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general duty to furnish for the public convenience. The distinction between an order relating to such a subject and an order fixing rates coming within either of the hypotheses which we have stated is apparent. This is so because, as the primal duty of a carrier is to furnish adequate facilities to the public, that duty may well be compelled, although, by doing so, as an incident some pecuniary loss from rendering such service may result. It follows, therefore, that the mere incurring of a loss from the performance of such a duty does not, in and of itself, necessarily give rise to the conclusion of unreasonableness, as would be the case where the whole scheme of rates
service of summons upon a foreign corpora-
See same case below, 147 Fed. 767.
Mr. Francis Rawle for defendant in error.
Mr. Justice Moody delivered the opinion of the court:
The plaintiff in error, a citizen of Pennsylvania, brought an action in the circuit court for the eastern district of Pennsylvania to recover damages for
was unreasonable, under the doctrine of Submitted April 8, 1907. Smyth v. Ames, or under the concessions made in the two propositions we have the stated. Of course, the fact that the furnish-IN ERROR to the Circuit Court of fict 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 viewing absolute a rule to show cause why the in determining the reasonableness of the order, but it is not the only one. As the duty to furnish necessary facilities is coterminous with the powers of the corporation, the obligation to discharge that duty must be considered in connection with the nature and productiveness of the corporate business as a whole, the character of the services required, and the public need for its performance. A similar contention to the one we are considering was adversely passed upon in Wisconsin, M. & P. R. Co. v. Jacobson, 179 U. S. 287, 45 L. ed. 194, 21 Sup. Ct. Rep. 115. That case involved the enforcement of an order of a state railroad commission directing a railroad company to acquire the necessary land and make a track connection for the purpose of afford-personal injuries alleged to have been ining facilities for the interchange of business with another road. The court, after holding that the order was not so unjust and unreasonable as to be repugnant to the Constitution of the United States, disposed of the contention that the order was void because compliance with it would necessitate the incurring of expense, by saying (179 U. S. 302, 45 L. ed. 201, 21 Sup. Ct. Rep. 120): "Although to carry out the judgment may require the exercise by the plaintiff in error of the power of eminent domain, and will also result in some, comparatively speaking, small expense, yet neither fact furnishes an answer to the application of defendant in error. Worcester v. Norwich & W. R. Co. 109 Mass. 112; People ex rel. Green v. Dutchess & C. R. Co. 58 N. Y. 152, 163; People ex rel. Kimball v. Boston & A. R. Co. 70 N. Y. 569; People v. New York, L. E. & W. R. Co. 104 N. Y. 58, 67, 58 Am. Rep. 484, 9 N.E. 856."
curred in Colorado through the negligence of the defendant, against the defendant in error, a corporation created by the laws of the state of Iowa, and, therefore, for jurisdictional purposes, a citizen of that state. The return upon the writ shows a service "on Chicago, Burlington, & Quincy Railway Company, a corporation which is doing business in the eastern district of Pennsylvania
by giving a true and attested copy to Harry E. Heller, agent of said corporation." The defendant appeared specially for the purpose of disputing jurisdiction. The circuit court held that the service was insufficient, because the defendant was not doing business within the district, and that decision is brought here by writ of error for review.
The jurisdiction of the circuit court in this case was founded solely upon the fact that the parties were citizens of different states. In such a case the suit may be 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 Stat. at L. 434, U. S. Comp. Stat. 1901, p. 508). But to obtain jurisdiction there must be service, and the service was upon the corporation in the eastern district eastern district of Pennsylvania. Its validity depends upon whether the corporation was doing business in that district in such a manner and to such an extent as to warrant the inference that, through its agents, it was present there.
