Supplemental Brief for Respondent — Toucey v. New York Life Ins. Co.

Supreme Court brief1941

Ask Donna

What actually matters in this document.

Text

CeaAgi-s ans 4,

Supreme Court of the United States

OCTOBER TERM, 1941.

nelly? 15

SAMUEL R. TOUCEY. PETITIONER,

VS.

NEW YORK LIFE INSURANCE COMPANY,

A CORPORATION, RESPONDENT.

RESPONDENT'S SUPPLEMENTAL. BRIEF.

~ SAMUEL W. SAWYER,

RicH’.23» S. RIGHTER,

Hor ic" F. BLACKWELL, JR.,

li’ ‘delity Building,

Kei >is City, Missouri,

Counsel for Respondent

INDEX

Summary of the Argument

Argument—

State courts enjoin parties from prosecuting actions

in the federal courts on substantially the same

grounds on which the federal courts enjoin pro-

ceedings in state courts

State courts enjoin parties from proceeding in

other stat: courts under circumstances similar or

comparable to the facts of the present case

The English cases are in accord with the American

ee.

Dial vs. Reynolds, 96 U. S. 340, distinguished

Conclusion

TABLE OF CASES

Akerly vs. Bilas, 15 Wis. 401

Baldwin vs. Iowa State Travelling Men's Association,

283 U. S. 522 (1931), 1. ¢. 525

Beckford vs Kemble, 1 Sim. & St. 7

Brown vs. Trent, 35 Okla. 164, 128 Pac. 895 (1912)

Carron Iron Co. vs. MacLaren, 5 H. L. Cas. 416, 24

L. J. Ch. 620, 3 W. R. 597

Chicago, R. I. & P. Ry. Co. vs. Callicotte, (8 Cir.)

267 Fed. 799 (1920) |

Cole vs. Cunningham, 133 U. S. 107 (1889)

Denver, etc., R. Co. vs. Ben Terte, 284 U. S. 284, $2

Sup. Ct. 152, 76 L. Ed. 295

Dial vs. Reynolds, 96 U. S. 340

Fowler vs. Westerhoff Bros. Co., 104 Atl. 198 (1918)

(N. J. Chancery)

Howard vs. Cannon, 11 Richardson's Eq. 23. 75 Am.

Dec. 736 (S. Car., 1859)

Hull vs. Burr, 234 U. S. 712. 1. ¢. 723

30, ¢

Il INDEX

Hunt vs. New York Cotton Exchange, 205 U. S. 322

(1906), 1. c. 338

Ingraham vs. National Salt Co.. 139 Fed. 684 (E. D.

N. Y., 1905), Aff. 143 Fed. 805 (1906)

In re Dawley, 99 Vt. 306, 131 Atl. 847 (1926)

Kansas City Rys. Co. vs. MeCardle, 288 Mo. 354, 232

Keith vs. Alger, 114 Tenn. 1, 85 S. W. 71 (1905)

Life Insurance Co. vs. Fisher, 5 Tenn. Civ. App. 232

(1915) .

Marchant vs. Wannamaker, 176 S. Car. 369, 180 S. E.

356 (1935)

Marshall vs. Holmes, i141 U. S. 589 (1891), 1. ¢. 599

Michigan, etc., R. R. Co. vs. Mix, 278 U. S. 492, 49

Sup. Ct. 207, 73 L. Ed. 470

Mock vs. Kennedy, 11 La. Annuai 525, 66 Am. Dec. -

203 (1856) aes 14

Moebius vs. McCracken, 261 Mich. 409, 246 N. W. 163

(1932) 1]

New York, C. & St. L. R. Co. vs. Perduie, 97 Ind.

App. 517, 187 N. E. 349 (1933) sesh sh ataas ot oe aed Oe

Oakley vs. Ramsey, 27 L. T. 745 35

O'Haire vs. Burns, 45 Colo. 432, 101 Pac. 755, 131 Am.

St. Rep. 191, 25 L. R. A. (N.S.) 267 (1909)... 20, 22

Princess Lida vs. Thompson et al., Trustee, 305 U. S.

OE gc esc aliens ede ee 17, 30

Providence & N. Y. S. S. Co. vs. Hill Mfg. Co., 109 .

U. S. 607 (1883) 37

Prudential vs. Merritt-Chapman & Scott ee 163

Atl. 894 (N. J. Chancery, 1932) s 12

Reagan vs. Dick, 233 Pac. 159 (Colo., 1925) _ a

Sandage vs. Studebaker Bros. Mfg. Co., 41 N. E. 380

(Indiana, 1895) 26

State ex rel. N. Y.,C. & St. L. R. Co. vs. Nortoni, 321

Mo. 764 (en banc), 55 S. W. 2d 272 (1932)... 22, 24

Steelman vs. All Continent Corp., 301 U. S. 278 (1936)

acelin hy Oy Dey OO

The Home Insurance Co. vs. Howell, 24.N. J. Eq. 238 17

Toledo Scale Cc. vs. Computing Scale Co., 261 U. S.

399 (1923)

INDEX I!

Tredigar vs. Windus, 44 L. J. Ch. 268; L. R. 19 Equity

607; 32 L. T. 596; 23 W. R. 511 35

Treinies vs. Sunshine Mining Co. et ai., 308 U. S. 66

(1939), i. c. 78 32

Twaits vs. Penn. R. Co., 77 N. J. Eq. 103, 75 Atl. 1010

Wedderburn vs. Wedderburn, 2 Beavan 208 (1840) 33

Wells Fargo & Co. vs. Tavier, 254 U. S. 175 (1920),

l. c. 182 36, 37

Wonderly vs. Lafayette County, 150 Mo. 635, 51 S. W.

745, 73 Am. St. Rep. 474, 45 L. R. A. 386

(1899) "5, 12, 26, 27

STATUTES

Judicial Code, Section 262 (28 U.S. C., Sec. 377) 28, 31, 38

Judicial Code. Section 265 (Sec. 379, 28 U. S. C.: R.

S., Sec. 720) 2,3, 4, 19, 36. 38

TEXTBOOKS

32 C. J. 117 cee 22

32 C. J., Sec. 137, pp. 115 et seq. | 20

Supreme Court of the United States

OCTOBER TERM, 1941.

No. 587.

SAMUEL R. TOUCEY, PETITIONER,

VS.

NEW YORK LIFE INSURANCE COMPANY,

A CORPORATION, RESPONDENT.

RESPONDENT’S SUPPLEMENTAL BRIEF.

In Respondent's Brief it is shown that one

of the long established and wel! recognized grounds

of injunctive relief by supplemental bill is to prevent

the re-litigation in another court of issues finally settled

by a decree in equity (Respondent’s Brief, p. 17 et seq.’.

We also showed that the uniform decisions of

this Court for at least the last fifty years have held

that Section 265 of the Judicial Code (Sec. 379, 28

U.S. C.; R. S., Sec. 720) does not prohibit the issuance

of an injunction to prevent a party from re-litigating in

a state court issues already adjudicated by a federal equity

court (Respondent's Brief, page 21 et seq.). We pointed

out tnac the present is such a case and, therefore, that if

the uniform prior decisions of this Court are still the

law the ruling of the Eighth Circuit in this case (102

Fed. 2d 16 and 112 Fed. 2d 927) must be affirmed.

This Court has, however, granted certiorari in several

cases bearing no similarity cn the facts to this case and

having the single common characteristic that lower fed-

eral courts had enjoined the parties for various reasons

from proceeding in state courts. At least three of these

cases were decided by this Ccurt by four to four votes

and have been set down for argument on the opening day

of the Cctuber term. The remaining case (of which we

know) is still pending here on petition for certiorari. It

is therefore evident that this Court is primarily interested

in a questicn of judicial policy rather than in the

justice or injustice of the ruling in any particular case.

We can only guess the sources of this new interes! in a

subject on which the law, both federal and state, as well as

the law of England and its dominions, has long been settied.

We believe that some members of this Court doubt the

wisdom of permitting the federal courts to enjoin parties

from proceeding in state courts under any circumstances

and therefore wish to review the purpose and scope of

Section 265 wiin the object of changing its present inter-

pretation.

We shall, therefore, assume for the purpose of this

supplemental brief that the question for review is this:

Is a federal injunction against proceedings in a state court

such an unwarranted interference with the processes

of that court, leading to such conflict and dissonance that

Section 265 of the Judicial Code should be invoked to abol-

ish it under all circumstances. Such injunctions at the

fo4

present time issue only under exceptional circumstances

(Respondent’s Brief, >. 35). The question is whethe:

th exceptions snould be abolished.

It is demonstrated in Respondent's Brief that upon

principle and authority, including many decisions of this

Court, the injunction issued by the district court in this

case was a jawful and proper exercise of its equity powers,

not an unseemly interference with the state court’s juzis-

diction. To have withheld the injunction here might

have resulted in a state court judgment directly contrary

to the equity decree aud, hence, an undesirable conflict

between the rulings of the two courts, the thing Section

265 of the Judicial Code was designed to prevent. So this

court and the inferior courts have held.

