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general duty to furnish for the public con- ROBERT M. GREEN, Plff. in Err., venience. The distinction between an order relating to such a subject and an order fixo CHICAGO, BURLINGTON, &
& QUINCY ing rates coming within either of the hy
RAILWAY COMPANY. potheses which we have stated is apparent. This is so because, as the primal duty of Writ and process-service on foreign corpoa carrier is to furnish adequate facilities to
ration-what is doing business. the public , that duty may well be com- and passenger agent in Philadelphia, freight
Soliciting through its district freight pelled, although, by doing so, as an inci- and passenger traffic for a railway company dent some pecuniary loss from rendering incorporated in Iowa and having its eastern such service may result. It follows, there terminal at Chicago, is not doing business fore, that the mere incurring of a loss from within the eastern district of Pennsylvania the performance of such a duty does not, in such a sense that process can be served in and of itself, necessarily give rise to the upon the corporation there. conclusion of unreasonableness, as would be the case where the whole scheme of rates
[No. 435.] was unreasonable, under the doctrine of
Submitted April 8, 1907.
Decided April Smyth v. Ames, or under the concessions
29, 1907. made in the two propositions we have stated. Of course, the fact that the furnish- N ERROR to the Circuit Court of the ing of a necessary facility ordered may oc- United States for the Eastern District casion an incidental pecuniary loss is an of Pennsylvania to review a judgment makimportant criteria to be taken into view ing absolute a rule to show cause why the in determining the reasonableness of the service of summons upon a foreign corporaorder, but it is not the only one. As the tion should not be vacated, on the ground duty to furnish necessary facilities is co- that the corporation was not doing business terminous with the powers of the corpo- in the district. Affirmed. ration, the obligation to discharge that duty See same case below, 147 Fed. 767. must be considered in connection with the The facts are stated in the opinion. nature and productiveness of the corporate Messrs. John G. Johnson and Frank P. business as a whole, the character of the Prichard for plaintiff in error. services required, and the public need for its Mr. Francis Rawle for defendant in erperformance. A similar contention to the ror. one are considering was adversely passed upon in Wisconsin, M. & P. R. Co. Mr. Justice Moody delivered the opinion v. Jacobson, 179 U. S. 287, 45 L. ed. 194, 21 of the court: Sup. Ct. Rep. 115. That case involved the The plaintiff in error, a citizen of enforcement of an order of a state railroad Pennsylvania, brought an action in the commission directing a railroad company to circuit court for the eastern district of acquire the necessary land and make a Pennsylvania to recover damages for track connection for the purpose of afford - personal injuries alleged to have been ining facilities for the interchange of business curred in Colorado through the negligence with another road. The court, after holding of the defendant, against the defendant in that the order was not so unjust and un error, a corporation created by the laws of reasonable as to be repugnant to the Consti- the state of Iowa, and, therefore, for juristution of the United States, disposed of the dictional purposes, a citizen of that state. contention that the order was void because The return upon the writ shows a service compliance with it would necessitate the "on Chicago, Burlington, & Quincy Railway incurring of expense, by saying (179 U. S. Company, a corporation which is doing busi302, 45 L. ed. 201, 21 Sup. Ct. Rep. 120): ness in the eastern district of Pennsylvania “Although to carry out the judgment
by giving a true and attested copy may require the exercise by the plaintiff in to Harry E. Heller, agent of said corporaerror of the power of eminent domain, and tion." The defendant appeared specially will also result in some, comparatively for the purpose of disputing jurisdiction. speaking, small expense, yet neither fact The circuit court held that the service was furnishes an answer to the application of insufficient, because the defendant was not defendant in error. Worcester v. Norwich doing business within the district, and that & W. R. Co. 109 Mass. 112; People ex rel. decision is brought here by writ of error Green v. Dutchess & C. R. Co. 58 N. Y. 152, for review. 163; People ex rel. Kimball v. Boston & A. The jurisdiction of the circuit court in R. Co. 70 N. Y. 569; People v. New York, this case was founded solely upon the fact L. E. & W. R. Co. 104 N. Y. 58, 67, 58 Am. that the parties were citizens of different Rep. 484, 9 N.E. 856."
states. In such a case the suit may be Affirmed.
