# Petition for Rehearing — Grant v. AB Leach & Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Rehearing
- **Published:** January 1, 1930
- **Citation:** 280 U.S. 351

## Text

>9 PEM EE oN U0} "e

SPURT IT SRM To ee

Pe el nin eis sat aie, abe 4

Offlee Supreme Court, U

JAN 830 1930

FILE COPY CHARS EuORE

IN THE

Supreme Court of the United States

OCTOBER TERM, 1929.

No. 9

HUGH W. GRANT, Receiver of the Struthers Furnace Company,
Petitioner,
vs.

A. B. LEACH & CO., INC.,
Respondent.

RESPONDENT’S PETITION FOR REHEARING.

EDWARD R. JOHNSTON,
FLOYD E. THOMPSON,

HENRY JACKSON DARBY,
Attorneys for Respondent.

GUNTHORP-WARREN PRINTING COMPANY, CHICAGO.

SUBJECT INDEX.

Summary of reasons why rehearing should be granted......

ARGUMENT.

Point I.

The Court inadvertently construed against the respond-
ent its contract with The Struthers Furnace Company
for the purchase of the bond issue................

Point II.

The Court’s holding that the Common Pleas Court had
jurisdiction of the Petitions for the appointment of a
receiver in the suits of the mortgage Trustee and pre-
ferred stockholder, and that, therefore, the orders sub-
sequently made by it could not be collaterally attacked,
is demonstrably erroneous.................22.000-

Criterion adopted by the Court. Its vices........

Cases showing that Criterion adopted by the court
in case at bar is fallacious....................
The Criterion that is applicable to the facts herein. .
The double limitation upon the authority of a court
in a cause whereof it has general jurisdiction. . .

Another fallacious Criterion adopted by the court
eS Es iho ds buds Cavnrerectiand ace

vod wi sci seake Odea kao es ceae awe

Point ITI.

This Court departed from the issues joined in the Cir-
cuit Court of Appeals, and failed to give effect to the
stipulation of the parties in that court............

——

Point IV.

The Court of Common Pleas was without jurisdiction of
the subject-matter of the stockholder’s suit, which was
solely for the appointment of a receiver, and the order
appointing a receiver therein was coram non judice
EE ksi nt R Sb once ae a eteis wassccccces
This Court’s decision herein is based upon a misconcep-
tion of what constitutes jurisdiction, an inadvertent
misstatement of Respondent’s contention, and cases
that have practically been overruled. It is contrary
to the Ohio decisions, numerous decisions by this Court
and the overwhelming weight of authority.......... 23-30
Inadvertent misstatement of Respondent’s contention 23
Jurisdiction defined .................0e ee eeeee 24

There is no class of cases to which the stockholder’s
EE habbo Ge Ah Sekwhe cn euss Rives > 24-26

Cases holding that all orders in the stockholder’s
suit were void, and consequently subject to Col-
EE i oN and

Reed, Ex parte, 100 U. S. 13, 23, and cases cited..........
Remington v. Superior Court, 69 Cal. 633, 11 Pac. 252...... 1
Reynolds v. Stockton, 140 U. S. 254, 35 L. ed. 464, 11 Sup.

V

st. Louis, Vandalia and T. H. R. R. Co. v. Terre Haute and
Indianapolis R. RB. Co., 145 U. S. 393...........-.-00- oy

Sanger v. Upton, Assignee, 91 U. S. 56, 58, distinguished... 16
Seamster v. Blackstock, 83 Va. 232, 5 Am. St. Rep. 2S. E. 36 8

Sennott’s Case, 146 Mass. 489..........-.-.-eeeeeeeeees 7
Shields v. Coleman, 157 U. S. 168...........--0+eeeeeeee 31
Shriver’s Lessee v. Lynn, 2 How. 43, 11 L. ed. 172.......... 8
Shull v. Fidelity & Guaranty Co. 81 W. Va. 184.......... 32
Siebold, Ex parte, 100 U. S. 371............ eee e eee eeee 7
Snow, In re, 120 U. S. 274......... cece cece e eee eeeees 7
Spoors v. Cowen, 44 Ohio State 497, 9 N. E. 132, 135..... 8, 10, 26
State ex rel. McManus v. Muench, 217 Mo. 124, 117 S. W.

QB, 2D nce cc cc ccc cececcccccccceccccccnseceececess 10, 24
State ex rel. Merriam v. Ross, 122 Mo. 435, 25S. W. 947... 28
State v. Molly, 18 Iowa, 525...........- eee cece cece cence 10

State v. Union Nat. Bank, 145 Ind. 537, 44 N. E. 585, 588.. 30
Sterrett, etc. v. Second Nat’l Bank of Cincinnati, 248 U. S.

FB, BD nc ivcccnsencsgeccccevecseesscussnscccssccencs 7
Stewart v. Stewart Hotel Co. (Cal.) 164 Pac. 620.......... 3
Strobe v. Downer, 18 Wis. 10............. eee ee ee eeeee 10
Taylor v. Exnicious, 197 Cal. 443, 241 Pac. 397............ 27
Texas, etc. R. R. Co. v. Gay, 86 Tex. 604, 26 S. W. 599..... 28, 31
Townsend v. Gordon, 19 Cal. 188.............. eee eens 8
Vance v. Mfg. Co., 82 Fed. 251............. cece eee eeees 22
Verry v. McClellan, 6 Gray (Mass.) 535, 66 Am. Dec, 423... 8
Waterman v. Lawrence, 19 Cal. App. 753, 218 Pac. 61...... 10
Whitney v. Hanover Nat’l Bank, 71 Miss. 1009, 15 So. 23... 28
Williams v. Childress, 25 Miss. 78.............-00eeeeee 10
Williamson v. Berry, 8 How. 495, 543.................--- 13
Wilmot v. Cole, 10 0. D. 77, 23 B. 339................4.- 31
Windsor v. McVeigh, 93 U. S. 274, 282...............45. 9
Withers v. Patterson, 27 Tex. 491..............0eeeeeeee 6
Wood v. Stanberry, 21 Ohio State 142................-4. 8, 13

Wright v. Edwards, 10 Ore. 208............0eceeeeeeees 8

TEXTBOOKS.
2 Austin’s Jurisprudence, p. 658 (Lecture 39)............ 4
BD GRE FUR, B. GER ewe cc wwvcceveccesuctvcveesevees 4
1 Freeman on Judgments (5th ed.) § 318, p. 633.......... 19
1 Tardy’s Smith on Receivers (2d. ed.) § 14, p. 51...... 25
= 4
§ 338, p. 845...... ll

STATUTES.
Ce CE cr anccwesene san asrecvesesesc esses 12, 13
MS chGANb On 0040040 VeneVes es nee ness 12
Throckmorton’s Ohio Code (1929), Sec. 1532.............. 31

Revised Statutes, United States, §§ 4972, 5044, 5046, 5047.. 18

IN THE

Supreme Court of the United States

OCTOBER TERM, 1929.

No. 9

HUGH W. GRANT, Receiver of the Struthers Furnace Company,
Petitioner,
vs.

A. B. LEACH & CO., INC.,
Respondent.

RESPONDENT’S PETITION FOR REHEARING.

May IT PLEASE THE CouRT:

The respondent respectfully asks that a rehearing be
granted in this cause for the following reasons:

1, The Court inadvertently construed against the
respondent its contract with The Struthers Furnace
Company for the purchase of the bond issue. The
construction of this contract obviously concerns the
merits, which were not properly before this Court.
The Court’s construction is, we believe, erroneous.
Whether it is or not, this Court should not, in pass-
ing upon purely jurisdictional questions, express its
views on the merits.

2. The Court’s holding that the Common Pleas
Court had jurisdiction of the petitions for the ap-
pointment of a receiver in the suits of the mort-
gage trustee and preferred stockholder, and that,
therefore, the orders subsequently made by it could

not be collaterally attacked, is, we respectfully sub.
mit, contrary to settled law.

3. The Court departed from the issues joined in
the Circuit Court of Appeals, and failed to give ef.
fect to the stipulation of the parties in that court.

4. The Court (in one instance) inadvertently mis.
stated the contentions of respondent.

5. A re-examination of the record will, it is be.
lieved, show that the Court has inadvertently failed
to pass upon the respondent’s contentions, and that
the decision rendered is unsound.

6. The Court’s decision that Grant, as receiver,
could sue in the District Court is based upon a mis-
apprehension of the facts, and, we respectfully sub-
mit, is erroneous.

I,

This honorable court inadvertently construed against the respond-
ent its contract with the Struthers Furnace Company for the
purchase of the bond issue.

On page 2 of the Court’s opinion it is said:

**1. The bonds in question were part of an issue
of eight per cent bonds of the Furnace Company,
secured by a mortgage upon certain real and per-
sonal property. In 1922 Leach & Co. purchased from
the Furnace Company a large number of these bonds,
at 903 and accrued interest, in exchange for 3,000
shares of the seven per cent preferred stock of the
Furnace Company, at 85 and accrued dividends."’
(Italics ours.)

The contract for the purchase of the bonds gave Leach
& Co. the option to purchase at 90} the whole or any
part of an issue of $1,500,000. par value. (R. 22.) It
also provided that in the event the option was exercised.
Leach & Co. should pay cash for all bonds purchased up
to $800,000. par value. If bonds in excess of $800,000.

—_—

3

par value were purchased, then Leach & Co. were to
pay for bonds of the par value of $450,000. partly in
cash and partly in preferred stock. The remaining bonds,
of the par value of $250,000., if taken, were to be paid
for in cash. (R. 23.)

Leach & Co. made one election to take the entire issue
of bonds, (R. 135), and thereafter did so. When Grant,
as receiver, sought to rescind this executed contract, he
did not tender the preferred stock and the more than
$1,000,000. in cash that had been paid thereunder, but
only the preferred stock. The respondent contended that
partial rescission of an executed contract was unknown
to the law; that it had never agreed to pay all cash for
all the bonds, and that the court could not make a new
or better contract for the company, especiaily some three
years afterwards when conditions had changed. The
respondent also contended that Grant, as receiver, could
not separate that part of the contract that permitted re-
spondent to pay partly in cash and partly in preferred
stock from the other parts of the contract, in view of the
single election made by respondent, and that in any event
no bonds had been paid for wholly in preferred stock.

The District Court held that Grant could at the same
time ‘‘both approbate and reprobate,’’ and that there
was no other consideration for part of the bonds than
3,000 shares of preferred stock. (R. 205, 213.)
According to the authorities the learned court was
wholly wrong.’ However, that question is not now

1, Stewart v. Stewart Hotel Co., (Cal.) 164 Pag. 620.
Memphis & Little Rock R. R. Co. v. Dow, 120 U. S. 287.
McKee v. Title Ins. & Trust Co., (Cal.) 113 Pac. 140.

Missouri River, Ft. Scott & Gulf R. R. Co. v. Commis-
sioners, 12 Kans. 482—Brewer, J.

Dickerman v. Northern Trust Co., 176 U. 8. 181, 202.

—

4

before this Court, nor was it argued on the hearing.
What this Court does by means of the excerpt above
quoted is not to state the facts, but to construe the con-
tract, apply the law, and announce legal conclusions,
This cannot fail to prejudice the respondent in any fn-
ture hearing on the merits. Since the Court merely un-
dertook to determine jurisdictional questions, we respect-
fully submit that any intimation of its views on the merits
is improper.

Jones v. Randolph, 104 U. S. 108, 110.

Meccano, Ltd. v. Wanamaker, 253 U.S. 136.

Glasgow v. Baker, 128 U. S. 560, 577-8.

2 Austin’s Jurisprudence, p. 658 (Lecture 39.)

Hoe vy. Wilson, 9 Wall. 501, 502.

We respectfully ask that the foregoing excerpt from
the opinion herein be changed to state the facts, rather
than legal conclusions.

II.

The court’s holding that the common pleas court had jurisdiction
of the petitions for the appointment of a receiver in the suits |
of the mortgage trustee and preferred stockholders, and that,
therefore, the orders subsequently made by it could not be col-
laterally attacked is, we submit, demonstrably erroneous.

On page 5 of the opinion it is said: |
‘‘The Common Pleas Court had jurisdiction of

Burnes v. Burnes, (C. C. A. 8th Cir.) 137 Fed. 781, 800.

St. Louis, Vandalia and T, H. BR. R. Co. v. Terre Haute
and Indianapolis R. R. Co., 145 U. 8. 393.

Bullard v. Eames, (Mass.) 106 N. E. 584, 586.

Pittsburgh F. B. & T. v. American Clay Machy. Co.,
(Ohio) 106 N. E. 33.

Central Ohio Natural Gas & F. Co. v. Capital City Dairy
Co., (Ohio) 53 N. E. 711.

—

5

the petitions for the appointment of a receiver in
the suits of the mortgage trustee and preferred
stockholder; and the power to determine whether,
under the allegations of the petitions, it was author-
ized to appoint a receiver of the Company's prop-
erty; to what extent and for what purposes; and
what authority should be vested in him as such re-

ceiver.’’

This is the first ground upon which the Court rested
its decision, and the principle above stated is applied on
pages 5 and 6 of the opinion. It is there held that neither
the orders appointing the receiver, nor the order direct-
ing him to sue, even if they were so erroneous that they
would have been set aside on appeal, can be collaterally
attacked, because the court had jurisdiction of the peti-
tions and was authorized to determine what action it
should take.

We respectfully submit that the vice of this Court’s
decision lies in—

(a) the erroneous assumption that the power of a
court to determine whether or not it is authorized
to act renders any action taken by it invulnerable
to collateral attack;

(b) the equally erroneous assumption that where
jurisdiction of a cause is once obtained no order
thereafter made therein can be collaterally attacked;

(c) a misapprehension of what constitutes juris-
diction, and

(d) the erroneous conclusion that the Common
Pleas Court had jurisdiction to make the orders in
question.

In every case that is, or can be, brought before it a
court has the power to determine whether or not it is
authorized to grant the relief prayed for, and whether
or not it should do so. But that is far from determining
jurisdiction,

—

6

Take, for example, the case where an application for
letters testamentary or of administration is made to a
probate court. The court has power to grant these let-
ters in a proper case. Certainly it has power to de-
termine whether or not it is authorized to grant the let-
ters. But even if the proceedings are in all respects
regular, if it should appear after the estate has been
closed that the supposed decedent was in fact still alive,
the entire proceedings would be void, and any sale of
real estate or other property would be subject to collat-
eral attack.2, Or take the case where a person has been
convicted of an offense under an unconstitutional act,
or where a single offense has been split up into several
causes and the offender pursued twice or more. In each
of these cases the court would have the power to de-
termine the questions presented to it for decision. And
yet, in case of conviction the judgment would be void.

