Young v. Hamilton

69 S.E. 593, 135 Ga. 339, 1910 Ga. LEXIS 526

• Court: Supreme Court of Georgia
• Decided: November 16, 1910
• Status: Published

Opinion

Evans, P. J.

(After stating the foregoing facts.)

1. .One-of the grounds urged by the Federal court receiver for the transfer to him of the property of the Etna Steel & Iron Company from the possession of the State court receiver is that the order of appointment of the latter is void, because it was granted' before' the petition was filed in the clerk’s office, and that the appointment of the receiver was therefore coram non judice. Tn England a receiver could only be appointed after the hill had been filed, except in some special cases, as in the protection of the interests of lunatics and infants, when the court would interfere as a general guardian of that class of persons. Stone v. Wetmore, 42 Ga. 603. Tinder the English practice no sanction of a bill invoking the extraordinary powers of a court of equity was required5 as preliminary to the filing of the bill. The practice in Georgia does not now, and never did, conform to the English chancery practice. By the 53d section of the judiciary act of 1799, all bills in equity were required to be read and sanctioned by one of the judges, and a copy thereof served on the opposite party at least 30 days before the filing of such bill in court. By the act of 1827 so much of that provision as required judges to read and sanction bills in equity, other than applications for injunction, ne exeat, and quia timet, before filing them in court, was repealed. So that now only bills praying extraordinary relief require the sanction of the judge before they can be filed in court. Though an injunction can not be granted by the court in advance of the filing of the petition, yet the judge may, at the time that he sanctions the filing of the bill, grant instanter a restraining order against the party complained of, until the hearing or further order of the court; and this restraining order has the force of an injunction until rescinded or modified. Strickland v. Griffin, 70 Ga. 551. The requirement that the judge shall sanction a bill praying interlocutory extraordinary relief implies that he may, in emergent cases, preserve the status. This is usually done by the grant of a restraining order; and such has been the uniform practice. If, in addition to the grant of a restraining order, it becomes necessary for the preservation of the status that a temporary receiver be appointed, the same considerations for the protection of the property which justify the grant of a restraining order will also justify the appointment of a temporary receiver until the interlocutory hearing fixed in the order sanctioning the filing of the petition. A case may be easily surmised where the appointment of a temporary receiver is just as emergent and necessary for the protection of the property as the grant of a temporary restraining order. This course is clearly comprehended in the Civil Code, § 4967, which declares, that, if any extraordinary process or remedy is prayed, the sanction of the judge of the court must be first obtained before such process is issued or such remedy granted, and that the application may be ex parte and granted without a hearing in cases of manifest necessity. It is true that the statute (Civil Code, § 4975) provides that the clerk shall endorse upon every petition the date rf its filing in office, which shall be considered the time of tlie commencement of the suit; and that no petition shall require the sanction of the judge before its filing, unless it prays some extraordinary remedy. This section does not modify the other provisions of the code relative to the sanction of petitions praying extraordinary interlocutory relief. The court, in sanctioning the bill, acquires at least such inchoate jurisdiction over the petition and the res as to preserve the status, where the sworn petition or supplementary proof makes it manifest that the rights of the parties will be seriously impaired unless the status is preserved. A party may not present a petition to a judge, praying the grant of an interlocutory restraining order and the appointment of a temporary receiver, and procure an ex parte order to this effect, with direction that the application be filed, and then withhold it from the records. As soon as the judge favorably acts upon such petition and sanctions it, it then becomes a proceeding in court, at least to the extent that he has power to see that his order is carried out in respect to the prompt filing and service of the same. So far as the suit may affect third parties, under the, doctrine of lis pendens, whose rights have been acquired intermediate the sanction and the actual filing, the commencement of the suit is from the filing of the petition with the clerk, where it has been followed by service; yet,-as between the parties, the judge has such jurisdiction over the whole res when the bill is presented to him for sanction that he may by proper order preserve the status in emergent cases in advance of the filing; and when the bill thus sanctioned has been filed, the jurisdiction of the court, which was inchoate upon the sanction of the petition, becomes perfect upon the filing, followed by service. The appointment of the receiver in this case was not •a proceeding coram non judice.

