FIDELITY

TRUST &: SAFE-DEP. CO. V.NORFOLK &: W. R. CO.

815

tlon of counsel for the for leave to amend the ·petltfPIl by inserting certain allegation$ in respect to the citizenship of the parties. . The averments of the petition in this' regard were as' fol1bws: "The petition of Harriet Barker, widow of J. W. Barker, who resides in the city of New Orleans, respectfully represents: That the Preferred Accidllntilnsurance Company, of N.ew York, a corporation organized under the laws of, the state of New York, and domicUed in the city of New York, but here present In this district by an agent,-Franke Watson,-who is authorized to accept service of legal process, and to stand in judgment for Sliid corporation, rs required by the constitution and laws of the state of Louisiana, is legally and justIl' indebted," etc.

Hewes T. Gurley, for plaintiff in error. S. Wolff, for defendant in error. ;Before, PARDEE and McCORMICK, Circuit Judges, and SWAYNE, District 'Judge. PER CURIAM. The motion of counsel for defendant in error for leave to amend the petition filed in the court below by inserting that the plaintiff below was at the time that this suit was instituted, andis now, a citizen of the state of Louisiana, and the defendant was at that time, and is now, a citizen of the state of New York, is denied. The amendment proposed is one of substance, and presents an iSliluable fact, which cannot be traversed in this court. The motion presented is a confession of error; and as, upon an inspection of the record, the jurisdiction of the circuit court does not appear, it is ordered and adjudged that the judgment of the circuit court be, and the same is, reversed, and the cause is remanded, with instructions to dismiss the suit, unless, by a proper amendment, the jurisdiction of the circuit court shall be made to appear.

FIDELITY INSURANCE. TRUST & SAFE-DEPOSIT CO. W. R. co. (Circuit Court, W. D. Virginia. 1.

T.

NORFOLK &

July 2, 1898.)

RAILROAD RECEIVERS-l<'ORECLOSURE-:r'RANSFER TO PURCHASER-LIABILITY FOR

a.

A foreclosure decree provided that the purchasers should be let Into possession on the execution and delivery of deeds by the special masters making the sale, and that they should take the property subject to all liabilities incuned by the receivers, which liabilities should be detel1llined and enforced by the court ordering the sale. The receivers In fact remained in possession for six days after delivery of the deeds, during which period a liability arose for negligent operation of the road. Held, that the delivery of the deeds did not, in law, effect an immediate transfer of possession, so as to make the purchasers directly responsible for such negligence, nor could the receivers be considered as operating the road as their agents, but that such liability was one arising dUring the receivership, which could only be enforced by the federal court under the terms of the decree.

JURISDICTION OF FEDERAL COURT-ENJOINING PROCEEDINGS IN STATE COURT.

Where a federal court by Its decree of sale retains jurisdiction of a foreclosure proceeding so far as to detel1lline and enforce, against the property sold, claims for liability Incurred by the receivers, it may enjoin the prosecutioll of an action on such a claim in a state court without violating Rev. St. § 720,:which inhibits granting an injullction to stay proceedlD.gs 111 a state court.

816

.H,

88 ,FlllDERALREPORTlllR.

William A.. ',4.iJderson andO. B. Guyer, for respondent.
,1"

M. Pendleton,.for .Qetitiorier. ,

'PAUL,District Judge., In this cause the petitioner, the Norfolk &; Railway Comp3..llY, heretofore filed its petition praying for an jnjunction against BaXter Lilly, to restrain said Lilly from prosecuting an action at law instituted by him against said petitioner in the corporation court of the city of Buena Vista, Va., to recover damages for injury to his property; ,alleged to ,have occurred by reason of the negligence of said railway compap.y, ,by permitting a, certain water and impeded by the. embankment and roadbed of saId raIlway' company,and by not havlDg an adequate outlet for such water course. A temporary restraining order was granted IlY this court, enjoining said Lilly from further proceeding with his suit fn thestitte court. The defendant Lilly demurs to the petition on tlie following grounds:
, "(1), That, by, the terms of the decree confirming the sale, the receivership, and the possession of the receivers as the representatives of this court, terminated with the making and' delivery of the deed unreservedly conveylI'g the elJJtlre property of the Norfolk & Western Railroad Company to the Norfolk & Western Railway Company, thereby constituting the latter company the absolute owner of said property. (2)';I'hut from the Instant of the ddivery of said deed the title and control of 'the property was, as a question of law and of fact, vested absolutely In the grantee, and the jurisdiction of this court In the suit for which the sale was made finally at an end In respect to the control of the property conveyed, and as to all transactions and rights arising In respect to that property. (3) That It does not appear from the record that this court Intended to extend Its jurisdiction, or to retain the control and custod:JT of the property sold and conveyed, heyond the moment of the conveyance consummated. On the contrary, the decree expressly limits the possession of the receivers, as SUCh, until the conve;yance to the purchaser, his successors or assigns, in the following explicit language: 'Until the conveyance to the purchaser, his successor or assigns. of the mortga:;ed premises, railroad property, and franchises sold under this decree, the receivers shall continue in possession thereof, and to discharge the duties Imposed np n them by the order of their appointment, with the rights and powers thereby conferred.' (4) That the receivers had no right or power under said decree to retain possession and control of said property for a moment after the comp'etion 9f the conveyance. If they did so, it was as the agents and ot the and not of the court. It was merely for the convenlpnce Of the purchaser that the formal transfer of the po;;session was postponfd till September 30, 189G. In contpmplation of law, the rE'81 transfer of the poss'ession took place Instanter with the delivery of the deed to the purchaser. In such case, 'possession follows the title.' If It was In the powpr of the receivers to prolong the receivership and extend their control apd custody of the property for six days, It was In their power to do this for six munths, or anylonger period. They could only retain the pORsess[on at all :lfter the conveyance with the consent of the pUrchaser, and as his agent In law and In fact. 'I'lleir possession after September' 24. was the posse;;slon of the Norfolk & Westel'n Hallway Company. (5) 'l'his comi: did not by Its decree of confirmation undertake to prolong its control and custody of the p"operty sold beyond the consummation of the sale and transfer of the ra lro;ld property by the completion of the conveya'nce, and, If Its decree cou'd hear such construction, it would be, in such particular, erroneons and Inoperative. (G) To place such a construction upon the decree w'ould be to render nugatory the ,Provisions of the constitution and laws of the United States whIch give to the state conrts exclusive original jurisdiction of all snits between citizens of the" state, by undertaking to compel a citizen of Virginia, who has a cause of action against the Norfolk & Western Railway Company, to assert

FIDELITY INSURANCE, TRUST &: SAFE-DEP. CO. V. NORFOLK'" W. R. 00.

817

his demand In the federal court. (7) The prayer of the petition Is In contravention of the Inhibition of the judiciary act of 1793 (Rev. St. U. S. § 720): 'The writ of Injunction shall not be granted by any court of the United States to stay proceedings in any court of a stllJte except where such Injunction may be authorized by any law relating to proceedings In bankruptcy.' The allegation of the petitioner that the demurrant has sued the wrong party-that his suit should have been brought against the receIvers, and not against the petitioner-is no answer to this. If true, that would be an ample defense to the suit In the state court. But it cannot be availed of by this collateral proceeding, by Invoking the writ of InjunctIon from this court, Without violating the explicit prohibition of the act of 1793. That defense, In a suit like the one enjoined, between two citizens of VirgInia, can only be rightfully and properly asserted by way of direct defense to that suit In the Virginia forum. (8) The fact that this court retained jurisdiction of the case for the purpose of enforcing the terms· of the decree of saie for the benefit of any claimants against the receivers does not justify the extension of that jurisdiction to a party who Is asserting no claim against the receivers. who Is not claiming the benefit of the lien retained under the terms of sale, but who Is suing the Norfolk & Western Railway Company upon a cause of aetlon which has arisen between these two parties after said railway company had become the actual and the only responsible owner of the property."

The petition shows the following state of facts: In February, 1895, receivers were appointed of the Norfolk & Western Railroad Company in a foreclosure suit brought by the Fidelity Insurance, Trust & Safe-Deposit Company. A decree of sale of the railroad property was entered on the 2fith day of June, 1896; and on the 16th day of September, 1896, a deed conveying the same to the Norfolk & Western Railway Company (which will hereafter be styled the "Railway Company") was executed and delivered, and the Railway Company took possession thereof at midnight on the 30th day of September, 1896. 'fhe injury of which Lilly complains, and for which he brings in the state court his suit for damages, occurred on the 29th day of September, 1896. The decree of sale contained a provision, very common in decrees of sale of railroad property, as to the payment of existing liabilities against the receivers. It is as follows:
"The purehaser shall, as part consideration for the rallrol1d propprty and franehises purchase(l, take the same and receive the deed th"rf'for upon the express condition tllat. to the extent that the assets or proeeeds of a-sets in the receivprs' hands not sulljPct to llny otlwr lien or charge shall be insnffjejent, sueh purehal'pr. his suecef-sors or shall pay. satl"fy, and discharge (ll) any unpaid eompensatioll which sllllil be allowe.l the co'rt to the l'eeeivpl's: (b) any inrlelltedness llnd oblig-ations or liabilities wldcll have bepn contraeted or ine11lTPd by the recelvf'l's. before dpIivpry of of the property sold, in the management, operation, use, or preservatlun thereof.