brought in the district of the residence of
either. Act of March 3, 1875, chap. 137, § 1, the agent was sufficient; and one element [18 Stat. at L. 470, chap. 137], as corrected of its sufficiency is whether the facts show by act of August 13, 1888, chap. 866, § 1 (25 that the defendant corporation was doing Stat. at L. 434, U. S. Comp. Stat. 1901, p. business within the district. It is obvious 508). But to obtain jurisdiction there must that the defendant was doing there a conbe service, and the service was upon the siderable business of a certain kind, alcorporation in the eastern district of though there was no carriage of freight or Pennsylvania. Its validity depends upon passengers. In support of his contention whether the corporation was doing business that the defendant was doing business within that district in such a manner and to in the district in such a sense that it was such an extent as to warrant the inference liable to service there, the plaintiff cites that, through its agents, it was present Denver & R. G. R. Co. v. Roller, 49 L.R.A. there.
77, 41 C. C. A. 22, 100 Fed. 738, and TuchThe eastern point of the defendant's line band v. Chicago & A. R. Co. 115 N. Y. 437, of railroad was at Chicago, whence its 22 N. E. 360. The facts in those cases were
| tracks extended westward. The business similar to those in the present case. But in for which it was incorporated was the car- both cases the action was brought in the riage of freight and passengers, and the state courts, and the question was of the construction, maintenance, and operation of interpretation of a state statute and the a railroad for that purpose. As incidental jurisdiction of the state courts. and collateral to that business it
The business shown in this case was, in proper, and, according to the business substance, nothing more than that of methods generally pursued, probably es- solicitation. Without undertaking to sential, that freight and passenger traffic formulate any general rule defining what should be solicited in other parts of the transactions will constitute "doing busi. country than those through which the de- ness” in the sense that liability to service fendant's tracks ran. For the purpose of is incurred, we think that this is not enough conducting this incidental business the de- to bring the defendant within the district fendant employed Mr. Heller, hired an office so that process can be served upon it. This for him in Philadelphia, designated him view accords with several decisions in the as district freight and passenger agent, and lower Federal courts. Maxwell v. Atchison, in many ways advertised to the public T. & S. F. R. Co. 34 Fed. 286; N. K. Fair these facts. The business of the agent was bank & Co. v. Cincinnati, N. 0. & T. P. R. to solicit and procure passengers and freight Co. 4 0. C. A. 403, 9 U. S. App. 212, 54 Fed. to be transported over the defendant's line. 420; Union Associated Press v. Times-Star For conducting this business several clerks Co. 84 Fed. 419; Earle v. Chesapeake & 0. and various traveling passenger and freight R. Co. 127 Fed. 235. agents were employed, who reported to the The judgment of the Circuit Court is af. agent and acted under his direction. He firmed. sold no tickets and received no payments for transportation of freight. When a prospective passenger desired a ticket, and ap- SOLON L. FRANK and Samuel Frank, plied to the agent for one, the agent took
Doing Business under the Name of S. L.
& S. Frank, Plffs. in Err., the applicant's money and procured from one of the railroads running west from
JOSEPH VOLLKOMMER, Jr., as Trustee Philadelphia a ticket for Chicago and
in Bankruptcy of the Estate of Jacob prepaid order, which gave to the applicant,
Vogt, a Bankrupt, and Jacob Vogt. upon his arrival at Chicago, the right to receive from the Chicago, Burlington & Courts-conflict of jurisdiction-interference Quincy Railroad a ticket over that road. Oc- with bankruptcy court. casionally he sold to railroad employees,
1. The possession by a court of bank. who already had tickets over intermediate ruptcy of the proceeds of a sale of the chatlines, orders for reduced rates over the de- tels covered by a mortgage given by the lines, orders for reduced rates over the de- bankrupt, which sale was had pursuant to fendant's lines. In some cases, for the con
an agreement, approved by that court, provenience of shippers who had received bills viding for the deposit of the net proceeds of lading from the initial line for goods by a temporary receiver as a special fund routed over the defendant's lines, he gave in to which the lien, if any, of the chattel exchange therefor bills of lading over the mortgage, was transferred, does not deprive defendant's line. In these bills of lading it a state court of its jurisdiction, under the was recited that they should not be in force bankrupt act of July 1, 1898 (30' Stat. at L.
544, chap. 541, U. S. Comp. Stat. 1901, p. until the freight had been actually received 3431), s 23b, 'of a suit by the trustee in by the defendant.
bankruptcy to set aside the mortgage as in The question here is whether service upon | fraud of creditors.
