Kelley v. T. L. Smith Co.

196 F. 466, 116 C.C.A. 240, 1912 U.S. App. LEXIS 1510
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 2, 1912
DocketNo. 1,787
StatusPublished
Cited by10 cases

This text of 196 F. 466 (Kelley v. T. L. Smith Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelley v. T. L. Smith Co., 196 F. 466, 116 C.C.A. 240, 1912 U.S. App. LEXIS 1510 (7th Cir. 1912).

Opinion

BAKER, Circuit Judge

(after stating the facts as above). [1] Appellees T. L. Smith Company and Buckley contend that the alleged error was waived through appellants’ having made a general [469]*469appearance by their demurrer. But when appellants added to their challenge of the court’s jurisdiction over their persons a further challenge of the. court’s jurisdiction over the subject-matter, we do not think that they thereby converted their special into a general appearance, abandoned their objections to the service of subpoena and notice, and asked the court to assume jurisdiction and determine the sufficiency of the bill. Clearly the intent was to urge only objections to jurisdiction.

That substituted service was proper practice in this case is urged on the claim that this is an ancillary proceeding in aid of the court’s jurisdiction in the pending suit of American Trust & Savings Bank, as trustee in bankruptcy, against Smith and T. L,. Smith Company. True, the trustee prayed that T. L. Smith Company be enjoined from transferring on its books not only the Smith stock but also that of other co-conspirators who were not parties to the suit. But the prayer should be read in the light of the allegations of the bill. Therein the only demand, on account of the refusal of which the suit was instituted, was. upon Smith to turn over to the trustee the stock in his possession" or under his control (with no allegation that the Kelley stock was either) and to account to the trustee for the remainder of the stock and all the cash taken by the joint tort-feasors. Kelley was not a party to this suit. Just bow the court, without violating familiar principles, could proceed in Kelley’s absence to adjudge that he had no title to the 105 shares and that the true title was in the trustee in bankruptcy, and to order T. E. Smith Company to transfer those shares on its books to the trustee, is not perceived. In the circuit court of Cook county, Ill., the trustee was holding Kelley to show why these shares should not be turned over to the trustee and why additionally he should not pay for his part in the conspiracy. If the present proceeding was in aid of the jurisdiction of any court, it was of the Cook county court and not of the United States Circuit Court for the Eastern District of Wisconsin.

Jurisdiction can be sustained only on the grounds: First, that the bill, not as a bill for the protection of the jurisdiction of any court, but as an independent and original bill for the protection of some equitable right existent in complainants, presented a subject-matter cognizable in a Circuit Court of the United States; and, second, the suit being in personam, that the court acquired jurisdiction of the persons of the defendants.

[2] That T. U. Smith Company and its secretary, having no interest in the 105 shares, but being under a duty to recognize the rights of the lawful owner, should be pressed on the one hand by a suit in which the trustee in bankruptcy and T. U. Smith Company and Kelley were parties, and on the other hand by a suit in which Kelley, his as-signee, and the secretary of T. E. Smith Company were parties, but in which the trustee, the other claimant, was not a party, presented as subject-matter an equitable right to protection from harassment and jeopardy. Impending danger came to T. E. Smith Company, a Wisconsin corporation having its office and records in the Eastern District, from the acts of appellants’ agents who in that district were [470]*470in possession of the stock certificate and were asserting appellants’ rights of ownership. Equally with the local courts, the Circuit Court for the Eastern District of Wisconsin, if the requisite amount in controversy and diversity of citizenship appear, has jurisdiction of equitable subject-matters. Diversity of citizenship and due amount were alleged, and the matter was of equitable cognizance; but, of course, neither the sufficiency of the bill nor the legality of the injunction is considered.

[3] Appellants insist that on the question of service Equity Rule 13 (29 Sup. Ct. xxvi) is controlling, as follows:

“The service of all subpoenas shall be a delivery of a copy thereof by the officer serving the same to the defendant personally, or by leaving a copy thereof at the dwelling house or usual abode of each defendant with some adult person who is a member or resident in the family.”

