State of Minnesota v. Guaranty Trust & Safe-Deposit Co.

73 F. 914, 1896 U.S. App. LEXIS 2670

• Court: U.S. Circuit Court for the District of Minnesota
• Decided: May 6, 1896
• Status: Published

Opinion

NELSON, District Judge

(after stating the facts). This motion is based upon a bill with accompanying affidavits, filed by the state of Minnesota, to enjoin and restrain a sale under a decree of foreclosure heretofore granted in the case of Guaranty Trust & Safe-Deposit Company against the Duluth & Winnipeg Railroad Company et al. No stockholder of the railroad company interposed any objection to the foreclosure. In my opinion, the motion must be denied, for the following reasons:

1. No federal question is involved. A state is not a citizen, and this court has no jurisdiction in a suit brought by a state against its own citizens or citizens of other states.

2. The state has no property rights in the original controversy. ,

3. The provisions of section 2743, Gen. St. Minn. 1894, relied upon by the attorney general, and which it is claimed give the state a standing in this court by a bill in equity to enforce the same, were enacted for the purpose of protecting stockholders and creditors against fictitious indebtedness, or “watered stock,” so called; in other words, to protect private rights; and the state has no authority to protect such private rights by suit.

4. The bill is not ancillary or auxiliary to the main proceeding, but original, and some of its features are in the nature of a bill “quia timet”; that is, for the purpose of quieting apprehensions of probable or possible future violation of the statute.

5. Counsel is mistaken when he says that the state can secure relief, if entitled to any, nowhere else save in the original action, and by this proceeding. The state, by informing bidders at the sale of what it intends to do, would not be cut off from proceeding against purchasers.

After such consideration as I have1 been able to give the matter' in the limited time allowed, I am clearly of the opinion that the state has no standing in court under the proceedings instituted by it, and I declinó lo issue an injunction restraining, the sale.