The eastern point of the defendant's line of railroad was at Chicago, whence its tracks extended westward. The business for which it was incorporated was the carriage of freight and passengers, and the construction, maintenance, and operation of a railroad for that purpose. As incidental and collateral to that business it was proper, and, according to the business methods generally pursued, probably essential, that freight and passenger traffic should be solicited in other parts of the country than those through which the defendant's tracks ran. For the purpose of conducting this incidental business the defendant employed Mr. Heller, hired an office for him in Philadelphia, designated him as district freight and passenger agent, and in many ways advertised to the public these facts. The business of the agent was to solicit and procure passengers and freight to be transported over the defendant's line. For conducting this business several clerks and various traveling passenger and freight agents were employed, who reported to the agent and acted under his direction. He sold no tickets and received no payments for transportation of freight. When a prospective passenger desired a ticket, and applied to the agent for one, the agent took the applicant's money and procured from one of the railroads running west from Philadelphia a ticket for Chicago and a prepaid order, which gave to the applicant, upon his arrival at Chicago, the right to receive from the Chicago, Burlington & Quincy Railroad a ticket over that road. Occasionally he sold to railroad employees, who already had tickets over intermediate lines, orders for reduced rates over the de
fendant's lines. In some cases, for the convenience of shippers who had received bills of lading from the initial line for goods routed over the defendant's lines, he gave in exchange therefor bills of lading over the defendant's line. In these bills of lading it was recited that they should not be in force until the freight had been actually received by the defendant.
The question here is whether service upon
that the defendant corporation was doing business within the district. It is obvious that the defendant was doing there a considerable business of a certain kind, although there was no carriage of freight or passengers. In support of his contention that the defendant was doing business within the district in such a sense that it was liable to service there, the plaintiff cites Denver & R. G. R. Co. v. Roller, 49 L.R.A. 77, 41 C. C. A. 22, 100 Fed. 738, and Tuchband v. Chicago & A. R. Co. 115 N. Y. 437, 22 N. E. 360. The facts in those cases were similar to those in the present case. But in both cases the action was brought in the state courts, and the question was of the interpretation of a state statute and the jurisdiction of the state courts.
The business shown in this case was, in substance, nothing more more than that of solicitation. Without undertaking to formulate any general rule defining what transactions will constitute "doing business" in the sense that liability to service is incurred, we think that this is not enough to bring the defendant within the district so that process can be served upon it. This view accords with several decisions in the lower Federal courts. Maxwell v. Atchison, T. & S. F. R. Co. 34 Fed. 286; N. K. Fairbank & Co. v. Cincinnati, N. O. & T. P. R. Co. 4 C. C. A. 403, 9 U. S. App. 212, 54 Fed. 420; Union Associated Press v. Times-Star Co. 84 Fed. 419; Earle v. Chesapeake & O. R. Co. 127 Fed. 235.
The judgment of the Circuit Court is affirmed.
SOLON L. FRANK and Samuel Frank, Doing Business under the Name of S. L. & S. Frank, Plffs. in Err.,
JOSEPH VOLLKOMMER, Jr., as Trustee in Bankruptcy of the Estate of Jacob Vogt, a Bankrupt, and Jacob Vogt.
Courts-conflict of jurisdiction-interference with bankruptcy court.
1. The possession by a court of bankruptcy of the proceeds of a sale of the chattels covered by a mortgage given by the bankrupt, which sale was had pursuant to an agreement, approved by that court, providing for the deposit of the net proceeds by a temporary receiver as a special fund to which the lien, if any, of the chattel mortgage, was transferred, does not deprive a state court of its jurisdiction, under the bankrupt act of July 1, 1898 (30 Stat. at L 544, chap. 541, U. S. Comp. Stat. 1901, p. 3431), § 23b, of a suit by the trustee in bankruptcy to set aside the mortgage as in fraud of creditors.
Error to state court-presumption as to
the validity of a chattel mortgage given by
Error to state court-questions reviewable -when raised in time.
3. The objection that the trustee in bankruptcy had no right to attack the validity of a chattel mortgage given by the bankrupt, because it did not appear that he represented any but simple contract creditors, is too late to be available on a writ of error from the Federal Supreme Court to a state court, when the point was not made
N ERROR to the Appellate Division of the Supreme Court of the State of New York for the Second Department to review a judgment affirming a judgment of a special term of the Supreme Court held in and for the county of Kings, in that state, which set aside a chattel mortgage given by a bankrupt as being in fraud of credit
See same case below, 107 App. Div. 594, 95 N. Y. Supp. 324.
