Sidor som bilder

Embree v. Hanna, 5 Johns. 110, was recog- | against him, to Epstein, he certainly ought nized as correct. There are, as we have not to be compelled to pay it a second time, said, authorities to the contrary, and they but should have the right to plead his paycannot be reconciled.

ment under the Maryland judgment. It is It seems to us, however, that the principle objected, however, that the payment by Hardecided in Chicago, R. I. & P. R. Co. v. ris to Epstein was not under legal compulSturm, 174 U. S. 710, 43 L. ed. 1144, 19 Sup. sion. Harris in truth owed the debt to Ct. Rep. 797, recognizes the jurisdiction, al. Balk, which was attached by Epstein. Her though in that case it appears that the pres- had, therefore, as we have seen, no defense to ence of the garnishee was not merely a tem-set up against the attachment of the debt. porary one in the state where the process Jurisdiction over him personally had been was served. In that case it was said: “All obtained by the Maryland court. As he was debts are payable everywhere unless there be absolutely without defense, there was no some special limitation or provision in re- reason why he should not consent to a judg. spect to the payment; the rule being that ment impounding the debt, which judgment debts, as such, have no locus or situs, but the plaintiff was legally entitled to, and accompany the creditor everywhere, and au- which he could not prevent. There was no thorize a demand upon the debtor every- merely voluntary payment within the meanwhere. 2 Parsons, Contracts, 8th ed. 702 | ing of that phrase as applicable here. [9th ed. 739). The debt involved in the But most rights may be lost by neglipending case had no 'special limitation or gence, and if the garnishee were guilty of provision in respect to payment.' It was negligence in the attachment proceeding, to payable generally, and could have been sued the damage of Balk, he ought not to be peron in Iowa, and therefore was attachable in mitted to set up the judgment as a defense. Iowa. This is the principle and effect of Thus it is recognized as the duty of the gar

. the best considered cases,—the inevitable efnishee to give notice to his own creditor, if fect from the nature of transitory actions he would protect himself, so that the credand the purpose of foreign attachment laws, itor may have the opportunity to defend if we would enforce that purpose."

The himself against the claim of the person sucase recognizes the right of the creditor to ing out the attachment. This duty is afsue in the state where the debtor may be firmed in the case above cited of Morgan v. found, even if but temporarily there; and Neville, 74 Pa. 52, and is spoken of in Chiupon that right is built the further right of cago, R. I. & P. R. Co. v. Sturm, 174 U. S. the creditor to attach the debt owing by the 710, 43 L. ed. 1144, 19 Sup. Ct. Rep. 797, algarnishee to his creditor. The importance though it is not therein actually decided to of the fact of the right of the original cred-be necessary, because in that case notice was itor to sue his debtor in the foreign state, as given and defense made. While the want of affecting the right of the creditor of that notification by the garnishee to his own creditor to sue the debtor or garnishee, lies creditor may have no effect upon the validin the nature of the attachment proceeding. ity of the judgment against the garnishee The plaintiff in such proceeding in the for- (the proper publication being made by the eign state is able to sue out the attachment plaintiff), we think it has and ought to have and attach the debt due from the garnishee an effect upon the right of the garnishee to to his (the garnishee's) creditor, because of avail himself of the prior judgment and his the fact that the plaintiff is really, in such payment thereunder. This notification by proceeding, a representative of the creditor the garnishee is for the purpose of making of the garnishee, and therefore if such cred- sure that his creditor shall have an opporitor himself had the right to commence suit tunity to defend the claim made against him to recover the debt in the foreign state, his in the attachment suit. Fair dealing rerepresentative has the same right, as repre-quires this at the hands of the garnishee. senting him, and may garnish or attach the In this case, while neither the defendant nor debt, provided the municipal law of the state the garnishee appeared, the court, while conwhere the attachment was sued out permits demning the credits attached, could not, by it.

