# Petition — Granite Investment Co. v. Federal Savings & Loan Insurance > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1538%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1981 - **Citation:** 452 U.S. 961 ## Text 80-1625 | FILED NO MAR 23 (981 IN THE SUPREME COURT OF THE UNITED STATRSEXANDER L. STEVAS, OCTOBER TERM, 1980 barman Office-Supreme Court, U.S. ] GRANITE sNVESTMENT COMPANY, a Limited Partmer- ship; JAMES C. GREEN; CAPITOL INDEMNITY CORPOR- ATION, a corporation; and HOWARD STEELE CONSTRUC- TION OO., Defendants-Petitioners, vs. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an agency of the United States of America, Plaintiff-Respondent , vs. PSL REALTY CO., a corporation, et al, Defendants-Respondents , THE HON. CHARLES E. JONES; THE HON. JOHN M. KARNES; THE HON. GEORGE W. KASSERMAN, JR.; and all other JUSTICES OF THE ILLINOIS APPELLATE COURT FOR THE FIFTH DISTRICT; THE HON. VICTOR J. MOSELE, and all JUDGES OF THE THIRD JUDICIAL CIRCUIT OF ILLINOIS. Respondents . FETTTION FOR WRIT OF CERTIORARI TO THE UNITED East St. Louis, Illinois 62201 (618) 274-0434 ATTORNEYS FOR PETITIONERS *% PETITION FOR WRIT OF CERTIORARI TO THE "IHS SEVENTH CIRCUIT COURT QUESTIONS PRESENTED FOR REVIEW 1. Subsequent to the granting of a Petition for a Writ of Temporary Injunction, the Circuit Court of Madison County, Illinois, appointed the Federal Savings and Loan Insurance Corporation receiver of certain oubeerctes which were the subject of dispute between the parties to the injunction. Extended proceedings in the state and federal courts ensued, culminating in the United States District Court for the Southern District of Illinois’ exercise of its injunctive powers to enjoin the Illinois state courts from interference with its jurisdiction over certain property subject to a mortgage foreclosure action instituted in the district court nearly four years earlier but some 4 1/2 years subsequent to the state court order appointing FSLIC receiver. On interlocutory appeal from the district court order granting 1 the injunction, the Court of Appeals for the Seventh Circuit affirmed the district court's order, holding that the state courts had never acquired jurisdiction over the properties in the first instance, and thus, the district court, having obtained exclusive possession * and control of the properties by virtue of the mortgage foreclosure proceeding, properly exercised its discretion in invoking its injunctive powers to protect its jurisdiction. The questions presented therefore are: 1. Whether the Court of Appeals’ holding that the Illinois state courts never acquired jurisdiction over certain properties pursuant to the state court's appointment of the Federal Savings and Loan Insurance Corporation as receiver of those g properties is contrary to the provisions of Section 9, Article VI, Constitution of Illinois 1970, the statutes of the State of Illinois, and the decisional law of this Court and the Supreme Court of the State of Illinois. 2. Whether this Court should exercise its supervisory authority and reverse the District Court's injunction, sanctioned by the Court of Appeals, which FX Be constitutes an improper intrusion upon the powers of the Courts of the State of Illinois to police the integrity of its officers. TABLE OF CONTENTS Questions Presented for Review Table of Contents Table of Authorities Opinions Below Jurisdiction Constitutional Provisions Involved Statutes Involved Statement of The Case Argument | Appendix A (Opinion of Court of Appeals) Appendix B (Order of Court of Appeals Denying Rehearing) \Appendix C (Opinion of District Court) Appendix D (Opinion of Illinois Appellate Court - 1976) Appendix E (Opinion of Illinois Appellate Court - 1979) TABLE OF AUTHORITIES American Surety v. Baldwin, 287 U.S. 156 3 Anderson v. Macek, 350 Ill. 135 City of Chicago v. Hart Building Corp., 116 IIT. App.2d 39 Cicero v. Otgaati. 410 F.Supp. 1080 Cousing v. Wigoda, 463 F.2d 603 (7th Cir. 1972) Donovan v. Dallas, 377 U.S. 408 Duke v. State of Texas, 477 F.2d 244 (5th Cir. 1973) Firebaugh v. McGovern, 404 Ill. 143 Goodrich v. Supreme Court of State of south Dakota, SIT F.2d 316 (Sth cir. 1975) Jackson v. Smith, 254 U.S. 586 Juidice v. Vail, 430 U.S. 327 Knaus _v. Chicago Title and Trust oe 365 Ill. 588 Kneisel v. Ursus Motor Co. 316 2) Ome Miller v. Rowan, 251 Ill. 344 Palmer v. Texas, 212 U.S. 118 People v. Berof, 367 Ill. 454 The People v. Leavens, 288 Ill. 447 People v. Leonard, 279 Ill. 159 Lkcea Sel People v. White,- 334 Ill. 465 4 reople v. Western Tire and Auto Stores, Inc., ld People v. Zimmer, 238 I1l. 607 Phelan v. Middlestates Oil Corp., 154 F.2d r. 1946) Sherman v. The People, 210 Ill. 552 Princess Lida v. Thomspon, 305 U.S. 456 U.S. v. Maragas, 390 F.2d 88 (6th Cir. 1968) Wilson Bros. v. Haege, 347 I1l. 140 U.S. Sup. Ct. Rule 19 1(b), 28 U.S.C. Rule 19 Ill. Const. 1970, Art. VI, §9 28 U.S.C. §1738 Ill.Rev.Stat. 1971, Ch. 69, pars. 1, 3 14 I.L.P. Courts §16 | OPINIONS BELOW The opinion of the Court of Appeals is reported at 603 F.2d 515 (1980), Appendix A, infra. The opinion of the United States District Court for*the Southern District of Illinois is reported at 482 F.Supp. 77 (1979), Appendix C, infra. The opinions of the Appellate Court of Illinois, Fifth Judicial District, are reported at 42 I1l1.App.3d 697, l I11.Dec. 417, 356 N.E.2d 605 (1976), Appendix D, infra, and 76 111.App.3d 978, 32 I11.Dec. 411, 395 N.E.2d 641 (1979), Appendix E, infra. JURISDICTION The judgment of the United States Court of Appeals for the Seventh Circuit was entered ‘on September 12, 1980. Appendix A, infra. A timely-filed Petition for Rehearing and Suggestion for Rehearing En Banc was denied by order filed on December 23, 1980. Appendix B, infra. This Petition for Certiorari was filed less than 90 days from the date of the order denying the Petition for Rehearing and Suggestion for Rehearing En Banc. The jurisdiction of the Court is invoked under 28 U.S:C. 1254(1). CONSTITUTIONAL PROVISIONS INVOLVED Constitution of the United States, Article IV, §1: Section i. Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner tn which such Acts, Records and Proceedings shall be proved, and the Effect thereof, Constitution of Illinois 1970, Article VI, §9: Circuit Courts shall have original jurisdiction of all justiciable matters except when the Supreme Court has original and exclusive jurisdiction relating to redistrict- ing of the General Assembly and to the ability of the Governor to serve or resume office, Circuit Courts shall have such power to review administrative action as provided by law, STATUTES INVOLVED 28 U.S.C., Sec, 1738: "Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken," Tll.Rev.Stat, 1971, Ch, 69, pars, 1, §l1. The circuit courts shall have power to grant writs of injunction, kkk §3. No court or judge shall grant a preliminary injunction without previous notice of the time and place of the application having been given the adverse party unless it clearly appears, from specific facts shown by the verified complaint or by affidavit accompanying the same, that immediate and irreparable injury, loss or damage will result to the applicant before notice can be served and a hearing had thereon. STATEMENT OF THE CASE On April 11, 1972, Illini Federal Savings and Loan Association and PSL Realty Co., Inc., its wholly owned subsidiary, obtained a preliminary injunction against James C. Green and Granite Investment Company. Granite Investment Company is a limited partnership of which James C. Green is the principal. Illini Federal Savings and Loan Association is the successor to Piasa Federal Savings and Loan Association pursuant to a supervisory merger procured by the Federal Savings and Loan Insurance Corporation in 1970. PSL Realty is a corporation originally formed by Piasa to hold legal title to certain properties formerly owned by Green and subject to mortgage loans to Piasa. The events leading up to Illini/PSL's petition for injunctive relief are set forth in the Court of Appeals' opinion (Appendix A, infra). Although some of the facts in the Court of Appeals’ opinion are disputed, it is undisputed that the Federal Savings and Loan Association's involvement in the litigation which ultimately led to the petition now before this Court arose as a result of FSLIC's relationship with Illini under a Contribution Agreement entered into between FSLIC and Illini pursuant to the Piasa-Illini merger in 1970 and the subsequent appointment of FSLIC as state court receiver for certain properties which had become the subject of dispute between Illini-PSL and Granite Investment and Green. Granite and Green appealed from the order of the Circuit Court of Madison County, Illinois, granting the preliminary injunction. 9 | On July 23, 1976, the Appellate Court of Illinois, Fifth District, filed.an opinion stating "Temporary injunction and receivership dissolved." (Appendix D, infra). On August 13, 1976, PSL and Illini filed a petition for rehearing in the Appellate Court. On August 18, 1976, FSLIC purchased first lien mortgages on all properties of which it was receiver pursuant to the state circuit court's order, and on August 26, 1976, without notice to Granite or Green, the trial court or the Appellate Court, FSLIC filed a mortgage foreclosure action in the United States District Court for the Southern District of Illinois on all mortgages of which it was receiver under the circuit court order. (Appendix E, infra). The Appellate Court's mandate reinvesting jurisdiction in the circuit court did not issue until October 13, 1976. (Appendix E, infra, Bi Upon appeal after remand to the Circuit Court of Madison County, Illinois, the 10 ‘s Appellate Court, when made aware of the fact that FSLIC had proceeded with mortgage foreclosure proceedings at a time when it had not been discharged as the state court's receiver for the properties and of its actions in pursuit of the foreclosure action, ordered FSLIC to "... stay any further action of any nature whatsoever in regard to the 48 mortgages, including, but not limited to, the prosecution of any action to foreclosure (sic) upon the 48 mortgages in Federal District Court for the Southern District of Illinois, or any other court ..."". The Appellate Court also ordered certain other prohibitions against FSLIC. (Appendix E, infra,). The proceedings in the United States District Court are set forth in its opinion (Appendix C). For purposes of this petition, it is sufficient to note that the District Court considered that an injunction of the state court proceeding was required to effectuate the District Court's jurisdiction ll ’% (Appendix C, infra,). The District Court's order for injunction was made permanent on October 11, 1979. Granite, Green, Howard Steele Construction Co., Inc., and the justices of the Illinois state courts appealed to the United States Court of Appeals for the Seventh Circuit pursuant to 128 U.S.C., §1291(a) (1), raising issues concerning the District Court's failure to give full faith and credit to the state courts’ decisions, the District Court's intrusion upon the power of the state courts to police the integrity of its own officers, the matter of jurirdiction over the District Court's jurisdiction over the property and the parties, and whether FSLIC could unilaterally confer jurisdiction on the federal court after having put its rights in issue in the state court. The Court of Appeals for the Seventh Circuit affirmed the District Court on the ground that the state courts never acquired jurisdiction in the first instance and, 12 therefore, the Madison County, Illinois Circuit Court's order appointing FSLIC receiver was void ab initio. Petitions for rehearing were denied and this petition follows. BASIS OF FEDERAL JURISDICTION IN THE COURT OF FIRST INSTANCE 12 U.S.C. §1730(k) (1) ARGUMENT By its holding that the Illinois state courts never acquired jurisdiction of the properties in this case the Court of Appeals has avoided reaching serious questions concerning the District Court's failure to give full faith and credit to the decisions of the Illinois state courts and has like- wise avoided equally serious questions ccri- cerning the District Court's intrusion upon the powers of the state courts to police the integrity of its officers. This Court should reverse the Court of Appeals' holding on the 13 - jurisdictional question and reverse the District Court's order under this Court's supervisory powers. ARGUMENT x The Court of Appeals' holding that the Illinois courts never acquired jurisdiction is contrary to constitutional, Statutory and decisional law. The Court of Appeals' opinion recognizes that because the Federal Savings and Loan Insurance Corporation has not yet been discharged as receiver, under the general law of receivership, the receivership property involved in this case would remain with the state court to this day but for the Court of Appeals' conclusion that the Circuit Court of Madison County, Illinois failed to acquire possession of the properties in the first instance. (Appendix A). Relying upon Firebaugh v. McGovern, 404 Ill. 143, 88 N.E.2d 473 (1949), however, the Court of Appeals 14 *% concluded that the Circuit Court of Madison County, Illinois, lacked jurisdiction to adjudicate the "principal matter", and therefore the Circuit Court's order purporting to grant the ancillary relief of temporary receivership was beyond its jurisdiction and as such was void ab initio (Appendix A, infra). Petitioner respectfully submits that this conclusion is in error. The issue upon which the Court of Appeals' opinion turned, i.e. whether or not the 1972 order of the Madison County Circuit Court creating the receivership was in excess of the jurisdiction of that court and, therefore, void ab initio, was never suggested, briefed or argued by any party to that action nor was such a ruling issued by the District Court. The FSLIC has always maintained that the state court had jurisdiction. And heretofore it has argued only that the state court lost jurisdiction in 15 1976 at which time, it argued below, the Federal Court was free to assume jurisdiction. The opinion of the Court of Appeals that the 1972 receivership was void ab initio is directly contrary to a year earlier judgment made by the Appellate Court for the Fifth District of the State of Illinois which under the full faith and credit provisions of the constitution is binding upon the Federal Courts. | The Appellate Court found, on September 13, 1979: "While receiver of the extensive properties involved in this case the receiver purchased mortgages on the properties and filed suit to foreclose them. This at a time when the receiver was the legal custodian of the property tor the court. A receiver is an officer or the court, and his possession is the ssession of the court.” (Emphasis za d.) (76 Ill. App.3d 978, 995; 395 adde N.E.2d 641, 654) In the Order issued by Justice Jones on September 26, 1979, the Appellate Court reiterated: 16 "This court does, however, have jurisdiction over the parties and over the subject matter of this cause of action as described in the September 13, 1979 opinion.'' (Emphasis added.) (76 sor 978, 1002; 395 N.E.2d 641, 59) In its supplemental opinion filed on October 2, 1979, the Appellate Court stated: "At the time of the purchase and commencement of the foreclosure action, this court had full jurisdiction of the entirety of the action, part, parcel, parties and receiver." (Emphasis added.) (76 I11.App.3d 978, 1000; 395 N.E.2d 641, 658) The Court of Appeals, at page 521 of its Opinion, incorrectly interpreted the Appellate Court's rulings: "Since the Circuit Court of Madison County was found to be without jurisdiction to award the ancillary remedy of receivership, its order placing the properties in receivership and appointing FSLIC as receiver was void. Since the state court was not a court of competent jurisdiction exercising control over the properties which would preclude the institution of an action concerning the properties in Federal Court, the District Court was free to assert its exclusive jurisdiction over the properties in the foreclosure suit, and appropriately did so by its order effective October 13, 1976." 