It occurred to us that in this brief it might be helpful

to the Court to broaden the field of inquiry to ascertain

what the state courts, including the Missouri courts,

would have done were tne positions of the two tribunais

reversed, or were the respective actions pending in two

state courts. Whether a state court would have enjoined

proceedings in the Federal Court if the positions of the

two courts were reversed, and whether one State court

would have enjoined another state court were both ac-

tions pending in state courts, has an important bearing

on the construction to be given Section 265. If injunc-

tions are issued by the state courts against proceedings

in Federal courts, and against proceedings in other state

courts under the same circumstances under which Fed-

eral injunctions against state court proceedings have here-

tofure been sanctioned, it would seem reasc :able to con-

strue Section 265 to preserve the same powers to the Fed-

eral courts in order to protect the co-ordinate jurisdiction

of the Federal courts and to prevent their being deprived

of a power which all other sirnilar courts possess in those

instances heretofore recognized by this Court as excep-

tions to the literal language of Section 265.

SUMMARY OF THE ARGUMENT.

The principie of law that a court of equity will en-

join the parties or those in privity with them from reliti-

gating in the courts of other jurisdictions a question al-

ready settied by final decree is not confined to the federal

courts but is of universal application. The state courts

have invoked it to enjoin. actions pending in federa!

courts, to enjoin actions pending in other state courts, and

to enjein actions pending in other courts within the state.

Likewise, the federal courts have invoked it to enjoin par-

ties from proceeding in other federal courts. It is the law

of England.

This court's present construction of Section 265 of the

Judicial Code (Sec. 379, 28 U. S. C.; R. S., Sec. 720)

which recognizes the case at bar as an exception to the

prohibition of the statute has merely enabled the fed-

eral courts to rule in harmony with all other courts pos-

sessing coordinate jurisdiction in our system of juris-

prudence. To repudiate this principle or withhold its

application in this case would seriously impair the power

of the federal court, and would be contrary, not merely to

a long line of decisions by this court and the lesser federal

courts, but to a rule of universal application in all courts

throughout the United States and the English speaking

world.

ARGUMENT.

STATE COURTS ENJOIN PARTIES FROM PROSECUTING AC.

TIONS IN THE FEDERAL COURTS ON SUBSTANTIALLY THE

SAME GROUNDS ON WHICH THE FEDERAL COURTS EN-

JOIN PROCEEDINGS IN STATE COURTS.

If the position of the federal and the state courts in

the case at bar were reversed the Missouri Supreme Court

would have directed that the prosecution of the federal

action be enjoined.

In Wonderly v. Lafayette County, 150 Mo. 635, 51 S.

W. 745. 73 Am. St. Rep. 474, 45 L. R. A. 386 (1899), the

plaintiff’s assignor, a resident of Illinois, had judgment

in the Federal Court for the Western District of Missouri

against the defendant on certain bonds issued by the

county. Afterward this judgment was assigned to the

plaintiff, a resident of Missouri, who sued the defendant

in the Circuit Court of Lafayette County. The county

set up as a defense that the judgment in the Federal

Court was procured by fraud for the following reasons:

The state courts, in other litigation, had previously held

the issue of which these bonds were a part invalid.

The Federal Court. in other litigation, had previously

held them valid. The real owner of the _ bonds,

a citizen of Missouri, caused the original action

to be brought in the Federal Court by the resident

of Illinois alleging that he was the owner of the bonds in

order to secure the benefits of federal jurisdiction. Hav-

ing procured the Federal judgment, and the term having

gone by so that it could not be set aside, the Illinois resi-

dent assigned the judgment to the resident of Missouri in

order that he might enforce it in tne state court and in

order that the suit on the judgment might not be re-

1,.0ved to the federal court. The answer asked that

the judgment in the Federal Court be set aside and

that the plaintiff be enjoined against the prosecution of

a writtof scire facias sued out in the Federal Court. On

plaintiff's motion the trial court struck out all of

this portion of the answer and, judgment going for the

plaintiff, the Mussour: Supreme Court on appeal held

that the answer stated a good defense to the action

on the judgment and a good ground for equitable relief.

After reviewing the authorities in other jurisdictions.

the court said, 1. c. 749:

The law which required the owner of the bonds

to be a citizen of another state, in order to give the

federal court jurisdiction, was a law of that court.

and the plaintiff's act of masking as Owings, and

thus gaining entrance, which, with his own face, he

could not have gained. was a fraud on that law: and

since, by that means, he evaded the law of this state

applicable to his cause of action, as pronounced by

this court, his judgment is to be deemed as in fraud

of the law of this state, and not entitled to the protec-

tion of its courts. Freem., Judgm., Sec. 566; Dunlap

v. Cody. 31 Towa 260; Duringer v. Moschino, 93 Ind

495,

and after discussing the authorities further said, i. c. 750

We quote the words of these high courts and dis-

tinguished jurists to slow in what estimation they

hold the conduct of those who, by cunning, would

pervert the administration of justice. There is no

difference. in principle, between the fraudulent con-

coction of a scheme that brings the defendant within

the jurisdiction of a court of a foreign state and the

fraudulert concoction of a scheme that brings him

within the jurisdiction of the federal court, which

otherwise would not have had jurisdiction over him.

In whatever aspect we view it, we cannot fai! to see

that the judgment in question was obtained by a

fraudulent abuse of the court which rendered it, and

» fraudulent scheme by which the defendant was

tricked out of the defense it had a right to make, and

could have made in the only forum in which the real

plaintiff could have sued.

and further said. 1]. ec. 750:

A suit in equity to set aside a judgment in no

sense assails the court in which the judgment was

rendered. It is simply a proceeding in personam, and

the decree adjudges the rights of the parties inter

sese in relation to that judgment. Story. Eq. Jur..

Sec. 875; Black, Judgm.. Sec. 919: Pearce v. Olney,

20 Conn. 544; Marshall v. Holmes, 141 U. S. 589, 12

Sup. Ct. 62. A judgment of a United States circuit

court sitting in this state is to be accorded such effect,

and such effect only, as a judgment of a circuit court

of this state. Black, Judgm., Sec. 938: Crescent City

Live-Stock Co. v. Butchers’ Union Slaughter-House

Co., 120 U.S. 141, 7 Sup. Ct. 472. The federal circuit

courts have never claimed for themselves higher au-

thority than the highest courts of original jurisdic-

tion of the state in which they sit, and the lofty spirit

in which those courts administer justice repels the

idea that they would claim that a judgment of theirs,

procured by fraud and abuse of their jurisdiction

should be held exempt from a direct attack in the

only forum in which the injured party could obtain

relief (italics ours).

The Court expressly pointed out that the judgment

of the Federal Court had become fina! with the passing

of the term and, therefore, could not be set aside by the

Federal Court ‘‘and, the defendant being a citizen of Mis-

souri could bring no independent suit in equity in that

tribunal.”” The court said that the writ of scire facias

had doubtless ‘taken its course’ pending the appeal and

that. therefore. a writ of injunction would, doubtless. be

without effect.

The similarity tn substance between that case and

this is striking. Here Toucey was defeated in his orig-

inal action and a decree dismissing his bill on the merits

duly entered (R. 43). No appeal was taken. Thereupon

on December 28, 1937 (R. 22), more than a year after the

dismissal of the original equity action, one James Shay, a

citizen of the District of Columbia, brought suit against

respondent in the Circuit Court of Jackson County, Mis-

sourl (R.53), alleging that he was the assignee of Toucev’'s

cause of action. The assignment is shown at R. 62. It is

attached to a stipulation (R. 60) respecting the testimony

of James Shay which states, in effect, that Shay had

known one of Toucey’s attorneys for six or seven years:

that he had never met Toucey; that he was requested by

Toucey's attorney to accept an assignment of the cause of

action; that he never knew anything about the nature of

the claim except what the attorney told him; that he ex-

pected to account to Toucey for the proceeds collected:

that he gave Toucey nothing of value for the assignment

Shay further states in the stipulation (R. 61):

I accepted the assignment of the cause of action

as an accommodation to Mr. M. W. Borders, Jr., it be-

ing my understanding that the legal title to the cause

of action being in my name and the suit being in my

name, and my being a resident of the District of Co-

lumbia, there would be no diversity of citizenship as

between me and the New York Life Insurance Com-

pany within the meaning of the statutes relating to

the removal of causes of action.

The purported assignment from Toucey to Shay was

therefore a mere fraudulent device for the purpose of

enabling Toucey, through Shay. to relitigate in the stat:

court the same issues adjudged by the decree in equits

in the Federal Court and to forestall any action by the

Federal court by preventing the defendant from removing

the case. It could not remove a suit brought by a citizen

of the District of Columbia.

The Court will observe that Shay’s action was merely

a suit at law on the policy for disability benefits claimed

to be due Toucey, alleging (R. 54) that Toucey had paid

all the premiums due and that the policy was in ful!

force and effect and that Toucey had performed ;]] of its

terms and conditions. entirely contrary to the al.egations

cf Toucey’s original petition (R. 26 et seq.) and to the

findings of the learned trial judge (R. 44 ef seg.). As

the Circuit Court of Appeals said (102 Fed. 2d 1. c. 20):

After that final adjudication has been made and

decree entered, a law case for recovery of disability

benefits has been ingeniously made out on the face

of a petition in the state court by simply omitting

the facts as they were established between the parties

in the federal equity suit. The pleader has omitted

to show that Mr. Toucey made application to the in-

surance company for reduction of his policy and that

pursuant to that application the alteration and reduc-

tion of the policy as to premiums and benefits was

made and that he had recognized the change in the

contract by making a payment of premium at the re.

duced premium rate.