the terms of the Maryland statute, issue the It seems to us, therefore, that the judg. writ of execution unless the plaintiff gave ment against Harris in Maryland, condemn- bond or sufficient security before the court ing the $180 which he owed to Balk, was a awarding the execution, to make restitution valid judgment, because the court had juris- of the money paid if the defendant should, diction over the garnishee by personal serv- at any time within a year and a day, appear ice of process within the state of Maryland. in the action and show that the plaintiff's

It ought to be and it is the object of claim, or some part thereof, was not due to courts to prevent the payment of any debt the plaintiff. The defendant in error, Balk, twice over. Thus, if Harris, owing a debt had notice of this attachment, certainly to Balk, paid it under a valid judgment within a few days after the issuing thereof

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and the entry of judgment thereon, because 3. One of two corporations bearing the same he sued the plaintiff in error to recover his

name, but incorporated in different states,

will be restrained by an ancillary suit from debt within a few days after his (Harris')

assailing the title of a purchaser under a return to North Carolina, in which suit the

decree of a Federal court, foreclosing a trust judgment in Maryland was set up by Harris deed executed under the common corporate as a plea in bar to Balk's claim. Balk, name and describing the property as lying therefore, had an opportunity for a year and

in both states, by a suit in a state court,

which proceeds on the theory that the real a day after the entry of the judgment to liti

grantor was the corporation which was a gate the question of his liability in the

citizen of the same state with the plaintiff, Maryland court, and to show that he did not

and therefore was not and could not have owe the debt, or some part of it, as was been made a party defendant without ousting claimed by Epstein. He, however, took no

the Federal court of jurisdiction, where the proceedings to that end, so far as the record

purpose of the double incorporation was the

development of a single plant, and all the shows, and the reason may be supposed to

proceedings were had on the supposition that be that he could not successfully defend the

there was but a single entity, which was inclaim, because he admitted in this case that debted, and gave the trust deed as security he did, at the time of the attachment pro

for such indebtedness. ceeding, owe Epstein some $344. Generally, though, the failure on the part

[No. 194.] of the garnishee to give proper notice to his creditor of the levying of the attachment Argued April 5, 6, 1905. Decided May 8, would be such a neglect of duty on the part

1905. of the garnishee which he owed to his creditor as would prevent his availing himself of N WRIT of Certiorari to the United the judgment in the attachment suit as a

States Circuit Court of Appeals for the bar to the suit of his creditor against him-Fifth Circuit, to review a decree which reself, which might therefore result in his be- versed a decree of the Circuit Court for the ing called upon to pay the debt twice.

Northern District of Georgia, enjoining the The judgment of the Supreme Court of further prosecution of a suit in the ChanNorth Carolina must be reversed, and the cery Court of the First District of the cause remanded for further proceedings not Northeastern Division, State of Alabama, inconsistent with the opinion of this court. and remanded the cause with instructions to Reversed.

dismiss the bill. Judgment of the Court of

Appeals reversed, and that of the Circuit Mr. Justice Harlan and Mr. Justice Day Court affirmed. dissented.

See same case below, 62 C. C. A. 295, 127 Fed. 497.



(198 U. S. 188)

Statement by Mr. Justice Brewer:

On February 7, 1866, an act passed the

Alabama legislature incorporating five perALABAMA & GEORGIA MANUFACTUR

sons named, their associates and successors, ING COMPANY and Huguley Manufac

as “The Alabama & Georgia Manufacturing turing Company.

