RUST v. UNITED WATERWORKS CO., Limited, 70 F. 129

SANBORN, Circuit Judge (after stating the facts). Before considering the merits of this case, it is necessary 1o dispose of a preliminary question. The defendant in error challenges th-e jurisdiction of this court to hear and de termine the questions presented’ by the assignments of error. It moves to dismiss the writ of error on four grounds. 1.

Because the jurisdiction of the court below to render the judgment against the American Waterworks Company, which the plaintiff in error, the receiver of that company, sought by his petition to vacate and to defend against, was in issue at the hearing below, which resulted in the judgment" denying the prayer of the petition, and it maintains that this question of jurisdiction can only be reviewed by the supreme court of the United States.

But the plaintiff in error, by the allegations in his petition, placed his claim for an order vacating the judgment against the American Waterworks Company, and permitting him to answer for that company, on two .grounds: That the court had no jurisdiction to render the judgment; and, if it had, that the judgment was obtained by collusion, in fraud of the rights of the corporation and of the plaintiff in error, and that they had a meritorious defense to the action, which he ought to be permitted to interpose.

The judgment below denied him relief on either of these grounds, and the latter did not necessarily involve any question of jurisdiction. When a final judgment or decision has been rendered in a district or a circuit court of the United States, the party against whom it is rendered may elect to take his writ of error to the supreme court, upon the question of jurisdiction alone, or to- the circuit court of appeals, upon the whole case.

When he chooses the latter course, the circuit court of appeals lias jurisdiction to determine the question of the jurisdiction of the court below, as well as all other questions in the case properly presented to it for consideration. McLish v. Roff, 141 U. S. 661, 668, 12 Sup. Ct. 118; Crabtree v. Madden, 4 C. C. A. 408, 410, 54 Fed. 426; Crabtree v. Byrne, 4 C. C. A. 414, 54 Fed. 432; Sugar-Refining Co. v. Johnson, 9 C. C. A. 110, 60 Fed. 503; Sugar-Refining Co. v. Tatum, 9 C. C. A. 121, 60 Fed. 514. 2.

Because the judgment which denied the prayer of the petition of the plaintiff in error was not a final judgment or decision. But that judgment denied the plaintiff in error all relief in the action in which he filed his petition, and finally determined all his rights therein.

A final decision, which completely determines the rights, in the suit in which it is rendered, of some of the parties, who* are not claimed to be jointly liable with those against whom the suit is retained, and a final decision which completely determines a collateral matter distinct from the general subject of litigation, and finally settles that controversy, is subject to review in this court by appeal or writ of.error. Standley v. Roberts, 8 C. C. A. 305, 59 Fed. 836; Central Trust Co. of New York v. Marietta & N. G. Ry. Co., 1 C. C. A. 116, 48 Fed. 850; Grant v. Railroad Co., 1 C. C.

A. 681, 50 Fed. 795; Potter v. Beal, 2 C. C. A. 60, 50 Fed. 860; Jacksonville, T. & K. W. Ry Co. v. American Construction Co., 6 C. C. A. 249, 57 Fed. 66; Withenbury v. U. S., 5 Wall. 819; Williams v. Morgan, 111 U. S. 684, 4 Sup. Ct. 638; Hill v. Railroad Co., 140 U. S. 52, 11 Sup. Ct. 690; Forgay v. Conrad, 6 How. 201, 204; Bronson v. Railroad Co., 2 Black, 524, 529; Thomson v. Dear, 7 Wall. 342, 345; Trustees v. Greenough, 105 U. S. 527. 3. Because the plaintiff in error was not a party to the action in the case of the United Waterworks Company v.

The American Waterworks Company, in which the judgment was rendered by default against the latter company, and therefore was not entitled to a writ of error to review that judgment. But the plaintiff in error was a party to his own petition for the vacation of that judgment, and for leave to defend that suit, and to the judgment which dually denied him any of that relief, it is the latter judgment which he seeks to review, and that he is entitled to have reviewed by this court through this writ. 4.

Because the plaintiff in error, a receiver, .appointed by a court: of the state of New Jersey, has no authority to prosecute a writ of error in this court to review a judgment against the corporation for which he was appointed receivin'. But it is not the judgment against the corporation, but the judgment against himself, as we have said, that he seeks to review by tins writ. The motion to dismiss the writ cannot be sustained on any of these grounds, and it is denied. Counsel for the defendant in error interpose another objection to the consideration of the merits of this casi*.