2. Griffith v. Frazier, 8 Cranch 9, 3 L. ed. 471.
Duncan v. Stewart, 25 Ala. 408.
Beckett v. Selaver, 7 Cal. 215, 242.
Jochumsen v. Suffolk Savings Bank, 3 Allen (Mass.) 87.
Withers v. Patterson, 27 Tex. 491.

According to the Court’s opinion herein, even if it appeared
on the face of an application for letters testamentary upon the
estate of a person that the person in question was alive and compos
mentis, no order granting the application or ordering the sale of
real estate would be subject to collateral attack. We say this for
the reason that an action solely for the appointment of a receiver,
at the instance of a stockholder, who charges no breach of duty
or other wrongful act, is as unknown to the law as an application
for letters of administration or testamentary upon the estate of a
living person. And yet this Court held that because the Court of
Common Pleas had “jurisdiction” of the petition and power to
determine whether it was authorized to appoint a receiver, the
orders entered by it could not be collaterally attacked even by
one not a party to the proceeding when some one else claimed the
benefit of them.

7

No appeal would be necessary. The defendant would
be released on habeas corpus.®

It follows, therefore, that the eriterion adopted and
applied by the Court in the case at bar would seem to
have no foundation in either logic or law.

The reasons given in the cases cited are conclusive of
the proposition that a court may obtain jurisdiction of a
cause and yet make an order therein that is void, and,
therefore, subject to collateral attack. As above nointed
out (b) the Court’s opinion herein rests upon the con-
trary assumption.

Take, for example, the case where an offense is duly
and regularly charged, and the defendant has been duly
and regularly tried and found guilty in a court having
jurisdiction of the cause. There can be no doubt of the
authority of the court to hear the cause. And yet, if
the offense is punishable only by fine and not by impris-
onment, and the latter penalty is imposed, the judgment
would be void just as if jurisdiction of the cause had
never existed.*

Another example: Take the case of Sterrett v. Second
National Bank, 248 U. S. 73, 76, as well as the other
cases cited on p. 37 of our original brief in opposition
to the petition for certiorari herein, where a local court
with undoubted jurisdiction of the cause entered an or-
der directing its receiver to bring suit in a foreign juris-

3. Hans Nielsen, 131 U. S. 176, 182.
Ex parte Siebold, 100 U. S. 371.
Ex parte Lange, 18 Wall. 163.
In re Snow, 120 U. S. 274.
In re Coy, 127 U. 8S. 731, 758.
Sennott’s Case, 146 Mass. 489.

4. Ex Parte Reed, 100 U. S. 13, 23, and cases cited.

8

diction. Unquestionably it had the power to determine
whether it was authorized to grant the application for
leave to sue. Yet the order was a nullity.

Or take the case of proceedings to foreclose a mort-
gage where service is obtained by publication of sum-
mons and a personal judgment is rendered against the
defendant ;° or the case of an assignment of dower where
it includes lands not embraced in the petition for assign-
ment®; or orders authorizing or confirming the sale of
lands by administrators or trustees where the land in
controversy was not included in the petition to sell’; or
the case where land is ordered sold by an administrator
but without any showing that a sale is necessary to pay
debts*; or the case where in an action on a (mortgage)
note for a money judgment only, a judgment of fore-
closure is entered.® In each of these cases the judgment
would be wholly void, and consequently subject to col-
lateral attack, despite the fact that it was made in a
cause whereof the court had (general) jurisdiction.

Wood v. Stanberry, 21 Ohio State 142.
6. Falls v. Wright, 55 Ark. 562, 29 Am. St. Rep. 74, 18
S. W. 1044.
Corwithe v. Griffing, 21 Bart. (N. Y.) 9.
Seamster v. Blackstock, 83 Va. 232, 5 Am. St. Rep,
28. E. 36.

7. Shriver’s Lessee v. Lynn, 2 How. 43, 11 L. ed. 172.
Verry v. McClellan, 6 Gray (Mass.) 535, 66 Am. Dec. 423.
Townsend v. Gordon, 19 Cal. 188.

8. Heirs of Bishop v. Hampton, 15 Ala. 761, 766.
Wright v. Edwards, 10 Ore. 298.
Hays v. McNealy, 16 Fla. 409.
Kindell v. Titus, 56 Tenn. (9 Baxter) 727, 739.

9. Spoors v. Cowen, 44 Ohio State 497, 9 N. E. 132, 135.

—

9

This is true for several reasons. One of these is that
courts cannot ex mero motu set themselves in motion,
nor have they power to decide any questions except those
presented by the parties in their pleadings. What is de-
cided within the issues is coram judice; anything beyond
them is void. In other words, general jurisdiction of a
controversy is not alone sufficient. It does not give the
court a universal license to enter such orders as it
pleases. And particular matters that may be determined
by a court in a cause whereof it has general jurisdiction
are doubly limited. Firstly, by the general nature of
the controversy’, and, secondly, by the issues presented
by the pleadings.

Now let us apply the foregoing principles to the case
at bar."

10. As pointed out by Mr. Justice Field in Windsor v. McVeigh,
93 U. S. 274, 282:

“If, for instance, the action be upon a money demand, the
court, notwithstanding its complete jurisdiction over the sub-
ject and parties, has no power to pass judgment of imprison-
ment in the penitentiary upon the defendant. If the action
be for a libel or personal tort, the court cannot order in the
case a specific performance of a contract. If the action be
for the possession of real property, the court is powerless to
admit in the case the probate of a will. Instances of this
kind show that the general doctrine stated by counsel is sub-
ject to many qualifications. The judgments mentioned, given
in the cases supposed, would not be merely erroneous; they
would be absolutely void; because the court in rendering them
would transcend the limits of its authority in those cases.”

11. The two petitions filed in the Court of Common Pleas are
so essentially different that lumping them together, as this Court
did in its opinion herein, cannot fail to result in confusion. We

shall take up each petition separately.

a

10

Of course, the Court of Common Pleas had general
jurisdiction of the controversy presented by the petition
of the trustee to foreclose the mortgage. This fact is
important, but by no means conclusive. The question is,
what controversy was presented to the court for de-
cision? As demonstrated in our former briefs herein,
the petition showed on its face that the mortgage did
not cover all the property of The Struthers Furnace
Company, and whether a receiver should be appointed
for property not so covered was not presented to the
court for decision. It was not an issue that could be
determined by the court. And its order appointing a
receiver for property not covered by the mortgage was,
pro tanto, not responsive to the pleadings, but coram
non judice and void.'*

The court has failed to pass upon this point directly,
or to state all the facts. In its statement the Court says

12, Reynolds v. Stockton, 140 U. S. 254, 35 L. ed. 464, 11
Sup. Ct. Rep. 773.

Hurr v. Davis, 155 Minn. 456, 193 N. W. 943, 194 N. W.
379, petition for certiorari denied, 263 U. S. 709, writ
of error dismissed, 267 U. S. 572.

Spoors v. Cowen, 44 Ohio State 497, 9 N. E. 132.

Remington v. Superior Court, 69 Cal. 633, 11 Pac. 252.

Waterman v. Lawrence, 19 Cal. App. 753, 218 Pac. 61.

Knopf v. Morel, 111 Ind. 570, 13 N. E. 51.

Williams v. Childress, 25 Miss. 78.

State ex rel. McManus, 217 Mo. 124, 117 S. W. 25.

