CHICAGO TITLE & TRUST CO. v. NEWMAN et al., 187 F. 573

SANBORN, District Judge (after stating the facts as above). Strictly speaking, there never was any question of jurisdiction in the case. It was one of equity power. A court of equity will not. as a general rule, administer the internal affairs of a foreign corporation. As decided by the Supreme Court of Illinois in Babcock v. Farwell, 245 Ill. 14, 33, 91 N. E. 683, the question is not strictly one of jurisdiction, but rather of discretion in the exercise of jurisdiction. And the Supreme Court of the United States has often had occasion to make the same distinction. Blythe v. Hinckley, 173 U. S. 501, 19 Sup.

Ct. 497, 43 L. Ed. 783; Bache v. Hunt, 193 U. S. 523, 24 Sup. Ct. 547, 48 L. Ed. 774; Louisville Trust Co. v. Knott, 191 U. S. 225, 24 Sup. Ct. 119, 48 L. Ed. 159. See, also, Re Hill Co., 159 Fed. 73, 76, 86 C. C. A. 263, in this circuit. The Circuit Court actually exercised jurisdiction by directing the receiver to continue the business. For a long time it had all the parties before it, by repeated general appearances.

As a matter of discretion it allowed these appearances to be withdrawn; but it had the power to treat them at their full value, and to decide the merits of the case, notwithstanding it involved the internal affairs of a foreign corporation. The court also had power to sustain a demurrer for want of equity, as it did; and it is of no consequence, especially on this appeal by the receiver, whether or not it assigned a wrong reason for doing so. It is equally immaterial that the court may have assigned an insufficient reason for refusing to allow appellant to retain the $1,-500.

When it appeared that the Circuit Court found that the receiver’s services had not enhanced the value of the estate, and therefore the compensation claimed should not be taxed against the fund, appellant should have paid over the money, as directed, and applied to the court to insert a provision in the decree directing taxation against complainant. It seems from the opinion that this would have, been decreed. If not, the receiver would have had its right of review. No such application was made, nor any denial of the right to such taxation.

It appears that the receiver took the view, suggested by its neutral position, that the court should tax the claim against complainant, upon a mere suggestion. This was a dignified view, but we think an impractical one. Appellant has mistaken its remedy. Its assignments of error do not reach the case, nor could it draw one which would, because the court did not get far enough to do anything which might be subject to review as erroneous. The Hill Company Case, supra, is cited as justifying the position taken by the receiver here.

All that case holds is that where a receiver’s services have resulted in large material benefits to the parties, and the court allows him compensation out of the fund, he is under no duty to look after the interests of the defendant by moving to have such allowance charged to plaintiff. The decree of the Circuit Court is affirmed. For other cases see same topic &.§ number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes