Hutchinson v. Green

6 F. 833, 2 McCrary's Cir. Ct. Rpts 471, 1881 U.S. App. LEXIS 2178
CourtU.S. Circuit Court for the District of Eastern Missouri
DecidedApril 5, 1881
StatusPublished
Cited by4 cases

This text of 6 F. 833 (Hutchinson v. Green) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Eastern Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hutchinson v. Green, 6 F. 833, 2 McCrary's Cir. Ct. Rpts 471, 1881 U.S. App. LEXIS 2178 (circtedmo 1881).

Opinion

Treat, D. J.

The plaintiffs, citizens of Iowa, bring this suit in behalf of themselves and other stockholders who may join against the defendant corporation, of which they are stockholders, and the assignee of said corporation. The purpose of the suit is to have the assignment made by the corporation, through its then corporate authorities, under the facts and circumstances alleged, adjudged void; and in addition thereto it is prayed that a receiver inay be appointed and an injunction against the assignee granted. The present motion is for a provisional injunction against the assignee. It appears that a petition pursuant to the statutes of Missouri was filed in the state circuit court for the removal of certain directors and the president of the defendant corporation, and such proceedings were thereupon had that said removals were decreed, and a special election ordered to fill the vacancies thus created in the board of directors. At the same time said court appointed a receiver of the corporate prop[834]*834erty and effects. Tbe election, as ordered, was held and confirmed by tbe court, and a meeting, on due notice of tbe board as thus constituted, was held December 13, 1880, at which a new president was chosen, etc. Notice was duly given thereafter for the annual'meeting to be held on January 19,1881.

It is averred that for fraudulent purposes a meeting of the board was. held, and, by a vote of the majority against the protest of the minority, and against the wishes of a majority of the stockholders, an assignment of the corporate effects, etc., was made January 15, 1881, — four days before the annual meeting. The assignee has given bond under the state statute, and has proceeded, and is now proceeding, to execute the duties imposed upon him by law, subject to the supervision of the state court.

At the annual meeting, January 19, 1881, an election of directors was had, a new president chosen, said assignment repudiated, etc., and the new board instructed to protect the interests of the corporation in such manner as might be deemed advisable.

It is averred that, on investigation made, said corporation has been found solvent, and able, by the administration of its own affairs, not only to meet its obligations, but have a large surplus. The new board authorized and requested its president to proceed in the state court to have the receiver turn over to the corporation its property in his hands on payment of expenses, etc., whereupon the president did so proceed, his petition therefor being accompanied by the written consent of 96 per cent, of the creditors. Said petition was opposed by the assignee and denied by the court.

It is alleged that pursuant to the vote of the stockholders the. president had demanded of the assignee that he should reconvey the property to the corporation; that said assignee refused so to do? and that on March 25, 1881, the plaintiffs demanded of said president that “said corporation should at once institute the proper proceedings to enjoin” said assignee from “in any manner interfering with the property and assets of said corporation under said deed of assignment, and to set aside and cancel said deed of assignment, and that [835]*835thereupon said Lowery [the president] refused to take further steps,” etc.

. These latter averments are evidently designed to bring the ease within recognized rules as to suits by stockholders when the proper corporate authorities refuse to act in the name of the corporation or permit the name of the corporation to be used as party litigant. Although the averment may be subject to criticism as to its sufficiency, yet as it might be amended, possibly, consistent with facts justifying this form of action, it is thought, for present purposes, advisable to treat the averments as if fully complying with the equity rule.

The allegations of the bill have been thus summarized in order that it may appear with sufficient clearness what the demand is, why the jurisdiction of this court is invoked, and what is the condition of the record in the state court. The bill proceeds as follows: “And your orators, further complaining, say [etc.] that said St. Louis circuit court, in due course of procedure under the provisions of the statutes of the state of Mis-ouri in that behalf, is about to discharge the said Glubb as receiver of the assets of said corporation defendant, and direct said receiver to turn over said property to the party entitled to receive the same; and that said Charles Green, defendant herein, claims the right and proposes to receive said property from said receiver, and to sell and dispose of tíie same under said deed of assignment The hill then states that irreparable mischief to the plaintiffs may follow if the assignee proceeds under the assignment.

The prayer is for an injunction to restrain said assignee “from in any manner interfering with any of the property of said corporation; that the assignment maybe declared void; that the title of the property be decreed to be in the corporation ; that the property he turned over accordingly to the corporation ; and that some one may be appointed by this court to demand and receive from said Glubb, receiver aforesaid, when he, the said Glubb, shall be directed by the said St. Louis circuit court to turn over the said property of said defendant corporation, now in his possession, such property, and the same to hold, subject to the order and decrees of this [836]*836court, ” etc. Does not the foregoing analysis of the bill, with its prayers for relief, show most distinctly that this court is asked to enjoin the proceedings of a state court which has custody of the property in dispute, and is proceeding to determine the rights of the several parties in interest ? At present the state court has custody, but’ it is apprehended that it is about to turn over the possession and management of said property from the receiver to a duly-qualified assignee under the state law, over whom it has full supervision. It is not necessary to decide the bald question whether a state assignee who has given bond, etc., in a state court can be interfered with by injunction from this court.

The force of decisions read from the United States Reports is fully appreciated, and the clear distinction observed between judgments in federal courts against state assignees, administrators, etc., and the modes of enforcing said judgments, which, when rendered, are against them in their representative capacity, payable out of assets in their hands. Whatever may be the apparent doubt arising from the cases cited, it seems clear that the case before this court involves no such difficulties; for it is disclosed in the bill that its purpose is to interfere directly with pending proceedings in the state court —practically, to direct what order it shall make as to the future custody or control of property now in the possession of its receiver; or, in other words, that its judgment shall be restricted, in a certain way, so that it cannot adjudge what, to it, law and right may seem to demand. An analysis of the authorities cited will show that in no well-considered case has a United States court ever issued an injunction, directly or indirectly, (except in bankruptcy matters,) to restrain proceedings pending in a state court; nor has it respected any injunction or other mode of interference with its jurisdiction.

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Bluebook (online)
6 F. 833, 2 McCrary's Cir. Ct. Rpts 471, 1881 U.S. App. LEXIS 2178, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hutchinson-v-green-circtedmo-1881.