17 In point of fact, no court ever had found that the Circuit Court of Madison County "was without jurisdiction", prior to the opinion filed by the Court of Appeals. No such lan- guage appears in the Appellate Court opinions. To be sure, the order establishing the re- ceivership was found to be "ancillary", but the Illinois Appellate Court did not find this to be a void ab initio order issued by a court with no jurisdiction. Nowhere does it appear that the Illinois Appellate Court "found the Circuit Court of Madison County to be with- out jurisdiction" or that the order appoint- ing the FSLIC as receiver was void. Instead, it found possession to be in the state court and that it had and continues to have jurisdiction. 28 U.S.C., Sec. 1738, states: "Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage 18 in the courts of such State, Tecritory or Possession from which they are taken." Without question, a long line of cases requires the Federal Courts to give full credit to the Appellate Court's prior find- ings of September 13, 1979 (reaffirmed on September 26 and on October 2, 1979) that the state court had possession of the property; that the receiver was its "legal custodian"; and that the state court had "jurisdiction of the entirety of the action, part, parcel, parties and receiver". In American Surety v. Baldwin, 287 U.S. 156, 77 L.Ed, 231, 237, the Court said: "The full faith and credit clause, together with the vie, PP lation pursuant thereto, applies to judicial proceedings of a state court drawn in question in an independent proceeding in the federal courts. Act of May 26, L970, chap. 11, ZT Stat. ac i. 422; Act of March 27, 1804, chap. 56, §2, 2 Stat. at L. 299; Rev. Stat §905, U.S.C. title 28, §687; Mills v. Duryee, 7 Cranch, 481, 485, . ed. 411, 413; Mutual L. Ins. Co. v. Harris, 97 U. S. SII, 336, . ed. , 962. Compare 19 i Bradford Electric Light Co. v. planer 286 U.S rs: 155, 76 ed. 1026, 1032, 52 S. Ct. 571. The principles of res judicata ‘) apply to questions of jurisdic- tion as well as to other issues. Baldwin v. Iowa State Travelin Men's Aso., 283 U.S. 522, 75'L. ed. 1244, 51S. Ct. 517. They are given effect even where the proceeding in the federal court is to enjoin the enforcement of a state judgment, if the issue was made and open to litigation in the original action, or was determined in an independent proceeding in the state courts. See Marshall v. Holmes, 141 U.S. 589, 596, 35 L. ed. 870, 872, 12 S. Ct. 62; Fidelity & D. Co. v. Gaston, Williams & Wigmore es : ; e principles of res judicata may apply, although the proceeding was begun by motion. Thus, a decision in a proceeding begun by motion to set aside a judg- ment for want of jurisdiction is, under Idaho law, res judicata, and precludes a suit to enjoin enforcement of the judgment. Bernhard v. Idaho Bank & T. Co., aho, . ac. n. Cas. 1913E, 120. Since the decision would formally consti- tute res judicata in the courts of the state; since it in fact satisfies the requirements of prior adjudication; and since the constitutional issue as to jurisdiction might have been presented to the state Supreme Court and reviewed here, the 20 decision is a bar to the present suit insofar as it seeks to enjoin the enforcement of the judgment for want of jurisdiction." This case, we believe, controls. The rule enunciated there has always been the law. The Court of Appeals' opinion which ignores directly contrary state court rulings on issues between identical parties is in opposition to a lie of cases long in existence and consistently followed. In Palmer v. Texas, 212 U.S. 118, 53 L.Ed. 435, 29 S.Ct. 230, the court said at 53 L.Ed. 441: "The Texas courts have the right to construe their own statutes, and their judgment in such matters is conclusive upon the Federal Courts." See also Donovan v. Dallas, 377 U.S. 408, 12 L.Ed.2d 409, 84 S.Ct. 1579; Porter Sabin, 149 U.S. 473, 37 L.Ed. 815; Princess Lida v. Thompson, 305 U.S. 456, 83 L.Ed. 285. Under the Constitution of Illinois 1970 "Circuit Courts shall have original 21 jurisdiction of all justiciable matters except when the Supreme Court has original and exclusive jurisdiction relating to redistricting of the General Assembly and to the ability of the Governor to serve or resume office." I11. Const. 1970, Art. VI, §9. Illinois, therefore, has no courts of limited subject natter jurisdiction; if a matter is justiciable at law, it is triable in the Circuit Court. By statute, the Madison County Circuit Court had power to grant a writ of injunction or a pre- liminary injunction at the time this case was filed. I11.Rev.Stat. 1971, Ch. 69, pars. 1, 3. And, a court which has juris- diction of the subject matter of the general class to which a case belongs and which has jurisdiction of the parties has "jurisdiction". Wilson Bros. v. Haege, 347 Ill. 130, 143, 179 N.E. 459 (1932). In the Wilson case just cited, 22 ‘% plaintiff filed in the Circuit Court of Rock Island County a purported affidavit in replevin, After judgment was rendexed in appellee's favor, derendant appealed, con- tending inter alia that the purported affi- davit was insufficient and that because the statute required the filing of a sufficient affidavit, the circuit court lacked juris- diction. The Supreme Court stated: "In the state of this record we are not called upon to pass upon the sufficiency of the purported affidavit, It is a historical fact that the first Illinois state replevin statute recognized replevin as an action at law existing in Illinois prior to the enactment of such just statute on the subject. The Circuit Court of Rock Island County had jurisdiction of the subject matter of suits in replevin, to which this case belongs, **kk = 6The court having juris- diction of the persons of the parties to the cause and juris- diction of this particular case --i.e., the right and power to hear and determine the particu- lar case."' Wilson Bros. v. Haege, supra, 347 TIT, 142-143, "Jurisdiction of the subject matter does not depend on the sufficiency of the 23 pleadings, or on the validity of the demand, the regularity of the proceed- "ngs, or the correctness of the decision, .."" 14 I,L.P. Courts §16. The cases supporting this view are ancient and legion. In The People v. Leavens, 288 Ill. 447, 123 N.E. 545 (1919), defendants appealed from a judgment obtained against defendants’ lands for a delinquent drain- age assessment. It was shown to the court that defendants had appeared and filed objections in a prior action for changes and new construction which the drainage district had brought under the wrong section of the Levee Act of 1879, but that defendants had not appealed from the circuit court's decision adverse to them in that action. Rather, defendants in the action against them for the de- linquent assessments urged that the judgment on the prior petition was void. 24 FX because the county court was without jurisdiction of the subject matter, The Supreme Court affirmed, citing and quot- ing from People v, Leonard, 279 111, 159, 116 N.E, 612 (1917), a case in which ",,, while the petition was filed under the wrong section of the statute and the levy of the assessment was void, 'it does not follow that the court was without jurisdiction to make any order, The petition purported to be filed under Section 37. The court had jurisdiction of the general subject of assessments upon lands of the district for additional work or the completion of any work already commenced within any drainage district to insure the protection of drainage of the lands in the district, The petition for such an assessment gave it jurisdic- tion over the particular case, The petition asked for an order which it was erroneous for the court to make but 25 the general subject was within the juris- diction of the court. Its order, there- fore, however erroneous, was not subject to collateral attack. ***'" Leavens, supra, 288 Ill. 449. The Illinois Supreme Court continued in Leavens to note the distinction between the jurisdiction of the subject matter and an erroneous exercise of jurisdiction. Quoting from an even older case (Miller v. Rowan, 251 Tll. 344, 96 N.E. 285 (1911)), the court said: "...'(I)f a bill states a case belonging to a class over which the authority of the court extends, the jurisdiction attaches and no error com- mitted by the court can render the judg- ment void. If the court has jurisdiction, it is altogether immaterial, when the judgment is collaterally called into question, how grossly irregular or mani- festly erroneous its proceedings may have been. The judgment cannot be regarded as 26 - a nullity, and cannot, therefore, be collaterally impeached' ***,"' Leavens, supra, 288 I1l1. 450-451. See also: Knaus v. Chicago Title and Trust Co., 365 Ill. 588, 592, 71 N.E.2d 298 (1937) ("/Subject matter/ jurisdiction is con- ferred by the constitution or by legis- lative enactment and does not depend upon the sufficiency of the bill of complaint in a particular case, the validity of the demand set forth therein, the regularity of the proceedings, or the correctness of the decision ren- dered. /citations omitted/."" To the same effect is People v. Western Tire Auto Stores, Inc., 32 I11.2d 527, 207 N.E.2d 474 (1965). The court in Rowan v. Miller, supra, discusses at some length the confusion: surrounding the use of the word 27 *% Jurisdiction as applied to courts of equ- ity and draws the distinction between the use of the word to denote lack of power to decide a matter as opposed to an improper exercise of chancery powers. (251 T11. 348-350) Defendants respect- fully submit that the Court of Appeals misunderstood Illinois law concerning the Circuit Court's jurisdiction in this case for the very reasons discussed in Rowan. Thus, it cannot legitimately be argued that the Circuit Court of Madison County lacked subject matter jurisdicti- on in this case, The court had the general power or authority to hear and determine a petition for a preliminary injunction by Constitution and by statu- te. It therefore had subject matter jur- isdiction as to this general class of case, and even if its exercise of that jurisdi- ction was erroneous, as the Appellate 28 Court obviously held, its order granting the temporary injunction and appointing a receiver was not void. The Illinois Appellate Court has never once questioned the circuit court's jurisdiction to entertain a prayer for 2 temporary injunction in this case. The Appellate Court's only holding was that the temporary injunction was improvident- ly granted, not for a lack of power vest- ed in that court to grant such relief, for the court clearly had such power by Constitution and statute, but rather bec- ause the plaintiffs in the state court action fatled, in the Appellate Court's considered opinion, to allege facts entitling them to that relief. The circuit court had jurisdiction to grant a pre- liminary injunction and it therefore had jurisdiction to appoint FSLIC as receiver. That its exercise of its jurisdiction was erroneous, according to the Appellate 29 Court, does not render its action void ab initio. In both the state courts below, the FSLIC has assiduously avoided any con- clusion that would treat its possession in the 4 1/2 y3ars prior to the Illinois Appellate Court's 1976 decision as pur- Suant to an absolutely void order. It has consistently agreed that the Madison County Circuit Court had jurisdiction at the outset. The FSLIC, in discussing Granite's argument that the courts of the State of Illinois had exclusive possession, said, at page 27 of tts Brief filed in the Seventh Circuit: "Their argument begins with the assertion that the courts of the State of Illinois acquired exclusive possession of the property by the appointment of a receiver on April 28, 1972 (Granite's Brief at page 53) with this assertion, FSLIC has no quarrel," 30 At page 28, the FSLIC also said: "A trial court of the State of Tllinots tndeed took exclusive possesston of the property in 1972." The FPSLIC has had two state court appeals itn which to contest the issue of jJurisdictton -- the original appeal taken by Granite in 1972 and the second appeal taken by Granite in 1976 -- in neither appeal did any party suggest the Madison County Circutt Court to be without juris- diction so as to make all of its orders votd ab initto. Nor has the Honorable Federal Distr- ict Judge found that the state court never had jurisdiction. Rather, the District Judge has always acknowledged original jurisdiction tn the state court, and has held only that, while the state court did have jurisdiction, it lost that Jurisdiction when the receivership was dissolved tn 1976. The District Court's 31 °°. injunctive order of October 2, 1979, recites that tt "concluded that the L1llinots courts relinquished possession of the receivership properties in 1976 upon dissolution of the state court re- ceivership notwithstanding the subse- | quent state court proceedings involving the receiver's final accounting." The finding that the state court "relinquish- ed possession" in '76 ts clearly an ex- pression of the District Court's conclu- ston that the state court had jurisdic- tion, for without possession there can be no jurisdiction. FSLIC argued in the court below that the Appellate Court's statement in its 1979 opinion concerning the federal court's jurisdiction of the parties and subject matter constituted a concession of jurisdiction in the federal district court, The Appellate Court undoubtedly recognized that the District Court had 32 *% the power to hear and determine mortgage foreclosure actions and undoubtedly was aware of the fact that none of the part- tes had contested the court's in personam jurisdiction. Therefore, although the Appellate Court recognized that the Dist- rict Court had the power to determine a case of the class before it and had in personam jurisdiction, the Appellate Court also well recognized that it had no power to determine whether or not the District Court was indulging tn a proper exercise of that power and would not pretend to do sO. The Court of Appeals' reliance on Ftrebaugh v. McGovern, 404 I11. 