Company.” On March 21, 1866, the Georgia Federal courts—conclusiveness of judgments als under the same name, "The Alabama &

legislature incorporated the same individuin state courts-ancillary jurisdiction

Georgia Manufacturing Company." The enjoining proceedings in state court.

purposes of the two corporations were iden

tical. Among others, the use of the water 1. Judgments or decrees of a Federal court

whose jurisdiction is invoked on the ground power of the Chattahoochee river, the bounof diverse citizenship, which is alleged and dary line between Alabama and Georgia, was admitted, cannot be collaterally assailed in a contemplated, and the Georgia act specificalstate court on the ground that there was in ly authorized the corporation “to carry on fact no diverse citizenship.*

any of the business and manufactures, or 2. A Federal court which has decreed a fore- any branch or branches of the same, in this

closure in a suit in which diverse citizenship state, that said charter authorizes them to was alleged and admitted, and the property was described as lying partly in the state, engage in or carry on in the state of Alamay, by an ancillary suit, restrain any at bama.” On January 2, 1884, the Alabama & tack on the title of the purchaser under the Georgia Manufacturing Company executed a decree by a suit in a state court, brought trust deed, conveying property, situate partby a party to the original suit, which pro- ly in Georgia and partly in Alabama, but ceeds on the theory that, by reason of his own untruthful admission of citizenship, the Fed-practically only a single plant, to J. J. Roberal court assumed a jurisdiction which in inson, W. C. Yancey, and W. T. Huguley, as fact it did not have.

trustees, to secure the payment of sixty-five thousand dollars of the mortgage bonds. I was commenced by one of the trustees, J. J. There is nothing in the trust deed to indi- Robinson, in the United States circuit court cate whether it was executed by the Ala- for the northern district of Georgia; that bama corporation or the Georgia corpora- the parties named as defendants therein tion, except it be the mention of West Point, were the Alabama & Georgia Manufacturing Georgia, as the location of the company's of Company, alleged to be a corporation organfice.

*Ed. Note.-For cases in point, see vol. 30, Cent. Dig. Judgment, $$ 1511, 1512. +Ed. Note.-For cases in point, see vol. 13, Cent. Dig. Courts, $ 1418.


ized under the laws of Georgia, the said On February 28, 1890, the Huguley Manu- Huguley Manufacturing Company, and W. facturing Company was incorporated under T. Huguley. The bill set out with some dethe laws of the state of Alabama, and subse- tail the proceedings in the circuit court of quently acquired by purchase all the prop- Georgia, but alleged that they were null and erty included within the trust deed. De void so far as concerns the title of the plainfault having been made in the payment of tiffs in that suit. The bill sought to reinterest on the bonds, Robinson, one of the deem the property described from the lien of trustees, and a citizen of Alabama, on Janu- the bonds and trust deed. On June 10, ary 21, 1891, filed a bill of foreclosure in the 1901, this petitioner, a corporation which circuit court of the United States for the had acquired all the title to the property northern district of Georgia against the Ala- described in the trust deed, passing under bama & Georgia Manufacturing Company, the foreclosure proceedings hereinbefore rethe Huguley Manufacturing Company, each ferred to, filed in the circuit court for the of which was alleged to have been created northern district of Georgia an ancillary bill under the laws of the state of Georgia, and to restrain the further prosecution of the a resident and citizen of that state, and suit in the state court in Alabama. A temagainst W. T. Huguley, also averred to be a porary injunction was issued, which, on final citizen of the state of Georgia, and all three hearing, was made perpetual. Thereupon residing within the northern district of defendants took an appeal to the circuit Georgia. In the bill the plaintiff alleged court of appeals for the fifth circuit, which that Yancey, one of the trustees, was dead; reversed the decree of the circuit court, and that Huguley, the other trustee, was inter-ordered that the case be remanded to that ested adversely to the bondholders, and that court with instructions to dismiss the bill. plaintiff was, therefore, the only one author- The case was then brought here on certioized to bring the suit. A vast amount of rari. litigation concerning the property has followed the commencement of this foreclosure Messrs. Louis D. Brandeis, Thomas H. suit, as partially appears from the following Watts, and William H. Dunbar for petireferences: Robinson v. Alabama & G. Mfg. tioner. Co. (1891) 48 Fed. 12, (1892) 51 Fed. 268, Messrs. Marion Erwin, John T. Morgan, (1893) 6 C. C. A. 79, 13 U. S. App. 359, 56 John M. Chilton, William S. Thorington, Fed. 690, (1894) 67 Fed. 189, (1896) 19 C. and Robert Porter Shick, for respondents. C. A. 152, 30 U. S. App. 683, 72 Fed. 708, (1898) 89 Fed. 218; Huguley Mfg. Co. v. Mr. Justice Brewer delivered the opinion Galeton Cotton Mills (1899) 36 C. C. A. of the court: 236, 94 Fed. 269, (1899) 175 U. S. 726, 44