Error to state court-presumption as to As alleged in the complaint, by agreefindings below.
ment between the Franks and the petition2. If it was necessary for a trustee in ing creditors, which was approved by the bankruptcy to represent judgment as well as district court and entered of record therein simple contract creditors when attacking the validity of a chattel mortgage given by July 2, A. D. 1902, it was provided that the the bankrupt, it will be presumed, on a writ property in question should be sold at pubof error from the Federal Supreme Court to lic auction on July 3 by the temporary rereview a judgment of a state court settingceiver; “that the expenses of the sale be aside the mortgage as in fraud of creditors, paid out of the proceeds thereof; that the that the trial court, in passing upon all the said temporary receiver deposit the net evidence, found that he did represent both proceeds of said sale at the People's Trust classes of creditors, where the record shows Company of Brooklyn as a special fund, that the entire record of the proceedings in there to await the further order of the the bankruptcy court, though not returned to the Federal Supreme Court, was in evi- court upon due notice to all creditors who dence before the trial court.
have or may hereafter appear; that the Error to state court-questions reviewable lien, if any, of the alleged chattel mort. --when raised in time.
gage of the said defendants Frank be trans3. The objection that the trustee in ferred to and attached to said special fund, bankruptcy had no right to attack the va- or deposit, in lieu of and to the same exlidity of a chattel mortgage given by the tent as if attached to the said property bankrupt, because it did not appear that he thereinbefore directed to be sold; that, in represented any but simple contract creditors, is too late to be available on a writ pursuance thereof, said sale was had on the of error from the Federal Supreme Court to 3d of July, A. D. 1902, and the net proceeds a state court, when the point was not made thereof, amounting to about $5,482.47, were, in the trial court.
on or about the 10th day of July, 1902, duly
deposited in the People's Trust Company of [No. 184.]
Brooklyn, as provided by said agreement.”
July 10, A. D. 1902, Vogt was duly adjudiArgued January 25, 28, 1907. Decided
cated an involuntary bankrupt, and on NoApril 29, 1907.
vember 12, A. D. 1902, Vollkommer, Jr., was N ERROR to the Appellate Division of appointed trustee in bankruptcy of Vogt,
the Supreme Court of the State of New duly qualified November 21, and entered York for the Second Department to review upon the duties of his office as trustee. He
thereafter filed this complaint against the a judgment affirming a judgment of a special term of the Supreme Court held in Franks and Vogt, setting up the proceedand for the county of Kings, in that state, ings, and averring that defendants Frank which set aside å chattel mortgage given claimed a lien upon the special fund to the by a bankrupt as being in fraud of credit- whole extent thereof, which constituted a
cloud on plaintiff's title to the fund, and ors. Affirmed. See same case below, 107 App. Div. 594, mortgage be declared null and void, and
he demanded judgment that the chattel 95 N. Y. Supp. 324.
canceled and discharged of record, and that Statement by Mr. Chief Justice Fuller: the special fund be declared free of the en
This was a suit commenced in December, cumbrance of the alleged chattel mortgage, 1902, in the supreme court of New York for and from any lien or claim by the Franks the county of Kings by Joseph Vollkom- under the mortgage or otherwise. The trial mer, Jr., as trustee in bankruptcy of the court held that the mortgage was made estate of Jacob Vogt, bankrupt, against
“with the intent and purpose of said Vogt Solon L. Frank and Samuel Frank, doing and said defendants Frank to hinder, debusiness as S. L. & S. Frank, and Jacob feat, defraud, and delay said Vogt's credit
ors.” And decreed the annulment of the Vogt, to set aside an alleged chattel mortgage on certain horses, harness, wagons,
mortgage, and that it was “no lien upon' etc., given by Vogt to defendants Frank, the moneys, viz., $5,481.47, deposited on April 16, 1902, as fraudulent, and intended July 9th, 1902, by Arthur T. Stoutenburgh, to hinder, delay, and defraud creditors.
temporary receiver, in the People's Trust The mortgagees had taken possession, Company of Brooklyn, New York, under and creditors immediately thereafter filed an order of the district court of the United petitions in bankruptcy against Vogt in States for the eastern district of New York, the district court of the United States for made July 2d, 1902.” The case was carried the eastern district of New York, where to the appellate division of the supreme upon and on June 30, 1902, one Stouten-court and the decree was affirmed. Leave burgh was appointed temporary receiver to appeal to the court of appeals was deand duly qualified as such.
nied by the appellate division, and subse.
quently by an associated judge of the court | the acts of July 1, 1898, and February 5, of appeals. This writ of error was then 1903, the amendments made by the latter allowed.
act being italicized.
