McKECHNEY et al. v. WEIR, 118 F. 805

BAKER, Circuit Judge, having stated the case thus, delivered the opinion of the court. Prior to May 14, 1901, the federal circuit court had full jurisdiction of the subject-matter of, and parties to, the original bill. An order had then been entered restraining the defendants from selling or in any way disposing of the assets of the firm. A motion for the appointment of a receiver was pending. That court, therefore, had absolute control of the whole matter, free from the interference of any other court. Farmers’ Loan & Trust Co. v. Lake St. El. R. Co., 177 U. S. 51, 20 Sup. Ct. 564, 44 L. Ed. 667.

And the sole question is whether the contract and stipulation of May, 1901, deprived that court of the rightful power to act as it did upon appellee’s supplemental bill and motion. Counsel for appellants are entirely right in saying that á suit is under the control of the parties, and that a court has no jurisdiction to be upheld, from imagined considerations of dignity or other motive, against a binding stipulation, and the case is to be scanned exclusively from that point of view. What was the situation of the Messrs. McKechney on May 14, 1901 ?

They were defendants to the original bill,—under a restraining order. A motion was pending to have the assets of the firm collected and distributed by a receiver. The parties were willing to avoid that expense if possible.

So they agreed,—to what? “The assets of the firm shall be collected and distributed in a manner to be hereafter agreed upon.” And “proceedings upon the bill shall be stayed until the supreme court of Illinois shall have rendered judgment in the case of Weir, McKechney & Co. against the city of Chicago, therein pending, and until the method of collecting and distributing the assets shall be agreed upon.” With respect to the control and disposition of the assets, a matter then pending in the court below, the parties agreed to agree; that is, they agreed to nothing.

But they thereby expressed their desire and intention to endeavor to reach an adjustment later. So they entered into an armistice. They agreed to suspend hostilities until the supreme court of Illinois should dispose of their case and until they should unite upon a method of distributing the proceeds. In determining the scope of this time limit, it must not be forgotten that the evident purpose of the parties was to see if they could not reach a complete settlement. The only remaining asset was the judgment against Chicago. But that fact would not prevent the appointment of a receiver immediately.

There might well be pressing occasion for the appointment of a receiver long before a decision could be had. There might be urgent demands for money to use in that litigation or in defending the firm against claims of creditors, and the parties might be unable or unwilling to raise it. And a motion for the appointment of ’a receiver was pending when the. agreement of May 14th was made. There would be no immediate need of a receiver, if the parties would proceed with their negotiations and take care of emergencies as they arose.

The principal thing, therefore, was their agreement to strive in good faith to effect a settlement. The time-limit of the stay was not until the supreme court of Illinois should act, but until the supreme court should act and until the parties should reach an agreement. The clause respecting action by the supreme court was coupled with another that evidenced the dominant purpose of'the parties, and the whole clearly contemplated that the wait for the supreme court should be conditioned upon the parties proceeding honestly and successfully to a mutually satisfactory conclusion.

And if they did not, and if emergencies arose, what was intended? The agreement to agree could not be specifically enforced. It neither dismissed the suit nor furnished a basis therefor. It did not even suspend the restraining order, for Mr. Weir only consented that the Messrs. McKechney might act with respect to the assets in such a manner as he might thereafter agree to. It only stayed the determination of the application for a receiver and the hearing on the merits until the parties found out whether they could close their remaining differences without the court’s aid.

If they could not, the armistice was at an end. If either refused or incapacitated himself to try, the stay was broken, and the other was at liberty to proceed in the court below as if no attempt at settlement had been made. Now, the Messrs. McKechney, by appearing in the state circuit court and consenting to the appointment of a receiver, abandoned the controlling object of the truce, repudiated their agreement to negotiate with Mr. Weir untrammeled, and placed, so far as they could, the manner of collecting and distributing the assets in the control of the state court.

And this is. true independently of the question whether they incited Mrs. McKechney to apply to the state court for the appointment of a receiver. The court below was of the opinion, in which we concur, that the proceedings in the state court were collusive. On the basis that Mrs.. McKechney allowed herself to be used as a cloak to mask the purposes of her husband and son, her appeal falls with theirs. But, collusion aside, Mrs. McKechney has no standing. Mr. Weir did not give her an unconditional obligation to pay $75,000.

He assigned her an interest in the subject-matter of a pending suit, with reference to the handling of which the very instrument that gave her her interest made certain provisions. She could not count on these provisions otherwise than as Mr. Weir made them. To have-prevented him from taking up and pressing the motion for a receiver which was pending in the federal circuit court when she bought into-the suit, it was incumbent upon her to show that he had bound himself not to do so, and that such agreement was in force. There was no-direct engagement with her on the subject. She could not take the benefits of Mr.

Weir’s stipulation with her husband and son without its burdens. There is no basis for the claim that Mrs. McKechney, on account of her citizenship in Illinois, could not apply to the federal court for protection of her dependent interests and was compelled to resort to the state court. Ex parte Tyler, 149 U. S. 164, 13 Sup. Ct. 785, 37 L. Ed. 689. The contention that Mr. Weir could avail himáelf of the facts exhibited in his supplemental bill only as a defense to the proceedings in the state court is without merit.

The federal circuit court had the right to decide for itself whether its original jurisdiction had been lost. The intervening creditors have been permitted to file briefs in support of their position that, after their petitions had been filed, the 'original parties could not dismiss the suit without their consent. In view of the' conclusions already reached, it is needless to decide that question. The order appealed from is affirmed.