FARMERS' LOAN:&: TRUST CO. fl. HOUSTON & T. C. RY. CO.
115
The act of congress provides that,if it shall appear to the satisfaction of the court at any time after a suit brought or removed fnto this court that such suit "does. not really and substantially involve a dispute or the court shall proceed no controversy properly within its further, but shall dismiss the suit or remand it. In obedience to this injunction of the statute, this cause must be dismissed. DUNDY,
J., concurs.
FARMERS'LoAN
& TRUST CO.
t7. HOUSTON
& T. C. Ry. Co. et ale
(Oircuit Ooun, E. D. Texas. October 20, 1890.) FORBCL08URII OP MORNAGES-JmtISDICTION-PARTIES-SUBSTITUT!i:D SERVIQB.
Wbere a railroad whicb is in lobe bands of a receiver appoinWd b! a Uniwd States circuit court is sold under a decree of foreclosure to satisfy a jUDlOr deed of trust, and, wbile lobe property is still being administered by the coun through its receiver, suitis brougbt in the same court against the company by the trustee in the elder deed oftrnst to foreclose it, the court having jurisdiction of the sUbject-matter bas autbority to make the purchaser under the first foreclosure sale, which was made subjeQt. to tbe prior deed of trust, a party defendant, and to order substituted servo ice of. process upon him, notwithstanding the fact that he is a citizen of the same state as coIllplainant.
In Equity. Motion of George E. Downs. to set aside substituted service of process. WiUu, .Volt &- BaUinger, for complainant. .Rou8e &- Grant, for defendant Downs. PARDEE, J. In the case of Nelson S. Easton and James Rintoul, Trustees, and The Farmer8' Loan&- Trust Company, Trustee. vs. The HfJ'U&ton &- Texa8 Oentra,l Railway Company, a decree was rendered on the 4th day of May, 1888, for the sale of the Honston & Texas Central Railway, including that division of said railway known as the "Waco & Northwestern Division." The decree directed this particular division (Waco & Northwestern) to be sold in satisfaction of a deed of trust carrying a lien upon the property subsequent in date toa deed oftrust held by the Farmers' Loan & Trust Company, upon which last deed of trust this proceeding is based. The aforesaid decree ordered the sale to take place subject to said prior deed of trust to the Farmers' Loan & Trust Company;and the sale was so thereafter made, the present mover, Downs, becoming the purchaser. The sale under the decree aforesaid was alterwards con.firmed by the court, and the deed passed to the purchaser, which deed stated that it was made subject in all respects to the lien of the first mortgage in. {avorof said Farmers? Loan & Trust Company. At the time the decree aJoresaid was rendered, and the sale made thereunder, and at the time the Farmers' Loan & Trust Company, trustee, inStituted the present suit to foreclose the first mortgage upon the Waco &
116
FEDERAL REPORTER,
vol. 44.
\,
Northwestern Division, and at the time of substituted service upon Downs, the said Houston & Texas Central Railway, including the Waco & Northwestern Division, was in the hands of a receiver appointed by this ,court in the case of Easton and Rintoul et at. VB. The Houston eXTexas Central Railway Company, which receiver was holding and managing the said property under the orders of this court. The present suit was instituted against the Houston & 'fexas Central Railway Company as the only party defendant to the suit. By subsequent amendment, it was prayed that Downs be made a defendant also, as the purchaser of the property under the decree and proceedings aforesaid. On December 3, 1889, it being made to appear to the court that this suit is one commenced to enforce a lien upon real and personal property within the jurisdiction of the court at the time of the institution of the suit, and that the defendant George E. Downs is not an inhabitant of, or found within, the eastern district of Texas, but that he is a resident citizen of the city of Brooklyn, N. Y., an order was issued requiring said Downs to appear and plead to the suit. And this order having been served UpOIl him, he appear at the time appointed and pleaded that, at the date of the filing of the complaint, he was, and still was, a citizen of same state as the complainant, to-wit, the state of New York, and could not be impleaded in the cause, this court being without jurisdiction iJ;l the premises;i:tnd thereupon obtained an order staying proceedings until the questions presented could be passed upon. That this court had lawful jurisdiction for the foreclosure of the mortgages, for the satisfaction of which the sale was made under which Downs bought, is not disputed. That such sale was ordered, and the deed to Downs made and accepted by him expressly reserving the rights to the complainant, is equally clear. It is not denied that the property was in the lawful custody of this court, which