Everglades Drainage & Development Corp. v. Fairbanks, Morse & Co.

75 F.2d 794, 1935 U.S. App. LEXIS 3066
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 16, 1935
DocketNo. 7525
StatusPublished

This text of 75 F.2d 794 (Everglades Drainage & Development Corp. v. Fairbanks, Morse & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Everglades Drainage & Development Corp. v. Fairbanks, Morse & Co., 75 F.2d 794, 1935 U.S. App. LEXIS 3066 (5th Cir. 1935).

Opinion

HUTCHESON, Circuit Judge.

Brought in chancery in a Florida circuit court, by a bill filed March 22, 1934, the suit was for abatement of purchase price and for injunction. After a temporary injunction had been granted in it, Fairbanks, Morse & Co., the principal defendant, removed it into the federal court. There plaintiff’s motion to remand was denied, and defendants’ motions to dissolve the interlocutory injunction and dismiss the bill were granted. This appeal is from those orders. Testing them by an examination of the bill, we find it neither complicated nor greatly over long. Though with its exhibits it runs to nearly one hundred pages, its contents may be briefly stated. It shows that on July 14, 1933, plaintiff bought from Fairbanks for a sum certain, $225,000, payable part cash and the balance in fixed installments beginning April 1, 1934, with $50,000, claims that company had against certain drainage districts in Florida, including the South Florida Conservancy District. These claims and choses in action were the result of sales Fairbanks, Morse & Co. had made of engines,' pumps, machinery, and equipment, to drainage districts under retained title or chattel mortgage contracts. Among the claims thus purchased was one against the conservancy district for $82,-724.95, for pumps, etc., sold it by Fairbanks. The contract recited that the claim was in litigation in a foreclosure suit in the federal court for the Southern District of Florida, and bound the purchaser to press the suit with reasonable dispatch to final decree. In the purchase contract it was represented that the claim was secured by a lien upon and claim against the machinery, pumps, etc., and additionally secured by a deposit with Fairbanks of bonds of the district of the face value of $100,000. As to this claim, the purchase contract recognized that the seller retained an interest in it, satisfiable by turning the machinery, etc., over to it, if and when reclaimed, or by [795]*795paying it $25,000. By allegations and by attached exhibits, the bill shows that Fairbanks expressly covenanted and represented that its contract with the conservancy district was valid and binding, that the district justly owed it on account thereof, $82,-724.95, and that the bonds had been deposited with it as additional security. It alleges that plaintiff believed these representations to be true, and in making the contract relied on them, knowing nothing to the contrary. As to the payments made and to be made under the purchase contract plaintiff had with Fairbanks, the bill alleges the payment of $50,000 in cash, the agreement to pay $175,000 in four annual installments, and that to secure these payments 15,000 shares of . General Motors stock had been deposited under a trust agreement, providing for maturing the whole indebtedness and selling the collateral, should any installment not be paid. Thus predicating of the purchase contract to fix plaintiff’s rights, the bill proceeds to a recital of its wrongs. This consists in alleging generally that plaintiff has, since the making of the purchase contract, become and now is advised that its consideration has partly failed, for that the representation and covenant of Fairbanks that the conservancy district was indebted to it, and had deposited its bonds as collateral, was and is untrue. The bill alleges neither the time when, nor the circumstances under which, the discovery was made, nor does it undertake to explain why plaintiff, under an obligation to press the foreclosure suit, has, failing to do so, waited from July 14, 1933, when the contract was signed, until March 22, 1934, when the first payment was about due, to bring this suit or take other appropriate action. The allegation of the bill, that Fairbanks knew when it made the contract with plaintiff, that the district was contending in pleadings already filed in the foreclosure suit, that it was not indebted, emphasizes these omissions. They are made more glaring by the further allegation that Fairbanks knew, when the purchase contract with plaintiff was made, but plaintiff did not, that the district was contending, by pleadings filed in the foreclosure suit, that by reason of a letter the district had written, bearing date July 28, 1929,1 it was not liable to Fairbanks in any sum.

Upon these allegations the pleader concludes that it ought not to be required to litigate in the Southern District of Florida, the suit between Fairbanks, Morse and the conservancy district, which in the contract of purchase it had agreed to prosecute with reasonable dispatch to a final decree. It concludes, too, that it ought not to have to pay $50,000 on April 1 following, as it had in its contract agreed to do, and that therefore an injunction ought to issue, restraining it, Fairbanks, and the conservancy district from proceeding with the suit, and restraining Fairbanks and the trustee from [796]*796proceeding, after April 1st, to declare the whole purchase price due for nonpayment of the first installment. The prayer of the bill was that the court take jurisdiction and issue an injunction pendente lite, restraining the prosecution of the federal court suit and all proceedings to mature, collect, and realize upon the purchase money indebtedness. There was a further prayer that the court determine, upon final hearing, whether, and what amount, the district owes Fairbanks, abating accordingly the purchase money plaintiff had agreed to pay.

Appellant’s position on the order refusing to remand is: (1) That its bill initiated merely a proceeding under the Florida statutes for a declaratory decree; it did not present a case or controversy within the range of federal judicial decision. (2) That in any event, its bill did not present a separable controversy between it and Fairbanks, but a single controversy between it as plaintiff, and the conservancy district and Fairbanks as defendants, the determination of whether, and what amount, the district owes. Its position on the orders dissolving the injunction and dismissing the bill as invalid, is that if the removal was proper, there is equity in the claim of its bill that until what the district owes is determined in this suit, the prosecution .of the suit Fairbanks filed against the district and the payments on plaintiff’s purchase money contract should be suspended and restrained.

We find no merit in any of these positions. Turning to plaintiff’s first position on the order refusing remand, we find it unnecessary to determine whether, if plaintiff’s proceeding had been brought under chapter 7857, Laws of Florida 1919, authorizing its state equity courts to grant declaratory decrees,2 it would have been an action presenting a case or controversy within the range of federal judicial decision, either under the law as it stood before,3 or as it stands since,4 the enactment of the Federal Declaratory Act, 28 USCA § 400, for plaintiff’s suit is, not under that statute. The bill as styled and drawn is a bill for abatement of a portion of the purchase price, invoking the jurisdiction of equity, and praying for ordinary and .extraordinary decrees. Such a suit presents a case or controversy fully justiciable in a federal court having jurisdiction of it. Harr v. Pioneer Corp. (C. C. A.) 65 F.(2d) 332. It was in its nature removable.

Its second position, that the bill states no separable controversy with Fairbanks, is no better based.

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Bluebook (online)
75 F.2d 794, 1935 U.S. App. LEXIS 3066, Counsel Stack Legal Research, https://law.counselstack.com/opinion/everglades-drainage-development-corp-v-fairbanks-morse-co-ca5-1935.