Banking House, etc. v. Dukes, 70 Neb. 648, 97 N. W. 805.

Edinburg Irr. Co. v. Ledbetter, (Tex.) 247 S. W. 335.

Strobe v. Downer, 13 Wis. 10.

State v. Molly, 18 Iowa, 525.

Eames v. Northumberland, 44 N. H. 67.

11

that the trustee prayed that a receiver be appointed to
take charge of the ‘‘property of the defendant,’’ (p. 2),
and apparently some reliance is placed upon the prayer
of the trustee. However, in our supplemental brief (p.
16) we cited decisions by the Supreme Court of Ohio in
support of the universal rule that a prayer is no part of
the issues to be tried, and cannot authorize relief not
warranted by the facts pleaded.'* Manifestly, this point
should not be ignored by the Court, and, clearly, to say
that the Common Pleas Court has jurisdiction of the
petition is to stop short of the crucial point in the case.
It had (general) jurisdiction, yes, but not jurisdiction
to appoint a receiver for property not covered by the
mortgage. That question was not presented by the
pleadings.

Since the order appointing Grant receiver for prop-
erty not covered by the mortgage was, pro tanto, void, it
necessarily follows that Grant cannot sue Leach & Co.
even though he was ordered to do so by the Court of
Common Pleas. The claim asserted by the receiver
against Leach & Co. ‘‘was a chose in action of the Fur-
nace Company,’’ (Opinion, p. 5), which was not, of
course, covered by the mortgage, neither was it ever
assigned by the Struthers Company to the receiver, who
does not take title even to property of which he is law-
fully appointed receiver.'* If the order appointing him

13. To which may be added:
Petition of Furness, 62 Cal. App. 753, 218 Pac. 61.

14. Lafayette Bank v. Buckingham, 12 Ohio St. 419.
Morley v. Cleveland Hippodrome Co., 23 Ohio C. C. (N.
S.) 295, 297.

1 Tardy’s Smith on Receivers (2nd ed.) § 338, p. 845.

12

receiver of this chose in action was void, then, of course,
neither the Court nor the receiver could thereafter take
any lawful action concerning it, particularly so far as
its enforcement is concerned.

This Court says that section 11897 of the General Code
of Ohio provides that the court may authorize a re-
ceiver to sue, ete., and that

‘‘under this provision the Common Pleas Court had

jurisdiction to determine what actions the receiver
might bring.’’ (P. 6.)

Manifestly, the authority granted by section 11897 is
limited, not only by the general nature of the proceed-
ings in which the receiver is appointed, but to cases con-
cerning property of which he had lawfully been appointed
receiver. It certainly would not include power to author-
ize the enforcement of a chose in action in a case where
the pleadings did not authorize the court to appoint a
receiver of it." A court always has jurisdiction for cer-

15. In simple foreclosure proceedings against a corporation,
§ 11897 would hardly justify an order directing the receiver to
sue the corporation defendant on a claim held against it by a
simple-contract creditor. An order directing the receiver to bring
suit to enforce a purely personal claim of a bondholder against
Leach & Co. would likewise be void. Also in foreclosure proceed-
ings against a person, an order directing the receiver to institute
proceedings for separate maintenance in behalf of the defendant's
wife, would be a nullity. The order directing the receiver to sue
Leach & Co. on a chose in action not covered by the mortgage, and
of which Grant was never lawfully appointed receiver, is equally

void.

13

tain purposes only.’® And this is particularly true of
simple foreclosure proceedings.

And here it should be pointed out that Section 11894
of the Ohio Code (Appendix, p. 34, infra) provides for
the appointment of receivers in a great many other cases
than mortgage foreclosure proceedings. Consequently
the power granted the court (by Cection 11897, p. 35,
infra) to authorize the institution of suits by receivers
is necessarily limited by the nature of the proceedings
in which the receiver was appointed, no less than by the
issues presented for decision.

The power of the Common Pleas Court was limited,
then, by the general nature of the proceedings, which
were instituted solely for the purpose of foreclosing a
mortgage. Insolvency was not alleged; a winding up of
The Struthers Furnace Company was not sought. In-
deed,—and this important fact was not stated by this
court,—the petition expressly alleged that all the bonds
were duly issued for a valuable consideration in accord-
ance with the terms of the mortgage; that all bonds were
then outstanding wm the hands of various persons and
corporations, who were the owners and holders thereof
for value, ‘and that all the bonds were in all respects
valid and outstanding obligations of the defendant.
(R. 238.)

16. Wood v. Stanberry, 21 Ohio State 142.
Boswell v. Dickerson, 4 McLean 262.
Fithian v. Monks, 43 Mo. 502.

As said in Williamson v. Berry, 8 How. 495, 543:
“Though there may be jurisdiction for certain purposes
in a cause, that jurisdiction may be exceeded in the judg-
ment.”

——ay

14

The very action in which an erring court appointed
this knight-errant receiver was predicated upon the valid
issuance of all the bonds. The very purpose of the suit
was to procure the payment of all the bonds. Unlike a
receiver appointed in many other cases, a receiver ap-
pointed in simple foreclosure proceedings is an indif-
ferent stakeholder, who merely conserves and manages
the mortgaged property and the fruits thereof. Neither
he nor the court is concerned with anything else. The
court’s power is limited to ascertaining the amount due
under the mortgage, preserving the mortgaged assets,
selling them if necessary, and applying the proceeds.
That is all that it has the power to do. Its power to en-
ter orders in the case is necessarily limited not only to
the issues presented by the pleadings, but by the nature
and purpose of the proceedings. In a winding-up pro-
ceeding, where insolvency, fraud, etc., were alleged, of
course, the court could order its receiver to institute suits
where the rights of creditors or others had been in-
fringed.

But here, the petition does not show that there were
any creditors other than bondholders. Insolvency was
not alleged. The valid issuance of all bonds was the bed-
rock upon which the. court’s jurisdiction was predicated.
The invalidity of not one bond was an issue in the case.
And how could the court have jurisdiction to order this
mere stakeholder to attack the contract pursuant to
which all the bonds had been issued? The order entered
by the court was entirely beyond the scope and purpose
of the proceeding and wholly void. It was contrary to
the jurisdiction conferred upon the court by the allega-
tions of the petition, by which all subsequent action was
limited, as is shown by the cases cited on pages 9-12,

supra.

15

On page 6 of the opinion herein it is said:

“This action against Leach & Co.,—involving in
effect the claim of an illegal taking of a large
amount of the Company’s bonds, which if recovered
would reduce the amount of the mortgage lien—
came, we think, fairly within the terms of the stat-
ute as an act respecting property in the custody of
the court in the trustee’s suit.’’

We respectfully submit that whether or not the action,
if successful, would reduce the amount of the mortgage
lien, is irrelevant. Speculation in the stock market with
the proceeds of mortgaged assets would also, if success-
ful, reduce the amount of the mortgage lien. Obviously,
the test suggested by the court is a fallacious one. It is
a question of lawful authority, not of results. And the
order entered by the Court of Common Pleas is con-
demned by the law, just as conversion of trust funds is
condemned by ethics regardless of its enrichment of the
wrongdoer.

Moreover, this Court’s very statement of the test
above quoted conclusively shows that the action is hors
the scope of the petition to foreclose. Indeed, the for-
mer is squarely opposed to the latter, since the petition
expressly alleged that all the bonds had been lawfully
issued and were valid claims against the corporate de-
fendant. The petition was never amended, and, so far as
the record shows, the corporate defendant never, either
by answer or by proof, disputed or attempted to contro-
vert the allegations of the petition.