was administering it through a receiver appointed in the case of Easton and Rintoul vs. The Houston eXTexas Central Railway Company when this present suit was commenced. It is not suggested that Downs is not a necessary and proper party to the present suit. It is clear that he could voluntarily make himself a party for the protection of his rights,and that without ousting the jurisdiction of the court. The question then to be determined at this time iswhethel', under the circumstances of this case as statod, the court has authority to mq,ke Downs a party defendant, and direct substituted service of process upon him. If the court has jurisdiction over the property and over Downs, there can be no question of the right to substituted service under the eighth section of the judiciary act of 1875. That it has jurisdiction of the property and of Downs' rights therein, notwithstanding the said Downs is a citizen of the same state as the complain.. ant, presents a question that has been affirmatively decided by the supreme court of the United States in a number of cases. See Co. v. St. Paul (',c., 2 Wall. 609; Bank v. Calhoun, 102 U. S. 256; Krippendorj v. Hyde, 1l0U. S. 276,4 Sup.Ct.Rep.27; O>vell v. Heyman, 111 U.S.176, 4 Sup. Ct. Rep. 355. For these reasons it is ordered that the motion of George Eo Downs of January 22, 1890, be denied, and that the order of
GEORGE V. ST. LOUIS CABLE &; W. RY. CO.
117
said date staying proceedings i,n said cause, so far as they should affect said Downs, be vacated, and that 'the said Downs be ordered to plead, answer, or demur to said bill of complainant within 20 days from this date.
GEORGE
et al. v. ST.
LoUIS CABLE
& W. Ry. 00.
(Oircuit Court, E. D. Missouri, E. D. September 28, 1890.)
1.
CREDITORS' BILL-DISTRIBUTION Oll' PROCEEDS-LIEN Oll' TAXES.
Where the federal courts have appointed a receiver of tho property of a judgment 4ebtor in Missouri, and have ordered the property sold, and the receiver has been in possession thereof during the time when a levy might have been made thereol!l ; for taxes on the personalty, the court will direct the payment of such taxes out of the proceeds of the sale in preference to all other claims, though the sale was ordered to be made "subject to all liens for taxes," as taxes on' personalty are not a lien thereon until levy under the tax-bill, in Missouri. But as the state has a paramount lien for taxes on realty, and the sale was subject thereto, such taxes will not be ordered paid out of the.proceeds.
2.
SAME.
8.
SAME-WHO MAY SHARE IN :PISTRIBUTION.
Where the proceeds of a sale of a debtor's property on judgment creditors' bill are insufficient to pay the judgment creditors, and there has previously been no application to the payment of judgment creditors of any of the debtor's property which should have been applied to the payment of open accounts, the holders of such accounts cannot participate in the proceeds of the sale. Where a bill to reach property which cannot be effectively reached at law is filed by certain judgment creditors for the benefit of all judgment creditors of defendant. and no order is made requiring others to intervene by a certain time or be barred of their rights, all judgmeut creditors who choose to intervene may share ratably with complainants in the proceeds of a sale of the property, even though some do not intervene until after the interlocutory decree ordering the sale. lt does not alfect the right of snch subsequent intervenors to share ratably that the bill prays that after a sale the proceeds may be distributed among the persons in whose behalf the suit is brought "according to their respective rights and equities, "where the original complainants and prior intervenors had no prior lien on' all the property sold when the bill was filed.
4.
SAME-INTERVENTION.
.5.
In Equity. On the 17th of October, 1889, three non-resident judgment creditors .of the St. Louis Cable & Western Railway Company filed a bill in behalf .of themselves and all other judgment creditors against the railway company, to obtain the appointment of a receiver of the judgment debtor's property, and a decree for the sale of the same for the payment of their debts, according to the respective rights of the several creditors, as they might be adjudged. The bill stated, in substance, that the defendant companyowned a railroad extending from a point within the city of St. Louis to Florissant, in the adjoining county of St. Louis; that it was largely in,debted and insolvent, owing, among other debts, a debt of $1,000,000, which was secured by a mortgage lien on all of the defendant company's rights, property, and franchises; that the complainants had no adequate Ie;gal remedy to reach and sell the property of the company, because its road, was located partly in the city and partly in the county of St. Louis, 81ld,