Iron Cliffs Company v. Negaunee Iron Company/Opinion of the Court

The Federal question, from which alone this court can take jurisdiction, is alleged to arise from the adverse decision made upon the answer of William G. Mather, setting up, in substance, that in proceeding to determine the case and render a decree without the presence of the Pioneer Iron Company as a party defendant in the action the said company and Mather, as a stockholder therein, were deprived of property without due process of law, in violation of the 14th Amendment to the Constitution of the United States. It is elementary that, unless such Federal right set up in the state court was denied the plaintiff in error, this court has no jurisdiction. An examination of the opinion and decision of the supreme court of Michigan shows the court held, among other things, that the lease to the Pioneer Iron Company and the rights acquired thereby were appurtenant to the furnaces then existing upon the lands, and that it acquired no right to mine more ore than was necessary to supply such furnaces. That, as the right to mine the ore under the lease was appurtenant to the blast furnaces erected and intended to manufacture the iron so mined, the abandonment and destruction of the furnaces destroyed the right to mine the ore under the lease. The Pioneer Company, after the execution of the ninety-nine-year lease, having found ore in nonpaying quantities, had abandoned explorations, and for forty-three years had made no attempt to mine on the lands. That in 1866 the Pioneer Iron Company conveyed to the Iron Cliffs Company, for a period of ten years, all its iron works, buildings, lands, and property rights. The Iron Cliffs Company afterwards became the owner of all the stock of the Pioneer Company, and thereafter carried on the furnace business. That the Pioneer Iron Company was regarded as merged in the Iron Cliffs Company, and never thereafter made or filed any reports as required by the laws of the state of Michigan. That the complainants and those under whom they claim right and title, beginning about the year 1870, spent large sums of money in exploring and developing the lands and opening valuable mines thereon, and that the rights thus acquired, with the knowledge of those in interest, had worked an estoppel of any claim of right under the lease. For these, among other reasons, the supreme court affirmed the decree of the circuit court.

It is apparent that the questions decided in the state supreme court were of a non-Federal character, and give no right of review here unless it is true that in this judgment the Pioneer Iron Company has been concluded and its property rights taken without giving it an opportunity of being heard in the case. It is fundamental that no person can be deprived of property rights by any decree in a case wherein he is not a party. Not being made a party to the suit, the rights of the Pioneer Iron Company cannot be affected in any way by the decision of the court. Finley v. Bank of United States, 11 Wheat. 304, 307, 6 L. ed. 480; New Orleans Waterworks Co. v. New Orleans, 164 U.S. 471, 480, 41 L. ed. 518, 523, 17 Sup. Ct. Rep. 161.

But it is urged that, notwithstanding the Pioneer Iron Company is not a party to the record, its rights are necessarily adjudged in the decision, which affects the lease granted to it, and under which the defendants in their answer claim to act. But we cannot concede this proposition. It may be answered primarily that the Pioneer Iron Company cannot thus be denied its rights. The affirmative relief granted to the complainant must be on the case made in the bill, its amendment, and the testimony supporting the allegations therein made. The bill proceeds upon the theory that under the laws of the state of Michigan the charter of the Pioneer Iron Company had expired in 1887,-thirty years from the date of its organization; and there was the most careful avoidance, in the pleadings of the complaint, of any recognition of the existence as a going corporation of the Pioneer Iron Company. It was charged in the bill that its corporate existence had ended, and, so far from making it a party, the complainants refrained from recognizing it as an existing corporation, and the relief sought was against the corporations and persons named and made defendants in their own right, and not as agents of the Pioneer Iron Company, but who were alleged and found to be using the name of that corporation as a cover for wrongful acts of their own. The mere fact that the defendants sought to justify their acts as agents of the Pioneer Iron Company would not warrant the court in awarding a decree against that company or its agents, neither being made a party to the record. Nor, in our opinion, did the judgment rendered have this effect. In the case of Tindal v. Wesley, 167 U.S. 204, 42 L. ed. 137, 17 Sup. Ct. Rep. 770, where a suit was brought in South Carolina to recover possession of certain real property in that state, one of the defendants answered that he had no personal interest in the property except as secretary of the state of South Carolina, in which capacity alone he had acquired the control of the property. It was argued that in that event the suit could not be maintained, because it was in fact an action against the state within the meaning of the 11th Amendment, and the judgment of the court concluded the state. To this contention this court, speaking by Mr. Justice Harlan, made answer:

'It is said that the judgment in this case may conclude the state. Not so. It is a judgment to the effect only that, as between the plaintiff and the defendants, the former is entitled to possession of the property in question, the latter having shown no valid authority to withhold possession from the plaintiff; that the assertion by the defendants of a right to remain in possession is without legal foundation. The state not being party to the suit, the judgment will not conclude it. Not having submitted its rights to the determination of the court in this case, it will be open to the state to bring any action that may be appropriate to establish and protect whatever claim it has to the premises in dispute. Its claim, if it means to assert one, will thus be brought to the test of the law as administered by tribunals ordained to determine controverted rights of property; and the record in this case will not be evidence against it for any purpose touching the merits of its claim.'

So in this case, notwithstanding the answer of the defendants justifying as agents of the Pioneer Iron Company, the bill made neither the company nor any agent of it as such a party to the proceedings. The mere fact that the claim is made that the Pioneer Iron Company will be concluded can have no effect upon it so long as it has not submitted its rights to adjudication by voluntary proceedings on its part, or been brought into court by proper process. It is true the defendants claim the charter of the company has been renewed, and that it is still a going corporation. It is conceded that at the date of its origin the Constitution of the state of Michigan prohibited the organization of corporations for a period greater than thirty years. That the supreme court of Michigan did not intend to adjudicate that the Pioneer Iron Company if reorganized was concluded by the decree of the circuit court, is shown by the language used in the conclusion of its opinion:

'The Constitution at the date of its organization and at the expiration of its charter expressly prohibited the organization of corporations beyond the period of thirty years. No provisions then existed, either by the Constitution or by the statute, authorizing a reorganization of corporations which had expired by limitation. A constitutional amendment was adopted in 1889, authorizing the legislature to provide by general laws for one or more extensions of the term of such corporations, and also for the reorganization 'for a further period, not exceeding thirty years, of such corporations whose terms have expired by limitation, on the consent of not less than four fifths of the capital.' Pursuant to this authority the legislature in 1889 passed an act authorizing such reorganization. 2 Comp. Laws, § 7035. Very important questions are raised by counsel as to the effect of this reorganization statute, the validity of the act of reorganization by the Pioneer Iron Company, as to whether the Pioneer Iron Company was in position to avail itself of this statute, and also the effect upon the nine-nine-year lease should the reorganization be held to be valid. Inasmuch, however, as these questions are not essential to a decision of the case, we refrain from determining them.'

But it is said the supreme court affirmed the decree of the lower court, in which the defendants were enjoined in a representative capacity, and that this includes them as agents of the Pioneer Iron Company, and that when the agents of the company are enjoined the decree amounts to a judgment against the corporation which they represent. But in view of the pleadings, as already stated, and the claim made and insisted upon by the complainants that there was no Pioneer Iron Company in existence, we think the language in the decree has reference to the injunction and order against the corporations and individuals made defendants and their attorneys, solicitors, and agents, in their representative capacity, that is, as representing the defendants in any of the ways mentioned. The decree was rendered after finding in favor of the complainants' theory of the case, and had the effect to require the defendants to the bill, their agents and attorneys, to vacate the premises, and enjoined them from further mining thereon. It is utterly inconsistent with the proceedings and the decree to enlarge the judgment so as to include agents of the Pioneer Iron Company. If it should hereafter be insisted that the rights of that company or its agents are concluded, a Federal question might arise if such effect shall be given to the decree in this action. In our view of this case there is nothing in the proceedings or decree in anywise conclusive of the rights of the Pioneer Iron Company, if it is held to be a living corporation, or any of its duly authorized agents acting in its behalf.

We therefore find that no Federal question arises upon this record. The proceedings in this court will be dismissed for want of jurisdiction.