And further said, |. c. 20:

Mr. Toucey can not by mere concealment or

change of form of procedure obtain an effective ad-

judication contrary to the adjudication in the federal

court. Both his claims to life insurance and to dis-

ability benefits under the policy have been settlea

against him.

If it was wrong for Wonderly to shift his cause of

action back and forth between a citizen of Missouri and a

citizen of Illinois to secure adjudications by courts he

thought were favorable to him, thus arousing the manifest

indignation of the Missouri Supreme Court, why is it not

wrong for Toucey to do so? If it is wrong for Toucev to

do so why should not the Court to which he first resorted

stop him from doing so? It is a court of equity. It cannot

be that this Court is less inclined to discourage the in-

justice to a litigant which would result from such an in-

cenious but wrongful device than are the courts of the

various states.

Reagan v. Dicl:, 233 Pac. 159 (Colo., 1925), presents

the identical situation here except that the original action

was brought-in the Colorado state court and the subse-

quent action in the federal court. An equity suit was

begun and proceeded to final decree. Afterward the los-

Ing party began an action in the Federal Ceurt for the

District of Coloradce to re-litigate the same question, which

subsequently was appealed to the Circuit Court of Appeals

where it was pending. A decree was then obtained from

the

thon

The

Colorade state court enjoining the further prosecu-

of the federal action. It was affirmed on appeal!

Supreme Court said, |. c. 160:

That the court, federal or state, which first be-

gins the exercise of its jurisdiction, holds it, is clear

(15 C. J. 1176), and it follows, of course, that such

a proceeding cannot be enjoined or prevented by en-

joining the parties. It has been held, however, that,

when the jurisdiction of a United States court has

first attached, it may enjoin the parties from proceed-

ing in a state court concerning “the identical con-

troversies therein pending,” and we see no answer

to the proposition that the state court in a converse

case may do the same. It has actually been done.

Home Ins. Co. v. Howell, 24 N. J. Eq. 238, cited with

approval in Moran v. Sturges, 154 U. S. 256, 14 5. Ct.

1019, 38 L. Ed. 981.

Court further said, |. c. 160:

The complaint in the present action alleges that

there was a former action between the parties, see

74 Colo. 293, 294, 220 Pac. 990. wherein the present

plaintiffs were defendants, in which they were granted

an injunction against interference with their posses-

sion and use of certain mining property, and that the

proceedings in the United States court were begun

for the purpose of retrying the issues tried in that

former suit, which would be unlawful. Riverdale

Mills v. Mfg. Co., 198 U. S. 188, 25 S. Ct. 629, 49 L. Ed.

1008. The lower court found this to be true, and we

cannot review that finding. It follows that, upon the

record before us, the procedure in the federal court

is not the first but the second exercise of jurisdiction

over litigation, not only begun, but already in judg-

ment in the state court, and the injunction in the

present case is not void.

While the original state court action in Reagan V.

Dick was in rem involving the rights of the parties to

a mining property, the issuance of the injunction enjoin-

ing the parties from proceeding in the federal court is

not placed on any such ground but on the ground of the

previous adjudication by the Colorado court.

In Moebius v. McCracken, 261 Mich. 409, 246 N. W.

163 (1932), a minor by next friend sued at law for per-

sonal injuries in an Ohio court from which the action was

removed to the federal court for that district. On a com-

promise the federal court entered judgment for the plain-

tiff for an agreed sum. Six years later, being then of

age, she brought two suits in the Michigan state court,

one at law for damages for the injuries and tne other in

equity asking that the judgment of the federal court in

Ohio be declared a nullity and that the defendant be en-

joined from setting up the Ohio judgment as a bar to her

sult at law. The groynds of the bill were that the com-

pensation adjudged the federal court was inadequate

for the injuries, that the federal court in arriving at the

amount of the judgment considered only the compromise

agreement and did not review the merits of the claim

and that she had suffered great pain, expense and dis-

ability since. She alleged that the defendant could not

be served in the State of Ohio and that the judgment in

the Ohio federal court could not be vacated because the

term had long passed. On appeal from an order below

dismissing the bill the court held that it stated a good

cause of action, saying, |. c. 167:

While we will not refuse recognition to a foreign

judgment regularly entered. nor, as a rule will we

set aside such a Judgment in an independent equity

proceeding, by exercising chancery power over the

parties, nevertheless, when it appears from the face

of the judgment itself that it was entered in accord-

ance with a compromise settlement, as a mere for-

mality designed to lend strength to the agreement

affecting minors’ rights and without the benefit of

testimony o° a judicial examination of the merits of

the case or the fairness of the compromise, a court of

equity, in performance of its duty to protect the in-

terests of minors, should give relief. To deny plain-

tiff the right to bring the suit may result in depr:

ing her ae anv remedy at law for what mav be a flx:-

vrant fraud practiced on her.

The Court cites and relies on Wonderly v. Lafayette

County, supra,

In Prudential v. Merritt-Chapman & Scott Corp., 163

Atl. 694 0N. J. Chancery, 1932), the controversy arose upon

the death of one Baker on whose life insurance aggregat-

ing $1,000,000 had been written by various companies.

The benefici: rv sued on the policies, on one in the Federa!

Court for the District of New Jersey. on one in the New

Jersey Supreme Court and on the others in the New York

Supreme Court. The compuaies filed suits for the can-

cellation of the policies in the New Jersey Chancery Court

on the ground that the issuance of the policies had been

procured by the fraud of Baker and asked that the bene-

ficilary be enjoined from prosecuting the law actions pend-

ing the determination of the issues in the equity suits.

The Court held that the companies were entitled to the

injunctions because in point of time the equity suits hac

been “first commenced” and that the right of the com-

panies to set up their equitable defenses in the law ac-

tions was not “an adequate remedy” such as to entitle

the law actions to have pniority. The Vice Chancello:

considered the authorities carefuily The principle upon

which the Court proceeded is stated as follows, |. c. 895.

896:

That this court has power to enjoin one subject

to its jurisdiction from the prosecution of an action

at law pending the determination of the validity of

the instrument upon which such law action is based

and alleged to be void for fraud is elementary; ana

this, also, whether such action is pending in the law

courts of this or of a foreign jurisdiction, and irre-

spective of precedence of time between this and t:+

law courts, providing the remedy here is more com-

plete and adequate than at law Home Insurance

Company v. Howell, 24 N. J. Eq. 238: New Jerse

Zine Company v. Franklin Iron Company, 29 WN. J.

Eq. 422; Margarum v. Moon, 63 N. J. Eq. 586, 53

Atl. 179; Bigelow v. Old Dominien Copper Mining &

Smelting Company, 74 N. J. Eq. 457, 71 Atl. 155; Le-

high Valley Railroad Company v. Andrus, 91 N. J.

Eq. 225, 109 Atl. 746; Caruso v. Caruse. 103 N. J. Eq.

487, 143 Atl. 771. * * * The principle lving at

the foundation of this rule was early recog-

nized and applied in England by Lord Ellenbor-

ough, just after the close of the eighteenth century,

in Payne v. Drew 4 East 523, cited in the United

States ex rel. Rigg. v. Board of Superrisors of John-

son County, 72 U. S. (6 Wall.) 196, 18 L. Ed. 768.

776, and also in Taylor v. Carryl, 61 U. S. (20 How.)

583, 617, 15 L. Ed. 1028, 1032.

Keith v. Alger, 114 Tenn. 1, 85 S. W. 71 (1905), holds

that a state court can and will enjoin the enforcement

of the decree cr judgment of a federal court where it 1s

shown that it was procured by fraud extrinsic to the

questions examined and determined in the action, say-

ing. |. c. 76:

There is no doubt, as we think, that a state court

may entertain a bil! to restrain the enforcement of

a decree or judgment of a federal court on the ground

that the latter was procured by fraud. This is an

independent right of action that does not involve a

retrial of the issues disposed of in such former cause.

It has been held that the federal courts may entertain

such a cause of action against a judgment of a state

court. The reasons and the authorities on which they

are based are fully considered in the case of Marshall

v. Holmes, 141 U. S. 589, 12 Sup. Ct. 62, 35 L. Ed.

870; likewise in the case of National Surety Com-

pany v. State Bank, 56 C. C. A. 657, 120 Fed. 593, 61

L. R. A. 394. The same reasons contro] an application

in a state court to restrain the enforcement of a de-

cree or judgment rendered by a federal court.

There, however, the fraud submitted to the Tennessee

Court had already been submitted to and ruled on by

the federal court in a proceeding by supplemental bill

and the state court therefore held that since the express

issue raised had been ruled by the federal ccurt, its ruling

was res judicata and the state court bill should be dis-

missed. The original suit in the federal court had been

to set aside a conveyance of real estate for the vendor's

fraud and to require the return of the vendee’s monev.

The equity suit in the state court was on the ground

that the vendee had acquiesced in the transaction by, sub-

sequently, with knowledge of the facis, making convey-

ance of the property to another for a valuable con-

sideration.

Mock v. Kennedy. 11 La. Annual 525, 66 Am. Dec.

203 (1856). The plaintiff brought a suit the object of

which was to secure a separation of her property from

that of her husband after his insolvency and suit by

creditors. Judgment had been secured against the hus-

band in the federal court to which the wife was not a

party, from which a writ of execution had issued to the

marshal to seize the husband's property. The Court held

that an injunction was properly issued below against the

marshal to abstain from the commission of a trespass

by executing the writ against property adjudged in the

state court action to be the separate property of the wife.