. . ."

The decree further provides:

"'The purehasel' of sueh railroad property and franchise shnll also take the same subject to the performance by him or his suceessors or a··s gns of all pending contracts in respect thereof theretofore lawfully made by the receivers. In the event that the purehaspr of said railroad pl'opprty anrl fr'lnchises, his successors or assigns, after demand made, shall refuse to pay any of the before-mentioned indebtedness or liabilities, the perSlJn hol.liug the claim therefor, upon fifteen days' notice to such purchaser and his snccessors a.nd assigns, may file his petition In this court to have such claim enforcPd against the property sold, in accordance witrl the usual practice ot the court In relation to claims of similar character; and such purchaser and his suecesso::-s and assigns shall have the right to appear and make defense to any 88 F.-52

81$

I,

88 FEDERAL REJ'ORTER.

",

..

:..

'

"j

claim; debtl<bll'dainll.,nd so Bought to beentorced, and any sllall have right to appeal from' "any judgment, decree, or order made therein. " For the PUfp&8e of" etIforcing the foregoing provisions of the ot this 'cause, :isretaJned by this court; and the court retains :the right to retake and resell said property In, case such purchaser or hi,S successors or assigns shall fail to comply with any order of the court in respect to the payment of such' prior indebtedness or liabilities within thirty daJ's after service of a copy of such order." '

The decrel;! provides .for notice in the newspapers of certain towns, 'calling upon the holders of any such claims as are directed to be paid to present theeame for allowance or payment; those not witbiri.,six months after first publication of such notice to be ,disallowed. Xn the decree; i(was further ordered:
'''Upon pa:yment of the purchase price bid by the purchaser or purchasers, or upon maklng such provision as the court shall approve for the payment thereof, the said special masters shall execute proper deed or deeds conveying and assigIiing' the property purchased to such purchaser, or his successors or assIgns;' arid upon tl1e execution 'and delivery of such deed or deeds the grantee therein shall be let into possession of the premises conveyed, and the receivers shall deliver any of the premises sold which may be In their possession over to the purchaser, his successors or assigns, together with any property and net income acquired or received by the receivers since the commencement of this suit, and up to the date of such delivery of possession, In the management or operation of the mortgaged premises embraced in such conveyance, subject nevertheless to the condition that the court may retake and resell all or any of said property in case the purchaser thereof, his successors or sasIgns, respectively, shall fail to pay any balance of the purchase price remaining unpaid by him or them, or to comply with any order of this court with respect to the payment of the prior Indebtedness, obligations, and liabilities as hereinbefore prOVided, within thirty days after the service of copy of such order. Until the conveyance to the purchaser, his successors or assigns, of the mortgaged premises, raIlroad property, and franchises sold under this decree, the receivers shall continue In possession thereof, and to discharge the duties imposed upon them by the order of their appointment, with the rights and powers thereby conferred. They will keep a correct account of the earnings and income of the premises. accruing after the date of sale; and, if the same should be confirmed, the purchaser, on delivery of. possession by the receivers, Will, as hereinafter prOVided, be entitled to receive the net mcome and earnings accruing subsequent to the date of sale, and the proceeds of such income and earnings. The purchaser of the saId railroad property And franchises, and his successors and assigns, respectively, after such delivery of the premises, shall hold, possess, and enjoy the same, and all the rights, privileges, immunities, and franchises appertaining thereto, as fully and completely as said Norfolk & Western Railroad Company now holds and enjoys the same, or held and enjoyed or was entitled to hold and enjoy the same at the time of the execution of the said mortgage, or at any time since; and the purchaser and his successors and assIgns, respectively, shall therenpon be entitled to have and hold the premises so conveyed free and discharged from the lien and incumbrance of said mortgage, and from the claims claIming under them, save only as of all other parties to this suit, and hereafter shall be adjudged to be prior, in lien or superior In equity to said mortgage, and which, as he'reinbefore provided, the purchaser may be reqnired to pay in addition to the purchase price bid."