2. Courts of co-ordinate jurisdiction may entertain the same cause of action between the same parties, concurrently, where a judgment is sought in personam. Some-cases are conceivable where both suits mayr proceed to judgment and execution be had therein, or the judgment first obtained may be pleaded in abatement of the pending suit. The rule, however, is different where the cause of action in both suits is a proceeding in rem. In such eases the doctrine is well settled that where a court in the progress of a suit properly pending before it takes possession of the property hv the appointment of a receiver, its jurisdiction over the property for the time being becomes exclusive, and no other court can lawfully interfere with the possession so ácquired. Wabash Railroad v. Adelbert College, 208 U. S. 54 (28 Sup. Ct. 182, 52 L. ed. 379). This result “is merely an application of the familiar and necessary rule, so often applied, which governs the relations of courts of concurrent jurisdiction, where, as in the case here, it concerns those of a State and of the United States, constituted by the authority of distinct governments, though exercising jurisdiction over the same territory. The rule has no reference to the supremacy of one tribunal over the other, nor to the superiority in rank of the respective claims, in behalf of which the conflicting jurisdictions are invoked. It simply requires, as a matter of necessity, and therefore of comity, that when the object of the action requires the control and dominion of the property involved in the litigation, that court which first acquires possession, or that dominion which is equivalent, draws to itself the exclusive right to dispose of it, for the purposes of its jurisdiction.” Heidritter v. Elizabeth Oil-Cloth Company, 112 U. S. 294-305 (5 Sup. Ct. 135, 28 L. ed. 729); Merritt v. American Steel Barge Company, 79 Fed. 228 (24 C. C. A. 530). Covell v. Heyman, 111 U. S. 176-182 (4 Sup. Ct. 355, 28 L. ed. 390). In the last-cited 'authority it was said by Mr. Justice Matthews, in the course of his opinion, that: “They [the State and the United States courts] exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes into its possession a specific thing, that res is as much withdrawn from the judicial power of the other as if it had been carried physically into a'different territorial sovereignty.” Where a cause in rem is depending into two courts of co-ordinate jurisdiction, and the property is in the possession of one, a spirit of comity has developed the practice that the court claiming the right of possession over the res may authorize its proper officer to petition the court which has possession to turn over to its officer the property, the possession of which it claims is necessary for the full assertion of its jurisdiction and the grant of the relief prayed. When the officer of the court seeking the possession of the property files such petition, the court in possession of the property,-] ooks to its pleadings in order to determine its jurisdiction; and if such jurisdiction 'appears upon the face of the pleadings, it will not in an independent proceeding collaterally and summarily try the truth of the allegations of the petition to determine its own jurisdiction. The jurisdiction of a court to entertain a cause, and the right of the plaintiff in such cause to finally prevail, present essentially different questions; — the former is determined from an inspection of the record, the other results from a consideration of the facts as established by the proof. In the ease at bar the bondholder is given the right to foreclose the mortgage or deed of trust, upon the refusal of the trustee to act under certain conditions. The petition alleges that the trustee refused io act, and by the terms of the trust deed the bondholder, in behalf of himself and others, became vested with the same right that the trustee had to foreclose the mortgage. In an answer to the petition filed in the Federal court the mortgaging corporation admits the right of the trustee to institute foreclosure suit. Thus, we have the case of where two plaintiffs are contending in co-ordinate jurisdictions for the right to foreclose the same mortgage, and, in aid of such right, to take physical possession of the mortgaged property pending the foreclosure suit. No question is presented by the United States court receiver as to the jurisdiction of the State court upon the pleadings before, it; his contention being that the complaining bondholder had misrepresented the facts in his petition upon which the court secured its right to the jurisdiction; and the question thus made is whether the receiver of a co-ordinate court, by summary motion, can oust the possession of the receiver of the court first taking jurisdiction upon a traverse of the facts alleged. The objection to the court’s proceeding to determine disputed questions of fact in a collateral motion instituted by the receiver of a court of coordinate jurisdiction is based upon the fundamental principle that only parties to a cause will be allowed to contest the truth of an allegation made in the pleadings.- On the other hand, the argument is advanced, that, unless the receiver of the United States court be allowed to present and press his motion, it would permit a party to obtain jurisdiction of the res by false allegation; that only one person was entitled to foreclose the mortgage, and that was the trustee; that he had the right to select the forum of the suit; and that unless he be permitted to show that the allegations of the plaintiffs were untrue, th(>. effect would be to deprive the court entitled to exclusive jurisdiction of its dominion over the suit. If two proceedings over the same res, against the same defendant, both being instituted by parties under tlie same right to the cause of action, are depending in the same court, upon such being brought to the notice of the court, the court may consolidate the two causes or discharge one of its receivers, according to the exigencies of the ease. National Bank of Augusta v. Richmond Factory, 91 Ga. 284 (18 S. E. 160). But where the proceedings are in different courts, and the court which has first seized the property has no power of consolidation, it will look to its own pleadings to ascertain its jurisdiction of the res. A receiver of the United States court has no right by virtue of a collateral motion to contest before the State court the truth of the allegations in the petition, unless he intervenes in the cause. The trustee by becoming a party in the State court would be accorded the privilege of asserting its right, either in the continuance of. the suit as dominus litis, or in abatement of the suit on the ground that the plaintiff had not performed the conditions precedent to the bringing the suit in his own name. If it chose the latter course and prevailed, then it could institute in the Federal court its suit to foreclose the mortgage: or the trustee might file in the State court an independent .petition to enjoin the stockholders’ suit, on account of fraud. A diligent search has failed to discover any precedent for allowing a receiver in a co-ordinate court to contest by a collateral and summary motion the jurisdiction of the court of concurrent jurisdiction, based upon a traverse of the allegations of the petition conferring jurisdiction. We do not think such a course is permissible. Our case of May v. Printup, 59 Ga. 128, is not to the contrary. Tn that ease the suit was originally instituted in the circuit court of the United States, and was against the property; subsequently a bill of like character was filed in the State court, and a receiver was appointed. Pending an appeal to the Supreme Court of the United States a receiver was appointed by the circuit court, and he made application to the State court, praying a revocation of the appointment of the State court receiver and the transfer of the property in his possession. The court granted the application upon the ground that the priority of proceeding in the Federal court invested it with exclusive jurisdiction over the res, and gave that court priority over the subsequent suit in the State court.

