Supreme Council of Royal Arcanum v. Hobart

244 F. 385, 157 C.C.A. 11, 1917 U.S. App. LEXIS 2022
CourtCourt of Appeals for the First Circuit
DecidedJune 15, 1917
DocketNo. 1285
StatusPublished
Cited by9 cases

This text of 244 F. 385 (Supreme Council of Royal Arcanum v. Hobart) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Supreme Council of Royal Arcanum v. Hobart, 244 F. 385, 157 C.C.A. 11, 1917 U.S. App. LEXIS 2022 (1st Cir. 1917).

Opinions

DODGE, Circuit Judge.

[1] Whether or not the District Court had jurisdiction is first to be determined. It is our duty to see to it that the statutory jurisdiction of that court is not exceeded, irrespective of any question raised by the parties in regard to the matter. Louisville, etc., Co. v. Mottley, 211 U. S. 149, 152, 29 Sup. Ct. 42, 53 L. Ed. 126.

The plaintiff, a Massachusetts citizen, holds a “death benefit certificate” for $500, issued December 26, 1916, by the defendant, a fraternal benefit society organized under the laws of M assachusetts.

On April 13, 1917, upon a bill in equity that day filed by him in the Massachusetts District Court, a receiver was appointed to take charge of the defendant’s business and assets. The decree appointing the receiver was later modified by subsequent decrees, entered April 17 and April 20, 1917, whereby exercise of his active duties was suspended until further order of the court, and his custody of the defendant’s, property so limited as not to prevent it meanwhile from carrying on its current and usual business.

The present appeal is taken by the defendant from the above decrees under section 129 of the judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1134 (Comp. St. 1916, § 1121). The appellee and appellant are hereafter referred to as plaintiff and defendant, respectively.

The plaintiff’s bill is brought on behalf of hitnself and all other death benefit certificate holders in good standing, who may join therein and contribute to the expense of the suit. No other holders of such certificates have yet so joined.

. The bill alleges, in substance, that the defendant is conducting its business illegally, improvidently, and fraudulently, that it is now or will soon become insolvent as a result, and that great and irreparable loss and injury will thereby be suffered by the plaintiff and other holders of similar certificates. The relief prayed for is an accounting of the defendant’s assets and liabilities, and the appointment of a receiyer to wind up its business, in order that its assets may be distributed under the court’s direction.

Both parties being Massachusetts citizens, the Massachusetts District Court can have no jurisdiction of such a suit, unless the bill shows a federal question to be involved in the cause of action, and the amount in controversy to be more than ,$3,000.

The only allegations of the bill claimed to present a federal question are found in the second paragraph thereof. They are in substance that the defendant is conducting its business subject to a Massachusetts statute, namely, chapter 628 of the Acts of 1911, and that sections 24 and 25 of said chapter deprive the plaintiff of the equal protection of the law, the equal protection of his property rights, and the right [388]*388to be heard in the protection of said rights by the Massachusetts courts, in violation of the Fourteenth Amendment to the federal Constitution.

The Massachusetts statute thus referred to is entitled “An act to provide for the control and regulation of fraternal benefit societies.” Sections 24 and 25, of which the above complaint is made, are quoted at length in paragraph 2 of the bill.

By section 24 power is given to the state insurance commissioner to inspect and investigate the affairs of any such society, and, whenever satisfied that its business is being conducted in a manner such as is charged in this bill, to present the facts to the state Attorney General, who, if he deem the circumstances to warrant such a course, is then to begin a quo warranto proceeding in. a proper court. If after due notice and hearing, as provided by said section, the court finds that the society should be closed, it is to enjoin further business and appoint a receiver to wind up affairs and distribute its funds under the court’s direction.

Section 25, which contains the principal provisions alleged to violate the plaintiff’s constitutional rights, directs that:

“No application for injunction against, or proceedings for dissolution of, or the appointment of a receiver for. any such * * * society * * * shall be entertained by any court in this state unless the sam'e is made hy the Attorney General.”

[2] The above are provisions which have formed part of the Massachusetts legislation regarding fraternal benefit societies since 1898. See chapter 474, § 19, of the Acts of that year. Assuming that they violate any constitutional right belonging to a certificate holder like the plaintiff, it must appear from the bill, before a federal question can be said to be involved as a ground of jurisdiction, that such violation is so connected with the real cause of action which the bill sets forth, as to form an essential part thereof. In other words, whether the remedy sought from the District Court is obtainable or not must depend upon the result of the constitutional question raised as to the validity of said provisions. New Orleans v. Benjamin, 153 U. S. 411, 14 Sup. Ct. 905, 38 L. Ed. 764; Bankers’, etc., Co. v. Minneapolis, etc., Co, 192 U. S. 371, 385, 24 Sup. Ct. 325, 48 L. Ed. 484; Hull v. Burr, 234 U. S. 712, 720, 34 Sup. Ct. 892, 58 L. Ed. 1557.

[3] The plaintiff has never tried, so far as shown, to get the state officials to proceed against the defendant according to the above provisions ; still less is any opposition by the defendant to such an attempt shown. The bill does not show that the defendant has in any way availed itself of them to the plaintiff’s prejudice.* That it is conducting its business subject to them, as part of tire state legislation applicable to all such business, is not enough to render the defendant liable to any such charge. Nothing is found in said provisions which in any way purports to permit or justify maladministration of said business, such as that against which the bill prays relief. The District Court is not asked to enjoin their enforcement, and could not do so if asked.

[4] A suit to obtain the relief prayed for in the bill is not a suit which the federal statutes allow one Massachusetts citizen to bring against another in the federal courts. If it is true that unconstitution? [389]*389al limitations are imposed by the Massachusetts statutes upon the bringing of such suits, the right of one Massachusetts citizen to resort to a federal court for such relief against another Massachusetts citizen is not thereby enlarged. The method provided by existing statutes for raising a question of constitutionality as to any such limitations, in the federal court, is by raising it first in a Massachusetts court,_ and then by appealing to the Supreme Court from a decision sustaining them. The presumption to be made here is that, if such limitations are objectionable because unconstitutional, the Massachusetts courts will so declare when the question is brought before them. Defiance Water Co. v. Defiance, 191 U. S. 184, 24 Sup. Ct. 63, 48 L. Ed. 140; Gundall v. Manhattan Rwy. Co. (D. C.) 205 Fed. 410. Should they fail to do so, the Supreme Court of the United.

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Bluebook (online)
244 F. 385, 157 C.C.A. 11, 1917 U.S. App. LEXIS 2022, Counsel Stack Legal Research, https://law.counselstack.com/opinion/supreme-council-of-royal-arcanum-v-hobart-ca1-1917.