In Howard v. Cannon, 11 Richardson's Eq. 23, 75 Am.

Dec. 726 (S. Car., 1859), Cannon assigned to Howard as

trustee for the benefit of Cannon's creditors. Then others

recovered a large money judgment against Cannon in the

Federai Court for South Carolina and the marshal was

proceeding to seize and sell certain slaves which Cannon

had assigned to Howard. The court held that the Com-

missioner below was right in enjoining the creditors from

seizing and selling the assigned property pursuant to the

Federal Court judgment, saying, |. c. 738:

The second ground of appeal assails the reasoning

expressed in the pleas, that the subject of contro-

versy was within the exclusive jurisdiction of the

circuit court of the United States, which rendered

the judgment of Cummings & Styron v. Cannon. We

have every disposition to avoid even the appearance

of a conflict with the tribunals of the United States

created under the constitution, and we have no dis-

position to quibble between restraining processes and

restraining persons from proceeding under them.

But sureiy there is a substantial difference between

undertaking to revise the judgment and procedure

of a co-oidinate or even superior tribunal, and inter-

fering to restrain parties from acts not authorized

hy our equals or superiors. It does not impugn in

any respect the judgment of the federal tribunal.

that we interpose to prevent parties under our control

from abusing the process of that court. It has granted

a judgment against Cannon, and we make no offer

to restrain the execution of their judgment from the

estate of Cannon. But we do not perceive that, under

a judgment egainst Cannon, the estate of Howard or

any other person can be legitimately seized and sold.

The judgment of Cummings & Styron is left in-

tact, and we simply determine that they or their

agent had no authority to seize the property of a

stranger under pretense of :ts operation. To deter-

mine otherwise would be to adjudge that a plaintiff

in execution against a pauper might obtain satisfac-

tion from any rich inhabitant of the state.

Ingraham v. National Salt Co., 139 Fed. 684 (E. D. N.

Y.. 1905), Aff. 143 Fed. 805 (1906). There a suit bv

attachment against real estate was begun in the federa!

court in New York. Later a receivership action was be-

gun in the state court and the receivers sold the attached

property. Afterward judgment was recovered in the fed-

eral court but the state court enjoined the marshal from

making <.le of the attached property. The federal court

held that it would not enjein the receivers from pros-

ecuting their injunction suit because, the mere issuance

of a writ of attachment not amounting to possession, the

receivers had the prior actual custody of the real estate

involved and, therefore, the prior right of disposition.

In Twaits v. Penn. R. Co., 77 N. J. Eq. 103, 75 Atl

1010 (1910), plaintiff sued for personal injuries in New

Jersey and the case was removed to the federal court

where the defendant set up a release as a defense. Plain-

tiff then filed a second su:t, this time in equity in the

state court to enjoin the defendant from asserting the

release as a defense on the ground that under the cir-

cumstances set forth in the bill it would be «unfair and

inequitable for the defendant to set up the release. The

defendant contended that the New Jersey Chancery Court

was Without jurisdiction because that of the federal court

was exclusive. In deny g this contention and in up-

holding the jurisdicticn of the state court in equity the

court said, |. c. 1012-13:

Since the gravamen of this bill is that the rail-

road company, the defendant in the lawsuit pending

in the other jurisdiction, is setting up as a defense

a receipt claimed to operate as a release, which.

under the circumstances alleged in the bill, it is

charged it is inequitable for it to do, I find that there

is no principle of comity or public policy which for-

bids this court from passing upon the equitable claim:

of the complainant, and exercising whatever of its

jurisdiction it finds proper under the circumstances.

My opinion is that this would be so even if the ac-

tion at law were pending in one of the courts of a

sister state; therefore, a fortiori, would it be true

where the suit at law was pending in New Jerse,

and was removed by the defendant to the federal

court, where, I assume, it could also have removed

this equitable action had it seen fit to do so? The

jurisdiction at law is not interfered with by this

equitabie action. Whatever jurisdiction the Circuit

Court of the United States has power to exercise

with respect to the action at law is left unimpaired.

and is not taken over into this court in this action

in any way. The sole thing sought by the complain-

ant here is equitable jurisdiction over the defend-

ant to prevent it from inequitable conduct. J en-

tirely agree with the expression of the learned Chan-

cellor as above expressed that there is no doubt or dif-

ficulty about the :ight of the exercise of the power

of equity of its jurisdiction undcr such circumstances.

It therefore becomes necessary to investigate the

equitable claims of the complainant for the purpose

of seeing whether thev are well grounded.

See also: /

In re Dawley, 99 Vt. 306, 131 Atl. 847 (1926).

Marchant v. Wannamaker,. 176 S. Car. 369. 180

S. E. 350 (1935).

The Home Insurance Co. v. Howell. 24 N. J. Ea

238.

Akerly v. Bilas, 15 Wis. 401.

Brown v. Trent, 35 Okla. 164, 128 Pac. 895 (1912).

Fowler v. Westerhoff Bros. Co., 104 Atl. 198 (1918)

(N. J. Chancery).

Chicago, R. I. & P. Ry. Co. v. Callicotte. (8 Cir.)

267 Fed. 799 (1920%.

WE Many additional cases could be cited. The foregoing,

however, clearly show that the state courts do not hesitate

to enjoin the parties from proceeding in the federal courts

or to enjoin the officers of those courts where the liti-

gant does not have an equitable remedy in the federal

court or where the federal remedy is not adequate. The

circumstances under which such injunctions issue from

the state courts are comparable to those under which

they issue from the federal courts.

It may be that in earlier times some doubt was enter-

tained respecting the right of state courts to enjoin parties

from proceeding in Federal courts. If so that doubt has long

since been resolved in favor of the right, on which this

court recently placed it’ stamp of approval in Princess

Lida v. Thompson et al., Trustee, 305 U. S. 465 (1938).

There the trustees under a trust filed an account in the

Common Pleas Court of Fayette County, Pennsylvania.

which, in the absence of exceptions. was confirmed. Five

years later a second partial account was filed in the same

court by the two surviving trustees. On the following

day two of the beneficiaries brought suit in equity

against the two surviving trustees and the administrators

of the deceased trustee in the District Court for the West-

ern District of Pennsvivania alleging mismanagement of

the trust. praving that the trustees be removed and that

the defendants account for and repay the losses of the

trust. The trustees moved to dismiss the bi:l in the

federal court for lack of indisyensable parties and be-

cause the state court had exclusive jurisdiction. The fed-

eral court over-ruled the motion and ordered the defend-

ants to answer, reserving the question of jurisdiction.

Upon the petition of the trustees the state court en-

joined the beneficiaries from prosecuting the action in the

federal court and this was affirmed by the Pennsylvania

Supreme Court. Meanwhile the federal court had en-

joined the trustees from further prosecuting the injunc-

tion proceedings in the state court and proceeded to try

the case. On certiorari to the Supreme Court of Pennsyl-

vania this court held that the Pennsylvania Court ac-

quired a prier jurisdiction in equity by virtue of the fil-

ing of the accounts and was in a position enabling it to

give complete relief and, therefore, the District Court for

the Western District of Pennsylvania was without juris-

diction of the subsequent equity suit brought to secure

the same relief which the state court was already in a po-

sition to afford, and could and should be enjoined. This

court said, |. c. 465-466:

Certain it is, therefore, that if both courts were

to proceed they would be required to cover the same

ground. This of itself is not conclusive of the

question of the District Court's jurisdiction, for it 1s

settled that where the judgment sought is strictly

in personam, both the state court and the federal

court, having concurrent jurisdiction, may proceed

with the litigation at least until judgment is obtained

in one of them which may be set up as res judicata

in the other. On the other hand, if the two suits are

im rem, or quasi in rem, so that the court, or its officer.

has possession or must have contro! of the property

which is the subject of the litigation in order to pro-

ceed with the cause and grant the relief sought the

jurisdiction of the one court must yield to tha‘? of the

other. We have said that the principle applicable to

both federal and state courts that the court first as-

suming jurisdiction over property may maintain and

exercise that jurisdiction to the exclusion of the other,

is not restricted to cases where property has been

actually seized under judicial process before a second

sult is instituted, but applies as well where suits are

brought to marshal assets, administer trusts, or hiq-

uidate estates, and in suits of a similar nature where,

to give effect to its jurisdiction, the court must con-

trol the property. The doctrine is necessary to the

harmonious cooperation of federal and state tribunals.

And further said, .. c. 467:

The Common Pleas Court could not effectively

exercise the jurisdiction vested in it, without a sub-

stantial measure of control of the trust funds. Its

proceedings are, as the court below held, quasi in rem,

and the jurisdiction acquired upon the filing of the

trustees’ account is exclusive. The District Court for

the Western District of Pennsylvania is without juris-

diction of the suit subsequently brought for the same

relief, and the petitioners were properly enjoined

from further proceedings in that court.

It would of course be wreng to say that the courts of

the state and nation have the unrestricted right.each to

enjoin parties from proceeding in the other. It would be

equally wrong and equally unreasonable to say that they

cannot do so under any circumstances. There is a well

recognized intermediate ground in which either may, as

the law now stands. properly do so. It wili not promote

the ends of justice to so far impair the power of the na-

tional courts to administer equity as to say that while

under proper circumstances the state courts may enjoin

parties from proceeding in them, they, on the contrary,

cannot in any event restrain parties from proceeding in

state tribunals. Especially is this true where as we have

shown in respondent's original brief this Court has re-

peatedly said that Congress entertained no such intention

in enacting Section 265 of the Judicial Code.