143, 88 N.E.2d 473 (1949) is misplaced. In the first place, the Illinois Supreme Court in Firebaugh sustained the validity of an order involving general jurisdiction to appoint a receiver of a corporation. There, Separate groups of persons claiming an 33 FX interest in a corporation filed complaints for injunctive reltef against each other. The court on tts own motion appointed a receiver for the corporate assets until the case was determined. On appeal by one of the competing groups, the order appoint- ing the receiver was reversed by the Appellate Court on the ground that the trial court was without jurisdiction to enter such an order. While the Appellate Court decision was pending, the parties settled thetr differences and the receiver was directed to return the building and certain funds to the parties who were plaintiffs in the ortginal case and in the case before the Supreme Court. The besetver's final account was filed one week before the Appellate Court decision. After the Appellate Court decision was received, the corporation filed objections to the recetver's account, ",.. basing its contenttons on the holding of the Appellate 34 aa —ee Court that the order appointing the receiver was void for lack of jurisdi- ction." The trial court approved certain of the receiver's expenditures but sus- tained the objection to any compensation for services as receiver and for attorney's fees. The corporation appealed and the Appellate Court reversed and remanded with directions to sustatn all objections to the receiver's report. The receiver was granted leave to appeal. The Supreme Court reversed the Appellate Court in Firebaugh, holding that the Appellate Court's decision that the superior court was without jurisdiction to appoint a receiver was erroneous. Any thought that Firebaugh supports the proposition advanced by the Court of Appeals that the appointment of the receiver in the instant case was void must arise from the Firebaugh court's discussion of the distinction ". .. 35 between cases wherein the ultimate relief sought its within the general or statutory Jurisdiction of the court and those where- in such ultimate reltef is beyond its juris- diction." (Firebaugh, supra. 404 111.143). Discussing the class of cases wherein the trial court has no jurisdiction to adjudi- cate the principal matter, the court cited Steenrod v. Gross Co,, 334 I11, 362, 166 N.E. 82 (1929). Steenrod was a case in which no matter how the complaint which resulted in appointment of a receiver had been pleaded, the court would have been without power to appoint the receiver and grant the ultimate relief sought. The genesis of Steenrod has been a bill which sought in substance the dissolution of a solvent corporation, distribution of its assets and the appointment of a receiver tn aid of that goal. This the Steenrod court held was without the general equity powers of the court, the statute granting 36 no power to the court to grant such relief. (334 I11, 368) As has been stated, the Firebaugh court noted the dis- tinction (404 111, 150-151), | In the state court case which pre- ceded the instant action, plaintiffs! complaint sought certatn affirmative relief which could well have been chara- cterized as a prayer for specific perform- ance of the terms of certain contracts (turnover of rents, examination and produ- ction of rent rolls, books, leases and records) along with injunctive relief. Defendants filed a "Cross-Complaint for Injunction" and a "Motion to Quash Inju- netton" which clearly indicated that defendants pervetved the ultimate itssues to involve contract questions. The trial court's order denied Granite's Motion to Dissolve Injunction, denied Granite's Cross-Complaint, appointed FSLIC as recei- ver, and effectively left the theretofore-~- (a 7 fA entered temporary injunction in effect" +ee until the final adjudication of the rights of the parttes hereto is determi- ned by this court," The Circuit Court of Madison County, fllinois had Constitutional and statuto- ry jurisdiction in the state court action. The Appellate Court of Illinois, Fifth District, has never said otherwise. Nei- ther should the Seventh Circuit Court of Appeals have so held. 38 II This Court should exercise its supervisory powers and reverse the District Court's injunction, sanctioned by the Court of Appeals, which constitutes an improper intrusion upon the powers of the courts of the State of Illinois to police the integrity of its officers. Petitioners have argued that the Court of Appeals’ decision is in conflict with the constitutional, statutory and decisional law of the State of Illinois. (Argument No. 1, supra). In wrongfully deciding the question of jurisdiction, the Court of Appeals has sanctioned an injunction which is an improper intrusion upon the powers of the courts of Illinois to police the integrity of its officers. This Court should exercise its power of supervision to reverse the improper injunction entered by the District 39 *% Court and sanctioned by the Court of Appeals. (U. S. Sup. Ct. Rule 19 1(b), 28 U.S.C. Rule 19), The action of the FSLIC, a state- appointed receiver, while it was acting in its capacity as receiver in purchasing the 48 mortgages on the receivership property on August 18, 1976, constituted a direct criminal contempt of the Circuit Court of Madison County, Illinois. That the receiver, at that time, was acting solely in its capacity as a state- appointed receiver of a state-initiated receivership pursuant to powers given it by the state court is without question. That the action of a receiver in so deal- ing with receivership Property is a direct criminal contempt is also without question. The action of any party, be it creditor or receiver, against or upon receivership property without permission of the court 40 is a direct criminal contempt which can be, if committed in the presence of the court, or, if admitted to the court, punished summarily. The receiver has admitted by its Brief filed in the Illinois Appellate Court and by its counsel in person that it did purchase these 48 mortgages on August 18, 1976 without notice or permission. Thus, the courts of the State of Illinois have the dnherent power to punish these contemptu- ous actions, without hearing, if desired. City of Chicago v. Hart Building Corporation, 116 I1l1.App.2d 39 (Cert. denied, 398 U.S. 950); 8 A.L.R. 1548, 1550; Kneisel v. Ursus Motor Company, 316 Ill. 336; Anderson v. Macek, 350 Ill. 135; U, S. v. Maragas, 390 F.2d 88; People v. Zimmer, 238 Ill. 607. In Sherman v. The People, 210 I1l. 552 at page 557, the court said: 41 -% 465, "Courts have power to punish, in certain cases, administrators, executors, guardians, masters in chancery, reporters, sheriffs, bailiffs, clerks, jurors, witnesses, attorneys and receivers. ... The extent to which the law of receiver- ship has been developed by the courts is remarkable. Receivers are appointed by the court to become officers of the courts making the appointment even though their acts are generally ministerial ... Not only are they individually responsible, but other employees are governed by the same law; and the powers of the courts are almost unlimited and must, of necessity, be so for the proper administration of justice." See also People v. White, 334 I1l. 484; People v. Berof, 367 Ill. 454. In Phelan v. Middlestates Oil Corporation, 154 F.2d 978, the court said, in answering an argument that federal law does not permit punishment of a federal receiver or permit receivers to avoid accounting for their actions, at page 1001: "We think that it would be most unfortunate to apply such a rule to a wrongdoing federal receiver; it would do much to thwart the policy of inducing careful discharge of 42 their duties by receivers. The doctrine, relative to receivers, of strict accountability, and of opposition to divided loyalties, is prophylactic; it aims not merely to punish actual evil in cases where it occurs but to avoid the ‘tendency to evil in other cases'." That same court in a second appeal involving the same subject matter said at 220 F.2d 593, 615: 586; "For the court, in administering the estate in its custody for all the beneficiaries, must see to it that none of them suffers because of the misconduct of its receiver, and the discharge of that obligation should not depend upon their appearance in court to voice their objections to that misconduct ... Thus, if the judge learned of the misconduct from a wholly neutral source ... he should surcharge a receiver and distribute among all interested the money owing to the estate by the receiver because of that misconduct." See also Jackson v. Smith, 254 U.S. 65 L.Ed. 418, Granite had, in 1976, filed a petition seeking to have the receiver punished for its contemptuous actions in the trial court in purchasing the 43 mortgages and in filing the foreclosure action thereon. The trial court refused to consider the petitions, saying that it had no jurisdiction so to do under the mandate of the Appellate Court which remanded with directions. Upon a sub- sequent appeal to the Appellate Court, that court found the actions of the receiver wrongful and in blistering language termed the conduct "reprehensible", That it should be disciplined for such action is obvious and clear, Granite sought a contempt finding in the Appellate Court on the 28th. day of September, 1979. That court said, in its supplementary opinion issued that date: 3 "At the September 28, 1979, re- hearing the defendants filed with this court a petition for an order of court finding the receiver and the plaintiff in contempt of court and for assessment of a fine of $10,000,000.00 as punishment therefor. We decline to consider 44 this petition at this time. If appropriate it may be refiled in the Circuit Court upon issuance of the mandate of this court." The court did issue that mandate but it was recalled by the Illinois Supreme Court and petition for leave to appeal by FSLIC and Illini-PSL was later allowed. Should the Illinois Supreme Court affirm, the parties, including Granite, are nevertheless forever barred from proceeding with a contempt action against the receiver by the District Court order of October 2, 1979. This order, if allowed to remain in effect, will completely immunize and insulate the receiver from any disciplin- ary proceedings, whatsoever, on account of its breach of trust and loyality committed in the summer of 1976 and con- tinuing from that date to the present time. That the District Court's order has interfered with the integrity of the 45 state court judicial process is abundantly clear. This Court, in a 1977 opinion, Juidice v. Vail, 430 U.S. 327, 51 L.Ed. 2d 376, 97 S.Ct. 1211, said in dis- cussing Younger v. Harris, 401 U.S. 37: "We now hold, however, that the principles of Younger and Huffman are not confined solely to the types of state actions which were sought to be enjoined in those cases. As we emphasize in Huffman, the "more vital consideration” behind -the Younger doctrine of non intervention lay not in the fact that the state criminal process was involved but rather in 'the notion of comity, that is a proper respect for state functions, a recognition of the fact that the entire country is made up of a union of separate state governments, and a continuance of the belief that the national government will serve best if the states and their institutions are left free to perform their separate functions in their separate ways.’ ..." And at page 51 L.Ed. 384, the court said: "But the federal court cannot of course, interfere in a case where the proceedings were already pending in a state court. ...”" 46 -% "These principles apply to a case in which the State's contempt process is involved. A State's interest in the contempt process through which it vindicates the regular operation of its judicial system, so long as that system itself affords the opportunity to pursue Federal claims within it, is surely an important interest. Perhaps it is not quite as important as is the State's interest in the enforcement of its criminal laws. Younger, Supra, or even its interest in the maintenance of a quasi- criminal proceeding such as was in- volved in Huffman, Supra. But we think it is of sufficiently great import as to require application of the principles of those cases. The contempt power lies at the core of the administration of a State's judicial system, ... Whether disobedience of a court-sanctioned subpoena, and the resulting process leading to a finding of contempt of court, is labeled civil, quasi-criminal, or criminal in nature, we think the salient fact is that Federal court inter- ference with the State's contempt process is ‘an offense to the State's interest’... likely to be every bit as great as it would be were this a criminal proceeding. ' Moreover, such interference with the contempt process not only "unduly interferes with the legitimate activities of the State’ ... but also ‘can readily be interpreted as ‘reflecting negatively upon the State Court's 47 i ability to enforce constitutional principles." In Cicero v. Olgiati, 410 F.Supp. 1080 (U.S. Ct. S.D. N.Y., 1976), the court in analyzing Younger v. Harris and its meaning from a comity aspect said that: "The Supreme Court held that absent extraordinary circumstances, deference to the federal system of government, particularily respect for state judiciary's ability to determine federal issues arising before it, bars a federal district court from enjoining a pending state criminal prosecution. "The mandate to abstain for reasons. of comity has also been extended to pending civil proceed- ings where the state is a party to a pending and uncompleted proceed- ing which is "both in said of and closely related to criminal Statutes’ and ‘akin to a criminal prosecution'," The Court further said: ‘Noting that the Supreme Court characterized disbarment proceed- ings as 'quasi-criminal' in nature --. the court emphasized that the interest of the state court in policing the integrity of its officers is ‘at least as great as 48 7 > -% the interest of the state in Huffman v. Pursue, because state courts are the only bodies which ‘can impose sanctions upon those admitted to practice in its courts." In Goodrich v. Supreme Court of State of South Dakota, 511 F.2d 316 (8th Cir. 1975), the court affirmed the District Court's denial of an injunction in which the petitioner sought to prevent the State of South Dakota from conducting a disbarment proceeding. The court held there: "Before exercising its equit- able power to enjoin the state pro- ceeding, the District Court must find the plaintiff threatened with great and immediate irrepar- able injury that cannot be eliminated by his defense to the state proceed- ing. Younger v. Harris, 41 U.S. 37." In Duke v. State of Texas, 477 F.2d 244 (5th Cir. 1973), the court, when asked to enjoin a proceeding in the state court, said, at page 248: "We iterate that the Younger principles of equity, comity and federalism apply to federal inter- 49 vention in state ‘civil’ as well as 'criminal' proceedings, even where the exercise of First Amend- ment rights is involved; two of our sister Circuits have so held, Cousins v. Wigoda, 7 Cir. 1972, 463 F.2d 603, application for stay denied, 409 U.S. 1201, 92 S.Ct. 2610, 34 L.Ed.2d 15 (Rehnquist, Circuit Justice); Lynch v. Snepp, 4 Cir. 1973, 472 Pod 769. In Younger, the Supreme Court made it clear ‘that the normal thing to do when federal courts are asked to enjoin pending proceedings in state courts is not to issue such injunctions.’ 