General Investment Company v. Lake Shore & Michigan Southern Railway Company

[Syllabus from pages 261-264 intentionally omitted]

This suit in equity was begun in the court of common pleas of Cuyahoga county, Ohio, to enjoin a proposed consolidation of the New York Central & Hudson River Railroad Company, the Lake Shore & Michigan Southern Railway Company, and nine other companies, not identified in the bill, and to secure other relief of an incidental nature. The suit was brought by the General Investment Company, a Maine corporation, and the New York Central & Hudson River Railroad Company, the Lake Shore & Michigan Southern Railway Company, the Central Trust Company, and three individuals, called the 'Read committee,' were named as defendants.

The principal ground on which the proposed consolidation was assailed was that it would contravene the Sherman Anti-Trust Act (Comp. St. §§ 8820-8823, 8827-8830) and the Clayton Act (38 Stat. 730)-both laws of the United States. There were also charges that it would be contrary to the Constitution and laws of Ohio and other states, but the general tenor of the bill made it evident that these charges were to be taken as of secondary importance. The plaintiff's right to sue was based on allegations that it was a stockholder in the New York Central Company and the Lake Shore Company, and, as such, would be subjected to irreparable loss and damage, should the consolidation be effected.

Process was duly served on the Lake Shore Company and there was a purported service on the New York Central Company; but there was neither service on nor appearance by the other defendants. The New York Central Company, appearing specially for the purpose, promptly challenged the validity of the service on it by moving to set the same aside; but the state court overruled the motion.

In due time the two railroad companies caused the suit to be removed into the District Court of the United States for the Northern District of Ohio. The plaintiff objected to this and reserved an exception to the order allowing it. The removal was sought and allowed on the ground that the suit, according to the claim made in the bill, was one arising under the laws of the United States, and of which the District Courts of the United States are given original jurisdiction. Diversity of citizenship was shown, but not specified as a ground for removal.

Shortly after the removal the New York Central Company, again appearing specially for the purpose, sought and obtained in the District Court another hearing on its objection to the purported service on it, and on that hearing the objection was sustained and the service set aside. 226 Fed. 976. Afterwards motions by the plaintiff to remand the suit to the state court, to direct special service on the New York Central Company and other defendants in the mode provided in section 57 of the Judicial Code (Comp. St. § 1039), and for leave to file a supplemental bill and make new parties defendant, were severally overruled. And lastly a motion by the Lake Shore Company, the only defendant then before the court, to dismiss the suit, was sustained on the ground that the New York Central Company was an indispensable party, had not voluntarily appeared, and was not within the reach of the court's process.

From the decree of dismissal the plaintiff appealed to the Circuit Court of Appeals. That court upheld the rulings setting aside the service on the New York Central Company, denying the motion to remand to the state court, declining to direct special service on the New York Central Company and other defendants, and refusing leave to file a supplemental bill and make new parties. It also sustained the decree of dismissal as to much of the bill, with the qualification that it be without prejudice, and reversed it as to other parts of the bill to which that court thought the Lake Shore Company was the only necessary defendant. 250 Fed. 160, 162 C. C. A. 296.

When the cause was returned to the District Court, the plaintiff, complying with a direction that the bill be made certain in a particular in which the Circuit Court of Appeals deemed it uncertain, so amended it as to show the date on which the directors of the Lake Shore and other companies adopted the agreement for the proposed consolidation. The Lake Shore Company then moved that the bill, as left by the decision of the Circuit Court of Appeals, be dismissed on the grounds: (a) That in so far as it was directed to securing an injunction against alleged or threatened violations of the Sherman Anti-Trust Act, or the Clayton Act, the plaintiff had no right or standing to maintain it, or, if having such a right or standing, could not bring it in a state court, as was done; and (b) that in so far as it was directed against alleged or threatened violations of state Constitutions or laws it did not show a right in equity to the relief sought or any part thereof. This motion was sustained and a decree of dismissal entered. The plaintiff again appealed to the Circuit Court of Appeals, and that court affirmed the decree, but without prejudice to the institution in a proper court of a new suit, based only on infractions of state Constitutions or laws. 269 Fed. 235. A further appeal brings the case here.

Messrs. F. A. Henry, of Cleveland, Ohio, and Elijah N. Zoline, of New York City, for appellant.

Messrs. Walter C. Noyes, of New York City, and Samuel H. West, of Cleveland, Ohio, for appellees.

Mr. Justice VAN DEVANTER, after stating the case as above, delivered the opinion of the Court.