STATE COURTS ENJOIN PARTIES FROM PROCEEDING IN

OTHER STATE COURTS UNDER CIRCUMSTANCES SIMILAR

OR COMPARABLE TO THE FACTS OF THE PRESENT CASE.

State courts readily enjoin their citizens from pros-

ecuting actions in the courts of sister states where suf-

ficient grounds are shown for the interposition of a court

of equity as where the party seeking the injunction will

be subjected to fraud or oppression, where the purposs

of the foreign suit is to secure some unfair advan-

tage under the law er the facts or where, as here, one of

the parties is attempting to re-litigate in another juris-

dictlon issues areeey settled in equity by the enjoinin.

court. See. 32.C. J., Sec. 137, pp. 115 et seq. Great num-

bers of cases hav e gains this principle.

In O'Haire v. Burns, 45 Colo. 432,-101 Pac. 755, 131

Am. St. Rep. 191, 25 L. R. A. «N. S.) 267 (1909), O’Haire

had originally sued Burns and others in equity asking that

he be decreed the owner of a one sixth interest in certain

mining properties pursuant to the terms of what appears

to have been a “grub stake” contract. Burns prevailed

and O’Haire was adjudged to have no interest, the decree

being affirmed by the Coloradc Supreme Court. After-

ward while Burns was in Iowa on business O’Haire sued

him there at law for $300,000 damages. Burns then

brought a second equity suit in Colorado setting up the

facts and alleging that O’Haire sovtht in the Iowa suit

to relitigate issues vreviously disposed of by the Colo-

rado court and asked that O’Haire be enjoined from pros-

ecuting the Iowa suit. A demurrer to the complaint was

over-ruled and the defendant eiected to stand on‘it. A

final decree was entered below and the preliminary in-

junction made permanent. On appeal the Colorado Su-

preme Court affirmed the decree below and said, 11

Pac. 1. c. 757-8:

We have no doubt but that Mr. Burns could have

pleaded in the Iowa action the former litigation in

this state and the result thereof as a complete de-

fense. and, if established by proper evidence, it would

have received the full faith and credit bv the Towa

court to which it is entitled under the Constitution

of the United States. but why compel him to go over

560 miles to a foreign jurisdiction from that in

which both parties reside. or from where the original

cause of action, if anv. accrued. from where the prop-

erty over which the original contention arose was

situate, and from where all the witnesses reside, in

order to present these facts to a foreign tribunal?

We have been furnished with no principle of law or

equity nor process of sound reasoning why this should

be done and are of the opinion none can be presented.

Besides, if O’Haire is allowed to continue his Iowa

suit, and is defeated, under this same rule he could,

if aided by persons with means, bring another action

in some other state wherever perchance he might se-

cure personal service upon Mr. Burns and thus com-

pel him to again defend the same action with at least

the piea and proof of res judicata an@so continue

without any redress. The fallacy yf statement

is itself an answer to it. This metho of equitable

relief appears to have been approved by the great

weight of authorities, and, for answer to the able

argument of counsel] against. it,.we refer to the rea-

sons assigned in support thereof in the following

cases: Cole v. Cunningham, 133 U. S. 107, 10 Sup.

Ct. 269, 33 L. Ed. 538; Cunningham v. Butler. 142

Mass. 47, 6 N. E. 782, 56 Am. Rep. 657; Butler v.

Goreley, 146 U. S. 313, 13 Sup. Ct. 84, 36 L. Ed. 981;

Pickett v. Ferguson et al., 45 Ark. 177. 55 Am. Rep.

545; Engel v. Scheuerman, 40 Ga. 206, 2 Am. Rep.

573: Dehon et al. v. Foster et al.. 4 Allen (Mass.} 545,

Hawkins v_ Ireland, 64 Minn. 339, 67 N. W. 73, 58 Am.

St. Rep. 534: Field v. Holbrook, 33 Abb. Prac. (N. Y.)

377; Kittle v. Kittle, 8 C. P. Rep. (N. Y.) 72; Vermont

& Canada R. R. Co. v. Vermont Cen. R. R. Co. et al.,

46 Vt. 792: Guge v. Riverside Trust Co.. (C. C.) 86

Fed. 984; Kempson v. Kempson, 63 N. J. Eq. 783.

92 Atl. 360, 625, 58 L. R. A. 484. 92 Am. St. Rep. 682.

Haze & Quimby v. Lyndonville Nat. Bank et al.

70 Vt. 543, 41 Atl. 1046, 67 Am. St. Rep. 680; Ken-

dall v. Coke Co.. 182 Pa. 1, 37 Atl. 823. 61 Am. St.

Rep. 688: Hager v. Adams. 70-Iowa 746, 39 N. W.

36; Dinsmore v. Neresheimer, 32 Hun. 204.

Except for the matter of geographical distance be-

tween Colorado and Iowa we do not believe that the case

at bar can be distinguished from O’Haire v. Burns. We

do not believe that distance was the determinative ele-

ment in that case. As the Court says, res judicata could

be pleaded but that weuld not prevent the bringing of

still another suit and another and another. Here, it

Toucey through Shay can maintain his suit at law in

Missour!, why can he not maintain it in any other state.

and again and again? If distance is the test, what is a

reasonable distance? No case we know of holds that

distance is the test.

For a very similar case and the same ruling see Life

Insurance Co. v. Fisher, 5 Tenn. Civ. App. 232 (1915)

(Affirmed without opinion by Tenn. Sup. Ct., i915). The

only difference between that case and O’Haire v. Burns.

supra, is that in Life Insurance Co. v. Fisher the original

action in Tennessee appears to have been at law to collect

the proceeds of a policy as was the subsequent action

filed by the same plaintiff in Mississippi. The Tennessee

court enjoined Fisher from prosecuting the suit in Mis-

sissippi after he had been defeated in Tennessee and

upon his proceeding to do so punished him for a contempt.

The appellate Court affirmed this action below.

The rule is stated in 32 C. J. 117, as follows:

Where a controversy between residents has been

determined by the courts of the state, and, while one

of the parties is temporarily in a sister state, an ac-

tion is commenced against him there by the adverse

party, involving matters previously determined, an

injunction will be granted restraining the adverse

party from prosecuting the suit in the sister state.

The same essential principle is applied to different

facts in State ex rel. N. Y.,C. & St. L. R. Co. v. Norton.

321 Mo. 764 (en banc), 55 S. W. 2d 272 (1932). A citizen of

Indiana, the administratrix of her deceased husband's estate.

sued the railroad in Missouri under the Federal Emptovers’

Liability Act for damages for his death which occurred

in Indiana. The railroad secured an injunction in Indiana

against the prosecution of the Missouri suit notwithstand-

ing which she pressed it to judgment. The railroad then

moved the Indiana court to issue a citation for contempt

against her which was done. Thereupon the Missouri

circult, court enjoined the railroad from prosecuting the

citation and the latter petitioned the Missouri Supreme

Court for a writ of prohibition prohibiting the circuit

court from entertaining jurisdiction of the injunction prc.

ceeding against it. The court made absolute the pro.

visional rule in prohibition theretofore issued saving. 1].

c. Zia:

It is settled law that, in a proper case, a court

of equity having jurisdiction of the person may en-

join such person from prosecuting a suit in a fereign

jurisdiction. By a “proper case’ we mean that the

party seeking such an injunction must make a clear

showing that it would be nequitable, unfair and un-

just to permit the prosecution of the suit in a foreign

jurisdiction (italics ours).

And further said, ]. c. 274:

The Indiana court had jurisdiction to enjoin Lena

C. Meek, administratrix. from prosecuting her suit

in the St. Louis circuit court, and to adjudge her in

contempt for proceeding with the prosecution of that

sult in violation of tne injunction. If, as we have

held, the decree of the Indiana court enjcining the

prosecution of the suit in the St. Louis circuit court

was a valid decree, the railroad company, being an

interested party. was entitled to institute any lawful

proceeding looking to the enforcement of that decree

* * * The contempt proceedings were instituted by the

railroad company. When these proceedings were in-

stituted, the jurisdiction of the court, as well as the

right of the railroad company to prosecute the pro-

ceedings to a termination, at once attached. It 1s

familiar law that, where the jurisdiction of a court

and the right of # party to prosecute the proceedings

therein have cnce attached, that right cannot be ar-

rested or taken away by proceedings in another court.

Stevens v. Central National Bank of Boston, 144 N.

Y. 50, 39 N. E. 68. For this reason the St. Louis cir-

cuit court did not have jurisdiction to enjoin the rail-

road company from prosecuting the contempt. pro-

ceedings in the Indiana court.

It is significant, and a review of the cases will show.

that it is typical of the attitude of the state appellate

courts that the Missouri Supreme Court did not coun-

tenance the attempt of the St. Louis Circuit Court to create

a stalemate in the litigation by enjoining the railroad

from prosecuting the contempt action. The exercise of

the power of injunction in this field has not produced the

discord or the conflict between courts or the stalemate in

litigation which some members of this court may have

been led to fear. The reason is that such injunctions is-

sue only in exceptional cases and then only in accordance

with well defined and well recognized pyinciples of law,

so that as far as can be judged from reading the reports,

the courts in which the parties have upon established

principles been enjoined from proceeding, do not take the

attitude that their powers have been interfered with

by the enjoining courts. Federal courts nave been as

careful in this respect as have the state courts. The cases

iend no support to the theory that the established excep-

tions to the application of Section 265 of the Judicial

Code lead to conflict between the courts of the states and

nation.