401 U.S. at 45, 91 S.Ct. at 751, 27 L.Ed.2d at 676. This interdiction of federal interference in state judicial proceedings is based on federalism concepts of comity and respect for state functions, op. cit. 401 U.S. at 44, 91 S.Ct. at 750, 27 L.Ed.2d at 675-676. In order to overcome it two express pre-conditions must be shown before relief may be grant- ed to a federal plaintiff. First, the moving party must demonstrate that he will suffer irreparable injury if the federal court stays its hand, and second the moving party must demonstrate that he does not have an adequate remedy at law in the state courts, op. cit. 401 U.S. at 43-44, 91 S.Ct. at 750, 27 L.Ed.2d at 675." In a Seventh Circuit case, decided in 1972, the court, in Cousins v. 50 Wigoda, 563 F.2d 603, in vacating a District Court injunction said at page 606: "Although a federal court has power to grant an injunction to stay litigation in a state court, --.- principles of equity, comity and federalism dictate restraint in the responsible exercise of that power." As the Illinois Appellate Court has found and reaffirmed, the FSLIC has committ- ed a grievous wrong and continuing harm upon. these defendants. The Appellate Court has made certain orders which, if that court is to have any integrity whatsoever, must be obeyed by its own receiver, the custodian of the property for the State of Illinois. The receiver is contumaciously defying the state court and has sought refuge in the U. S. District Court. That court has granted that refuge and made the injunction permanent on the 1lth of October, 1979. The Court of 51 °°. Appeals has sanctioned the injunction by its erroneous holding on the jurisdic- tional question. If this Court does not dissolve that injunction, the FSLIC will have successfully thwarted the Appellate Court of the State of Illinois and will have successfully breached its duty as receiver, in effect, thumbing its nose at the courts of Illinois. The U. S. District Court has undertaken to determine, without hearing, that the FSLIC is not guilty of the wrongful, reprehensible conduct as charged by the Appellate Court. It seeks to enter a permanent "not guilty" order in conformance with its own finding. We urge this court to protect the Appellate Court of Illinois, the other courts, and attorneys similarly enjoined, by striking down this injunction. The order which prevents Granite and its attorneys from resorting to legitimate 52 -' judicial processes of the State of Ellinois is improper. Clearly, the interference between the Circuit Court of Madison County and its receiver is improper. The disregard for the specific findings of the Appellate Court of the State of Illinois is improper. This Court should exercise its supervisory power to prevent the United States District Court from exonerating FSLIC of its wrongful acts as state court receiver. CONCLUSION For the foregoing reasons, a Writ of Certiorari should issue to review the judgment and opinion of the United States Court of Appeals for the Seventh Circuit. 53 -% March 23, 1981 Respectfully submitted, REX CARR COHN, CARR, KOREIN, KUNIN, SCHLICHTER & BRENNAN 412 Missouri Avenue East St. Louis, Illinois 62201 (618) 274-0434 Attorneys for Petitioner 54 -% NO. IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 GRANITE INVESTMENT COMPANY, a Limited Partner- ship; JAMES C. GREEN; CAPITOL INDEMNITY CORPOR- ATION, a corporation; and HOWARD STEELE CON- CO STRUCTION ©O., Defendants-Petitioners, vs. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an agency of the United States of America, Plaintiff-Respondent, vs. PSL REALTY ©O., a corporation, et al, Defendants-Respondents , THE HON. CHARLES E. JONES; THE HON. JOHN M. KARNES; THE HON. GEORGE W. KASSERMAN, JR.; and all other JUSTICES OF THE ILLINOIS APPELLATE COURT FOR THE FIFTH DISTRICT; THE HON. VICTOR J. MOSELE, and all JUDGES OF THE THIRD JUDICIAL CIRCUIT OF ILLINOIS. . Respondents. ENTRY OF APPEARANCE Now comes Rex Carr, a member of the Bar of this Court, entering his appearance as counsel for petitioners Granite Investment Company and James C. Green in the above captioned cause. 412 Missouri Avenue East St. Louis, Illinois 62201 Attomey for Petitioners 7% IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 GRANITE INVESTMENT COMPANY, a Limited Partner- ; JAMES C. GREEN; CAPITOL INDEMNITY CORPOR- » & corporation; and HOWARD STEELE OON- STRUCTION ©O., Defendants-Petitioners, vs. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an agency of the United States of America, Plaintiff-Respondent, vs. PSL REALTY ©O., a corporation, et al, Respondents AFFIDAVIT Rex Carr, a member of the Bar of this Court, being first duly sworn, deposes and states that he has knowledge that forty (40) copies of a Petition for Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit in the above cause were enclosed in an envelope addressed to the Clerk of the Supreme Court of the United States, Supreme Court Buil , Wash- i i F 4 iF 5 Fo 412 Missouri Avenue East St. Louis, Illinois 62201 Attorney for Petitioners SUBSCRIBED and SWORN TO before me this 23rd day of March, 1981. a ee tee IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 GRANITE INVESTMENT COMPANY, a Limited Partnership; JAMES C, GREEN; CAPITOL INDEMNITY CORPORATION, a corporation; and HOWARD STEELE CONSTRUCTION CO., Defendants-Petitioners, vs. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an agency of the United States of America, Plaintiff-Respondent, vs. PSL REALTY CO., a corporation, et al, Defendants-Respondents, THE HONORABLE CHARLES E. JONES; THE HON. JOHN M. KARNES; THE HON. GEORGE W. KASSERMAN, JR.; and all other JUSTICES OF THE ILLINOIS APPELLATE COURT FOR THE FIFTH DISTRICT; THE HON. VICTOR J. MOSELE, and all JUDGES OF THE THIRD JUDICIAL CIRCUIT OF ILLINOIS, Respondents, CERTIFICATE OF SERVICE Rex Carr, a member of the Bar of this Court, hereby certifies that three copies of a Petition for Writ of Certiorari to the United States Court of Appeals for the Seventh Judicial Circuit was served on the parties named below by depositing the same in the United States Mail at St. Louis, Missouri on March 4a; 1981, in envelopes plainly addressed as shown below, with prepaid first class postage affixed thereto; Solicitor General of the United States Department of Justice Washington, D.C. 20530 Mr. W. Stanley Walch Thompson & Mitchell ONe Mercantile Center, Suite 3400 St. Louis, Missouri 63101 Attorneys for Respondent, PSL Realty Co, Mr. Robert W. Patterson Hopkins, Sutter, Mulroy, Davis & Cromartic One First National Plaza, Suite 5200 Chicago, Illinois 60603 Attorneys for Respondent, Federal Savings and Loan Insurance Corporation. Hon. Tyrone C. Fahner Attorney General State of Illinois 300 South Second Street Springfield, Illinois 62706 Attorney for the Justice of the Illinois Appellate Court for the Fifth District and all Judges of the Third Judicial Circuit of Illinois. % The above constitutes service on counsel for all parties known to be interested in this cause. sieeve 7 COHN, CARR, KOREIN, KUNIN, SCHLICHTER & BRENNAN 412 Missouri Avenue East St. Louis, Il. 62201 (618) 274-0434 APPENDICES APPENDIX A % In the Guited States Court of Appeals For the Seventh Circuit Nos. 79-2134, 79-2211, 79-2212 and 79-2303, Frpera, Savines Anp Loan Insurance CorRPORATION, an _ agency of the United States of America, Plaintiff-Appellee, v. PSL Rezaury Co., a corporation, et al., Defendants-A ppellees, Grantrz Investment Company, a limited partnership; James C. Green; Carrrou Inpemmiry CoRPORATION, @ cor- poration; and Howarp Srezte Construction Co., Defendants-Appellants, Te Hon. Canes E. Jonzs; Toe Hon. Joun M. KarNeEs; Tae How. Gzorce W. Kasszrnman, Jz.; and all other Jus- Ticks Or THe Ittiom Appettate Court For Tae Fira District; Tue Hon. Victor J. Moszzz, and all Jupczs Or Tae Tamp Jupicun Cmourr Or Inuion, Appellants. Interlocutory Appeal from the United States District Court for the Southern District of Illinois—No. A-CIV-76-79, J. Waldo Ackerman, Judge. ARGUED Jawvany 25, 1980—Dzcwep Szpremser 12, 1980 Before Swrczet, Cummrnes and Baus, Circuit Judges. Bauer, Circuit Judge. These consolidated appeals pre- sent for review a decade of litigation, whose odyssean 2 Nos. 79-2134, 79-2211, 79-2212 & 79-2303 journey through the various state and federal courts sit- ting in Illinois was ultimately destined on a collision course between the two court systems and which achieved that destiny in a rather dramatic interim finale when, on Octo- ber 2, 1979, the United States District Court for the South- ern District of Illinois invoked its injunctive powers to enjoin the Illinois state courts from furthe interference with its jurisdiction over certain property subject to a shy foreclosure action instituted in the district court nearly four years earlier. Our jurisdiction is founded on 28 U.S.C. § 1292(a)(1), permitting an interlocutory appeal as a matter of right from the granting of an injunction. The sole issue before us is whether the district court erred in issuing the injunction. We affirm. I Although the final chapter of this case remains to be written, its history to date stands as a compelling testi- monial to the maximum utilization of the American juris- aD ey system, embracing as it does both the state and et trial and appellate courts as. — as eB federal tey courts. For our purposes, the story begins in the oui 1960’s when a pallens James C. Green entered into a debtor-creditor re tionship with the Piasa Federal Savings-and Loan Association (‘‘Piasa’’), in which first lien mortgages were executed in favor of Piasa to finance the development and consiruction by Green and his asso- ciates of several apartment complexes situated in Madison, Clinton, St. Clair, and Sangamon Counties, Illinois. Finan- cial difficulties were encountered in the completion and op- eration of the units and restructuring of the debt and pro- vision of additional construction funds became necessary. To that end, the parties entered into a lengthy and detailed agreement, termed the Base Agreement, on August 1, 1970. Under its terms, title to the Pm rties was conveyed to a newly formed corporation, PSL Realty Company, wholly: owned by Piasa. PSL Realty Pg ge (**PSL’’) then en- tered into contracts for deed to the same properties with Granite Investment Company (‘*Granite’’), a limited part- nership of which James Green was the principal. Granite was to manage the properties until such time as the pro- Nos. 79-2134, 79-2211, 79-2212 & 79-2303 3 vided payments were made and the other conditions im- oo by the contracts for deed were fulfilled, upon which L would reconvey the properties to Granite. During this time PSL had an absolute right to all income generated by the properties. Piasa continued to hold the first lien mo gages as mortgagee. ! The Granite management arrangement was not success- ful. The properties continued to — grave financial difficulties and in 1971, the Fede Savings and Loan In- surance Corporation (‘‘FSLIC’’) determined that Piasa was on the verge of insolvency. Pursuant to its es under Section (f) of the National Housi ct, 12 U.S.C. § 1729(f), FSLIC procured the merger of Piasa into the Illini Federal Savings and Loan Association (‘*Tllini’’). gsc the — of the frye ae: ee owner of mo orty-eight in number, upon the apartment units and a residence of James Green. Illini also became the sole owner of PSL which, under the Base Agreement, was the holder of legal title to the properties, subject to the contracts for, deed with Granite, and entitled to the gross rentals from the operation of the units. At the time of the merger, the Green loans were in the area of $14 mil- lion and were seriously delinquent. As the principal in- ducement to Illini, FSLIC Illini entered into a Con- tribution ent, which provided that FSLIC would os ini for —_— ype 9 te “ a wi e non-earning assets it would acquire from Piasa. The : ae be granted ee the option to — nate subsidy purchasing the non-earning Piasa assets from Illini at book value. After the merger, the economic situation * gegiaemncen to the financial management and operation of the properties continued to deteriorate. Granite remained manager of the properties, but the units were incurring losses of ap- proximately $30,000 per month. Mo delinquencies continued to mount, and matters reached a climax in March 1972. On March 27, PSL and Illini demanded the books and records from Granite, but they were refused. On April 11, 1972, PSL and Illini filed a four count complaint in the Circuit Court of Madison pps 4 Illinois seeking an injunction requiring Granite and James Green to turn ’% 4 Nos. 79-2134, 79-2211, 79-2212 & 79-2303 over the books and records of Granite for examination, to refrain from collecting further rents, and to cease inter- ference with PSL’s collection of the rents. A temporary restraining order was issued to that effect upon posting of a $50, sas Ream waived. On April 28, 1972, the trial court denied Granite’s motion to dissolve the tem- rary injunction and granted the motion of PSL and filini i to appoint FSLIC, without objection by Granite, as receiver of a ae e lite. Pursuant to the powers accorded to it by the receivership order, FSLIC esignated Illini as its local agent in the management of the receivership properties. On May 23, 