For over ten years from January 21, 1891, L. ed. 339, 20 Sup. Ct. Rep. 1022; Riverdale the date of the filing of the original bill, Cotton Mills v. Alabama & G. Mfg. Co. litigation was carried on in the circuit court (1901) 111 Fed. 431; Huguley Mfg. Co. v. of the United States for the northern disGaleton Cotton Mills (1902) 184 U. S. 290, trict of Georgia, and in appellate courts, in 46 L. ed. 546, 22 Sup. Ct. Rep. 452; Re Hug- the foreclosure of a trust deed executed by uley Mfg. Co. (1902) 184 U. S. 297, 46 L. the Alabama & Georgia Manufacturing Comed. 549, 22 Sup. Ct. Rep. 455; Alabama & G. pany. In the course of that litigation deMfg. Co. v. Riverdale Cotton Mills (1904) crees were entered and reversed, sales were 62 C. C. A. 295, 127 Fed. 497.

made and set aside, possession of property On May 2, 1901, the Alabama & Georgia was transferred and retransferred, accountManufacturing Company of Alabama and ings had as to the proceeds of property in the Huguley Manufacturing Company of the possession, and when it seemed that at last same state filed their bill in the chancery litigation was at an end, the foreclosure court of the first district of the northeastern consummated, and the title established in the division of the state of Alabama, in which purchaser, we are told that it all amounted they alleged that the plaintiff the Alabama to nothing; that parties, lawyers, and courts & Georgia Manufacturing Company was at have been spending their time and labor in one time the owner of the property included simply beating the air, the title to the propwithin the trust deed hereinbefore referred erty conveyed by the trust deed being exactto; that it executed that deed to the parties ly where it was before the litigation comnamed as trustees; that a foreclosure suit 'menced, and the party which had acquired. possession by that litigation subject to an of Alabama, never has been made a defendobligation to account as a mortgagee in pos- ant thereto, and never appeared as a party session.

to said cause, the president of said corporaUpon what is this contention based? The tion, to wit, W. H. Huguley, himself likerespondents say that the property conveyed wise a citizen and resident of the county of by the trust deed was all in Alabama, al. Chambers, state of Alabama, never having though the deed recites that part of it was been served with notice either of said alin Georgia; that it originally belonged to leged default of interest, as expressly rethe Alabama company; that that company quired under the terms of the trust deed, or executed the trust deed, although the resolu- notice of said suit of foreclosure against tion incorporated in the trust deed purports said Alabama & Georgia Manufacturing to have been passed at a meeting of the di- Company. No attempt was made, by either rectors, held at the office of the company in direct or ancillary proceedings, to subject West Point, Georgia; that the Alabama com- the property lying in the state of Alabama pany was not made a party to the foreclos- to this suit.

to this suit. A portion of the property was ure proceedings, and could not have been, erroneously described in the said mortgage because the plaintiff was a citizen of Ala- as lying within the county of Harris, in bama, and making the Alabama company a the state of Georgia, while the orators aver defendant would have ousted the court of that all of said property was and is situatjurisdiction; that the subsequent owner of ed within the county of Chambers, in the the property, another Alabama company, state of Alabama. was also not made a party to those proceed- “The property was not advertised in the ings, and that therefore they were res inter state of Alabama, nor was any sale or prealios acta, and in no way binding upon either tense of sale conducted in said state.” Alabama company. It is also insisted by And again, the respondents that the so-called ancillary “The Huguley Manufacturing Company, a bill filed by the petitioner was not, in any corporation, avers that it purchased and acsense of the term, an ancillary, but in fact quired all the property hereinabove dean original bill, and that under Rev. Stat. scribed, subject to said mortgage, and is § 720, U. S. Comp. Stat. 1901, p. 581, the now the owner of the same, subject to said Federal court had no power to restrain the mortgage." further proceedings in the state chancery The answer filed to the ancillary bill alcourt.