Tho rule, that, as between Federal and State courts of concurrent jurisdiction, the court first acquiring dominion over the res will retain it to the encl of the controversy does not apply when the Federal courts exercise superior jurisdiction for the purpose of enforcing the supremacy of the constitution and laws of the United States. 1 Foster’s Fed. Prac. 9g. If a court of bankruptcy, under the constitution of the United States and laws passed in pursuan'ce thereof, is entitled to the possession of the property, through its receiver, the State court will not decline to surrender such possession, but will yield possession of the property to the bankrupt court. White v. Davis, 134 Ga. 274 (67 S. E. 716); McGahee v. Cruickshank, 133 Ga. 649 (66 S. E. 776). In such cases the receiver of the United States court applying for the possession of the property does not undertake to contest the jurisdiction of the State court because the receiver was improvidently granted, or that the allegations upon which the court acted were not true in point of fact, but because of the extrinsic fact of bankruptcy, which gives the United States court exclusive jurisdiction of the property of the bankrupt, after adjudication in proper cases.

We therefore hold, that, as the petition in the State court disclosed jurisdiction in that court, and its allegations presented a case entitling the plaintiff to the relief sought, the receiver in the subsequent suit instituted in the circuit court of the United States can not proceed by a collateral motion, based, solely on a traverse of the allegations- in the petition, for a summary vacation of the appointment of the State court receiver and a surrender of the possession of the property to the movant.

3. A motion was made by the plaintiff in error to docket the ease as a fast writ. This motion was allowed. The Civil Code, § 5540, classifies as fast writs all writs of error from judgments “in all cases where an application for an injunction or receiver is granted or refused; in all applications for discharge in bail trover and contempt cases; granting or refusing application for alimony, mandamus, or other extraordinary remedy; the granting or refusing an application for attachment against fraudulent debtors; and in all criminal cases.” We think this application may properly and wisely be included in the classification “granting or refusing application for . . other extraordinary remedy.” In a contest between two courts of concurrent' jurisdiction over the possession of the property, it is essential to the orderly administration of justice and to prevent unseemly conflicts that the two courts bear to one another a spirit of comity; and when one court through its officer, in-that spirit of comity, asks of the-court of co-ordinate jurisdiction a surrender of the possession of property in its custody, such proceeding should be regarded as an extraordinary remedy. Certainly it is out of the ordinary. And when we consider the importance of preserving that spirit of comity manifested in 'the friendly overture to adjust the conflict of jurisdiction, we are all the more convinced that the writ of error to the judgment as to the jurisdiction rendered in such proceeding should be speedily heard, and the question of jurisdiction as to the possession of the property in controversy should be promptly settled by the reviewing court. Judgment affirmed.

All the Justices concur.