Furthermore, we submit with great respect, this
Court’s statement of the test will not bear analysis. The
only property in custody of the Court of Common Pleas
was the property covered by the mortgage. The action
against Leach & Co. was on a chose in action that was

16

not covered by the mortgage. Consequently the action
could not be ‘‘an act respecting property in the custody
of the court.’’ Surely, this Court does not mean to
imply that the bonds were in the custody of the Court of
Common Pleas. And certainly not the mortgage lien,

In support of its conclusion that the order directing
the receiver to sue is not subject to collateral attack the
Court cites

Sanger v. Upton, Assignee, 91 U. S. 56, 58.

We respectfully submit that the case is readily distin-
guishable. That case concerned the power of an assignee
in bankruptcy to collect the balance due on a subscrip-
tion to the capital stock of the corporate bankrupt. The
bankruptcy court had entered an order directing the as-
signee to sue all stockholders who refused to pay. Plain-
tiff in error contended that she was not bound by the
order since at the time it was entered ‘‘she was not be-
fore the court.’’ (P. 57.) This Court pointed out that

‘*in view of the law she was before the court in all
the proceedings touching the body of which she was
a member.’’ (P. 59.)

This Court also pointed out that

‘*by the deed of assignment, all the property and
effects of every kind, which belonged to the com-
pany when the petition to have it declared bankrupt
was filed, passed to the assignee. Bump on Bank-
ruptey, 473, 478; Rev. Stat. sect. 5044. * * The
statute in terms gave him the same right in any liti-
gation he might institute which the bankrupt would
have had ‘if the decree in bankruptcy had not been
rendered, and no assignment had been made.’ Id.
sect. 5047; Bump on Bank. 528. The liability of the
plaintiff in error, and the right and title of the com-

ny, were legal in their character. If the company

d sued, it might have sued at law. The rights of
the company passed to the assignee, and he also could

—

17

enforce them by a legal remedy. The assignee was
subrogated to all the rights, legal and equitable, of
the bankrupt corporation. This suit was, therefore,
well brought in the form adopted. Hall v. U. S. Ins.
Co., 5 Gill. 484.’’

The differences between bankruptcy proceedings and a
simple foreclosure suit are both numerous and vital.
In the former the rights of creditors of all kinds, stock-
holders, ete., are involved in proceedings where all ques-
tions are open either to adjudication or investigation.
The assignee had title in that case, and the order direct-
ing him to sue was wholly supererogatory. The stock-
holders, creditors, and all other persons were bound to
take notice of bankruptcy proceedings, and what would
bind the corporation would of course bind its privies, the
stockholders. Moreover, the stockholder in that case
‘‘might have applied to the District Court to revoke or
modify the order. Had she done so, she would have been
entitled to be heard; but it does not appear that any such
application was made.’’ (P. 59.)

So far as the claim against Leach & Co. is concerned
there was no privity between The Struthers Furnace
Company and Leach & Co. Leach & Co. was not a party
to the proceedings, had no notice of them, and would
have had no standing in the Court of Common Pleas to
move that the order directing suit be modified or re-
voked. The receiver in the case at bar had no title even
to the assets lawfully seized by him. The rights of gen-
eral creditors were not before the court. It was not
alleged that the corporation was insolvent, neither was
the court asked to wind it up. Necessarily the jurisdic-
tion of the Court of Common Pleas, in view of the nature
of the foreclosure proceedings, was much more restricted
than the jurisdiction of the bankruptcy court in the case
above mentioned.

18

Therefore, we respectfully submit not only that the
ease cited by this Court is not in point, but that the ex-
cerpt from it, appearing in this Court’s opinion in the
case at bar, does not give an accurate idea of what the
case really holds.’ The omitted matter which is indi-
cated by the points suspensifs in the excerpt set forth
in the margin is a reference to Revised Statutes, § 4972.
This section and §§ 5046-47 are set forth in the Appen-
dix, pp. 33-4, infra.

So that the case is distinguishable not only because of
the greatly circumscribed jurisdiction of the Court of
Common Pleas, but because the stockholder in that case
was, if not a party, at least privy to the judgment,"

17. “The order was conclusive as to the right of the assignee
to bring the suit. Jurisdiction was given to the District Court by
the Bankrupt Act . . . to make it. It was not necessary that
the stockholders should be before the court when it was made, any
more than that they should have been there when the decree of
bankruptcy was pronounced. That decree gave the jurisdiction
and authority to make the order. The plaintiff in error could not,
in this action, question the validity of the decree; and for the
same reasons, she could not draw into question the validity of
the order. She could not be heard to question either, except by a

separate and direct proceeding had for that purpose.”

18. Coe v. Armour Fertilizer Works, 237 U. S. 413, 59 L. ed.

1074, 31 Sup. Ct. Rep. 625.

Glenn v. Leggett, 135 U. S. 533, 34 L. ed. 262, 10 Sup. Ct.
Rep. 867.

Hawkins v. Glenn, 131 U. 8. 319, 33 L. ed. 184, 9 Sup. Ct.
Rep. 739.

Montezuma Canal Co. v. Smithville Canal Co., 218 U. 8.
371, 54 L. ed. 1074, 31 Sup. Ct. Rep. 67.

_

19

whereas, Leach & Co. was neither party nor privy to the
proceedings in the Court of Common Pleas. As stated
in 1 Freeman on Judgments (5th ed.), § 318, p. 633:
‘While parties and privies may attack a judg-
ment for lack of jurisdiction, this right, in most
states, is restricted to cases where the judgment is
void on its face. But strangers are not bound by
this limitation and may offer evidence to show the
absence of jurisdiction. A decree awarding relief
entirely beyond the scope and subject matter of the
complaint, being void, may be collaterally impeached
by a stranger whose rights are affected.”’

This is the law in Ohio. (Coe. v. Erb, 59 Ohio St. 259,
268.)

Of course, the cases cited on p. 6 of this Court’s opin-
ion in support of the proposition that where a court has
jerisdiction to appoint a receiver the validity of the
appointment cannot be inquired into in collateral pro-
ceedings, do not meet the respondent’s contentions. Con-
sequently these cases need not be noticed, except to re-
mark that, obviously, there is nothing sacrosanct about
the appointment of a receiver. Like any other order or
judgment, an order appointing a receiver may be col-
laterally attacked when the court lacks jurisdiction.

We respectfully submit that the Court of Common
Pleas was without power to seize property not covered
by the mortgage, and thet the order directing the re-
ceiver to sue Leach & Co. was wholly void.

Before discussing the jurisdiction of the Court of
Common Please in the stockholder’s suit, let us first no-
tice another very important matter.

20

Lil.

We respectfully submit that this court departed from the issues
joined in the Circuit Court of Appeals, and failed to give effect
to the stipulation of the parties in that court.

Concerning the appointment of the receiver this Court
says that

“its validity was not challenged in any respect by

the answer of Leach & Co. in the District Court,

which admitted that Grant had been ‘duly appointed’
receiver of all the Company’s property.’’ (P. 6.)

Now consider the position of Leach & Co. when the Cir-
cuit Court of Appeals notified the parties that it would be
inclined to remand the cause, and invited counsel to con-
sider whether the rights of their clients might properly
be preserved by means of a stipulation for the filing of a
transcript of the record in the Court of Common Pleas
and the argument of the specific questions stated by the
Court. (R. 266-7.)

