White v. Ewing/Opinion of the Court

While the receiver prayed in his petition to bring in all the debtors by bill or petition in one suit, alleging that it was so requested by creditors, in order to avoid the expense of a separate suit against each, and the bill was brought in that form against 130 defendants, who were charged to be severally indebted upon notes given for lots of land purchased from the company, no exception was taken to the form of the bill by demurrer of otherwise, but the defendants answered, denying their liability. The question certified does not, as we understand it, demand the opinion of this court as to whether a single bill against all these defendants would lie for the amounts severally due by them (upon which point we do not feel called upon to express an opinion), but whether, so far as in said suit the receiver claimed the right to recover from any one debtor a sum not exceeding $2,000, the court had jurisdiction to render a judgment against them.

This question must be answered in the affirmative. As was observed by this court in Porter v. Sabin, 149 U.S. 473, 479, 13 Sup. Ct. 1008: 'When a court exercising a jurisdiction in equity appoints a receiver to hold the property of a corporation, that court assumes the administration of the estate; the possession of the receiver is the possession of the court; and the court itself holds and administers the estate, through the receiver as its officer, for the benefit of those whom the court shall ultimately adjudge to be entitled to it.'

The circuit court obtained jurisdiction over the Cardiff Coal & Iron Company by the filing of the original creditors' bill by Bosworth, a citizen of Massachusetts, and by the appointment of a receiver; and any suit by or against such receiver, in the course of the winding up of such corporation, whether for the collection of its assets or for the defense of its property rights, must be regarded as ancillary to the main suit, and as cognizable in the circui court, regardless either of the citizenship of the parties or of the amount in controversy. Freeman v. Howe, 24 How. 450, 460; Krippendorf v. Hyde, 110 U.S. 276, 4 Sup. Ct. 27; Dewey v. Coal Co., 123 U.S. 329, 8 Sup. Ct. 148; In re Tyler, 149 U.S. 164, 181, 13 Sup. Ct. 785; Root v. Woolworth, 150 U.S. 401, 413, 14 Sup. Ct. 136; Rouse v. Letcher, 156 U.S. 47, 49, 15 Sup. Ct. 266.

Indeed, it was conceded that, where an insolvent corporation is placed in the hands of a receiver of the circuit court, such appointment draws to the jurisdiction of that court the control of its assets, so far as persons having claims to participate in the distribution of such assets are concerned, and that parties must go into that court in order to assert their rights, prove their demands, and receive whatever may be due them, or their share or interest in the estate. But it is insisted that there is a distinction between cases where parties are brought before the court for the purpose of the payment to them of claims they may hold against the estate and cases where it is sought to recover of them claims which the receiver insists they owe the estate; that the receiver stands in the shoes of the company, and has no higher rights than the corporation; and, having sued for less than the jurisdictional amounts, that as to them the cases must be dismissed.

This position is entirely correct so far as the right of the receiver to recover upon the merits is concerned, but it has no bearing whatever upon the question of the jurisdiction of the court to pass upon such merits. The receiver does not take his authority as an ordinary indorsee of the paper, and subject to the disability to sue in the federal court, which attaches to such indorsee, but he takes title by operation of law, and as an instrument of the court which appointed him. The cases upon which the appellant rehes of Railway Co. v. Parker, 143 U.S. 42, 12 Sup. Ct. 364, and Walter v. Railroad Co., 147 U.S. 370, 13 Sup. Ct. 348, were both original bills, over which jurisdiction could only be acquired upon proper allegations of citizenship and amount. In this case, however, the court proceeds upon its own authority to collect the assets of an estate with the administration of which it is charged; and, if the receiver in such cases appears as a party to the suit, it is only because he represents the court in its inherent power to wind up the estate of an insolvent corporation, over which it has by an original bill obtained jurisdiction. In this particular the jurisdiction of the circuit court does not materially differ from that of the district court in bankruptcy, the right of which to collect the assets of a bankrupt estate we do not understand ever to have been doubted. There is just as much reason for questioning the jurisdiction of the court in this case upon the ground of the want of diverse citizenship as upon the ground that the requisite amount is not involved.

Two cases decided by justices of this court are directly in point: Price v. Abbott, 17 Fed. 506; Armstrong v. Trautman, 36 Fed. 275.

The question certified will therefore be answered in the affirmative.