Quinton v. Equitable Inv. Co.

196 F. 314, 116 C.C.A. 134, 1912 U.S. App. LEXIS 1482

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 6, 1912
• Docket: No. 2,093
• Status: Published

Opinion

GILBERT, Circuit Judge

(after stating the facts as above). The appellants assert that there is equity in their bill to enjoin the prosecution of the actions at law, and that the case stands upon the doctrine that taxpayers have the right to invoke the intervention of a court of equity to prevent the illegal disposition of moneys of a county or a municipal corporation, as sustained in Crampton v. Zabriskie, 101 U. S. 601, 25 L. Ed. 1070, where it was held that, in the absence of legislation restricting the rig'ht to interfere in such cases, there was no substantial reason why a bill by or on behalf of individual taxpayers should not be entertained to prevent the misuse of corporate powers. In the present case, however, the bill is not directed against officers of the irrigation district, nor is it the object thereof to restrain or control any action of such officers looking to an illegal disposition of moneys of the district, or to the creation of debt which the taxpayers of the district may be called upon to pay. In fact, neither the district itself nor any officer thereof is. made a party to the bill. The suit is directed against persons who are the plaintiffs, in actions brought to recover judgments on certain bonds issued in the name of the district, and the right of the appellants to prosecute their suit is predicated on the allegations that the persons who were served with process in those actions are not the officers of the district, and have no power or authority to represent it, and will make no defense to the actions, and that neither at the time of the commencement of the actions, nor at any time since, has the district had any directors upon whom service could be made, and that the court in which said actions were brought was therefore without jurisdiction thereof.

[1] It is the general rule that, where a court is proceeding in an action at law without jurisdiction, no injunction will be granted to restrain the plaintiff therein, since the proceeding is void at law, and the law affords an adequate remedy. Gray v. Jones, 178 Ill. 169, 52 N. E. 941; Birmingham Ry. & Electric Co. v. Birmingham Traction Co., 121 Ala. 475, 25 South. 777; Etowah Mfg. Co. v. Dobbins, 68 Ga. 823; St. Louis Iron Mountain Ry. Co. v. Reynolds, 89 Mo. 146, 1 S. W. 208. The rule has generally been applied in cases where the defendants in the law action have attempted to resort to equity for injunctive relief. It should be held to apply also to cases where, as here, the complainants in equity are strangers to the action at law. No special facts are alleged in the present case which will create an exception to the general rule.

[2] If it is true that there are no directors of the Perris irrigation district and there were none at the time of the commencement of the actions, the appellants had a remedy under section 10 of the Wright Act (St. 1887, p. 33), which provides that, in case of vacancies in the office of members of the board^of directors:

“The vacancies shall be filled by appointment by the board of supervisors of the county where the office of such board is situated.”

If there were valid defenses to the actions at law, it was the duty of the officers of the Perris irrigation district to present them; and, if there were no such officers, it was the duty of the appellants to have made application to the board of supervisors for the appointment of such officers. There is no allegation in the bill that any such application was ever made, or that the board of supervisors ever refused to make such appointments. It is well settled that a stockholder in a corporation may not bring a bill against the corporation and other parties founded on rights which may properly be asserted by the corporation, without setting forth in his bill the efforts he has made to obtain the action which he desires on the part of the officers of the corporation, and alleging their refusal to act. Corbus v. Gold Mining Co., 187 U. S. 455, 23 Sup. Ct. 157, 47 L. Ed. 256; Hawes v. Oakland, 104 U. S. 450, 26 L. Ed. 827. There is stronger ground for applying that doctrine in a case where the suit is brought by taxpayers of an irrigation district who are not in privity with the district and do not even make the district a party to the suit. The case comes clearly within the principle of the decision in Taylor v. Holmes, 127 U. S. 489, 8 Sup. Ct. 1192, 32 L. Ed. 179, where it was held that a stockholder in a corporation which had passed the term of its corporate existence and had long since ceased to exercise its corporate franchises must, in order to maintain an action for equitable relief in his own name, show that he has endeavored in vain to secure action on the part of the directors if there are any, or to have the stockholders elect a new board of directors. Said the court:

“Although the allegation of the bill is that many of the directors of the company are dead, still it is shown that one of them survives, and no assertion is made that there was any application to this surviving director on the part of the defendants for the purpose of instituting any proceedings looking to the rectification of this deed or for the recovery of the real estate in North Carolina; nor does it appear that there was any request made to him to bring any suit either at law or in chancery for that purpose. No effort was made to call, together the stockholders to take any action on the part of the company, or to elect other directors, or to obtain any united action in the assertion of the claims now set up.”

[3] The question of the legality of the organization of the irrigation district may not be raised collaterally if the district be acting under color of law and the state acquiesces therein. People v. Linda Vista Irrigation District, 128 Cal. 484, 61 Pac. 86; Miller v. Perris Irrigation District (C. C.) 85 Fed. 693. A decision construing the Constitution and laws of the state is binding upon a federal court. Fallbrook Irrigation District v. Bradley, 164 U. S. 112, 17 Sup. Ct. 56, 41 L. Ed. 369.

The decree is affirmed.