Surely, it will not be asserted that in case of remand-
ment Leach & Co. could not have obtained leave to amend
its answer. But, clearly, in view of the statement con-
tained in the Court’s letter,’® there was no need of insist-

19. “The further argument desired will be devoted to the ques-
tion whether authority to bring this suit either was or could be
conferred upon the receiver, and be rightly based upon the plead-
ings, in connection with the controlling statutes and equitable
principles, and whether such authority would or would not be
rightly incidental to and consistent with the nature and purposes
of his possession of those assets which passed to the receiver.”
(R. 267.)

_ <—

21

ing upon remandment. All parties understood that the
validity of the proceedings in the Court of Common
Pleas, regardless of the record made in the District
Court, would be considered by the Circuit Court of Ap-
peals in the event that the parties entered into a stipu-
lation and filed a transcript of those proceedings. We
respectfully submit that the Court’s letter is not subject
to any other construction.

Morvover, both parties entered into the suggested stip-
ulation and filed briefs addressed to whether or not the
orders entered by the Court of Common Pleas were valid.
Our position has been consistent from the first, as is
evidenced from the matter set forth in the margin,?°

20 Iv.

In simple foreclosure proceedings the power of a court to appoint
a receiver is necessarily limited to the appointment of a receiver
for the mortgaged property.

The alleged claim of The Struthers Furnace Company against Leach
& Company under the contract of April 5, 1922, pursuant to
which the bonds secured by the mortgage sought to be foreclosed
were sold, necessarily was not a part of the mortgaged property.

The State Court was therefore without jurisdiction to direct the
receiver to sue Leach & Company on the alleged claim.

Vv.

The rights of neither creditors nor stockholders were involved or
could be involved in the foreclosure suit, consequently the prose-
cution of any suit against Leach & Company is wholly foreign
to and inconsistent with not only the foreclosure suit, but the
Receiver’s possession of the mortgaged assets. A receivership
in foreclosure proceedings is entirely different from a receiver-
ship for winding up a corporation or in other suits which require
a liquidation of a corporation’s assets.

oo,

22

which, on our honor as members of this bar, we cer.
tify is a copy of certain points that appear in Leach &
Co.’s brief filed in the Cireuit Court of Appeals after
the stipulation was entered into.

We respectfully submit, therefore, that this Court
should confine itself to the record made in the Circuit
Court of Appeals, and that its failure to do so violates
the spirit of the rule so well stated by a member of this
Court when a member of another court:

‘The receiver agreed with the sheriff that his tak-
ing possession should not affect the validity of any
lien which might have been created by the sheriff’s
levy and continued in force until the receiver’s tak-
ing possession. The arrangement made by the sher-
iff and the temporary-receiver is to be commended.
It was a judicious compromise to avoid a conflict
between jurisdictions, and certainly this court will
not permit the commendable spirit of confidence
which the sheriff showed in the justice and equity
of this court to be made a ground for de-
priving him or those whom he represented of the
rights in the property which had been acquired and
maintained by lawful levy and subsequent official
eustody.’’ Vance v. Manufacturing Co., 82 Fed.
251.)

Moreover, Leach & Co. in the District Court, had put
in issue the power of the receiver to sue. (Opinion, p. 4.)
Surely, this Court will not say that the issue in the Cir-
cuit Court of Appeals after the stipulation was limited
to whether the Court of Common Pleas had actually en-
tered an order authorizing the suit against Leach & Co.
We stipulated that the order had been entered. And how
can the validity of the order be determined if we are to
be told that the validity of Grant’s appointment as re-
ceiver was not challenged in the District Court and that

23

we there admitted that Grant had been duly appointed
receiver of all the Company’s property? Obviously, that
is not to determine the validity of the order directing
Grant to sue, but to decide that its validity is not an
issue. It is to disregard the letter of the Circuit Court
of Appeals, or else to convert it into mere jugglery of
words, after our reliance on it. It is to pass upon issues
here other than those joined in the Circuit Court of Ap-

peals.

IV.

The court of common pleas was without jurisdiction of the subject-
matter of the stockholder’s suit, which was solely for the appoint-
ment of a receiver, and the order appointing a receiver therein
was coram non judice and void.

This court’s decision herein, we submit with great respect, is based
upon a misconception of what constitutes jurisdiction, an in-
advertent misstatement of respondent's contention, and cases that
have practically been overruled. It is contrary to the Ohio
decisions, numerous decisions by this court, and the overwhelm-
ing weight of authority.

On pages 5-6 of the opinion herein the Court states that

“‘it is asserted that under the petition of the pre-
ferred stockholder, in which no other relief was
prayed, the appointment was erroneous, under the
decisions of the Ohio courts. But, however, this
may be, the court had jurisdiction and the power to
determine these questions.’’ (Italics ours.)

As a reference to p. 17, et seq., of our original brief
in opposition to the petition for certiorari herein will

ay

24

show, the Court has inadvertently misstated the conten.
tion of respondent, and in such a way that it constitutes
a reflection upon either their good faith or professional
ability. No lawyer would contend that a merely erro.
neous judgment is subject to collateral attack. The ex.
cerpt from page 20 of our original brief?! clearly indi-
cates our position.

This Court in Reynolds v. Stockton, 140 U. S. 254, ap-
proved the following definition of jurisdiction:

‘¢ Jurisdiction may be defined as the right to ad-
judicate concerning the subject-matter in the given
case. To constitute this there are three essentials:
First, the court must have cognizance of the class of
cases to which the one to be adjudged belongs;
second, the proper parties must be present; and
third, the point decided must be, in substance and
effect, within the issue.’’ (Italics ours.)*?

Now, we ask, to what class of cases does the stock-

re

21. “The Court was wholly without jurisdiction of the subject
matter and all that it did in said so-called suit was coram non
judice and void.

15 Corpus Juris, p. 853.

Where there is an absence of jurisdiction, not even the consent
of all parties in interest can confer it.

1 Tardy’s Smith on Receivers (2nd. ed.), p. 63.”

22. See also:
Charles v. White, 214 Mo. 187, 112 S. W. 545, 549.
State ex rel. McManus v. Muench, 217 Mo. 124, 117 8. W.
25, 29.
and the other cases cited in our Supplemental brief, p. 23 et seq.

&
s
.

bee eh oe lien ge aes

25

holder’s suit belong? The answer is that a suit solely
for the appointment of a receiver is unknown to the law.
The answer is that where a court is without power to
grant the ultimate relief sought, it has no power to ap-
point a receiver, and that, if it does, its order is abso-
lutely void and, therefore, subject to collateral attack
whenever it is thereafter relied on for any purpose. The
cases leave no room for doubt on this point, as we shall
soon demonstrate.

In 1 Tardy’s Smith on Receivers, § 14, p. 51, it is said:

‘‘The nending action must be one for such relief
as can be litigated between the parties even if the
application for the appointment be denied. Hence
if the sole object of the suit is the appointment of
a receiver, the court will not take jurisdiction in the
absence of statutory provisions allowing such suits.
The court must have jurisdiction to entertain the
cause of action to which the appointment of the re-
ceiver would be ancillary and have power to grant
the relief demanded in the action, for if the court
has no jurisdiction over the subject matter it has
no authority to appoint a receiver, since it is funda-
mental that there is no such proceeding in equity as
a plain receivership action, in which the appoint-
ment of a receiver is the only desideratum. The ac-
tion must, of course, be one which comes within the
equitable jurisdiction of the court and the relief
prayed for must be of such a character as to be ger-
mane to the cause of action set up.