. The of the petitioner, the Railway Company, is that the claim of Lilly is one arising JInder this provision of the decree of sale, to wit: "The purchaser shall, as part consideration for the railroad property and franchises purchased, * * * pay, satisfy, discharge *, * * (b) any indebtedness and obligations or liabilities which shall have been contracted Or incurred by the re-

FIDELITY INSURANCE, TRUST & SAFE-DEP. CO. V. NORFOLK & W. R.

00.,819

. ceivers before deHvery of possession of the property sold, in the ,management, operation, use, or preservation thereof." It is claimed that, notwithstanding the property was sold on the 16th of Septem· bel', 1896, the sale confirmed, the deed of conveyance executed and delivered to the purchaser on the 24th of September, 1896, and al· though the injury complained of by Lilly occurred on the 29th of September, 1896, yet this is an obligation or liability incurred by the receivers, and is part of the consideration which the purchasers agreed to pay for the railroad property and franchises. The rail· way company insists that this liability must be ascertained and determined"in this court. The ground on which this contention rests is the fact that though the deed was executed and delivered to the purchaser on the 24th of September, 1896, the receivers did not deliver possession of the property to the Hailway Company until mid· night oh the 30th day of September, 1896. The defendant insists that the deliver.y of the deed of conveyance on the 24th of September, 1896, carried with it, and vested in the Norfolk & Western Railway Company, the possession and control of said railroad, and that the damage complained of having occurred subsequent to the execution and delivery of the deed to the purchaser, the Railway Com· pany, that company is liable for the damages claimed. The defendant urges that it was clearly in contemplation of the court to limit the time in which possession and control of the property should rest in the receivers to the time of the execution and delivery of the bond; that this is shown by the following provisions in the deed of sale:
"Upon the execution and delivery of such deed or deeds, the grantee therein shall be let into the possession of the premises conveyed, and the receivers shall deliver any of the premises sold which may be In their possession over to the purchaser, his successors or assigns, together with any property and net Income acquired or received by them since the commencement of this suit, and up to the date of such delivery of possession, In the manngement or operation of the mortgaged premises embraced in such conveyance. · · · Until the conveyance to the purchaser, his successors or assigns, of the mortgaged premises, railroad property, and franchises sold under this decree, the receivers shall continue in possession thereof, and to discharge the duties imposed upon them by the order of their appointment, with the rights and powers thereby conferred."

Taken in connection with other provisions of the decree, these extracts do not, in the opinion of the court, invest the purchaser with possession of the railroad property, in such sense as to make it responsible for acts of negligence occurring before it has assumed ;?ontrol and management of the property. Actual possession and control of the management of a railroad are so essentially necessary to fix responsibility for negligent conduct in its operation that these conditions cannot be met by the execution and delivery of a deed of conveyance to the purchaser of railroad property. The possession conferred by such a conveyance is not such possession as was con· templated by the decree of sale in this cause. Such a deed doubt· less gives a right of possession of the railroad property to the gran· tee, but it was actual, controlling possession that was intended by the court should be given to the purchaser before his responsibil.