Statement by Mr. Chief Justice Fuller: This was a suit commenced in December, 1902, in the supreme court of New York for the county of Kings by Joseph Vollkommer, Jr., as trustee in bankruptcy of the estate of Jacob Vogt, bankrupt, against Solon L. Frank and Samuel Frank, doing business as S. L. & S. Frank, and Jacob Vogt, to set aside an alleged chattel mortgage on certain horses, harness, wagons, etc., given by Vogt to defendants Frank, April 16, 1902, as fraudulent, and intended to hinder, delay, and defraud creditors.
The mortgagees had taken possession, and creditors immediately thereafter filed petitions in bankruptcy against Vogt in the district court of the United States for the eastern district of New York, whereupon and on June 30, 1902, one Stoutenburgh was appointed temporary receiver and duly qualified as such.
As alleged in the complaint, by agreement between the Franks and the petitioning creditors, which was approved by the district court and entered of record therein July 2, A. D. 1902, it was provided that the property in question should be sold at public auction on July 3 by the temporary receiver; "that the expenses of the sale be paid out of the proceeds thereof; that the said temporary receiver deposit the net proceeds of said sale at the People's Trust Company of Brooklyn as a special fund, there to await the further order of the court upon due notice to all creditors who have or may hereafter appear; that the lien, if any, of the alleged chattel mortgage of the said defendants Frank be transferred to and attached to said special fund, or deposit, in lieu of and to the same extent as if attached to the said property therein before directed to be sold; that, in pursuance thereof, said sale was had on the 3d of July, A. D. 1902, and the net proceeds thereof, amounting to about $5,482.47, were, on or about the 10th day of July, 1902, duly deposited in the People's Trust Company of Brooklyn, as provided by said agreement."
July 10, A. D. 1902, Vogt was duly adjudicated an involuntary bankrupt, and on November 12, A. D. 1902, Vollkommer, Jr., was
appointed trustee in bankruptcy of Vogt, duly qualified November 21, and entered upon the duties of his office as trustee. He thereafter filed this complaint against the Franks and Vogt, setting up the proceedclaimed a lien upon the special fund to the ings, and averring that defendants Frank whole extent thereof, which constituted a whole extent thereof, which constituted a cloud on plaintiff's title to the fund, and he demanded judgment that the chattel mortgage be declared null and void, and canceled and discharged of record, and that the special fund be declared free of the encumbrance of the alleged chattel mortgage, and from any lien or claim by the Franks under the mortgage or otherwise. The trial court held that the mortgage was made "with the intent and purpose of said Vogt and said defendants Frank to hinder, defeat, defraud, and delay said Vogt's credit
And decreed the annulment of the
mortgage, and that it was "no lien upon ́ the moneys, viz., $5,481.47, deposited on July 9th, 1902, by Arthur T. Stoutenburgh, temporary receiver, in the People's Trust Company of Brooklyn, New York, under an order of the district court of the United States for the eastern district of New York, made July 2d, 1902." The case was carried to the appellate division of the supreme court and the decree was affirmed. Leave to appeal to the court of appeals was denied 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.
Mr. Roger Foster for plaintiffs in error. Messrs. Francis B. Mullin and J. Frank Yawger for defendant in error Vollkommer.
Undoubtedly the state court, in which the trustee brought this suit, was the court "where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them [suits], if pro
Mr. Chief Justice Fuller delivered the ceedings in bankruptcy had not been instiopinion of the court:
Counsel for plaintiffs in error contended below that the state courts had no jurisdiction because the suit was brought to determine title to property or a fund in the possession of the district court of the United States. The bankruptcy act of July 1, 1898, provided that "suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant." 30 Stat. at L. 544, chap. 541, § 23b, U. S. Comp. Stat. 1901, p. 3431.