In order to constitute a suit as pending within the
above rule it is necessary that the complaint or bill
shall state a cause of action against the defendant,’’
(Italics ours.)

In this Court’s opinion herein it is said that section
11894 provides that the Common Pleas Court may ap-
point a receiver ‘‘in causes pending therein in certain
designated cases, and ‘6. In all other cases in which re-

26

ceivers heretofore have been appointed by the usages of
equity.’’’ (P. 5.)

But the appointment of a receiver is purely ancillary,
The usages of equity have never sanctioned the appoint-
ment of a receiver where that is the ultimate and only
relief sought. And the Ohio decisions cited in our orig-
inal brief in opposition to the petition for certiorari
herein demonstrate that this universal rule is followed in
Ohio. There is, therefore, no class of cases to which this
stockholder’s suit belongs. The Court of Common Pleas
did not have ‘‘cognizance of the class of cases to which
the one to be adjudged belongs.’’

Moreover, there was no cause pending in the Court of
Common Pleas, as provided by section 11894 of the Ohio
Code. The plaintiff alleged no breach of duty or other
wrongful act; and, so far as the record shows, his peti-
tion was never thereafter amended. Indeed, there was
nothing to amend by. As said by the Supreme Court of
Ohio in Spoors v. Cowen, 44 Ohio State 497, 9 N. E. 132,
135:

‘*But, in order that a party may be permitted to
amend, there must be something to amend by
(Shamokin Bank v. Street, 16 Ohio St. 10); so, un-
less a case is presented that could be amended, there
is no case upon which a judgment can be rendered.
A judgment rendered, where no case has been stated,
is as much a judgment upon a case coram non judice,
whatever may be the jurisdiction of the court ren-
dering it, as a judgment upon a case, however per-
fectly stated, before a court not clothed with juris-
diction to hear and determine it.’’

In
Blanchard Bro. & Lane v. The S. G. Gay Co.,

289 Ill. 413,
a stockholder of a corporation filed a bill for the ap-

EEE RT LRT Tare Tey wore

27

pointment of a receiver. No fraud or mismanagement
was alleged. A receiver was appointed, and in a collat-
eral attack the appointment was held absolutely void.
The Supreme Court said:

‘“‘The court clearly had no jurisdiction by reason
of the allegations of the bill, all of which are above
set forth to appoint a receiver to take charge of and
distribute the assets. * * * The court having no
jurisdiction to entertain the bill and to appoint a
receiver with the powers aforesaid, the decree was
void and the receiver acquired no title to any of the
property and therefore could convey no title.
(Fitch v. Wetherbee, 110 Ill. 475.) The decree being
absolutely void was open to collateral attack. (Peo-
ple v. Weigley, supra.) In any judicial sale by the
receiver the rule of caveat emptor must be applied.
Hutson v. Wood, 263 Ill. 376; Manternach v. Studt,
240 id. 464.’’

See also
Taylor v. Exnicious, 197 Cal. 443, 241 Pac. 397.

In
People v. Weigley, 155 Ill. 491,
a case very similar to the one in the case at bar, cited in
the quotation above, the Supreme Court of Illinois held
that where a court was without power to grant the ulti-
mate relief prayed for it had no power to appoint a
receiver; that the appointment was a nullity, and that
one who interfered with the possession of the receiver
could not be punished for contempt of court.

Neither the Ohio Code nor the usages of equity author-
ize the appointment of a receiver in a suit by a stock-
holder where that is the sole and ultimate relief sought
and no breach of duty or other wrongful act is alleged.
The appointment of a receiver in these circumstances is
as void as the granting of letters testamentary on the
estate of a living person, or an order undertaking to con-

7

trol the official discretion of the chief executive of a
State or Nation. In

Jones v. Schaff Bros. Co., 187 Mo. App. 597,
174 S. W. 177,

a receiver had been appointed on the voluntary appli-
cation of an insolvent corporation. The appointment
and all orders entered were held to be void in a collateral
attack on them. The Court said:

‘‘The appointment of a receiver is not the ulti-
mate end and object of a suit. The court cannot
appoint a receiver a the ex parte application of
the corporation itself. There must be a proceeding
pending. * * * So that thefe is no known statu-
tory authority given a court to appoint a receiver
upon the mere ex parte application of an insolvent
corporation to take charge of and manage its af-
fairs. And a court of equity has no inherent power
to appoint such receiver except as an incident to and
in a pending suit. [Citing cases.] * * * Conse-
quently the cireuit court was without jurisdiction
to appoint a receiver, and its order, as well as every- —
thing done in the alleged receivership, was void and
can be impeached even in a collateral proceeding. |
[Citing authorities.]’’

See also:

Jones v. Bank of Leadville, 10 Colo. 464, 17 Pac.
272.
Whitney v. Hanover National Bank, 71 Miss.
1009, 15 So. 23.
Texas, etc. Railroad Co. v. Gay, 86 Tex. 604, 26
S. W. 599.

State ex rel. Merriam v. Ross, 122 Mo. 435, 25
S. W. 947.

Lewis v. Shaw, (Cal.) 246 Pac. 86.

Bibby v. Dieter, 15 Cal. App. 45, 113 Pac. 874.

We respectfully submit that the cases cited on page

6 of the opinion herein are clearly not in point. Surely
not the case of
Barbour v. National Exchange Bank, 45 Ohio
State, 133,

where the holding of the Court was as stated in the sylla-
bus set forth in the margin.”*

The case of
McNary v. Bush, 35 Ore. 114,

is merely a decided case that is patently wrong, and has
since been practically overruled, or at least reduced to
an absurdity. In

Cook v. Leona Mills Lumber Co., 106 Ore. 521,
the Supreme Court reviewed the authorities and reached
the following conclusion :

‘‘Under our Code the appointment of receivers
is an ancillary remedy, in aid of the primary object
of litigation, and such relief must be germane to the
principal suit, and a proceeding cannot be main-
tained where the appointment of a receiver is the

23, “1. §. was surety of an insolvent manufacturing corpora-
tion for the payment of a large amount of overdue indebtedness.
The corporation was making no effort to pay its debts. Its busi-
ness could not be continued without loss and wasting of its assets.
The sale of its property and collection of its accounts were neces-
sary to the payment of its debts. S. brought his action under
section 5845 of the Revised Statutes, to compel it to pay the in-
debtedness upon which he was surety, by subjecting its property
to such payment. Held: The appointment of a receiver of the
property of the corporation was authorized by section 5587 of the
Revised Statutes.”

30

sole primary object. Neither at law nor in equity is
an action permissible in which only the appointment
of a receiver is sought.

From the face of the petition it clearly appears
that the receivership was the aim and object of
this suit and was not ancillary to any relief sought
or prayed for in the complaint. Hence, the plead-
ing failed to give the court jurisdiction to appoint
the receiver.’’ (P. 530-1.) (Italics ours.)

This is necessarily so. For if there is no such action
known either to law or to equity, it must follow that the
court does not have cognizance of that class of cases.
And if the court does not, then jurisdiction of the sub-
ject matter does not exist. The fact that in the case
above cited there was a direct attack upon the order
appointing the receiver is manifestly irrelevant.