Undoubtedly the state court, in which Mr. Roger Foster for plaintiffs in error. the trustee brought this suit, was the court
Messrs. Francis B. Mullin and J. Frank “where the bankrupt, whose estate is being Yawger for defendant in error Vollkommer. administered by such trustee, might have
brought or prosecuted them [suits], if proMr. Chief Justice Fuller delivered the ceedings in bankruptcy had not been instiopinion of the court:
tuted," and its jurisdiction under the apCounsel for plaintiffs in error contended plicable general rule must be conceded. below that the state courts had no juris- But plaintiffs in error contend that the diction because the suit was brought to de- possession by the bankruptcy court of the termine title to property or a fund in the proceeds of the sale of the mortgaged chatpossession of the district court of the tels deprives the state court of its conceded United States. The bankruptcy act of July jurisdiction to set aside the mortgage as 1, 1898, provided that “suits by the trustee fraudulent. shall only be brought or prosecuted in the The contention is wholly inadmissible. courts where the bankrupt, whose estate The mortgaged property consisted of horses, is being administered by such trustee, vehicles, harness, etc., and the order of sale might have brought or prosecuted them if of the temporary receiver, agreed to by proceedings in bankruptcy had not been plaintiffs in error, was evidently in the instituted, unless by consent of the pro- interest of all parties, and provided for the posed defendant.” 30 Stat. at L. 544, chap. deposit of the proceeds, not in the general 541, § 23b, U. S. Comp. Stat. 1901, p. 3431. funds of the estate, but as a special fund,
In Bardes v. First Nat. Bank, 178 U. S. to which the lien, if any, of the chattel 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000, mortgage was transferred, and clearly conwe held that the bankruptcy court, except templated a plenary suit to determine the by the consent of the defendant, had no validity thereof, which, at that time, there jurisdiction to try and determine a suit being no diversity of citizenship, and no brought by a trustee in bankruptcy to re- such possession as might lead to a different cover property alleged to be part of the result, could only be commenced in the bankrupt's estate, or to have been trans- state court. The trustee himself commenced ferred by him in fraud of the act, but that it there and obtained the decree, which was such suits must be prosecuted either in the in its nature self-executing, and merely set state courts or in the circuit courts of the aside the mortgage, and, as incident thereUnited States where diversity of citizenship to, declared that the special fund was free existed. The act of 1898 was amended by from its lien, and, without seeking to interthe act of February 5, 1903 (32 Stat. at L. fere with the possession, left it to the (
, 797, chap. 487, U.S. Comp. Stat. Supp. 1905, bankruptcy court to carry the decree into p. 682), S 19 of which provided that the act effect by placing the money in the custody should "not apply to bankruptcy cases of its officer, the trustee. pending when this act takes effect, but such No principle of comity was violated and cases shall be adjudicated and disposed of there was no interference with the bankcomfortably to the provisions of the said ruptcy court. First Nat. Bank v. Chicago act of July first, eighteen hundred and Title & T. Co. 198 U. S. 280, 49 L. ed. ninety-eight.”
1051, 25 Sup. Ct. Rep. 693; Davis v. FriedThe present case was commenced in 1902, lander, 104 U. S. 570, 26 L. ed. 818; Eyster and, besides, the amendment
amendment gave the v. Gaff, 91 U. S. 521, 23 L. ed. 403; Claflin bankruptcy court concurrent, and not ex- v. Houseman, 93 U. S. 130, 23 L. ed. 833; clusive, jurisdiction.
Re Platteville Foundry & Mach. Co. 147 Fed. We give in the margint quotations from 828; Guaranty Trust Co. v. North Chicago
Section 23b: “Suits by the trustee shall | fore the filing of a petition, or after the filonly be brought or prosecuted in the courts ing of the petition, and before the adjudiwhere the bankrupt, whose estate is being cation, and the person receiving it, or to be administered by such trustee, might have benefited thereby, or his agent acting therebrought or presecuted them if proceedings in, shall have had reasonable cause to bein bankruptcy had not been instituted, un- lieve that it was intended thereby to give a less by consent of the proposed defendant, preference, it shall be voidable by the except suits for the recovery of property trustee, and he may recover the property or under section sixty, subdivision b, and sec- its value from such person." tion sixty-seven, subdivision e."