1972, Granite and Green commenced an in- re srs uppeal raster jy ayaa issuance of the injunc- tion and the appointment of the receiver. The matter was continued at the request of the parties and was finally argued to the Illinois Appellate Court for the Fifth Dis- trict on March 31, 1976. On July 23, 1976 the appellate court reversed the order appealed from and dissolved the temporary injunction and receivership on the ground that these ancillary remedies were inappropriate in the absence of a complaint stating an underlying cause of action. The case was remanded to the circuit court solely for an ac- counting of the income and expenses of the receivership, for a determination of the distribution of the net income, and for the award of a fee to the receiver. PSL Realty Co. st AaTO) Investment Co., 42 Tll. App. 3d 697, 356 N.E.2d On August 13, 1976, PSL and Illini filed a petition for rehearing with the appellate court. On August 18, 1976, FSLIC exercised its contractual right under the Contribu- tion Agreement to purchase the mort s from Illini at the agreed price of $10,673,000, in eer to reduce its ob- ligation to indemnify Illini for losses on Piasa’s non- Par assets. On August 26, 1976, FSLIC filed a suit in federal court to foreclose on the notes and mo 8 en- cumbering the properties, and the subsequent actions of the federal and state courts precipitated the injunction order which is the subject matter of the instant appeal. On August 31, 1976, Granite and Green also petitioned the Illinois Appellate Court for rehearing of its decision Nos. 79-2134, 79-2211, 79-2212 & 79-2303 5 dissolving the temporary injunction and receivership, as- serting, among other claims, that FSLIC had acquired the mortgages and was prosecuting a foreclosure action in federal court, and that Granite was entitled to possession of the properties. On the same day, FSLIC petitioned the district court for an order authorizing it to remain in pos- session of the subject real estate as eg go Granite opposed the petition on the grounds that FSLIC was es- top “nd i its conduct, from proceeding with foreclosure an t SLIC had no legal right to the mort- gages in light of the state court’s juriediston On Septem- r 2, 1976, the district court entered an order authorizing FSLIC to remain in possession of the properties as mort- gagee, but providing specifically: That this order shall become operative upon the ef- fective date of the mandate from the Illinois Appellate Court for the Fifth District dissolving FSLIC’s status as receiver of the subject properties. Order of September 2, 1976 at 2-3. On September 13, 1976, the Illinois Appellate Court denied the petitions for re- hearing in a supplemental opinion and the mandate issued on October 13, 1976. Having decided that it had the power to and would in fact assume jurisdiction over the properties of the then-dissolved receivership, the district court pro- ceeded with the foreclosure action. The focus of the litigation returned to the Cirenit Court of Madison County, Illinois. On April 28, 1977, the circuit court denied the petitions of Granite and Green challenging the conduct tig PSLIC as se ye sell et an age approving receiver’s report rey’ ing the receiver effective retroactively to September 30, 1976. While the ap by Granite and Green from this order was pending before the Illinois Appellate Court, the trial on the merits of the foreclosure case in federal court com- menced. On November 16, 1978, FSLIC rested its case and Granite’s motion for a directed verdict was denied. The trial was subsequently recessed and in the ring of 1979, | the district court advised the parties that trial would resume on September 24, 1979. On September 13, 1979, the Illinois A te Court entered its now controversial judgment the appeal of the circuit court order dis- 6 Nos. 79-2134, 79-2211, 79-2212 & 79-2303 charging the receiver. The appellate court held that FSLIC bre its fiduciary duty as a receiver by acquiring the notes and ees to the property and directed the cir- cuit court to order FSLIC to credit its receiver’s fee to the pores and to convey the notes and mo 8 back to Illini. In all other respects the order appealed from was affirmed. PSL Realty Co. v. Granite Investment Co., No. 77-125 (September 13, 1979). ? On September 26, 1979, the district court entered an order confirming its jurisdiction over the parties and the possession of the properties and noted that it was com- lied to do whatever was necessary to protect that juri iction. On the same day, the Honorable Charles E. Jones, Justice of the Illinois Appellate Court for the Fifth Dis- trict, entered an order staying the September 13, 1979 decision of the appellate cou:t. The Order for Stay en- _ joined FSLIC and PSL from proceeding with the fore- closure case in federal court and also restrained Illini, which was not a party to that action and against whom no relief had been awarded in the September 13, 1979 opin- ion. The Order for Stay further that any at- | tempted future transfer of title to the ne by FSLIC ini, or the current legal title holder, PSL, would be void and di that this cloud on the titles to the properties be recorded with the recorder of deeds in the respective counties in which the properties were situated. On September 27, 1979, the district court was presented with the Order for Stay issued by Justice Jones of the Illi- nois Appellate Court. The district court admonished the evans to make every effort to avoid an unseemly conflict tween the two court systems and, upon ’s re resentation that it would seek a reconsideration of the Order for Stay by the three justices of the Illinois Appel- late Court, the trial of the foreclosure action was again recessed to October 1, 1979. On Friday, September 28, a special session of the Illi- peg ogee Court was convened to entertain arguments on C’s motion to reconsider and vacate the Order for Stay. Granite gyi a petition to the court asking that C be held in contempt for ing the mortgages in 1976 and fined $10,000, farther that it be fined Nos. 79-2134, 79-2211, 79-2212 & 79-2303 7 $1,000,000 per day if it continued to prosecute the fore- closure case in federal court. On October 1, the appellate court issued an order ‘y telephone to the parties which sustained the injunctio.. against FSLIC, PSL and Illini from proceeding in federal court, but only until the issu- ance of the mandate, which was directed to issue imstanter. Later that day the parties were advised that the court had decided to revise its order and that the telephone order was inoperative. After being advised on October 1 of the pA court’s refusal to withdraw its Order for Stay, the district court re- luctantly decided that an injunction pursuant to 28 U.S.C. § 2283 was necessary in aid of its jurisdiction. The dis- trict court found that the actions of the Illinois Appellate Court interfered with the Jonesy in its possession by threatening the pre with contempt and by P oncom a cloud upon the titles to the properties. The court drew upon the authority of 28 U.S.C. § 2283 and carefully tailored an injunction to prevent any further interference with its ive possession. The injunction restrained, among others, all Justices of the Illinois Appellate Court for the Fifth District and all Judges of the [linois Circuit Courts receiving actual notice of the injunction, ... from taking any action, without prior written per- mission of this court, which in any way, directly or indirectly, impinges upon, limits or otherwise inter- feres with the jurisdiction of this court in this cause vy mma Order and Injunction of October 2, 1979 at On October 3, 1979 the Illinois Appellate Court entered an order in the form of a Brg ecg Opinion,’’ sus- taining the injunction against FSLIC, PSL and Illini, to be operative after the issuance of the mandate which agai was ‘lirected to issue instanter. Furthermore, the appellate court declined to remove its absolute restraint on the alien- ability of the properties. On October 3, 1979, the parties to the foreclosure action appeared before the district court B erigr amy to its order for the resumption of the trial. At that time, Granite filed 8 Nos. 79-2134, 79-2211, 79-2212 & 79-2303 a notice of ap from the injunction order of the dis- trict court to this Court. It also filed a motion requesting a stay of the enforcement of that order and a postpone- ment of the foreclosure proceedings pending Granite’s ap- peal. The district court denied the motion for stay, but allowed Granite until October 5 to obtain a postponement of the primes. directly from this Court, and ordered the trial to resume on October 9. On October 5, 1979, we de- nied Granite’s application for a stay of the proceedings. On October 9, 1979, Granite filed a debtor’s petition to reorganize under Chapter 11 of the Bankruptcy Act in the United States Bankruptcy Court for the Southern Dis- trict of Illinois. Later that day, Granite advised the dis- trict court of the petition oa asserted that under Sec- tion 362(a) of the Act, the foreclosure proceedings were automatically stayed. The district court recessed the trial to determine whether or not it had jurisdiction to pro- ceed with the foreclosure action under the Bankruptcy Act. On October 11, 1979, the district court convened a sched- uled hearing to show cause why the temporary injunction entered on ber 2 should not be made permanent. The Attorney General for the State of Illinois appeared in be- half of the Justices of the Illinois Appellate Court for the Fifth District and the Judges of the Third Judicia)] Cir- cuit of Illinois, and filed a motion to vacate the order and gr ong teary of the district court. The district court de- nied the motion to vacate and, after ei | argument from the Attorney General and from counsel for ranite, made the injunction permanent by order entered October 11, 1979. The Attorney General, in behalf of the foregoin named judges, and counsel for Granite filed notices o appeal from that order to this Court. These appeals have been consolidated for decision by this Court. I The sole issue for review in these interlocutory appeals is whether the district court erred in entering the per- manent injunction order. Appellate review of an injunction order is limited to the determination of whether the dis- trict court abused its discretion in deciding that the cir- cumstances of the case justified injunctive relief. Doran v. Nos. 79-2134, 79-2211, 79-2212 & 79-2308 9 Salem Inn, Inc., 422 U.S. 922, 931-932 (1975); Kole v. Bd. of Ed. of the City of Chicago, 576 F.2d 747, 748 (7th Cir. 1978). We conclude that the circumstances in this case fully warranted injunctive relief and that the injunction entered by the district court constituted the sound exer- cise of its judicial discretion. As a preliminary matter, we address the appellant’s argument that the district court lacked subject matter jurisdiction in this case since such a finding would be dispositive of the remaining claims of error asserted on appeal. The appellants argue that the Illinois Circuit Court for Madison County acquired jurisdiction over the prop- erties by its appointment of a receiver on April 28, 1972, and that, under the common law of receivers, the ea erties have remained in the exclusive possession of the state court because the receiver has not been discharged and the receivership i oe has not been returned to the original owner or to another party pursuant to court order. Accordingly, the appellants contend that the district court was incapable of obtaining exclusive jurisdiction over the properties in the foreclosure action and ‘was therefore without power to enter an 7s ong in aid of jurisdiction it never acquired. The appellees, also in reliance on the law of receivers as well as the opinions of the Illinois Ap- pellate Court in this case, contend that the state court’s control over the properties was surrendered no later than October 13, 1976, the date the mandate of the Illinois A pellate Cory dissolving the receivership was filed in the circuit vou... With the dissolution of the receivership on October 13, the appellees argue that the district court prop- erly acquired | rigs over the res by its order effec- tive on that date, and that what remained in the state court was an exclusively in personam proceeding based on that court’s residual jurisdiction over its receiver to re- quire an accounting. As a general rule, wher a court of competent jurisdic- tion has, by appropriate proceedings, taken property into its possession in receivership and appointed a receiver, the property is in custodia legis and is thereby withdrawn from the jurisdiction of all other courts. The receiver is an officer of the court and subject to its orders in relation 10 Nos. 79-2134, 79-2211, 79-2212 & 79-2303 to the property for which he is gr agen until discharged by the court. Moreover, unless the receiver has made a disposition of the property by order of the court to the original owner or to another party, upon the receiver’s the property remains in the custody of the court. When the receiver in obedience to a court order has so disposed of the property in receivership, his liability and responsibility as receiver to that oy sb ceases and since the property is no longer in custodia legi , the receivership is terminated. However, an in personam action against the receiver concerning a breach of his fiduciary duties to the receivership property may nevertheless be maintained sub- sequent to his discharge. See Clark, Law of Recewers, Sec- tion 692.1 (3d ed. 1959) ; Chicago Title & Trust Co. v. Fou Theatres Corp., 164 F.Supp. 655 (S.D.N.Y. 1958), aff’d, 277 F.2d 462 (2d Cir. 1960) (per curiam). — In the instant case, although the Illinois Ape Court dissolved the receivership by its mandate o October 13, 1976, the receiver was not discharged because the appellate court, in its opinion of September 13, 1979, reversed and remanded the April 1977 order of the circuit court dis- charging the receiver. However, no further action was taken by the circuit court because the appellate cour! sub- sequently stayed its decision rendered on September 13. Thus, under an application of the foregoing rinciples to the circumstances in this case, the receivership property would be deemed to remain in the custody of the circuit court until such time as the receiver is discharged and the receivership 9 Tg terminated by a court order di- recting a disposition of the property. However, we find the appellants’ reliance on these prin- ciples to be misplaced in the context of this case for the reason that the state court failed to acquire possession of the properties in the first instance. On October 13, 1976, the fino is Appellate Court issued its mandate dissolving the state trial court’s injunction and appointment of the receiver on the ground that no i te existed as to the control or ownership of the properties or the mort- gages encumbering them. PSL Realty Co. v. Granite In- vestment Co., 42 App. 3d 697, N.E.2d 605 (1976). Since no complaint relating to the merits of the case had i Nos. 79-2134, 79-2211, 79-2212 & 79-2303 11 been filed in the trial court before or after it ordered in- junctive relief and a receivership, the appellate court held that these orders were improvidently granted under the es- tablished rule that such ancillary remedies are inappropri- ate in the absence of a substantive cause of action. 