The decisions relied on by the court in McNary v.
Bush, 35 Ore. 114, have since been questioned and prac-
tically overruled by the court that rendered them. See

State v. Union Nat. Bank, 145 Ind. 537, 44 N. E.
585, 588.

We respectfully submit, therefore, that the decision
of this Court on the point under consideration is not in
accord with legal principles or the decided cases.

31

The court’s decision that the receiver in the case at bar did not
sue in a foreign jurisdiction is based upon a misapprehension

of the facts, and is, we submit, erroneous.

We respectfully submit that the fact that the receiver
was directed to sue in ‘‘a Federal Court within Ohio,
and having jurisdiction in territory within which the
Common Pleas Court itself was located’’ (Opinion, p.
7) is irrelevant. This Court accepts the principle that
a receiver has ‘‘no extra-territorial power of official
action.’’ (P. 7.) This is because the court appoint-
ing him has none. Obviously, therefore, the test is
not the territorial jurisdiction of the court in which
suit is brought, but the territorial jurisdiction of the
court that appointed the receiver.**

The territorial jurisdiction of the Common Pleas
Court is limited to the county in which it sits. (Throck-
morton’s Ohio Code (1929), § 1532. Wilmot v. Cole,
10 O. D. 77, 23 B. 339.)

We also respectfully submit that equally irrelevant is
the fact that no administration of the property within
the District Court was sought, as the cases cited in our
Original brief, (p. 37), show.

The question presented by us in the case at bar was
not raised in Shields v. Coleman, 157 U. S. 168, nor in
Harkin v. Brundage, 276 U. S. 36. Clearly, there is an
essential difference between instituting an independent

24. Texas, etc. Railroad v. Gay, 86 Tex. 604, 26 S. W. 599,

and cases cited in our Original brief, p. 37.

32

suit, and making a motion in a pending suit concerning
property in the court’s possession, particularly where
there is a conflict of jurisdiction. If another court has
exclusive jurisdiction, then it is the duty of the latter
court to surrender the property to the agent of the other
court. Moreover, in the Harkin case, both courts sat in
Cook County.

It is also a fact that in Shull v. Fidelity & Guar-
anty Co., 81 W. Va. 184, the Federal receiver insti-
tuted the suit within the territorial jurisdiction of the
court that appointed him. (Judicial Code, § 194.)

We respectfully submit that territorial jurisdiction is,
in any event, irrelevant. It is a mere incident in one
type of case. The key to the whole situation is that
a person without title must seek the aid of another court,
which has not only the power but the duty of determining
who shall sue, and what shall be done with the fund in
the event of a recovery. (See our original brief.)

In conclusion it is with deference submitted that a
rehearing should be granted.

Respectfully,

Epwarp R. JoHNnsTon,
Fioyp E. THompson,
Henry Jaoxson Darsy,

Attorneys for A. B. Leach & Co., Inc.,
above named respondent.

We, the undersigned counsel for the respondent, A.
B. Leach & Co., Inc., hereby certify that the foregoing
petition for rehearing is presented in good faith and
not for delay. -

Epwarp R. JoHNnsrTon,
Fioyp E. THompson,
Henry Jackson Darsy,

33

APPENDIX.

Revised Statutes of the United States (1873-74) Sec-
ond Edition 1878:

‘*Sec. 4972. The jurisdiction conferred upon the
district courts as courts of bankruptcy shall extend:

First. To all cases and controversies arising be-
tween the bankrupt and any creditor or creditors
who shall claim any debt or demand under the bank-
ruptcy.

Second. To the collection of all the assets of the
bankrupt.

Third. To the ascertainment and liquidation of
the liens and other specific claims thereon.

Fourth. To the adjustment of the various prior-
ities and conflicting interests of all parties.

Fifth. To the marshaling and disposition of the
different funds and assets, so as to secure the rights
of all parties and due distribution of the assets
among all the creditors.

Sixth. To all acts, matters, and things to be done
under and in virtue of the bankruptcy, until the final
distribution and settlement of the estate of the bank-
rupt, and the close of the proceedings in bank-
ruptcy.’’

‘*Sec. 5046. All property conveyed by the bank-
rupt in fraud of his creditors; all rights in equity,
choses in action, patent-rights, and copyrights; all
debts due him, or any person for his use, and all
liens and securities therefor; and all his rights of
action for property or estate, real or personal, and
for any cause of action which he had against any
person arising from contract or from the unlawful
taking or detention, or injury to the property of the
bankrupt; and all his rights of redeeming such prop-
erty or estate; together with the like right, title,
power, and authority to sell, manage, dispose of,
sue for, and recover or defend the same, as the bank-

34

rupt might have had if no assignment had been
made, shall, in virtue of the adjudication of bank.
ruptcy and the appointment of his assignee, but sub-
ject to the exceptions stated in the preceding sec-
tion, be at once vested in such assignee.’’

‘‘Sec. 5047. The assignee shall have the like rem-
edy to recover all the estate, debts, and effects in
his own name, as the debtor might have had if the
decree in bankruptcy had not been rendered and no
assignment had been made. If at the time of the
commencement of the proceedings in bankruptcy,
an action is pending in the name of the debtor for
the recovery of a debt or other thing which might
or ought to pass to the assignee by the assignment,
the assignee shall, if he requires it, be admitted to
prosecute the action in his own name, in like man-
ner and with like effect as if it had been originally
commenced by him. And if eny suit at law or in
equity, in which the bankrupt is a party in his own
name, is pending at the time of the adjudication of
bankruptcy, the assignee may defend the same in
the same manner and with the like effect as it might
have been defended by the bankrupt.”’

OHIO CODE.

See. 11894. ‘‘Appointment of Receiver. A re-
ceiver may be appointed by the supreme court or a
judge thereof, the court of appeals, or a judge
thereof, in his district, the common pleas court or
a judge thereof in his district, or the probate court,
in causes pending in such courts respectively, in the
following cases:

1. In an action by a vendor to vacate a fraudu-
lent purchase of property, or by a creditor to sub-
ject property or a fund to his claim, or between
partners or others jointly owning or interested in
any property or fund, on the application of the plain-
tiff, or of a party whose right to or interest in the
property or fund, or the proceeds thereof, is prob-
ably, and when it is shown that the property

a ,

35

or fund is in danger of being lost, removed or mate-
rially injured ;

2. In an action by a mortgagee, for the foreclosure
of his mortgage and sale of the mortgaged property,
when it appears that the mortgaged property is in
danger of being lost, removed or materially injured,
or that the condition of the mortgage has not been
performed, and the property is probably insufficient
to discharge the mortgage debt;

3. After judgment, to carry the judgment into
effect;

4. After judgment, to dispose of the property
according to the judgment, or to preserve it dur-
ing the pendency of an appeal, or when an execution
has been returned unsatisfied and the judgment
debtor refuses to apply the property in satisfaction
of the judgment;

5. In the cases provided in this title, and by spe-
cial statutes when a corporation has been dissolved,
or is insolvent, or in imminent danger of insolvency,
or has forfeited its corporate rights;

6. In all other cases in which receivers hereto-
fore have been appointed by the usages of equity.’’

Sec. 11897. Powers of Receiver. Under the con-
trol of the court, the receiver may bring and defend
actions in his own name, as receiver, take and keep
possession of the property, receive rents, collect,
compound for, and compromise demands, make
transfer, and generally do such acts respecting the
property as the court authorizes.’’

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0310%3A06. Public record. Not legal advice.