Ex Parte Chetwood/Opinion of the Court

The writs of error removed the original suit, in both its branches, to this court, and whether or not jurisdiction may be entertained of both or either of them it is for this court to determine when the question properly arises.

And so, if there be controversy in respect of the form of the writs, parties, citation, and service, or otherwise, these are matters for the disposition of this court without interference from any other.

We find it impossible to accept any ground suggested for the assumption by the circuit court of jurisdiction to compel Chetwood to desist from using the name of the bank on the writ of error in the case against Thomas, and to dismiss absolutely the writ of error in the case involving Stateler's effort to obtain control of the funds.

It is true, as stated in Re Tyler, 149 U.S. 164, 181, 13 Sup. Ct. 785, that 'no rule is better settled than that, when a court has appointed a receiver, his possession is the possession of the court, for the benefit of the parties to the suit and all concerned, and cannot be disturbed without the leave of the court, and that if any person, without leave, intentionally interferes with such possession, he necessarily commits a contempt of court, and is liable to punishment therefor.' But we do not regard these proceedings as falling within that rule.

As neither the bank's officers or directors, nor the receiver, nor the comptroller, would, on demand, bring suit, Chetwood's suit, on behalf of himself and other stockholders of the California National Bank of San Francisco, to recover judgment in the bank's favor for the alleged wrongful acts of the managing agents of the corporation, must be assumed, on this record, to have been properly instituted; and it is not contended that this was ever challenged by the receiver, or by Stateler, claiming as his successor. The receiver was made a party defendant thereto, but took no steps to remove the cause to the federal court, and as is averred, assumed an attitude of hostility to the prosecution of the suit, and did nothing to aid in securing judgment against the officers of the bank whose alleged breach of trust and liability therefor was the sole foundation for the action. Nor is it questioned that the suit was rightly brought in the state court. Whittemore v. Bank, 134 U.S. 527, 10 Sup. Ct. 592.

The receiver was appointed by the comptroller of the currency January 14, 1889, and Chetwood commenced his suit July 19, 1890. The receiver was not the officer of any court, but the agent and officer of the United States, as ruled by Mr. Justice Gray, on circuit, in Price v. Abbott, 17 Fed. 506, and by Mr. Justice Jackson, then circuit judge, in Armstrong v. Trautman, 36 Fed. 276. And see Porter v. Sabin, 149 U.S. 473, 479, 13 Sup. Ct. 1008; Platt v. Beach, 2 Ben. 303, Fed. Cas. No. 11,215; Frelinghuysen v. Baldwin, 12 Fed. 395; Armstrong v. Ettlesohn, 36 Fed. 209.

It has been so often decided that the authority vested in the comptroller to appoint a receiver of a defaulting or insolvent national bank, or to call for a ratable assessment upon its stockholders, is not open to objection because vesting that officer with judicial power in violation of the constitution, that we have recently declined to reexamine that question. Bushnell v. Leland, 164 U.S. 684, 17 Sup. Ct. 209.

The receiver acts under the control of the comptroller of the currency, and the moneys collected by him are paid over to the comptroller, who disburses them to the creditors of the insolvent bank. Under section 5234 of the Revised Statutes, when the receiver deems it desirable to sell or compound bad or doubtful debts, or to sell the real and personal property of the bank, it devolves upon him to procure 'the order of a court of record of competent jurisdiction,' but the funds arising therefrom are disbursed by the comptroller, as in the instance of other collections.

The circuit court did not have the assets or property of this bank in its possession on July 19, 1890, nor was the leave of that court necessary in order that the receiver might be made a party defendant to the action instituted by Chetwood on that day.

In the bill filed by Stateler in the circuit court, January 4, 1896, to enjoin Chetwood and the bank, the averment is made that on February 21, 1889, the receiver filed an application in the circuit court entitled 'In re Application of Receiver of the California National Bank for the Sale of Personal Property'; and the bill asserts, as a conclusion of law, that thereby 'the said receiver submitted himself and the affairs of said banking association to the jurisdiction of this honorable court.' The application thus referred to is not made part of the return to the rule, but from the averments of the bill in regard to it, and from the terms of the national banking law itself, we think it plain that no such result followed its presentation. Our attention has been called to no case in which it has been held that the filing of such petitions by national bank receivers in the federal courts operates to make the receiver an officer of the court, or to place the assets of the bank within the control of the court, in the sense in which control is acquired where a receiver is appointed by the court.

As we have said, Chetwood's right to bring the suit in the state court against the officers of the bank must be held as not open to dispute on this record, and the bank was properly made a party.

Whether the bank's name was necessarily or rightly used in the prosecution of the writs of error, we are not now called on to decide.

