Russell v. Detrick

GILBERT, Circuit Judge

(after stating the facts as above). The appellants contend that the injunction order is violative of the settled rule that the tribunal ■where jurisdiction first attaches holds it to the exclusion of all other courts until its duty is fully performed and the jurisdiction involved is exhausted, and that, where a court of competent jurisdiction has taken property into its possession through its officers, the property is withdrawn from the jurisdiction of all other ■ courts, and the latter are without power to render any judgment which invades or disturbs the possession of the property while it is in the custody of the court which has seized it. The situation presented to the court below was this: The appellants here had suits pending in the state court, the purpose of which was to cancel notes and securities held by the insurance company, and which presented controversies wholly between the plaintiffs therein, who were the makers of those instruments, and the defendants therein, who were the payees and owners thereof. Subsequently the appellees brought a suit in the court below to assert the rights which they had in those notes and securities and to prevent the cancellation thereof. They had the right to bring an original suit for that purpose, for they were not parties to the suits in the state court, nor were their rights in litigation or represented therein.

It is clear, we think, that the pendency of the suits in the state court to determine the validity of the securities and the rights of the parties in those controversies did not deprive the court below of jurisdiction to entertain a suit against those who were the parties plaintiff in those suits to determine the appellees’ rights in and to the same securities, the latter suit not being one that disturbed the custody of property of which the state court had acquired jurisdiction. It would seem from the record that the securities were not in the actual custody of the state court. They had been deposited with the state treasurer, as required by law, to qualify the holder thereof to issue policies of insurance upon land values. The corporation defendants in the suits in the state court had thereby parted' with possession and control over the same, and the order appointing the receiver, while it directed him to take possession and control of the properties of the two corporations, and gave him the exercise and control of any and all rights which they had in those instruments, ordered that, until the final determination of the suit, they should remain in the custody of the state treasurer.

“The rule that where the same matter is brought before courts of concurrent jurisdiction, the one first obtaining jurisdiction will retain it until the controversy is determined, to the entire exclusion of the other, and will maintain and protect its jurisdiction by an appropriate injunction, is confined in its operation to instances where both suits are substantially the same, that is to say, where there is substantial identity in the interests represented, in the rights asserted and in the purposes sought.” Pacific Live Stock Co. v. Oregon Water Bd., 241 U. S. 440, 447, 36 S. Ct. 637, 641 (60 L. Ed. 1084).

But, if it were conceded that the state court acquired, by its receivership, jurisdiction over the property, so as to withdraw it from the jurisdiction of a federal court in the same territory (Palmer v. Texas, 212 U. S. 118, 29 S. Ct. 230, 53 L. Ed. 435), it does not follow that the relief which the appellees seek in the court below is beyond the" jurisdiction of that court, or, will necessarily invade or disturb the jurisdiction of the state court. The court below had no right to abdicate its own jurisdiction. It had the power to hear and determine any question and grant any relief concerning interests in the property not conflicting with the possession, so long as the state court should retain possession. The objection on account of the receivership cannot prevail to prevent proceedings in the court below, so far as it can go without interfering with the receivership. Watson v. Jones, 15 Wall. 679, 20 L. Ed. 666; Mercantile Trust Co. v. Lamoille Val. R. Co., 16 Blatchf. 324, Fed. Cas. No. 9432.

The question remains whether the injunction was forbidden by section 265 of the Judicial Code (28 USCA § 379), which, prohibits the issuance of a writ of injunction by any court of the United States to stay proceedings in any court of a state, except in bankruptcy eases. The appellees ■contend that the present case is not governed by that section- for the reason that the injunction runs not against the state court, = but. against the plaintiffs-iii the actions in that court. But violation of the section is not thus avoided. Essanay Film Co. v. Kane, 258 U. S. 358, 42 S. Ct. 318, 66 L. Ed. 658; Peck v. Jenness, 7 How. 612, 625, 12 L. Ed. 841. It is true that the prohibition of injunction is not universal in its scope. It does not forbid a federal court to enjoin attempts to impair its own jurisdiction by proceedings in a state court (French v. Hay, 22 Wall. 250, note, 22 L. Ed. 857), or to issue injunction where there is an entire lack of jurisdiction in the state court (Simon v. Southern Railway Co., 236 U. S. 115, 35 S. Ct. 255, 59 L. Ed. 492), or to enjoin the enforcement of a judgment subject to attack as having been obtained through fraud (Marshall v. Holmes, 141 U. S. 589, 12 S. Ct. 62, 35 L. Ed. 870), or a judgment, the enforcement of which would be contrary to recognized principles of equity and the standards of good conscience (Wells Fargo & Co. v. Taylor, 254 U. S. 175, 183, 41 S. Ct. 93, 65 L. Ed. 205); or to enforce an unconscionable judgment fraudulently obtained (Ex parte Simon, 208 U. S. 144, 28 S. Ct. 238, 52 L. Ed. 429).

But the present case does not belong in the class of any of the recognized exceptions. It is an injunction against the plaintiffs in a state court, enjoining them against taking further steps in the prosecution of suits to cancel securities, and it is issued on behalf of plaintiffs in a federal court, not parties to the suits in the state court, to defeat cancellation of the securities and protect their own interest therein. We think the injunction comes clearly within the prohibition of section 265. Essanay Eilm Co. v. Kane, supra.

The argument that, if the suits in the state court are permitted to be prosecuted to judgment before the suit in the federal court can be adjudicated, the latter adjudication will be made futile, is answered in Kline v. Burke Const. Co., 260 U. S. 226, 233, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077, where it. is pointed out that the jurisdiction of a federal court, having been conferred by act of Congress, may be taken away in whole or in part hy a later act of Congress, such as the prohibition of injunction expressed in section 265. But that section does not deprive a District Court of jurisdiction otherwise conferred by the federal statutes. It merely goes to the question of equity in the particular ease presented, leaving the eourt to determine whether the ease is one in which injunctive relief is prohibited. ' Woodmen of the World v. O’Neill, 266 U. S. 292, 298, 45 S. Ct. 49, 69 L. Ed. 293; Smith v. Apple, 264 U. S. 274, 277, 44 S. Ct. 311, 68 L. Ed. 678.

We hold that it is prohibited here. The injunction order is reversed.