It is that the appointment of’the plaintiff in error as receiver of the American Waterworks Company, and as trustee for its stockholders and creditors, \vas without force, beyond the jurisdiction of the chancery court of New Jersey, which appointed -him, and hence that he was without power to sue or to defend suits for that corporation in the courts of Colorado. lie cites in support of this position Booth v. Clark, 17 How. 322, 328; Second Nat. Bank v. New York Silk-Manuf'g Co., 11 Fed. 532; Wilkinson v. Culver, 25 Fed. 639; Hazard v. Durant, 19 Fed. 471; Olney v. Tanner, 10 Fed. 101, 104; and like cases.

But this objection begs the question at issue.

The question before the court below was not whether or not, without its order or permission, the plaintiff in error had the power or the authority to defend the action against the American Waterworks Company, hut whether or not, upon the facts disclosed by his petition and the answer to if, that court ought to give him permission and authority so to do. .It goes without saying that the court below lmd the power, upon the presentation to it of the decree of the court of chancery of the state of New Jersey appointing the plaintiff in error the receiver of the’properly of this insolvent corporation, and the trustee for its creditors and stockholders, to appoint him a receiver and trustee, with, the same powers, in the district of Colorado, and to authorize him to sue for, and to defend suits against, the waterworks company in that district in the name of flu; corporation, or in his own name.

This power was exercised in this very receivership by Judge; Caldwell, in the eircuit court of the; United State's for the; district of Nebraska. The whole is greater than any of, and Ineiudes all, its parts. If the; e:ourt. belervv Intel authority, em the' applieuifion of the plaintiff: in error, to allow and authorize; him to elefeaiel all actions against the American Waterworks Company, it had the; jurisdiction and power to permit him, on his applie-atiem, te; eleiemd the single’ actiem here; in question. This objection is untenable;.

It probably was nor very much relieal upem, for it eloes not appear to have; been maeie or considea-ed in the court below. The record eliscleese's the fact that counsel for plaintiff in error answered to the merits of the petition in that court without raising this objection. We turn to the merits of the case.

May the officers and attorneys of an insolvent corporation, who had been enjoined from exercising any of its powers or franchises, and from using its name, for any purpose whatever, by a court which had jurisdiction of the corporation and of its property, and which had appointed a receiver of the corporation, and a trustee for its creditors and stockholders, and issued such an injunction in the state of its incorporation, pursuant to the statutes under which it was incorporated, lawfully confess a judgment against it in another state, or so act on its behalf that such a judgment may be obtained by default?

The principles in accordance with which this question must be answered are nowhere more clearly and concisely stated than by Chief Justice Waite in the opinion of the supreme court in Railway Co. v. Gebhard, 109 U. S. 527, 537, 3 Sup. Ct. 363, where he says: “A corporation ‘must dwell in tlie place of its creation, and cannot migrate to another sovereignty’ (Bank v. Earle, 13 Pet. 588), though it may do business in all places where its charter allows and the local laws do not forbid (Railroad v. Koontz, 104 U. S. 12).

But wherever it goes for business it carries its charter, as that is the law of its existence (Relfe v. Rundle, 103 U. S. 226), and the charter is the same abroad that it is at home. Whatever disabilities are placed upon the corporation at-home, it retains abroad, and whatever legislative control it is subjected to at home must be recognized and submitted ,to by those who deal with it elsewhere. A corporation of one country may be excluded from business in another country (Paul v.

Virginia, 8 Wall. 168), but, if admitted, it must, in the absence of legislation equivalent to making it a corporation of the latter country, be taken, both by the government and those who deal with it, as a creature of the law of its own country, and subject to all the legislative control and direction that may be properly exercised over it at the place of its creation.

Such being the law, it follows that every person who deals with a foreign corporation impliedly subjects himself to such laws of the foreign government, affecting the powers and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes." The statutes of New Jersey, under which the American Waterworks Company was incorporhted, then, constituted its charter, granted its franchises, limited their duration and extent, and provided how and by whom they should be exercised.

