attachment cases, on diverse citizenship. If the motions of the defendants in error in the attachment cases had been granted, and the attached property turned over to the alleged liquidators, it would be difficult to distinguish the case as to the right of review from Railroad Oo. v.

G-omila, supra, where no doubt of the jurisdiction of the supreme court was suggested. If the plaintiffs in attachment could have had an adverse decision reviewed on error, why did not the defendants in error have the like right? The judgment of the circuit court was adverse and final as to them.

It denied them the right to the property attached, and appropriated the property to the payment of the attaching creditors’ claims. • In connection with this, on an issue provoked by themselves, the court decided that the corporation known as the Taylor Brothers Iron Works Company, Limited, was not legally dissolved by the proceedings of the stockholders on the 27th of December, 1892.

The court had jurisdiction; the parties were before it; the issue was made; and we feel constrained to now hold that the defendants in error, the alleged liquidators of the Taylor Brothers Iron Works Company, Limited, are estopped by the judgment of the circuit court in the attachment cases from now asserting against the plaintiffs in said attachment cases and against the present plaintiff in error, who holds title thereunder, that in fact, by the proceedings of the stockholders of the Taylor Brothers Iron Works Company, Limited, on the 7th of December, 18911 the corporation was dissolved.

We do not find it necessary to express any opinion upon the correctness of. the judgments of the circuit court in the attachment cases, denying the relief sought therein by the defendants in error; but we do suggest that the voluntary dissolution of a trading corporation, insolvent or otherwise, without public notice, and after its creditors have been driven into the courts, should be viewed with more or less suspicion; and, when such dissolution is brought forward to defeat attaching creditors, we think the court should see that all the formalities prescribed by the laws of the state and the charter of the corporation to bring about a legal dissolution of the corporation are strictly complied with.

Judge Billings, in his opinion, found in the record, given in the attachment cases, holds that ike provision in tke charter of tke Taylor Brothers Iron Works Company, Limited, providing for advertisement of proposed general meetings of tke stockholders for tke purpose of changing, modifying, or altering tke charter, included in its meaning and purposes tke matter of dissolution of the corporation; and that, as all such general meetings affected the public in regard to the then present indebtedness as well as future credits of the corporation, such preliminary advertisement could not he waived.

If Judge Billings was correct in this, — on which we express no opinion, — the Taylor Brothers Iron Works Company, Limited, does not even now appear to have ever been legally dissolved. Leaving this aside, however, and basing our judgment entirely on the estoppel pleaded in this present case, we áre of opinion that the judgment of the circuit court should be reversed, and the cause remanded, with instructions to award a new-trial; and it is so ordered.