356 NE. 2d at 607-609. It is equally settled that where, as here, the court lacks jurisdiction to adjudicate the principal matter, its orders purporting to grant the ancillary relief of tem- porary receivership are likewise beyond its jurisdiction and as such are void a mitio. Firebaugh v. McGovern, 404 Ill. 143, 88 N.E.2d 473 (1949). Since the Circuit Court of Madi- son County was found to be without jurisdiction to award the ancillary remedy of receivership, its order placing the properties in receivership and appointing FSLIC as re- ceiver was void. Since the state court was not a court of competent jurisdiction exercising control over the prop- erties which would preclude the institution of an action concerning the properties in federal court, the district court was free to assert its exclusive jurisdiction over the prop- erties in the foreclosure suit, and appropriately did so by its order effective October 13, 1976. This result is consistent with Doyne v. Saettele, 112 F. 2d 155 (8th Cir. 1940), a remarkably analogous case. In that case, the St. Louis City Circuit Court entered a decree finding a partnership had been dissolved and appointed a receiver for the assets. The Missouri Supreme Court or- dered the receivership dissolved on the ground that the petition upon which the receiver had been appointed failed to state a cause of action and thus the circuit court was without jurisdiction to appoint a receiver. Before the man- date of the supreme court was filed, an action was com- menced in the federal court seeking an accounting, a liqui- dation of the assets, and a distribution of the net income. Shortly thereafter, the district court issued an injunction restraining the parties from interfering with its jurisdic- tion over the assets which had previously been in the pos- session of the state court. The Court of Appeals for the Eighth Circuit affirmed the district court’s exercise of its injunctive powers in aid of its jurisdiction, and specifically rejected the appli- cability of the principle that because the state courts had 12 Nos. 79-2134, 79-2211, 79-2212 & 79-2308 first acquired jurisdiction of the property involved they were entitled to retain it exclusively against all other courts. Doyne, supra at 160. The court of appeals rea- soned that because the Missouri Supreme Court had ruled that the receivership must be dissolved, the state court was not a court of competent jurisdiction pe it to exercise exclusive control over the property which barred an action in federal court concerning the same property. This conclusion was reached despite the fact that the fed- eral court had acted before the mandate of the Missouri Supreme Court had been issued and that ‘‘certain acts re- mained to be done by the Missouri courts to make the writ (dissolving the receivership] completely effective.’’ Doyne, supra at 161. Having determined that the district court properly ac- quired subject matter jurisdiction over the properties in- volved in this case, it remains to be determined whether the district court properly invoked its injunctive powers to prevent interference with its exclusive possession by the state courts of Illinois. It That the district court has the power to enjoin a party to an action before it in aid of its jurisdiction cannot be disputed. 28 U.S.C. § 1651; Ex Parte Baldwin, 291 U.S. 610 (1934). It is also clear that the district court has the eta to enjoin the state courts of Dlinois pursuant to itle 28, United States Code, Section 2283, which provides: A court of the United States may not grant an injunc- tion to stay proceedings in a State court except as ex- pressly authorized by Act of Congress, or where neces- sary in aid of its jurisdiction... . 28 U.S.C. § 2283. See 14 Wright, Miller & Cooper Federal Practice and Procedure, § 3631 at p. 16 (1976); Toucey v. New York Life Insurance Co., 314 U.S. 118 (1941). The mere power to take such action is not, of course, sufficient to sustain the entry of the injunction. The cir- cumstances precipitating the injunction must elso be ap- propriate for injunctive relief. In this case the district court found itself compelled to invoke its injunctive powers Nos. 79-2134, 79-2211, 79-2212 & 79-2303 13 to protect its jurisdiction under the established principle that ‘‘when a court of competent jurisdiction has obtained possession, custody, or control of property, that possession may not be disturbed by any other court.’’ 14 Wright, Miller & Cooper, Federal Practice and Procedure, § 3631 at p. 6 (1976). See, e.g., Palmer v. Texas, 212 U.S. 118, 129- 130 (1909). The Illinois Appellate Court, in its Order for Stay of September 26, 1979 nonce | enjoins FSLIC and PSL Realty Company, — to the foreclosure action, from 3 ing with t action in federal court. Further, SLIC is restrained by that order from transferring the properties, which are subject to the jurisdiction of the dis- trict court, although the gy ig court’s order of Sep- tember 13, 1979 directed FSLIC to reconvey the properties to its predecessor. Finally, the appellate court decreed that all further attempts to convey title to the properties would be void and ordered that this cloud on the titles be recorded in each of the Illinois counties in which the properties are located. It requires no citation of authority to support the district court’s conclusion that these acts interfered with its exclusive possession and control of the same properties and mortgages. We therefore hold that the district court, in the sound exercise of its discretion, a invoked its injunctive powers to okt age its jurisdiction from further interference by the Illinois state courts. IV We have carefully considered the other arguments ad- vanced by the appellants and in view of the record find them to be equally without merit. For the foregoing rea- sons, the judgment appealed from is affirmed and the Clerk of this Court is directed to enter judgment accordingly. AFFIRMED. A true Copy: Teste: Clerk of the United States Court of Appeals for the Seventh Circuit USCA 4512—Midwest Law Printing Co., Inc., Chicago—9-12-80—350 APPENDIX B APPENDIX B. UNITED STATES COURT OF APPEALS For the Seventh Circuit Chicago, Illinois 60604 December 23, 1980. Before Hon. LUTHER M. SWYGERT, Circuit Judge Hon. WALTER J. CUMMINGS, Circuit Judge Hon. WILLIAM J. BAUER, Circuit Judge FEDERAL SAVINGS AND LOAN INSURANCE COR- PORATION, an agency of the United States of America, Plaintiff-Appellee, Nos. 79-2134, 79-2211, 79-2212 v. PSL REALTY CO., a cor- poration, et al., Defendants-Appellees, GRANITE INVESTMENT COMPANY, a limited partnership; JAMES C. GREEN; CAPITOL INDEM- NITY CORPORATION, a corporation; and HOWARD STEEL CON- STRUCTION CO., Defendants-Appellants, THE HON. CHARLES E. JONES; THE HON. JOHN M. KARNES; THE HON. GEORGE W. KASSERMAN, JR., and 1 le ee ee te he a he a a he a et eae On Petition for Rehearing and Suggestion for Rehearing En Banc. *e all other JUSTICES OF ) THE ILLINOIS APPELLATE ) COURT FOR THE FIFTH ) DISTRICT; THE HON. VIC- ) TOR J. MOSELE, and all ) JUDGES OF THE THIRD ) JUDICIAL CIRCUIT OF ) ILLINOIS, ) Appellants. ) On consideration of the petition for rehearing and suggestion for rehearing en bane filed in the above-entitled cause by Defendants-Appellants James C. Green, Granite Investment Company and Howard Steele Construction Company, Inc. and by Appellants The Hon. Charles E. Jones, The Hon. John M. Karnes, the Hon. George W. Kasserman, Jr., and all other Justices of the Illinois Appellate Court for the Fifth District, The Hon. Victor J. Mosele, and all Judges of the Third Judicial Cir- cuit of Illinois, no judge in active ser- vice has requested a vote thereon, */ and all of the judges on the original panel have voted to deny a rehearing. Accordingly, IT IS ORDERED that the aforesaid petition for rehearing be, and the same is hereby, DENIED. */ The Hon, Harlington Wood, If <5 did not participate in consideration of the petition for rehearing en banc. APPENDIX C FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, an agency of the United States of America, Plaintiff, Vv. PSL REALTY CO., a corporation, et al, Defendants. No. A-Civ-76-79, United States District Court, S. D. Illinois, Alton Division. OCS. 2, L979. MEMORANDUM ORDER AND INJUNCTION ACKERMAN, District Judge. I. Factual Background This is a mortgage foreclosure action relating to several apartment complexes located in Madison, Clinton, St. Clair and Sangamon Counties of Illinois. A brief factual analysis is necessary to fully appreciate the delicate issues which now confront this Court. As relevant here, all parties agree pa the properties here involved experienced grave financial difficulties. One of the defendants in this action, James C. Green, has reportedly admitted that in March of 1972 the apartments were losing about $30,000 per month. As a result of these financial problems, an action relating to the properties was. filed in the Circuit Court of Madison County, Illinois, and during the course of that litigation the Federal Savings and Loan Insurance Corporation (FSLIC) was appointed by the circuit court as receiver of all the properties here involved. On appeal, however, the Illinois Appellate Court for the Fifth District ordered the receivership dissolved because the plaintiffs there had sought only ancillary and temporary relief--no attempt had been made to obtain relief on the merits of any claimed cause of action. PSL 2 Realty Co. v. Granite Investment Co., 42 I11.App.3d 697, 1 I1l.Dec. 417, 356 N.E.2d 605 (5th Dist.1976). The case was ordered remanded to the circuit court for action relating to the receiver's final report and discharge. Both plaintiffs and defendants in the state court proceedings filed motions asking the Illinois Appellate Court to consider its order in which, inter alia, the receivership was dissolved, While motions to reconsider were pending and before the Illinois Appellate Court's mandate issued, FSLIC purchased the mortgages on all the apartments in the receivership for a purchase price of approximately $10.5 million. Following this purchase, on August 26, 1976, FSLIC filed this mortgage foreclosure action in federal court. By order of September 2, 1976, this 3 u% Court granted FSLIC possession of the properties here involved as mortgagee in possession. That order, however, was specifically conditioned upon the mandate of the Illinois Appellate Court in dissolving the receivership becoming effective. That mandate of the Illinois Appellate Court effectively dissolving the receivership was issued on October 13, 1976, and FSLIC took possession of the properties as mortgagee in possession under the auspices of this Court at that time. This fact was recognized in the Madison County Circuit Court's order of April 13, 1977 when that court stated "that foreclosure proceedings have been f: led upon properties presently the subject matter of this receivership and said properties are now possessed by FSLIC, as mortgagee, in the Federal Court." Since the dissolution of the 4 7% receivership, this Court has entertained several weeks of seccasdinan: including both testimony of witnesses and oral argument by counsel, in what has obviously evolved into an extremely complicated foreclosure action. FSLIC remains in possession of the properties as the mortgagee in possession of this Court, II. Current Controversy The current controversy before this Court stems from an order of the Illinois Appellate Court for the Fifth District entered on September 13, 1979. The case was there before the Appellate Court for consideration of matters relating to the receiver's final report and discharge. In its opinion, the Appellate Court, speaking through Justice Charles E. Jones, condemns as “repre- . hensible” the actions of FSLIC in pur- chasing the mortgages and filing this 5 foreclosure action while it was serving as receiver of the properties for the state court. The Appellate Court orders the case remanded to the Circuit Court of Madison County, Illinois with directions for that court to enter an order requiring that FSLIC reconvey the property to its predecessor before it can be discharged as the court's receiver. Further, FSLIC is denied all fees and compensation for its services as receiver because of its "misconduct and indiscretions incompatible with its position as an officer of the [state] court," On September 24, 1979, this Court heard arguments related to the effect, if any, of the Appellate Court's September 13 order upon this Court's ability to proceed in this action, By order of September 26, 1979, after careful con- 6 *% sideration of the pleadings, oral arguments and applicable law, this Court found that it had properly acquired jurisdiction of this fore- closure action and indicated that it was therefore incumbent upon this Court to protect that jurisdiction. This Court recognized in its September 26 order the wisdom and neces- sity of the well-established rule of law providing that "when a court of competent jurisdiction has obtained possession, custody or control of property, that possession may not be disturbed by any other court."’ 