These statutes provided that these franchises should be exercised by’ its directors and other officers and agents chosen by the corporation itself until it should become insolvent, but that when it became insolvent, and the court of chancery in New Jersey so ordered, all of these officers and agents should cease to use its franchises and its name for any purpose whatever, and a person appointed by that court as the receiver of the property of the corporation, and' as trustee for its stockholders and creditors, should succeed to its property, and to the right to act for the corporation.

The effect of these statutes was to limit the. time within which the officers and agents chosen by that corporation might exercise its franchises and privileges to the period anterior to the issue of the injunction by the chancellor restraining them from so exercising them in accordance with the provisions of those laws. Every officer, attorney, and agent of that corporation was charged with knowledge of this limitation, and took his authority and power subject to it. When, in February, 1892, Clarence II. Vernier, as vice president of the American Waterworks Company, employed Messrs.

Teller & Orahood to appear for that corporation in its lawsuits in Colorado, that limitation conditioned his power to employ them, and llieir authority to act for the corporation.

When, on July 20, 1892, the court of chancery of New Jersey appointed the plaintiff in error receiver and trustee, and, pursuant to the statutes of New Jersey which were the law of its being, enjoined “its officers, directors, agents, and attorneys * ⅞ from continuing its business, or exercising any of the franchises and privileges of its charter, * * or attempting 1o use its name and its privileges and franchise's, for any purpose whatever,” it fixed a limit of time to their authority to act on behalf of this corporation.

The charter of the corporation as effectually limited the powers of these officers and agents to the time anterior to the issue of this injunction as if it had expressly declared that they should not, have or exercise these powers subsequent to July 20, L892. Vernier was in court, contesting the application for the appointment of this receiver, when this injunction was granted. Teller & Oialiood were fully advised of this action of the court: of chancery of New Jersey long prior to August, 1891.

The inevitable result is that the authority of Teller, Orahood & Morgan to appear in court, for, or to use the name of, the American Waterworks Oompany of New Jersey, in any lawsuits in the stale of Colorado, for or -against it, had expired, by virtue of this limitation in the charter of the corporation, long before they entered tlieir appearance for it, on August 18, 1894, in the action of the United Waterworks Oompany against that corporation, and that action and judgment stand as though no such entry had ever been made.

In the absence of statutes in other jurisdictions modifying them, the grants and limitations of the franchises of a corporation, and of the powers of its officers, attorneys, and agents, contained in the general laws of the state under which it is incorporated, constitute the law of its exist (‘lice, go with it into every jurisdiction in which it is permitted to act, as a corporation, and there govern and limit those franchises and powers to the same extent as in the place of its creation. Relfe v. Rundle, 103 U. S. 222, 225; Railway Co. v. Gebhard, supra; Parsons v.

Insurance Co., 31 Fed. 305, 308, 309; Bockover v. Association, 77 Va. 85. How do this action and judgment stand, then, when stripped of the attempted appearance of the American Waterworks Company by these attorneys? The defendant, in error alleged in the complaint in that action that it was a, corporation organized under Hie laws of the state of New York, and that the American Waterworks Oom-pany was a corporation organized under the laws of the state of New Jersey.

In its answer to the petition of the receiver of the American Waterworks Company, it; attempted for the first time to show that the latter company was also a corporation of the state of Colorado.

This endeavor rests upon the facts that in 1891 a corporation of Colorado and a corporation of Illinois sold and conveyed all their property to the American Waterworks Oompany of New Jersey, and the latter complied with the statutes of Colorado relative to foreign corporations by filing with the proper authorities of that state-its certificate of incorporation, a copy of the laws of New Jersey under which it was incorporated, and a certificate that its principal place of business in Colorado would be at Denver, in that state, and that a certain resident of Colorado was designated as its agent to receive service of process for it.

The effect of the sale of the property of the two corporations to the plaintiff in error was to consolidate their property in the control of the latter, and the claim is that this consolidation made the latter a corporation of Colorado, by virtue of

section 14, art. 15, of the constitution of that state, which provides: “If any railroad, .telegraph, express or other corporation organized under any of the laws of this state,. shall consolidate, hy sale or otherwise* with any railroad, telegraph, express or other corporation organized under any laws of any other state or territory, or of the United States, the same shall not thereby become a foreign corporation, but the courts of this state shall retain jurisdiction oyer that part of the corporate property within the limits of the state in all matters which may arise, as if said consolidation had not taken place.” 1 Mills’ Ann.