On the other hand, appellees present Equity Rule 90 (29 Sup. Ct. xxxvii) as applicable:

“In all cases where the rules prescribed by this court or by the Circuit Court do not apply, the practice of the Circuit Court shall be regulated by the present practice of the High Court of Chancery in England, so far as the same may reasonably be applied consistently with" the local circumstances and local conveniences of the district where the court is held, not as positive rules, but as furnishing just analogies to regulate the practice.”

Congressional authority for the Equity Rules is found in section 913 of the Revised Statutes (U. S. Comp. St. 1901, p. 683).

English chancery practice as it existed at the time of the adoption. of this rule (March 2, 1842; Thomson v. Wooster, 114 U. S. 104, 5 Sup. Ct. 788, 29 L. Ed. 105) is thus described in Daniell on Chancery Practice .(2d Am. Ed.) p. 518:

“The jurisdiction (on substituted service) is most frequently exerted where actions at law are brought by persons resident abroad to enforce demands which, although they have, strictly speaking, a legal right to make, it is against the principles of equity to permit it. In such cases, the court will interfere by injunction served upon the- attorney employed in this country to conduct the proceedings at law, to restrain further prosecution of such proceedings until his employer has submitted himself to the jurisdiction. In order to accomplish this purpose, it is permitted to the plaintiff in equity, in the first instance, to obtain an order directing that service of the subpoena upon the attorney employed in the cause at law shall be deemed good service.”

And Daniell’s text seems to be amply sustained by Hobhouse v. Courtney, 12 Simon’s Chan. Rep. 140 (reviewing Hales v. Sutton [decided in 1716] 1 Dick. 26; Carter v. De Brune [1722] 1 Dick. 39; Hyde v. Forster & Myers [1745] 1 Dick. 102; Id., 2 Mer. 459, note; and Geledneki v. Charnock [1801] 6 Ves. 171); Murray v. Vipart, 1 Phillips’ Chan. Rep. 521; Hope v. Hope, 4 Deg., MacN. & G. Chan. Rep. 328.

In the last-cited case the bill was brought by the Hope children, through their next friend, to require their custody to be transferred from their mother, residing in France, to their father, residing in England. Before their bill was filed, Mrs. Hope through a firm of English solicitors had begun in the English Ecclesiastical Court a suit for divorce from Mr. Hope. This divorce suit was pending, and the [471]*471Chancery Court ordered that service in the. children’s suit against Mrs. Hope be made upon her solicitors who were prosecuting her divorce case in the Ecclesiastical Court. Said the Eord Chancellor:

“According to the rules of law, service ought either to he made personally, or at least by leaving notice at the dwelling house of the party. But the rule of this court differs in this respect from that of a court of law.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Davis v. Ensign-Bickford Co.
139 F.2d 624 (Eighth Circuit, 1944)
Wisconsin Mut. Ins. v. Western Mut. Fire Ins.
107 F.2d 402 (Seventh Circuit, 1939)
Andis v. Schick Dry Shaver, Inc.
94 F.2d 271 (Seventh Circuit, 1938)
Prudential Ins. v. McKee
81 F.2d 508 (Fourth Circuit, 1936)
Central West Public Service Co. v. Craig
70 F.2d 427 (Eighth Circuit, 1934)
Guaranty Trust Co. of New York v. Fentress
61 F.2d 329 (Seventh Circuit, 1932)
Wilson v. Beard
26 F.2d 860 (Second Circuit, 1928)
Armstrong v. Langmuir
6 F.2d 369 (Second Circuit, 1925)
Union Assurance Society v. Buono
193 N.W. 827 (Michigan Supreme Court, 1923)
Ryan v. McAdoo
46 App. D.C. 117 (D.C. Circuit, 1917)

Cite This Page — Counsel Stack

Bluebook (online)
196 F. 466, 116 C.C.A. 240, 1912 U.S. App. LEXIS 1510, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelley-v-t-l-smith-co-ca7-1912.