14 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction §3631, at 6 (1976). See, e. g., Palmer v. Texas, 212 U.S. 118, ‘ 129-30, 29 S.Ct. 230, 53 L.Ed. 435 (1909). However, I found that this principle did not preclude this action 7 '% in this court under the facts here presented, Accord, Doyne v. Saettele, 112 F.2d 155 (8th Cir. 1940). I specifically rejected the conten- tion that because a final accounting of the state court receiver was outstanding, and therefore the receiver had not been discharged, this Court could not exercise its jurisdiction over the subject matter of this action. Rather, I there found the tetting factor to be the control of the property. See Ryan v. First Pennsylvania Banking & Trust Co., aa9 Vad O12, Bld. Cae Bats bel oye: 1 further found that the state courts had relinquished all control or possession of the properties on October 13, 1976 when the Illinois Appellate Court mandate dissolving the receivership issued. At that point, in accordance with this Court's order of September 2, 1976, this Court assumed jurisidction over the properties and FSLIC took possession as mortgagee in possession. Thus, this Court did not interfere with the state court's jurisdiction over the properties here involved so as to violate the rule requiring that only one court control the property. Instead, this Court exercised its jurisdiction over the property when the state courts had relinquished such control with the dissolution of the receivership, notwithstanding the fact that a final report of the receiver remained out- standing, Finally, in this Court's September 26 order, this Court indicated its reluctance to enter into a conflict with its sister courts of the State of Illinois. At the same time, however, it was made abundantly clear that this Court believed 9 it had jurisdiction of this action and all necessary steps would be taken to protect that jurisdiction. Substantial problems are presented by the "Order for Stay" entered by the Illinois Appellate Court on September 26, 1979. While purporting to recognize that court's inability to limit the jurisdiction of this Court, the Illinois Appellate Court proceeds to effectively enjoin FSLIC and PSL Realty Company, both of which are parties here, from proceeding with this action in the federal court. The Appellate Court's action is premised on the tenet that the state court controls its own receiver, an officer and arm of that court. The crucial inquiry here presented is whether this state court action improperly impinges upon the jurisdiction of this Court. 10 III. Analysis First, counsel for defendants James C. Green and Granite Investment Company urges this Court to reconsider its September 26 order finding that this Court has jurisdiction over the subject matter of this cause. This motion is grounded upon the precept, earlier rejected by this Court, that because the state court receiver has not yet been discharged, that court retains first and therefore exclusive jurisdiction of the Property here involved. See 14 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3631, at 6 (1976); Palmer v. Texas, 212 U.S. 118, 129-30, 29 S.Ct. 230, 53 L.Ed. 435 (1909). Having once again carefully considered the issues here involved in light of the applicable law, I conclude the defendants’ motion must be denied ll and hereby reaffirm the findings of this Court's order of September 26 for the reasons stated therein and briefly reiterated above. In so ruling, I note the distinguishing factors which counsel suggests renders Doyne v. Saettele, 112 F.2d 155 (8th Cir. 1940), inapposite, but nevertheless adhere to the analogy between the two cases. Again I emphasize the controlling factor and the basis for the Palmer rule, control over the property, is absent in the state court proceedings here following the Illinois Appellate Court's dissolution of the receivership. To hold this Court lacks jurisdiction as suggested by counsel for James C, Green and Granite Investment Company would prove untenable. Such a determin- ation would mean that no court was exercising control over the properties 12 mX here involved, but would also preclude FSLIC from foreclosing on the allegedly defaulted mortgages. This is true despite the fact FSLIC, the owner of the mortgages, had invested substantial amounts of money into the failing properties in an effort to make them succeed, This would mean, in effect, that the properties were beyond reach of the mortgage holder because of its "reprehensible" conduct, even though the mortgages were allegedly in default. This anomaly is highlighted by the fact that counsel for defendants Green and Granite Investment Company apparently filed on September 28 a petition in state court seeking an order finding FSLIC and PSL Realty Company in contempt of that court for proceeding with this foreclosure action. In light of this Court's September 26 order, and 13 especially in light of this Court's September 24 discussion with counsel _ of the suggestion that the parties here may be subject to contempt in state court for proceedings here, I find this action by counsel, if true, to be a direct affront to the jurisdic- tion of this Court. Such actions themselves might be labeled reprehensible but, whatever the label, will not be countenanced by this Court. However, in light of this order and the fact that the parties here have not been irreparably harmed, no action will be taken by this Court at this time. Counsel is duly warned, however, that any similar conduct in the future will be dealt with summarily by this Court. I note, parenthetically, that all of the facts relating to this foreclosure proceeding, including the conduct of 14 FSLIC which the Illinois Appellate Court has found to be reprehensible, are before this Court. It is up to this Court, not the state courts, to determine whether the federal party can proceed with this foreclosure proceeding. This Court will make the necessary determina- tions after considering all of the evidence here involved. Without intimating any view on the merits of this question, I note there is apparently at least grounds for dispute as to the impropriety of these acts based upon the fact that the Circuit Court of Madison County originally approved the receiver's final report, although the same actions now said to be "reprehensible" were also presented to that court. Further, I believe there is a serious question as to whether, after the outlay of millions of dollars, FSLIC could, even if it so 15 desired, simply walk away from this action and thereby, in effect, forfeit the properties to the parties who are alleged to be in default under the mortgages, Finally, this Court takes little consolation from counsel's suggestion that FSLIC's alternative to its "reprehensible" conduct was simply to ask the state court to approve its actions in purchasing and foreclosing on the mortgages. First, the Illinois Appellate Court had ordered the receivership dissolved and, as discussed above, there- by relinquished control of the properties. Further, in light of the Appellate Court's order of September 13, this would apparently have been a futile task. In any event, as stated above, I believe a determination of whether FSLIC can proceed with this foreclosure action is a matter 16 for this Court's consideration, not that of the state court. IV, Protection of this Court's Jurisdiction For the foregoing reasons and based upon the rationale of this Court's order of September 26, 1979, this Court remains convinced that it has properly acquired jurisdiction of this foreclosure action. Given this finding, it is now incumbent upon this Court to protect that jurisdiction even if, as is apparently true in this case, a party or another court disagrees with this determination. This Court necessar- ily has the power to determine its own jurisdiction. See Fauntleroy v. Lun, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039 (1908). If parties or others subject to this Court's orders disagree with this Court's conclusion, their remedy is to appeal and they cannot be allowed to 17 simply pursue other avenues in conflict with this Court's orders. They must either abide by this Court's order or appeal. First, it is clear to me that recent events in the Illinois Appellate Court for the Fifth District do in fact impinge upon this Court's jurisdiction. For example, the contempt ee a reportedly filed in the state court amply illustrates the untenable predicament confronting FSLIC and PSL Realty Company. If they choose to proceed with this action, which is properly before this Court, these parties fact the potential of being held in contempt of the state court. Certainly the real possibility of facting contempt charges chills the participation of those parties in this proceeding. Further, the Appellate Court's order of September 13, 1979, 18 ordering FSLIC to reconvey the properties, though apparently not yet final, arguably impinges upon this Court's jurisdiction which is based upon the status of the federal entity, FSLIC, as a party. Certainly the Illinois Appellate Court's order of September 26, 1979, is a direct attempt to limit the proceedings in this Court. FSLIC and PSL Realty Company, parties to this action, are there effectively enjoined from proceed- ings in this action. Further; FSLIC is precluded by that order from trans- ferring the properties which I have found to be within the jurisdiction of this Court, although as noted above the Appellate Court's order of September 13 directs FSLIC to reconvey the property to its predecessor. Finally, title to the property under the control of this Court may have already been clouded by 19 the recording of the Appellate Court's order of September 26 in each of the Illinois counties in which this property is located in accordance with that court's order. I note also that, as if the above infringements upon this Court were not enough, this Court has lost two weeks of trial time which had been set aside specifically for this foreclosure action. This fact alone would justify action by this Court to protect its jurisdiction. Having thus found that this Court properly has jurisdiction of this action, and that this jurisdiction is being improperly impinged upon, the question ‘becomes what needs to be done to eliminate this interference and thereby allow this action to proceed. As indicated in this Court's order of September 26, 20 the power of this Court to protect its jurisdiction under these circumstances derives from two sources. First, somewhat ironically, the rule illustrated by Palmer v. Texas discussed above and relied upon by counsel for Green and Granite Investment Company in support of the argument for exclusive state court jurisdiction now applies to protect this Court's jurisdiction in dealing with the subject matter of this case. That is, based upon this Court' determination that jurisdiction is proper here, this Court's . possession of the property is exclusive and may not be disturbed by any other court. See generally, 14 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction §3631, at 6 (1976). See Toucey v. New York Life Insurance Co., 314 U.S. 118, 62 S.Ct. 139, 86 L.Ed. 100 21 (1941); lA(pt.2) Moore's Federal Practice 440.214-0.218 (1979). Secondly, a specific provision of the United States Code empowers this Court to enjoin state court proceedings where such action is necessary in aid of the federal court's jurisdiction. 28 U.S.C. § 2283. See generally, 1A (pt. 2) Moore's Federal Practice 440.208[3.-1], [3.-4] (1979). Having afforded due regard to the general principle that state judicial proceedings should be free from federal interference if at all possible, I nevertheless conclude that an injunction of the state court proceedings is required in this case to effectuate this Court's jurisdiction. I enter this order indi reluctantly because of my high regard for my colleagues on the state courts of Illinois. However, I do so 22 only because I am left with no alternative. V. Injunctive Relief Accordingly, IT IS HEREBY ORDERED that Justices Charles E. Jones, John Karns, and George W. Kasserman, Jr., and all other justices of the Illinois Appellate Court for the Fifth District, and all parties to this action, together with their officers, agents, servants, employees, and attorneys as well as persons acting in their stead or in active concert or participation with them, including judges of the state courts of Illinois, who receive actual notice of this order, by personal service or other- wise, are hereby enjoined from taking any action, without prior written permis- sion of this Court, which in any way, directly or indirectly, impinges upon, limits, or otherwise interferes with 23 *% the jurisdiction of this Court in this cause, including but not limited to: ya Enforcing or attempting to enforce the "Order for Stay" entered by Justice Charles E. Jones of the Illinois Appellate Court for the Fifth District on September 26, 1979 in PSL Realty Co. v. Granite Investment Co., No. 77-125 or any prior or subsequent order relating to the subject matter of said order; Enforcing or attempting to enforce the order entered by Justice Jones, with Justices Kunce and Kasserman concurring, in the Illinois Appellate Court for the Fifth District on September 13, 1979 in PSL Realty Co. v, Granite Investment Co., No. 77- 125; Restraining, limiting or otherwise preventing the parties and attorneys in this action before this Court, for any reason what- soever, from further proceeding with this cause, by use of con- tempt proceedings, trial, fine, punishment, imprisonment or by means of any other sanction whatosever. IT IS FURTHER ORDERED that the parties to this action and those individuals subject to the above-referenced injunctions shall 24 SHOW CAUSE, if any there be, why this injunction should not be made permanent at a hearing to be held on Thursday, October 11, 1979, at 3:00 p. m. in the United States District Court at Springfield, Illinois. At that hearing, this Court will also address the issue of whether the scope of this injunction need be broadened or narrowed in order to accomplish its purpose. IT IS FURTHER ORDERED that a copy of this order be personally served upon the parties to this action, or their attorneys, in open court on Wednesday, October 3, 1979, IT IS FURTHER ORDERED that the United States Marshall shall forthwith cause a true copy of this injunction and order to be personally served upon each of the above-named Justices of the Illinois Appellate Court for the Fifth District, F 43 and upon all other Justices of the Illinois Appellate Court for the Fifth District by delivering a true copy of this injunction and order to the Honorable Walter Simmons, Clerk of said Appellate Court in Mt. Vernon, Illinois, and upon all judges of the Third Judicial Circuit of Illinois by deliver- ing a true copy of this injunction and order to Chief Circuit Judge Victor J. Mosele in Edwardsville, Illinois. 