St. Colo. 1891, p. 359. This claim is. late, and it is futile. The only effect of this constitutional provision was to retain in Colorado the citizenship of the corporation originally organized under its laws, which entered into the consolidation, and to retain jurisdiction over the property which it had in that, state, for the purpose of securing the rights of its creditors and stockholders.

The provision is that the corporation originally organized under the laws of Colorado “shall not become a foreign corporation,” and not that its successor, organized under the laws of. another state, or any other foreign corporation, shall become a corporation of Colorado. This was evidently the view of this question which the officers of the American Waterworks Company took when they qualified the corporation to do business in Colorado.

It was the view taken by counsel for the defendant in error when it brought this action, and we have no doubt it is the correct view When this action was brought, then, the plaintiff was a citizen of New York, the defendant was a citizen of New Jersey, the action was brought in the circuit court of the United States for the district of Colorado, and the only ground of jurisdiction was the diverse citizenship of the parties.

The act of congress of March 3, 1887, as corrected by the act of August 13, 1888 (24 Stat. 552, c. 373; 25 Stat. 434, c. 866), provides that: “No person shall be arrested in one district for trial in another in any civil action before a-circuit or district court; and no civil suit shall be brought before either of said courts against any person by any original process or proceeding in any other district than that whereof he is an inhabitant, but where the jurisdiction is founded only on the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.” Supp.

Rev. St. pp. Oil, 012.' Under these -acts of congress, a corporation organized in one state only cannot be successfully sued in the circuit court of the United States for any other state than that of its incorporation, except by a citizen of the former state, unless it waives its privilege by a general appearance, or equivalent action. Shaw v. Mining Co., 145 U. S. 444, 12 Sup. Ct. 935; Southern Pac. Co. v. Denton, 146 U. S. 202, 13 Sup. Ct. 44; Railway Co. v. Pinkney, 149 U. S. 194, 13 Sup. Ct. 859; Express Co. v. Todd, 5 C. C.

A. 432, 56 Fed. 104, The American ■Waterworks Company never entered any appearance in this action, or in any way waived its privilege of compelling this suit to be brought in the stale of its incorporation, and that was a fatal objection to the maintenance of this action in Colorado. Moreover, the service of the summons in this action on C. 31. Tenner, the vice president and a stockholder of the American Waterworks Company, was insufficient to give; the court below jurisdiction to enter judgment, against it in a personal action.

The statute under which this service was made reads: “If the action he against a foreign corporation or joint stock company or association, organized under tlio laws of any other state or territory, and doing business within this state, the summons shall he served by delivering a. copy of it to any agent of such corporation, company or association found in the county in which 1lio action is brought. If no such agent ho found in such county, then l>y delivering a copy of the summons to any stockholder who may he found in such county.” Sess.

Laws Colo. 1891, p. 82, § 1. •The record discloses the tact that the American Waterworks Company was not at the time of the attempted service upon Venner, and liad'not been, doing business in Colorado for many months, so that the authority to serve the summons on this corporation was not given by this statute. Again, O. H. Tenner was a resident of the state of New York, temporarily in the state of Colorado, without any authority to act for this corporation in any manner whatever.

In a personal action against the corporation, brought, in a state in which the corporation is not incorporated, in which it does no business, and in which it has no agent, and jn which no property is seized, service of a summons upon an officer of the corporation temporarily within the jurisdiction is futile. Goldey v. Morning News, 156 U. S. 518, 15 Sup. Ct. 559.

The result: is that the receiver of the property of the American Waterworks Company, the trustee for its creditor's and stockholders, the successor to its rights and interests under the provisions of its charter, proved to the court below that a judgment had been rendered against that corporation for* $118,512.50, without a legal service of any summons or notice upon if, in a court in which tire defendant in error was forbidden by

an act of congress to sue it, and prayed that the execution upon the judgment might be stayed, that the judgment might be set aside, and that he might be admitted to specially or otherwise plead and .prove these facts, and such other defenses as the corporation had to this action. These facts furnish ample grounds, in our opinion, to entitle the plaintiff in error to the relief sought by his petition. The judgment which denied it must accordingly be reversed, with costs, and the case remanded, with directions to grant (lie relief prayed for in the petition, and it is so ordered.