"If a bankrupt shall have given a preferSection 60b: “If a bankrupt shall have ence, and the person receiving it, or to be given a preference within four months be- I benefited thereby, or his agent acting thereStreet R. Co. 65 C. C. A. 65, 130 Fed. 801; | Co. v. Cassell, 201 U. S. 344, 50 L. ed. 782, Re Spitzer, 66 C. C. A. 35, 130 Fed. 879; 26 Sup. Ct. Rep. 481. Bindseil v. Smith, 61 N. J. Eq. 645, 47 Atl. It is objected that the trustee had no 456; Skilton v. Codington, 185 N. Y. 80, 77 right to attack the validity of the chattel N. E. 790. In the latter case the court of mortgage because it did not appear that he appeals by Cullen, Ch. J., in sustaining the represented any but simple contract creditjurisdiction of the state court, admirably ors. But the record before us shows that expounds the applicable principles, with a the entire record of the proceedings in the full citation of authorities. That was a bankruptcy court was in evidence before suit against the trustee, while the present the trial court, though it was not returned case was brought by the trustee.
here, so that if it were necessary that the The possession of the temporary receiver trustee should represent judgment creditors, of the special fund was not, in the circum- which we do not decide that it was, it must stances, in any sense sufficient to change be presumed that the trial court, in passing the ordinary rule giving the state courts upon all the evidence, found that he did. jurisdiction any more than the constructive This may explain why the point was not possession in every case created by adjudi- made in the trial court, and it comes too cation. Mueller v. Nugent, 184 U. S. 1, 46 late here. L. ed. 405, 22 Sup. Ct. Rep. 269; York Mfg. Judgment affirmed. in, shall have had reasonable cause to believe the creditors of such debtor by the laws of that it was intended thereby to give a prefer- ! the state, territory, or district in which such ence, it shall be voidable by the trustee and property is situate, shall be deemed null and he may recover the property or its value void under this act against the creditors from such person. And, for the purpose of of such debtor, if he be adjudged a banksuch recovery, any court of bankruptcy, as rupt, and such property shall pass to the hereinbefore defined, and any state court assignee and be by him reclaimed and rewhich would have had jurisdiction if bank- covered for the benefit of the creditors of ruptcy had not intervened, shall have con- the bankrupt. For the purpose of such recurrent jurisdiction.”
covery any court of bankruptcy as hereinSection 67e: "That all conveyances, trans- before defined, and any state court which fers, assignments, or encumbrances of his would have had jurisdiction if bankruptcy property, or any part thereof, made or given had not intervened, shall have concurrent by a person adjudged a bankrupt under the jurisdiction." provisions of this act, subsequent to the pas
Section 70e: "The trustee may avoid any sage of this act and within four months transfer by the bankrupt of his property prior to the filing of the petition, with the which any creditor of such bankrupt might intent and purpose on his part to hinder, have avoided, and may recover the property delay, or defraud his creditors, or any of so transferred, or its value, from the perthem, shall be null and void as against the son to whom it was transferred, unless he creditors of such debtor, except as to pur- was a bona fide holder for value prior to the chasers in good faith and for å present fair date of the adjudication. Such property consideration; and all property of the debtor may be recovered or its value collected from conveyed, transferred, assigned, or encum- whoever may have received it, except a bona bered as aforesaid, shall, if he be adjudged fide holder for value. For the purpose of a bankrupt, and the same is not exempt such recovery any court of bankruptcy as from execution and liability for debts by the hereinbefore defined, and any state court law of his domicil, be and remain a part of which would have had jurisdiction if bankethe assets and estate of the bankrupt, and ruptcy had not intervened, shall have conshall pass to his said trustee, whose duty it current jurisdiction.” shall be to recover and reclaim the same Section 19 of act of February 5, 1903: by legal proceedings or otherwise for the "That the provisions of this amendatory benefit of the creditors. And all convey act shall not apply to bankruptcy cases ances, transfers, or encumbrances of his pending when this act takes effect, but such property made by a debtor at any time with cases shall be adjudicated and disposed of in four months prior to the filing of the conformably to the provisions of the said petition against him, and while insolvent, act of July first, eighteen hundred and which are held null and void as against ' ninety-eight.”