The subsequent history of State ex rel. N. Y..C.&S!

L. R. Co. v. Nortoni, supra, is interesting and sheds fur-

ther light upon this subject. After the Missouri Supreme

Court had prevented the lower court from interfering

with the prosecution by the railroad of the contempt pro-

eeedings against the plaintiff below whose name was

Meek. her Missouri atturneys had one Maude J. Hamilton.

an employee in their office, appointed ancillary adminis-

tratrix in Missouri of the estate of the deceased. Mrs.

Meek, the Indiana administratrix, dismissed her Missouri

action and Maude J. Hamilton as Missouri administratrix

brought a new action against the railroad in Missouri.

The railroad then brought an injunction suit against var-

ious attorneys, a notary public and certain witnesses to

prevent the taking of testimony in Indiana in the Hamil-

ton suit. In New York, C. & St. L. R. Co. v. Perduie, $7

Ind. App. 517, 187 N. E. 349 (1933), the appellate Court of

Indiana, en banc, reversed the order of the lower court

which refused to issue the injunction and directed that it

issue, Saving, }. c. 351:

We are not unmindful of the rule that, on

grounds of comity, the power of one state to interfere

with a litigant who is in due course pursuing his

rights and remedies given under the law, in the

courts of another state, should be exercised sparingly.

But we cannot lose sight of the fact in the instant

case that the prosecution of the identical cause of ac-

tion, when sought to be prosecuted by Lena C. Meek,

the widow and sole beneficiary, in the state of Mis-

souri, was enjoined in this state upon grounds of

equity. If it was inequitable for Lena C. Meek, either

individually or as such administratrix, to prosecute

the said cause of action in Missouri, then upon what

process of reasoning couJd it be maintained that it

would not be inequitable for the said Hamilton to

prosecute it in Missouri? It is true that the court

entering the injunction against Meek had jurisdic-

tion over her and that the trial court in the instant

case has no jurisdiction over Hamilton. But it is not

sought to make any order against Hamilton in the

instant case. It is sought only to make an order

against persons who are under the jurisdiction of the

courts of our state, from assisting her in prosecuting

her cause of action in Missouri. Her action is mani-

festly an attempt to circumvent and annul the de-

cision of a court of competent jurisdiction in our

state. As heretofore pointed out, that judgment is

amply and fully supported by the decisions of our

courts of final jurisdiction. The persons sought to be

enjoined in the instant case are within the jurisdic-

tion of our courts, and the attempt is clearly being

made to use them to circumvent and annul and ren-

der impotent the judgments and law of this state.

They should be enjoined from so doing. Every court

of general jurisdiction has the inherent power to

protect its valid orders and judgments from being so

annulled (Italics ours).

The Court relied on its own prior cited decisions and

on Michigan, etc., R. R. Co. v. Mix, 278 U.S. 492, 49 Sup.

Ct. 207, 73 L. Ed. 470, and Denver, etc., R. Co. v. Bei

Terte, 284 U. S. 284, 52 Sup. Ct. 152, 76 L. Ed. 295.

it seems to us that the Perduie case is in harmony

with Wonderly v. Lafayette County, supra, and its princi-

ple is applicable here since the attempt is clearly being

made to use the state court in the instant case ‘“‘to circuin-

vent and annul and render impotent the judgments and

law” of the Federal District Court. On the same point

see also Sandage v. Studebaker Bros. Mfg. Co, 41 N. E.

380 (Indiana, 1895).

In Kansas City Rys. Co. v. McCardle, 288 Mo. 354.

232 S. W. 464 (1921), the railroad had been harassed by

the defendant McCardle, a lawyer who had made a prac-

tice of bringing suits in the State of Kansas on behalf of

certain installment credit companies against the railroad’s

employees whe lived in Missouri and running garnish-

ments against the railroad requiring the impounding of

the employees’ wages, although both the creditor and the

railroad were citizens of Missouri. The object of the suits

was alleged to be to evade the Missouri Statute which

provided, in effect, that only 10% of the wages of a mar-

ried man or the head of a family could be garnisheed in

Missouri. The railroad brought an injunction suit against

McCardle in the case of one Campbell, an ernployee whose

wages had been garnisheed in Kansas, but also attempted

to enjoin the defendant generally from bringing any

such suits involving any of its employees. A demurrer

to this petition was sustained below and on appeal was af-

firmed by the Missouri Supreme Court on the ground that

the railroad was not entitled to have an injunction gen-

erally against the bringing of subsequent suits on behalf

of other employees; but the court also held that it would

have been entitled to an injunction had it confined its

action to the particular pending case involving the em-

plovee Campbell.

Quite a number of the state court cases rely on Cole

v. Cunningham, 133 U. S. 107 (1889). There proceedings in

insolvency were begun in a Massachwioerts court

against a man named Bird, under the local stat-

ute. Prior therete a Massachusetts creditor of Bird,

knowing that he had stopped payment and was

insolvent and that he had monev due him from a

New York firm, assigned its claim to a citizen of New York

(without consideration) and the latter brought suit in

New York against Bird by attaching the New York debt.

The Massachusetts Court enjoined the Massachusetts

creditor from proceeding with the New York suit through

the New York assignee. The injunction was attacked on

the ground that it violated the full faith and credit clause

of the Constitution. This court affirmed the Massachu-

setts decree and after reviewing the authorities at great

length held that the injunction did not violate the full

faith and credit clause of the Constitution. The court

further found that the right of the equity courts of one

state to prevent persons within their jurisdiction from

the prosecution of suits in other states had been long es-

tablished both here and under the principles of the Eng-

lish Jaw.

Steelman v. All Continent Corp., 301 U. S. 278 (1936),

appears to us to be an application of essentially the same

principle applied in Wonderly v. Lajayette County, supra,

New York, C. & St. L. R. Co. v. Perduie, supra, and Cole

v. Cunningham, supra, on which the Court in the Steel-

man case relies. While the action involved two Federal

courts, the principle applied makes it pertinent here.

There Steelman was trustee in bankruptcy in the District

Court for the District of New Jersey of the property of

Wilham Fox who had been adjudged a bankrupt. Fox

had set up a family corporation called ‘All Continent

Corporation” which the trustee claimed he had used to

divert property which was properly part of the bankrupt

estate. All Continent Corporation had an account and

securities in excess of one half million dollars with Sparks

& Co. a brokerage house in Philadelphia. All Continent

brought suit against Sparks in the District Cour: of the

Eastern District of Pennsylvania to establish its title to

the account as against the claim that the account was

really the property of Fox. The trustee in bankruptcy

was made a party. Thereupon the trustee secured from

the District Court in New Jersey an order staying the

prosecution of the Pennsylvania suit. On appeal the 3rd

Circuit held (86 F. 2d 913) that ‘the Pennsylvania court,

having first acquired jurisdiction of the property and con-

troversy, is entitied to exclusive jurisdiction, and the in-

stitution of the suit in chancery was an attempt to oust

the Pennsylvania court of the jurisdiction which it had

previously and validly acquired,” adding that the Penn-

sylvania court could restrain the trustee from litigating

the issue elsewhere. This court reversed the 3rd Circuit

and affirmed the decree of the district court. ruling, in

effect, that the Bankruptcy Court under all the circum-

stances was better able to administer full justice. It re-

lied on Sec. 262 of the Judicial Code (28 U. S. C..

Sec. 377), giving the United States courts power to issue

all writs not provided for by statute necessary for the

exercise of their jurisdictions and agreeable to principles

of law. Respondent’s argument was that in the Penn-

sylvania suit the court had custody of the res, namety.

the securities held by Sparks & Co. in Philadelphia and

that its possession of that res should not be interfered

with. Answering this argument Mr. Justice Cardozo said,

l, c. 290:

The argument misconceives the grounds upon

which the trustee looks to us for aid. The trustee

does not challenge the jurisdiction of the federal court

in Pennsylvania, if the word jurisdiction be taken in

its strict and proper sense. Cf. Straton v. New, 283

U. S. 318, 321; Isaacs v. Hobbs Tie & Timber Co.,

282 U.S. 734, 737, 738. He is not seeking a writ of

prohibition directed to the court itself. He is not

seeking an injunction to vindicate his exclusive con-

tro] over a res in his possession, or in the possession,

actual or constructive, of the court that appi-inted

him. Isaacs v. Hobbs Tie & Timber Co., supra;

Murphy v. John Hofman Co., 2)1 U. S. 562, 568,

969; Moran v. Sturges, 154 U. S. 256, 274. What he

seeks is an injunction directed to a suitor, and not

to any court,..upon the ground that the suitor is mis-

using a jurisdiction which by hypothesis exists, and

converting it by such misuse into an instrument of

wrong. Gage v. Riverside Trust Co., 86 Fed. 983,

998, 999; Higgins v. California Prune & Apricot Grow-

ers, 282 Fed. 550, 557; Cole v. Cunningham, 133 U. S.