leges that both plaintiffs in the state court Prima facie, the United States circuit were corporations chartered under the laws court had jurisdiction of the foreclosure bill. of Alabama. It further states: Diverse citizenship was alleged and admit- “That while said Alabama & Georgia Manted, and the relief sought was the foreclos- ufacturing Co. may have been incorporated ure of a trust deed covering property par- in the state of Georgia, it was also incortially in Georgia and partially in Alabama. porated in the state of Alabama prior to the The bill in the state court challenged the incorporation in the state of Georgia. And decree in the United States circuit court, these respondents aver that there never was, denied its efficacy to transfer title, on the by the action of the state of Georgia and ground that the Alabama & Georgia Manu-Alabama, any merger or consolidation of facturing Company (the grantor in the trust said two corporations. They therefore aldeed, and the original owner of the prop- lege that said Alabama & Georgia Manufacerty) and the Huguley Manufacturing Com- turing Company, incorporated under the pany (a purchaser and subsequent owner) laws of Alabama, was a distinct and separate

a were both corporations of Alabama, and citi- legal entity from the Alabama & Georgia zens of the same state with the plaintiff, Manufacturing Company incorporated unwhereby a case was presented of which the der the laws of Georgia. Federal courts could not take jurisdiction. The specific allegations were these:

“That while said Huguley Manufacturing "That a corporation known as the 'Ala- Company was alleged in said bill to have bama & Georgia Manufacturing Company,' been incorporated under the laws of Georgia, alleged to be a corporation organized under the defendants aver that as a matter of fact the laws of Georgia only, and said Huguley it was never so incorporated.” Manufacturing Company, together with the It also avers that the property is all in said W. T. Huguley, were the sole defendants the state of Alabama. The case was subto said bill, said W. T. Huguley being made mitted on bill and answer. defendant as cotrustee, alleged to be inter- It thus appears that a party carries on ested adversely. The Alabama & Georgia

The Alabama & Georgia a litigation in a Federal court on its merits, Manufacturing Company, originally char-and, when beaten in that court, goes into

, tered and organized as a corporation under a state court, and claims that, by reason said act of the general assembly of the state of his own untruthful admission of citizen

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ship, the Federal court assumed a jurisdic- foreclosure proceedings. In the opinion it tion which in fact it could not take, and was said (p. 112, L. ed. p. 639, Sup. Ct. that all the proceedings in that court must Rep. p. 407): go for naught. Under such circumstances "If the sheriff is allowed to sell the very there can be no doubt that the Federal court property conveyed by the Federal decree, may inquire and determine whether its pro- such action has the effect to annul and set ceedings were a nullity, and such inquiry is it aside, because, in the view of the state not an original proceeding, but ancillary to court, it was ineffectual to pass the title to those which have already been had. In other the purchaser. In such case we are of opinwords, a Fedéral court, exercising a juris- ion that a supplemental bill may be filed in diction apparently belonging to it, may the original suit with a view to protecting thereafter, by ancillary suit, inquire wheth- the prior jurisdiction of the Federal court, er that jurisdiction in fact existed. It may and to render effectual its decree. Central protect the title which it has decreed as Trust Co. v. St. Louis, A. & T. R. Co. 59 against every one a party to the original Fed. 385; Fidelity Ins. T. & S. D. Co. v. suit, and prevent that party from relitigat- Norfolk & W. R. Co. 88 Fed. 815; State ing the questions of right which have al-Trust Co. v. Kansas City, P. & G. R. Co. ready been determined. French v. Hay, 22 110 Fed. 10. Wall. 250, 22 L. ed. 857; Cole v. Cunning- "In such cases where the Federal court ham, 133 U. S. 107, 33 L. ed. 538, 10 Sup. acts in aid of its own jurisdiction, and to Ct. Rep. 269; Root v. Woolworth, 150 U. S. render its decree effectual, it may, notwith401, 37 L. ed. 1123, 14 Sup. Ct. Rep. 136. standing Rev. Stat. § 720, restrain all proIn this case, on page 410, L. ed. p. 1125, ceedings in a state court which would have Sup. Ct. Rep. p. 138, it was said:

the effect of defeating or impairing its juris"It is well settled that a court of equity diction. Sharon v. Terry, 13 Sawy. 387, 1 has jurisdiction to carry into effect its own L. R. A. 572, 36 Fed. 337, per Mr. Justice orders, decrees, and judgments, which re- Field; French v. Hay, 22 Wall. 250, 22 L. main unreversed, when the subject-mattered. 857; Deitzsch v. Huidekoper (Kern v. and the parties are the same in both proceed-Huidekoper), 103 U. S. 494, 26 L. ed. 497.ings. The general rule upon the subject is It must be borne in mind in this connecthus stated in Story's Equity Pleading, 9th tion that the Huguley Manufacturing Comed. § 338: 'A supplemental bill may also be pany was made a party defendant, and apfiled, as well after as before a decree; and peared in the original foreclosure suit, and the bill, if after a decree, may be either in also that it had purchased the property, and aid of the decree, that it may be carried owned it subject to the trust deed. So the fully into execution,'

The jurisdic- bill in the state court specifically avers, and tion of courts of equity to interfere and ef- the record of the proceedings in the foreclosfectuate their own decrees by injunctions or ure suit shows that it took an active part writs of assistance in order to avoid the re- in the litigation. It admitted in that litilitigation of questions once settled between gation that it was a citizen of Georgia. It the same parties is well settled. Story, Eq. now goes into a state court, and averring Jur. $ 959; Kershaw v. Thompson, 4 Johns. that it is a citizen of Alabama, the state Ch. 609, 612; Schenck v. Conover, 13 N. J. of which the plaintiff was a citizen, Eq. 220, 78 Am. Dec. 95; Buffum's Case, 13 contends that the United States court in N. H. 14; Shepherd v. Towgood, Turn. & R. Georgia had no jurisdiction; but having been 379; Davis v. Bluck, 6 Beav. 393. In Ker- in that United States court, litigating the shaw v. Thompson, the authorities are fully case on its merits, and its rights there dereviewed by Chancellor Kent, and need not termined, that court has power to protect be re-examined here."

its decree as against any action which such See also Julian v. Central Trust Co. 193 litigant may take in any other court. U. S. 93, 48 L. ed. 629, 24 Sup. Ct. Rep. It must also be remembered that the trust 399, which is very much in point. There, deed described the property conveyed as sitafter a suit in a Federal court for foreclos- uated partly in Georgia and partly in Alaure of a mortgage, resulting in decree, sale, bama. The Federal court sitting in Georgia confirmation, and delivery of possession to had jurisdiction to foreclose that trust deed. the purchaser, a state court attempted to Muller v. Dows, 94 U. S. 444, 24 L. ed. 207. subject the property to a judgment ren- Even if there were errors or irregularities dered in that court against the mortgagor in the proceedings they would not affect the on a cause of action arising subsequently to matter of jurisdiction, and as those prothe delivery of possession under the foreclos-ceedings have been sustained on appeal we ure proceedings. And it was held within may assume that they were free from er: the competency of the Federal court to re- rors. strain the action in the state court in order Where parties litigate in a Federal court, to protect the title it had conveyed by the whose jurisdiction is invoked on the ground


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