The suit was properly brought in the state court, proceeded to judgment, and was carried to the supreme court of California on appeal. These courts undeniably had jurisdiction over the suit and the parties. About four years after the suit was commenced, Stateler was elected agent to succeed the receiver, and the usual assignment by the comptroller and receiver, to him as such, was executed. The legality of Stateler's election, though controverted, must be conceded for the purposes of this application. But did the substitution of an agent for the receiver oust the jurisdiction of the state court? Certainly not. He was no more an officer of the circuit court in the first instance than the receiver was. The agent proceeds in the settlement with like authority to that conferred upon the receiver, although at the conclusion of his duty he is required to render to the circuit or district court of the United States for the district where the business of the bank is carried on 'a full account of all his proceedings, receipts, and expenditures as such agent, which court shall, upon due notice, settle and adjust such accounts and discharge said agent and the sureties upon said bond'; and thus he and his bondsmen are protected by the final order of the federal court upon the performance of the conditions imposed. But there is nothing in the language of the statute from which it can be inferred that it was the intention that the jurisdiction of state courts of competent and concurrent jurisdiction, first obtained, should be interfered with by restraining orders issued by federal courts on the application of such an agent. The agent may indeed intervene in a case in the state court, and receive the fruits of the litigation to be administered subject to the final approval of the federal court; and accordingly Stateler, as agent, submitted himself to the jurisdiction of the state courts, and applied for an order turning over to him the fund, so far as realized. Nevertheless the agent must abide the result, and cannot control it through the interposition of another independent and concurrent jurisdiction.

The doctrine is firmly established that where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right cannot be arrested or taken away by proceedings in another court, and that, where property is actually in the possession of one court of competent jurisdiction, such possession cannot be disturbed by process out of another court of concurrent jurisdiction. Moran v. Sturges, 154 U.S. 256, 14 Sup. Ct. 1019, and cases cited. And by section 720 of the Revised Statutes the granting of injunctions to stay proceedings in any court of a state is prohibited in express terms. It it unnecessary here to point out such exceptions or limitations as may exist.

Obviously the circuit court could not restrain the prosecution of this suit in the state courts, and we are equally clear that, if federal questions arose, the circuit court could not prevent this court, or a justice thereof, or the presiding judge of the state court, from granting writs of error, by restraining the parties from applying therefor; nor could it properly direct their dismissal, having been granted. Cases transferred to this court must be dealt with by this court. Of course, it is quite possible that the litigation had gone far enough after the state supreme court had passed upon it, but parties cannot be deprived of the right to prolong it, if the right exists, in this manner and under such circumstances.

Considered apart from the construction placed upon it by the circuit court, we should say that the injunction order of February 24, 1896, was not intended to restrain either Chetwood or the bank, or both, from prosecuting the writs of error from this court. The concluding words of the order are, 'but the defendants are not hereby enjoined from prosecuting or defending to final determination any actions in this matter now pending in the supreme court of the state of California or in this court.' According to the practice in this court, a writ of error has been treated rather as a continuation of the original litigation than the commencement of a new action. Nations v. Johnson, 24 How. 195, 205; Cohens v. Virginia, 6 Wheat. 410. But, in any view, we should not have thought that writs of error were included within the scope of the order, or that the circuit court designed to interfere in such a way with the prosecution of the principal controversy as to arbitrarily stop the case on the judgment of the supreme court of the state, if it proved adverse to the bank and its interested stockholders, and leave them, if such order were lawful, wholly without further remedy, if such they had, or to preclude one of the parties from attempting to obtain a review of the judgment in the matter of the rights of Stateler, however that might be determined in the state supreme court, whose decisions on both appeals were rendered after the entry of the restraining order.

The circuit court, however, has otherwise construed the order, and has adjudged petitioner and his counsel guilty of contempt in its violation, as thus construed. And it has directed petitioner to dismiss one of the writs of error, and to desist from using the name of the bank in the other, in advance of what we may determine as to either of these matters when coming on to be disposed of.

As, in our opinion, the circuit court exceeded its jurisdiction in thus proceeding, we are constrained to make the rule absolute.

By section 14 of the judiciary act of September 24, 1789 (1 Stat. 81, c. 20), carried forward as section 716 of the Revised Statutes, this court and the circuit and district courts of the United States were empowered by congress 'to issue all writs, not specifically provided for by statute, which may be agreeable to the usages and principles of law'; and, under this provision, we can undoubtedly issue writs of certiorari in all proper cases. American Const. Co. v. Jacksonville, T. & K. W. Ry. Co., 148 U.S. 372, 380, 13 Sup. Ct. 758. And although, as observed in that case, this writ has not been issued as freely by this court as by the court of queen's bench in England, and prior to the act of March 3, 1891 (26 Stat. 826, c. 517), had been ordinarily used as an auxiliary process merely, yet whenever the circumstances imperatively demand that form of interposition the writ may be allowed as at common law, to correct excesses of jurisdiction, and in furtherance of justice. Tidd, Prac. 398; Bac. Abr. tit. 'Certiorari.'

Judgments in proceedings in contempt are not reviewable here on appeal or error (Hayes v. Fischer, 102 U.S. 121; In re Debs, 158 U.S. 573, 15 Sup. Ct. 900; Id., 159 U.S. 251, 15 Sup. Ct. 1039), but may be reached by certiorari in the absence of any other adequate remedy.

The writ of certiorari will be allowed to bring up the record so that the order adjudging Chetwood and his counsel in contempt for being concerned in suing out the writs of error, and directing them, or either of them, to refrain from prosecuting the one writ in the name of the bank, and to dismiss the other, may be revised and annulled. We presume, after what we have said, it will not be necessary for the writ to issue.

Rule absolute. Certiorari allowed.