107, 112, 117, 118. Suits as well as transfers may be

the protective coverings of fraud. Shapiro v. Wilgus,

287 U.-S. 348, 355. We are unable to yieid assent to

the statement of the co.rt below that ‘‘the restraint

of a proper party is legally tantamount to the re-

straint of the court itself.” Th: reality of the dis-

tinction has illustration in a host of cases. 2 Story,

Eq. Jur., 14th Ed., Sec. 1195; 5 Pomeroy, Eq. Jur.,

Sec. 2091; Cole v. Cunningham, supra; Madisonvillz

Traction Co. v. Mining Co., 196 LU. S. 239, 245; Kess-

ler v. Eldred, 206 U. S. 285: Rickey Land & Cattle

Co. v. Miller & Lux, 218 U. S. 258: Toledo Scale Co.

v. Computing Scale Co.. 261 U. S. 399, 426; Smith v.

Apple, 264 U. S. 274, 279. Cf. Judicial Code, Sec, 265;

28 U. S. C.. Sec. 379; Brown .v. Pacific Mutual Life

Ins. Co., 62 F. 2d 711, 713; Chicago Title & Trust Co.

v. Fox Theatres Corp., 69 F. 2d 60, 61, 62.

Applying Steelman v. All Continent Corp. here, the

ground of the injunction in the present case is not

only that petitioner through his assignee is seeking to

relitigate issues already decided by a court of equity but

that respondent is misusing the jurisdiction of the Mis-

souri court “and converting it by such misuse into an in-

strument of wrong.”’ It cannot be said that this is an at-

tempt to control the Missouri court and thus will lead to a

conflict of courts since Justice Cardozo particularly points

out that the restraint of the party is not legally tanta-

mount to a restraint upon the court.

This Court said the same thing in Marshall v. Holmes,

141 U. S. 589 (1891), 1. c. 599:

While it (the federal court) cannot require the

state court itself to set aside or vacate the judg-

ments in question, it may, as between the parties be-

fore it, if the facts justify such relief, adjudge that

Mayer shall not enjoy the inequitable advantage ob-

tained by his judgments. <A decree to that effect

would operute directly upon him, and would not

contravene that provision of the statute prohibiting

a court of the United States froin granting a writ of

injuncticn to stay proceedings in a state court. It

would simply take from him the benefit of judg-

ments obtained by fraud.

The Steelman case affords an interesting contrast to

Princess Lida v. Thompson, supra, 305 U. S. 465. In the

latter this court, in resolving the jurisdictional! issue :n

favor of the state court, laid some stress upon the fact that

the action was quasi in rem. In the former the res was

within the jurisdiction, and by reason of the action was

within the custody of the District Court of the Eastern

District of Pennsylvania but all of the equities of the

situation preponderated in this Court’s opinion in favo:

of the prior jurisdiction of the Federal Bankruptcy Court

in New Jersey, even though Sparks & Co. was not a paity

to that proceeding. The case shows that there is no

special magic in a res or in the custody of a res. It is

only where that custody gives the court a peculiar right

of priority that the existence of a res has weight. It is

merely one of the elements the court takes into ac-

count in adjudging equitable rights, and may be out-

weighed by other considerations.

Toledo Scale Co. v. Computing Scale Co., 26)

UU. S. 399 (1923), affords an interesting comparison

with the Steelman case, supra, and Princess Lida v. Thomp-

son, supra. In the Toledo Scale Co. case one Federal

another Federal Court which represented an attempt to

re-litigate issues decided in equity by the first Court.

No res was involved in either court and upon the au-

thority of Section 262 of the Judicial Code this court

held that the Federal court in whicn the decree was ob-

tained properly enjoined the Toledo Company from in-

terfering with the execution of its decree by prosecuting

the subsequent suit.

American courts have universally recognized the de-

sirability of terminating litigation when the issues have

been finally adjudged and have many times expressed

this principle of public policy. Chief Justice Taft, speak-

ing for this court, said in the Toledo Scale Co. case,

supra, ]. c. 428:

As Mr. Justice Story remarked in Ocean Insur-

ance Co. v. Fields, 2 Story 59, 18 Fed. Cas. 532, “It

is for the public interest and policy to make an end

to litigation, or, as was pointedly said by a great jurist,

that suits may not be immortal, while men are

mortai.”

Two other expressions by this court are pertinent

upon the same principle. Mr. Justice Roberts said in

Baldwin v. Iowa State Travelling Men's Association, 283

U.S. 522 (1931), 1. c. 525:

Public policy dictates that there be an end of

litigation; that those who have contested an issue

shall be bound by the result of the contest, and that

matters once tried shall be considered forever settled

as between the parties. We see no reason why this

doctrine should not apply in every case where one

voluntarily appears, presents his case and is fully

heard, and why he should not, in the absence of

fraud, be thereafter concluded by the judgment of the

tribunal to which he has submitted his cause.

Mr. Justice Reed tersely stated the same thing in

Treinies v. Sunshine Mining Co. et al., 308 U.S. 66 (1939),

saying, l. c. 78:

One trial of an issue is enough.

A member of this court inquired at the original ar-

gument why respondent’s remedy was not adequate by

pleading the decree of the district court in bar of the state

court suit, and suggested that if the Supreme Court of

Missouri refused to honor the plea this court would

exercise its power of review by certiorari. Since the

identity of issues between the vending state court suit

and that concluded by the decree below has never been

denied, the public interest in terminatiny this litigation

requires that the matter be now concluded by affirming

the relief granted respondent below. is it just or proper

that in order ultimately to prevent this attempt to reliti-

vate the same issues decided by the Federal court, re-

spondent should be put to its defense in the State court.

subjected to a probable appeal, and then have to rely in

the final outcome upon the discretionary power of this

Court either to grant or refuse a petition for certiorari to

obtain a ruling on what is not disputed, namely, that the

issues in the two courts are, in fact, identical? We sub-

mit that it is not.

THE ENGLISH CASES ARE IN ACCORD WITH THE

AMERICAN RULE.

The English chancery couris have often recog-

nized and applied the principle that they have and should

exeicise the power to enjoin English citizens fzom prose-

cuting suits in other jurisdictions, the effect of which

was to relitigate issues previously determined by the

English courts. Thus, in Wedderburn v. Wedderburn,

° Beavan 208 (1840), a suit was instituted in England by

persons beneficially entitied to the estate of David Webster

against his surviving partner and persons who had suc-

ceeded them in the business. It sought participation in

the profits which had been made in the partnership busi-

ness from the death of Webster in 1801 to 1846. The case

was heard by the Master of the Rolls and a decree entered

for the plaintiffs which vas afterward affirmed by the

Lord Chancellor. While the parties were taking the nec-

essary accounts under the Master’s decree, plaintiffs

commenced proceedings in the Court of Session in Scot-

land against several of the defendants who had heritable

property there, the object of which was to obtain the

Scotch process of inhibition and arrestment by which, itn

the very early stage of the suit, the pursuer acquires a

lien on al! the heritable property of the defendant for

whatever he may eventually recover. ‘The process, being

recorded, operated as notice to all future purchasers and

mortgagees so that in effect the defendant from the be-

ginning of the suit was restrained from dealing with his

property. The proceedings were in respect of the same

demands as were the subject of the suit in England. The

defendants moved that plaintiffs be restrained by injunc-

tion from prosecuting the Scotland suit or any other suit.

The Master of the Rolls granted the injunction, saying

that the court had jurisdiction to interfere in a case of

this nature and that it was a proper case. He said, |}. c.

214: “the rule of the Court is, that there is not to be

a double investigation of the same matter upon which

the Court is to adjudicate.” He, however, pointed out

that there might be special circumstances under which a

party might be at liberty to proceed in a foreign country.

such as where the defendants have no available property

in England, or are insolvent, or some other special

reason why a plaintiff ought to be permitted an auxiliary

remedy; but he pointea out, even in’such a case, the

party ought first to apply to an English court for per-

mission to adopt such proceedings. On appeal of the case.

the Lord Chancellor affirmed the principle laid down by

the Master, but on application by the plaintiffs, gave

them leave to proceed in Scotland so far only as might

be necessary to obtain .wecurity for what might be found

due in the English suit. He said (4 Myl. & C. 584, 1. ¢.

595):

* * * | am of opinion that the order of the Master

of the Rolls is quite right. There can be no doubt

that the general rule precludes parties from proceed-

ing in any other court for the same purpose for which

they are proceeding in this court, whether the other

proceedings are taken in this or in any other country;

and if the party conceives there are any circumstances

in his case which constitute an exception to the rule,

I think that his proper course is, not to take pro-

ceedings in another court, of his own authority but

to apply to this court for permission to take such

proceedings.

In Beckford v. Kemble, 1 Sim. & St. 7, the English

court was moved on behalf of Beckford for an injunction to

restrain the defendants from all proceedings in a suit

instituted by them in the Chancery court in Jamaica

against plaintiff and from all other proceedings in said

country against plaintiff for the foreclosure and sale of the

plantations in question. The foreclosure suit had been he-

gun in Jamaica after a decree in an English court had been

rendered upon the plaintiff's bill fer an accounting, an

ascertainment of the amount of the mortgage debts. and

redemption. The Vice-Chancellor granted the injunction.

saying, l. c. 17:

All the parties are in England; and it is plain

therefore that the accounts can much more conven-

iently, as well as more satisfactorily, be taken here

than in Jamaica. It appears to me that the plaintiff

in this court has a clear equity to be protected against

a double account of the amount due on the mortgages.

