FAIRVIEW FLUOR SPAR & LEAD CO. et al. v. ULRICH et al., 192 F. 894

KOHESAAT, Circuit Judge (after stating the facts as above). Appellants challenge the legal right of appellee to appear for the Development Company in the institution of these proceedings. Apparently with a view to avoiding jurisdictional difficulties, the alleged receivers amended the bill filed by them as receivers by making their insolvent corporation complainant in their stead and thenceforth sought to direct it in their names as its receivers. Nothing was gained by this attempt.

The Supreme Court has expressly disposed of that question in no uncertain language: “Nor do we think the .-jurisdiction is established.” says Mr. Justice Day, speaking Cor the court in Great Western Mining & Manufacturing Co. v. Harris, 198 U. S. 561, 25 Sup. Ct. 770, 49 L. Ed. 1163, “because the action is authorized to be instituted by the receiver in the name of the corporation. ,Such actions subjecting local assets to a foreign jurisdiction and to a foreign receivership would come within .the reasoning of Booth v. Clark [17 How. 322, 15 L. Ed. 164].

If a recovery be had, although in the name of the corporation, the property would be turned over to the receiver, to be by him administered under the order of the court appointing him.” Ever since the decision of the court in Booth v. Clark, 17 How. 322, 15 L. Ed. 164, a receiver deriving his authority from the order of the court appointing him has been without power to institute suits in a foreign jurisdiction. The doctrine has been rerenunciated in Hale v. Allinson, 188 U. S. 56, 23 Sup. Ct. 244, 47 L. Ed. 380, and in Great Western Mining & Manufacturing Co. v. Harris, supra; Sullivan v. Swaine (C.

C.) 96 Fed. 259; Bunk v. Circuit Judge, 43 Mich. 296, 5 N. W. 627. In Street on Federal Practice, vol. 3, § 2694, it is said: “A suit for an ancillary receiver cannot be maintained merely for the purpose of obtaining a ratification by the court of one jurisdiction of what has been done in a court of another jurisdiction.” In Mercantile Trust Co. v. Kanawha & Ohio Railway Co. et al. (C. C.) 39 Fed. 337, it was held by Mr. Justice Harlan, in the.

Circuit Court of the United States for the District of West Virginia, that, if the plaintiff desired the active intervention of that court in respect to the mortgaged property there involved, “such intervention should only occur in a separate, independent suit of which it may take cognizance ; and in which, if proper or necessary to do so, this court may lay its hands upon the property within this district, and if need be, administer it by a receiver directly amenable to its authority for the benefit of all parties interested, of whatever state they may be citizens.” The bill was filed by the Ohio complainant seeking to have the Ohio proceedings, including the appointment of a receiver, enforced, and prays that such orders and decrees be passed by .the West yirginia court “as shall be necessary or advisable in order to vest in said receiver the possession of said mortgaged property and the control over the same” and that the court shall take “ancillary jurisdiction” with the Ohio court and give complainant all the relief “necessary to accomplish the purposes of filing said bill” in the Ohio court.

The court refused to enter an order simply approving or confirming the appointment of a receiver made in the original Ohio suit, in the language above stated. Here the original plaintiff was not made a party, nor was there any defendant named. Nor was any process prayed for. The proceeding-lacked the essential features of a pending suit. There was nothing upon which the jurisdiction of the court could attach — nothing which could affect the rights or status of the defendants -in the said amended bill. To them it was a nullity — something of which they were not bound, to take notice.

It in no way enlarged the powers of the foreign receivers as to the defendants to the amended bill. This being so, we are presented with the bald question whether foreign receivers having only the title acquired by the order of the court appointing them could maintain their suits in the Circuit Court of the United States for the Eastern District of Illinois, for there is nothing in the record to show that the receivers had any other title to the property of the Development Company than that derived from the order of the Delaware court.

The allegation found in clause 15 of the amended bill: “That afterwards, on, to ’wit', March 12, A. D. 1908, the said Frederick W. Griffin, prime trustee as aforesaid, by an instrument under his hand and seal did duly assign said mortgage above set forth to John O. Ulrich and Harry P.

Joslyn as receivers for the International Finance and Development Company, a corporation, together with all the rights, remedies, incidents, and appurtenances thereunto belonging, and all the right, title, interest, estate, property, claim and demand whatsoever of, in and to the same and the premises therein described, together with the bonds or obligations in said mortgage mentioned * * *” ■ — is not, when taken in connection with the other clauses of said amended bill, a sufficient statement of transfer of title to said receivers, to warrant the court in holding that any title passed to them.

There is nothing to show that Griffin had any power to make the transfer. Nor do the appellees rest their claims to the jurisdiction of the court upon that ground. The securities so attempted to be assigned constitute only a fraction of the property involved. We therefore give that allegation no weight. Judge Wellborn held in Re Brant (C.

C.) 96 Fed. 257, that there being no suit brought in that co.urt, the term “ancillary” was erroneously employed; that the suit was without a defendant and purely ex parte; and that the court was therefore without jurisdiction to appoint a receiver of any sort, either ancillary or original. To the same effect is Beach Modern Equity Practice, vol. 2, § 721.

We are of the opinion that the facts disclosed in the record bring this cause within the disapproval of the authorities; that the original ex parte proceeding in the Circuit Court of the United States for the Eastern District of Illinois was ineffectual to invest the foreign receivers with powers to act as receivers in said district; that the court was therefore without jurisdiction to entertain the subsequent proceedings in, or based upon, said cause; and that'such want of jurisdiction is now presented in this record. The decree of the Circuit Court is reversed. Reversed.