26 APPENDIX D 42 Ill. App.3d 697 356 N.E.2d 605 PSL REALTY COMPANY, a corporation, and Illini Federal Savings & Loan Association, a corporation of the United States of America, Plaintiffs-Appellees, v. GRANITE INVESTMENT COMPANY, a lim- ited a et al, Defendants- Appellants. No. 72-158. Appellate Court of Illinois, Fifth District. July 23, 1976. Supplemental Opinion on Denial of Rehearing Sept. 23, 1976. JONES, Justice. This is an appeal from an order of the trial court denying defendants' mo- tion to dissolve a temporary injunction and appointing a receiver. This case presents the question: May a party seek the relief of a temporary injunction and the appointment of a receiver pendente lite without concurrently seeking a de- 1 termination of the merits and the ultimate rights of the parties regarding the cause in issue? On April 11, 1972, plaintiffs, P.S.L. Realty and Illini Federal Savings and Loan Association (hereinafter "Illini"), filed a four-count complaint seeking an immediate temporary injunction, without notice and without bond, against defend- ants, Granite Investment Company (herein- after "Granite"), James C. Green, Darryl Layman, and First National Bank in Madi- son (hereinafter "Bank"). Granite is a real estate firm consisting of a general partner, Green, and several limited part- ners, including Layman. Bank is the de- pository of certain funds of Granite. P.S.L. Realty is the seller, and Illini the financing institution, with respect to the. sale of Granite of certain proper- ty (valued at approximately sixteen mil- lion dollars) under several contracts 2 °°". for deeds. On the date the complaint was filed, the court, without notice to defendants, granted the temporary injunction exactly as requested by plaintiffs, upon plain- tiffs' posting bond of fifty thousand dollars, "security waived." The injunc- tion ordered Granite, Layman, and Green to refrain from collecting or attempting to collect any rents due or to become due on the properties in question and from interfering with the attempts of plaintiffs to collect such rents, and directed Granite, Layman, and Green to turn over to plaintiffs any rents already collected. The court also directed Gran- ite, Layman, and Green to turn over their books and records for examination by plaintiffs, and directed Bank to hold any funds in the account of Granite until fur- ther order of the court. Granite and Green were served with 3 ii the writ of injunction on April 17, 1972. They then filed a motion for change of venue and a motion to dissolve the tem- porary injunction. The change of venue was granted and on April 21, 1972, a hearing commenced on the motion to dis- solve. On April 26, during a resumed session of the hearing, plaintiffs made an oral motion for appointment of a re- ceiver. By its order entered on April 28, 1972, the court denied the motion to dis- solve and appointed the Federal Savings and Loan Insurance Gorporation temporary receiver of Grarite. Granite and Green filed their notice of interlocutory ap- peal pursuant to Supreme Court Rule 307 (a) on May 23, 1972. At the same time, Layman filed a motion to dissolve the injunction issued against him. The next day this motion was allowed. Plaintiffs were subsequently allowed leave to file an amended complaint as to Layman, which 4 they did. However, we need not concern ourselves with that matter, since only Granite and Green are appellants in the cause presently before us. Defendants have raised several is- sues in this appeal. However, because of the nature of this case and the manner in which we have chosen to deal with it, we need not discuss all those issues. Ini- tially we note that this case was first set for oral argument in October of 1972, and thereafter was again set for oral ar- gument on several occasions. However, upon the occasion of each setting the or- al argument was continued at the request of the parties because a settlement of the matters involved was imminent. The negotiations for a settlement proved fruitless, and the parties requested that the case again be set for oral argument. Consequently, the case was finally orally argued on March 31, 1976. 5 Although approximately four years had passed from the time the temporary injunction was issued and the receiver appointed until the time of the oral argument, during the argument the attor- neys for the respective parties made it clear to this court that no further ac- tion had been taken in the trial court with respect to the substantive matter in dispute. Although the trial court be- low had issued what it termed a "tempor- ary injunction," no complaint relating to the merits of this case had been filed at or before the time the injunction was granted and, apparently, none has been filed since. Plaintiffs' complaint for injunction made no reference to a pending or contemplated action upon the merits of the disputed matter. From the fact of plaintiffs' complaint and plaintiffs' subsequent oral motion for the appoint- ment of a receiver, it appears that the 6 injunctive relief and receivership consti- tuted the only relief plaintiffs wanted. The lack of further action during the four years that have elapsed since the time plaintiffs' requested relief was granted clearly indicates that the injunction and receivership, although termed by the court "temporary,'' amounted to the only relief plaintiffs wanted, and, for that matter the only relief they would ever want. It is established that a temporary or preliminary injunction should not be granted where its effect would be to give all the relief that could be obtained af- ter a final hearing on the merits of the dispute. (People's Gas Light & Coke Co. v. Cook Lumber Terminal Co., 256 I1l. App. 357; Cassidy v. Triebel, 337 Ill. App. 117, 85 N.E.2d 461; Knuppel v. Adams, 12 I11. App.3d 708, 298 N.E.2d 767..) The purpose of a preliminary injunction is not to finally decide the controverted facts or 7 \ mexits of a case. (Lonergan v. Crucible Steel Co. of America, 37 I11.2d 599, 229 N.E.2d 536.) The preliminary injunction is merely provisional in nature and con- cludes no rights (Nestor Johnson Mfg. Co, v. Goldblatt, 371 Ill. 570, 21 N.E.2d 723; Schuler v. Wolf, 372 Ill. 386, 24 N.E.2d 162), its office being merely to preserve the status quo until a final hearing on the merits. (Dunne v. Rock Island County, 288 Ill. 359, 123 N.E. 501; Duval v. Sev- erson, 15 Ill. App.3d 634, 304 N.E.2d 747.) That a receivership is of the same nature and serves a similar function has been well established. "By the weight of authority it is a well-recognized province of equity jurisdiction to give aid to an action in another court either by injunctive process or by appointment of a receiver, whenever either or both of these remedies are necessary to pre- serve the existing status of the property until the proper distri- bution of the property has been determined in litigation then pending respecting the property, 8 provided irreparable damage may result if the existing status of the property is not preserved. Such an injunction is merely a mode by which the court preserves the property in dispute, with the least injury to all parties, un- til it can finally determine their respective rights and upon such a hearing, if a perpetual injunction is ordered, the defendant may be required to restore the status." 2 Puterbaugh, Chancery Pleading and Practice (7th Ed.), p. 626. "By the weight of authority it is a well-recognized province of equity jurisdiction to give aid to an action in another court, either by injunctive process or by the appointment of a receiver whenever either or both of these remedies are necessary to pre- serve the existing status of pro- perty until the proper disposi- tion of the property has been de- termined in litigation then pend- ing respecting the property, pro- vided irreparable damage may re- sult if the existing status of the property is not preserved." Kulwin v. Harsh, 232 I1l. App. 419, 423-424. To the same effect is People ex rel. Hoag- land v. Streeper, 12 I11.2d 204, 211, 145 N.E2d 625, 628-629. To say that a "tem- porary" injunction and receivership are "provisional" in nature, or that they are 9 used "in aid to" an action, or that their function is "to preserve the existing status of property until" some litigation determines the proper disposition of the property, is merely to say that a "ten- porary" injunction and a receivership are ancillary remedies and cannot be main- tained as the sole relief sought. That this is so, subject to a few specific ex- ceptions in cases of waste and other simi- lar torts, has been often stated. "/S/uch matters as a receiver- ship and preliminary injunction cannot per se be the subject of suit in equity." De Rees v. Costaguta, 2 Cir., 275 F.' 172, 175-176. As to the appointment of a receiver, the court in Davis v. Jacksonville & P. Ry. Co., 180 Ill. App. 1, 12 pronounced: "That the general rule is, that the appointment of receivers is an ancillary remedy in aid of the primary object of litigation between the parties, and such relief must be germane to the principal suit; and a suit can- 10 not be maintained under this general rule where the appoint- ment of a receiver is the sole primary object of the suit and no cause of action or ground for equitable relief otherwise is stated." A similar statement was made in Gauer v. Voltz, 190 Ill. App. 189. As to a preliminary injunction, some- times referred to as an injunction pen- dente lite, the court in Lambert v. Al- corn, 144 111. 313, 330, 33 N.E. 53, 58, stated: "/A/n injunction pendente lite was a mere ancillary writ, which the complainants were at liberty to apply for or not, as they saw fit. Its only office was to pre- serve the status quo until a final hearing could be had." Numerous other authorities support the proposition that a preliminary injunction and a receivership are merely ancillary remedies and cannot constitute the ulti- mate relief afforded in a particular dis- pute, except, as we have already stated, in cases of certain torts such as waste. 11 For example, see: Baker v. Backus' Ad- ministrator, 32 Ill. 79; Chicago Ry. Equip. Co. v. Nat'l. Hollow Brake Beam Co., 141 Ill. App. 572, aff'd 239 I11. 111, 87 N.E. 872; Hillmer Co. v. Behr, 196 Ill. App. 363; Crenshaw v. Looker, 185 Mo. 375, 84 S.W. 885; Bledsoe v. Grand Lodge of United Bros. of Friendship, (Tex. Civ. App.) 53 S.W.2d 73; 26 A.L.R. 33, sec. I, p. 35; 77 A.L.R. 717; 27 Am. Jur.2d Equity, sec. 11, p. 529; 42 Am. Jur.2d Injunctions, sec. 1l, So. gor: 65 Am. Jur.2d Receivers, sec. 25, p. 878; 75 C.J.S. Receivers § 5, p. 662-665; 1 High, Injunctions, sec. 7 and 8, p. 7-8. Having determined that a receiver- ship and a preliminary injunction are merely ancillary remedies which cannot stand alone as the full and ultimate re- lief afforded with respect to the matter in dispute, the question arises as to what should be done when these remedies 12 are pursued not as ancillary remedies but as the only relief sought. We think this question was properly answered long ago in the case of Patterson v. Miller, 57 N.C. (4 Jones' Equity) 451. In that case an interlocutory appeal was taken from the refusal of the lower court to dissolve an injunction. The North Caro- lina Supreme Court held that the injunc- tion, not having been sought as ancil- lary to some full relief upon the merits of the dispute, had been improvidently granted and dissolved the injunction. The court stated: "The relief by injunction does not per se constitute an equity; except when it is to prevent torts, as to stay waste, destructive trespass, and the like; but is ancillary to some primary equity which the bill seeks to enforce; * * * It follows that to entitle a plain- tiff to this ancillary relief, the bill must contain matter sufficient to make out some primary equity, in aid of which the injunction is asked for. * * * 13 What primary equity does the bill seek to establish? It lays the foundation for none. There is no averment of an offer to rescind the contract and recon- vey, because of the defect in the title, or of a willingness on the part of the plaintiff to do so, and without it, the pray- er for general relief is unmean- ing. No further proceeding seems to be contemplated in this Court except the injunction; no other order is asked for; there is not even an intimation that the plain- tiff wishes a reference in res- pect to the title, or a sugges- tion of what action is to be taken in regard to it, supposing the plaintiff is entitled to have such an order after the contract has been executed by his accept- ing a conveyance, and relying on the covenants of seizin and Warranty. Nor is there an aver- ment, that the plaintiff has in- stituted a suit at law, or intends to do so, upon the covenants of seizin, so as to try, in the courts of common law, the vali- dity of the defendant's title. In short, without laying the foundation for any further action in this Court; and without pro- posing to proceed in any other court, the plaintiff, being in possession under a deed with full covenants, desires to hold the land without paying for it! and to enjoin the collection of the purchase-money, for an inde- finite time, or until those claim- ing under one Cathcart, who are 14 not parties to this proceed- ing, and over whom the Court has no control may see proper to institute an action of eject- ment: It is not according to the course of this Court, to al- low litigation to be commenced and left in a condition, inde- finite, unfinished, and depend- ent upon the action of strangers." 57 N.C. at 453-454. To the same effect is Washington v. En- ery, 57 N.C. (4 Jones’ Equity) 29. In the instant case, plaintiffs brought a complaint for a temporary in- junction and later made an oral motion for the appointment of a receiver. There was no averment that a further proceeding was pending or contemplated; and in fact, no further proceeding seems to be con- templated. Granite has been forced to turn over its records, its books, and ics funds and to cease collecting rents on the property involved. Since 1972 the Federal Savings and Loan Insurance Corporation has managed the business of Granite as a court appointed receiver. 15 Plaintiffs, we presume, have been paid the regular installments pursuant to the contracts for deed. They need no further relief and do not appear ready to seek any. Regardless of whether plaintiffs should or should not ultimately prevail on the merits of this dispute, they should not be allowed to obtain full and ultimate relief by way of the an- cillary remedies they have been afforded. We, therefore, have concluded that the temporary injunction and the receiver- ship must be dissolved. One further point need be con- sidered, however. As we pointed out previously, the four years delay between the first setting for oral argument of this case and the oral argument, result- ed from the stipulations of the parties that a settlement of the dispute was contemplated and imminent. In that res- pect defendants acquiesced in the con- 16 tinued receivership status. And not on- ly did they acquiese in the continuation of the receivership, defendants agreed to the appointment of a receiver initi- ally. At the hearing on April 26, 1972, counsel for defendants stated: "We also have no objection to the Court appointing the Federal Savings and Loan Insur- ance Corporation as a receiver, or any other party, or any other person who is not a party to this directly at this time as a receiver." Therefore, although we have concluded that the temporary injunction and the receivership should be di [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1538%3A1. Public record. Not legal advice.