In Oakley v. Ramsey, 27 L. T. 745, A sued in England

for speciiic performance of a contract for the lease to him

of a Scotch moor which the owner, in violation of the

contract, had leased to a third party. The owner of the

moor then began an action in Scotland for the rescission

of the lease. The English court enjoined the owner from

proceeding with the Scetch action.

Tredigar v. Windus, 44 L. J. Ch. 268; L. R. 19 Equity

607; 32 L. T. 596; 23 W. R. 511, holds that the right to

plead a prior equity decree in defense of an action at law

does not prevent the court of equity from granting an

injunction against the prosecution of the law action.

There both actions were in the English courts.

Carron Iron Co. v. MacLaren, 5 H. L. Cas. 41€ 24

L. J. Ch. 620, 3 W. R. 597, holds that if the circumstances

of a case are such as would make it the duty of a court

of equity in Engiand to restrain a party from instituting

proceedings in another English court the same circum-

stances will also warrant it in imposing a similar re-

straint upon him with regard to proceedings in a foreign

court.

It therefore appears that the English courts apply

substantially the same principles in substantially the same

manner and reach the same result as our own state and

federal courts in determining vhen a court of equity

will enjoin the prosecution of proceedings in another court

or jurisdiction.

DIAL V. REYNOLDS, 96 U. S. 340, DISTINGUISHED.

In the first argument of this case one of the Justices

inquired why Dial v. Reynolds is not exactly in point.

It was not possible to answer the question because we

did not remember the case.

There Dial, as successor trustee, filed a bill to fore-

close a deed of trust executed by one Ceoper to secure

certain liabilities to Staatsman. Reynolds claimed title

to the real estate adversely ta Cooper. Dial’s bill, be-

sides foreclosure, asked to quiet the title of the trustee

as against Reynolds and to remove the cloud of Reynold's

claim and to enjoin him from further prosecuting an ac-

tion in ejectment he had previously brought. This court

held that the trial court correctly dismissed the bill for

misjoinder since the plaintiff was attempting to dispose

of two separate causes of action against two different

parties in the same suit. The court indicated that the

statute in question here forbade the injunction asked.

saying, 1. c. 341:

Such an injunction, except under the Bankrupt

Act, no court of the United States can grant. With

this exception, it is expressly forbidden by law.

By the court’s ‘‘such an injunction” it is fairly to

be inferred thet the court meant an injunction against

one who was not a party to the deed of trust and claimed

adversely to the mortgagor, the mortgagee and the trustee.

The statement should be read in the light of the facts be-

fore the court, and the circumstance that no attempt was

being made to relitigate issues previously adjudged.

Ii that is not what the court meant, then the statement is

in cenflict with the subsequent rulings on the subject

This court has cited Dial v. Reynolds only four times,

as follows: Wells Fargo & Co. v. Taylor, 254 U. S. 175

(1920), 1. c. 182 (see Respondent’s Brief, page 37). There

the court said, after quoting Section 265 of the Judicial

Code:

Is the suit one to stay proceedings in a state court

in the sense of that provision? If it is, the District

Court erred in not dismissing the bill on that ground

Haines v. Carpenter, 91 U. S 254; Dial v. Reynolds.

96 U. S. 340: United States v. Parkhurst-Davis Co.,

176 U. S. 317. If it is not, the court rightly enter

tained the suit and proceeded to an adjudication of

the merits, for the citizenship of the parties and the

amounts in controversy were within the jurisdiction«.

requirements.

The court, in the Wells Fargo case, then held that

the suit was not within the prohibition of the statute

and that the injunction against prosecuting the state court

proceeding was properly granted.

Providence & N. Y. S. S. Co. v. Hill Mfg. Co., 109

U. S. 607 (1883), was a limitation of liability proceeding

in admiralty and this court held that that proceeding

superseded any state court action. Dial v. Reynolds was

cited in the dissenting opinion. ~~ 7

In Hunt v. New York Cotton Exchange, 205 U. S. 322

(1906), 1. c. 338, where an injunction was granted against

the prosecution of a state court action, the court merely

said that Dial v. Reynolds and other cases cited did not

sustain the appellant’s contention without stating why.

In Hull v. Burr, 234 U. S. 712, 1. ¢. 723. this court,

after citing Dial v. Reynolds and other cases for the state-

ment that the prohibition of the statute against injunc-

tions to state court proceedings has been customarily ob-

served, proceeds as follows:

It is recognized, however, that Section 720 was not

intended te limit the power of the Federal courts to

enforce their authority in cases that on other grounds

are within their proper jurisdiction; and hence, it has

been held that, in aid of its jurisdiction properly ac-

quired, and in order to render its judgment and de-

crees effectual, a Federal court may restrain pro-

ceedings in a state court which would have the ef-

fect of defeating or impairing such jurisdiction.

French, Trustee, v. Hay, 22 Wall. 250; Dietzsch v.

Huidekoper, 103 U. S. 494, 497; Julian v. Central Trust

Co., 193 U. S. 93, 112; Traction Co. v. Mining Co., 196

U. S. 239, 245.

It seems clear, therefore, that in the subsequent cases

this court has in no sense repudiated Dial v. Reynolds

but has merely held that its ruling does not apply to

cases like the present one. This is apparent. No attempt

was being made there to relitigate issues already decided

by a Federal equity court.

CONCLUSION.

By the time the Court reaches this ‘‘Conclusion” it

will have read both Respondent’s Brief and Respondent's

Supplemental Brief and will, therefore, have reviewed

many of the principal cases in the United States declaring

and applying the principle of law before the Court for

review. It will, therefore, be apparent that the Court is

not here dealing with a peculiar abuse of federal power

contrary to the statute, or with an attempt by the na-

tional courts to supervise or control the state courts, or

witn a principle in any sense peculiar to or even origi-

nated by the national courts. On the contrary it has be.

fore it for review the invocation by tne District Court of

a principle of universal applicatium both here and in Eng-

land. Given the situation presented by the facts in this

case a Federal court will enjoin the part’cs from p:.-

ceeding in a state court; it will enjoin the parties from

proceeding in another Federal court; and a state court

will enjoin the parties from proceeding in the Federal!

courts or from: proceeding in another state court or from

proceeding in another court of the same state. Likewise

an English court will enjoin the parties from proceeding

in another English court or a court of a foreign country.

When, therefore, the question examined is not merely

“what have the federal equity courts done?” but “what

have all Anglo-Saxon courts done when faced with an at

tempt to litigate elsewhere issues already adjudged in

equity?”’, it becomes apparent that this court has really

construed Section 265 of the Judicial Code so as not to

exclude a remedy which every co-ordinate court possesst

and exerts, a remedy which the national courts alsc pos-

sess by the express provisions of Section 262. To con-

strue Section 265 otherwise would be to construe it to

deprive the national courts of a fundamental equitable

power of which it is unreasonable to suppose that Con-

gress intended to deprive them. It is equally clear that

the exercise of this power does not foster conflicts be-

tween the courts but that, on the contrary, it is essential

to prevent conflicts. It is invoked only in the interests

of justice; and justice is what the courts, state or national,

are intended to dispense.

It is also clear that the exercise of the power has

not been limited in any courts to actions in rem but that

on the contrary, the existence of a res is merely one equi-

table circumstance influencing judicia! action. If the jus-

tice of the situation requires, one court not having the

custody of a res will enjoin the parties from proceeding

in another which does have its custody (Steelman vy. All-

Continent Corp., supra).

In closing we respectfully request the court to bear

this further observation in mind. At the time when

this statute (Section 265) was first enacted (1793). as is

well known, the states were acutely apprehensive that

the Federal power, including the power of the federal

courts, might be exerted in a manner detrimental to and

derogatory of tne co-existing powers of the states and

of the state courts. It is fairly inferable that many states

feared that the federal courts might attempt improperly

to intetfere with the lawful and orderly processes of the

state courts and prevent them from exercising their proper

jurisdiction. At the same time we do not see how it can

be properly assumed that Congress intended to prevent

the federal courts from exercising those characteristic

powers which all courts of a similar character then pos-

sessed by reason of their inherent nature. One of those

powers which had long existed in English courts of

equity, as we showed in Respondent's Brief, was the

power to protect and effectuate the courts’ own decrees.

We do not believe that there is any just ground for saving

that it was the intent of Congress to strip the federai

courts of this essential, inherent power merely in the

one aspect of its exercise in which ~the federa courts

might come in contact with litigants in the state.courts

The exercise of power in this instance in no way inter-

feres with the state courts’ concurrent and coordinate

jurisdiction. It is not the exercise of a power which the

state court itself will not readily exercise in limiting

litigants who seek to relitigate in the federal courts

issues already determined in other courts, federal, state

or foreign. We trust that the court will differentiate be-

tween the case at bar and other cases now before it in

which the power of injunction to stay proceedings in state

courts has been exercised in other circurnstances where

it may be, the right to do so is neither so wel! define

as in the present case, nor so manifestly in the interest.

of justice and equity.

We are convinced that this Court will not proceed

upon a tangent which would throw it out of harmony with

all the other courts of the Anglo-Saxon world. The decree

below should be affirmed.

Respectfully submitted,

SAMUEL W. Sawyer.

RICHARD S. RIGHTER.

Horace F. BLrackweELt. Jr.

Counsel for Respondent.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.