820

88 FEDERAL REPORTER.

ity tor its negligent management attached, and that of the receivers ended. To have invested the purchaser of an extensive railroad system with immediate possession on the execution of the deed of conveyance would have been, in the very nature of the transaction, impracticable. In making the change from the control and management of the receivers to that of the officials of the purchasing railroad company required time, method, and orderly procedure, to the end that the public service might be conserved without derange. ment of the mails, passenger and freight trains, and the disorganiza. tion of the management and labor necessarily employed in the vari· ous departments of the railrofl,d business. There was not an unusual or an avoidable delay in the delivery of possession by the receivers; and, if there had. been, the court is at a loss to see how a failure on the part of the receivers to promptly perform their duty could fix any responsibility on the railway company. It took possession when delivered to it by the receivers, and its responsibility for acts of negligence, of commission or omission, began then. The contention of counsel for Lilly, that, during the interim of six days between the execution and delivery of the deed of conveyance and the delivery of po!'session of the railroad property, the receivers were the agents of the Railway Company, and not acting in their official capacity as receivers, cannot be maintained. There is noth· ing in the conduct of the parties, or in the facts of the case, to establish either an express, or an implied agency. The claim sought to be established in the state court against the Railway Company is a liability accruing during the time the reo ceivers were in control possession of the railroad, and must be established in the manner prescribed by the decree. The court did not surrender its jurisdiction over this class of claims, nor did its jurisdiction end with the execution and delivery of the deed of conveyance. It specifically provided in the decree of sale what liabili· ties the purchaser of the railroad property should assume as part of the purchase price therefor, and how such liabilities should be ascertained. These provisions of the decree entered into, and became a part of, the contract of purchase. The Railway Company by its pnrchase became a party to this suit. It is bound by the terms of the decree of sale, and it has a right to have them enforced in its behalf. In enforcing tbe provisions of this decree, and pro· tecting its own jurisdiction, the court does not, as contended in the second substantial ground of demurrer, violate the provision of sec· tion 720 of Revised Statutes of the United States, which inhibits the granting of an injunction to stay proceedings in a state court. The court, in granting an injunction to prevent Lilly from proceed. ing in the state court to establish a claim of which this court has jurisdiction, and so had when the suit in the state court was com· menced, is in no wifj invading the already acquired jurisdiction 'of the state court. This court is only endeavoring to protect its own jurisdiction, and to enforce its own decrees. Without this, its efficiency wOllld not only be seriously impaired, but its authority, in many cases, rendered nugatory. In Dietzsch v. Huidekoper, 103 U. S. 494,the suprerne court says:

CORNELL V. GREEN.

821

"A court of the United States Is not prevented from enforcing Its own judg· ments by the statute which forbids it to grant an Injunction to stay proceedings In a' state court."

The doctrine here announced has been followed by numerous deci sians in the federal courts. Railroad Co. v. Scott, 13 Fed. 793; Jesup 'V. Railway Co., 44 Fed. 663; Central Trust Co. v. St. Louis, A. & T. Haute Ry. Co., 59 Fed. 385; Lanning v. Osborne, 79 Fed. 657; & 1. R. Co. v. Peoria & P. U. R. Co., 82 Fed. 943. After a careful examination of the cases cited by counsel for the defendant, the court fails to find that they contravene in any respect the doctrine sustained by the authorities just cited. The demurrer will be overruled.
CORNELL v. GREEN.

(Circuit Court, N. D. Illinois. October 8, 1897.)
1.

FORECI,OSURE-PARTTES.

A foreclosure bill was brought against tbe mortgagors and their children and against "1'., B., and C., all of whom are residents, · · · and guardians of said minor .children. the said T. being also one of the exec· utOl'S of the last will of [the mortgagorl and others," "all of which persons and 'corporations before named are made defendants herein." The bill also aver:'ed conveyances fmm the mortgagor to said 1'., and that "the above-named parties against whom this bill Is brought have or claim to have some interest in the premises * * * by lllor,gage, judgment, conveyance, or otherwise," and that each and all of the defendants have nC'glecied to pay the debt. Held,. that T. was made a partJ' in his individual capacity, even though the prayer for process did not contain the names of all the parties, as required by the equity rules. Tile subpnma in a foreclosure suit was directed against the mortgagor, and "1'., B.. lIud C., guardian, etc., and '1'., executor, etc.," and recited, "\Ve commaud you, and everyone of you, to appear," and "the above-named defendants are notified that unless they, and each of them, shall enter tlwir appearance," etc. The return recited personal service "upon T. as guardian 11ml T. as executor," Held, that T. was sufficiently served in his individual capacity. A mortgage was foreclosed on the "south half" of a certain section. The master's deed recited that he sold the "south haif," and then recited: "Now, therefore, this indenture witnesseth that the said [master] * * * does convey the north haif." Held., that the word "north" is presumptively a mistake, that it may be rejeeted, and that without the substitution of any other word the deed is operative as a conveyance of the south '

2.

PROCESS -DEHVICE.

8.

MASTER'S DEED-DE8CIUPTION-MrsTAKE.

Robert Rae and F. B. Dyche, for complainant. Geo. R. Peck and C. W. Ogden, fOl' defendant. SHOWALTER, Circuit Judge. On November 27, 1875, Mrs. Green exhibited in the circuit court of the United States for the Northern district of Illinois her bill of complaint for the foreclosure of two mortgages. Mrs. Sarah H. Gage, widow of the mortgagor, and a number of other persons and a number of corporations were made parties defendant. Certain of the defendants answered; others weI'e defaulted. The cause was referred to a master, and a final