In Bardes v. First Nat. Bank, 178 U. S. 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000, we held that the bankruptcy court, except by the consent of the defendant, had no jurisdiction to try and determine a suit brought by a trustee in bankruptcy to recover property alleged to be part of the bankrupt's estate, or to have been transferred by him in fraud of the act, but that such suits must be prosecuted either in the state courts or in the circuit courts of the United States where diversity of citizenship existed. The act of 1898 was amended by the act of February 5, 1903 (32 Stat. at L. 797, chap. 487, U. S. Comp. Stat. Supp. 1905, p. 682), § 19 of which provided that the act should "not apply to bankruptcy cases pending when this act takes effect, but such cases shall be adjudicated and disposed of comfortably to the provisions of the said act of July first, eighteen hundred and ninety-eight."
The present case was commenced in 1902, and, besides, the amendment gave the bankruptcy court concurrent, and not exclusive, jurisdiction.
We give in the margin† quotations from †Section 23b: "Suits by the trustee shall | only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or presecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant, except suits for the recovery of property under section sixty, subdivision b, and section sixty-seven, subdivision e."
Section 60b: "If a bankrupt shall have given a preference within four months be
tuted," and its jurisdiction under the applicable general rule must be conceded.
But plaintiffs in error contend that the possession by the bankruptcy court of the proceeds of the sale of the mortgaged chattels deprives the state court of its conceded jurisdiction to set aside the mortgage as fraudulent.
The contention is wholly inadmissible. The mortgaged property consisted of horses, vehicles, harness, etc., and the order of sale of the temporary receiver, agreed to by plaintiffs in error, was evidently in the interest of all parties, and provided for the deposit of the proceeds, not in the general funds of the estate, but as a special fund, to which the lien, if any, of the chattel mortgage was transferred, and clearly contemplated a plenary suit to determine the validity thereof, which, at that time, there being no diversity of citizenship, and no such possession as might lead to a different result, could only be commenced in the state court. The trustee himself commenced it there and obtained the decree, which was in its nature self-executing, and merely set aside the mortgage, and, as incident thereto, declared that the special fund was free from its lien, and, without seeking to interfere with the possession, left it to the bankruptcy court to carry the decree into effect by placing the money in the custody of its officer, the trustee.
No principle of comity was violated and there was no interference with the bankruptcy court. First Nat. Bank v. Chicago Title & T. Co. 198 U. S. 280, 49 L. ed. 1051, 25 Sup. Ct. Rep. 693; Davis v. Friedlander, 104 U. S. 570, 26 L. ed. 818; Eyster v. Gaff, 91 U. S. 521, 23 L. ed. 403; Claflin v. Houseman, 93 U. S. 130, 23 L. ed. 833; Re Platteville Foundry & Mach. Co. 147 Fed. 828; Guaranty Trust Co. v. North Chicago fore the filing of a petition, or after the filing of the petition, and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person."
"If a bankrupt shall have given a preference, and the person receiving it, or to be benefited thereby, or his agent acting there
Street 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. 456; Skilton v. Codington, 185 N. Y. 80, 77 N. E. 790. In the latter case the court of appeals by Cullen, Ch. J., in sustaining the jurisdiction of the state court, admirably expounds the applicable principles, with a full citation of authorities. That was a suit against the trustee, while the present case was brought by the trustee.
The possession of the temporary receiver of the special fund was not, in the circumstances, in any sense sufficient to change the ordinary rule giving the state courts jurisdiction any more than the constructive possession in every case created by adjudication. Mueller v. Nugent, 184 U. S. 1, 46 L. ed. 405, 22 Sup. Ct. Rep. 269; York Mfg. in, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee and he may recover the property or its value from such person. And, for the purpose of such recovery, any court of bankruptcy, as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction."
Section 67e: "That all conveyances, transfers, assignments, or encumbrances of his property, or any part thereof, made or given by a person adjudged a bankrupt under the provisions of this act, subsequent to the passage of this act and within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all property of the debtor conveyed, transferred, assigned, or encumbered as aforesaid, shall, if he be adjudged a bankrupt, and the same is not exempt from execution and liability for debts by the law of his domicil, be and remain a part of the assets and estate of the bankrupt, and shall pass to his said trustee, whose duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors. And all conveyances, transfers, or encumbrances of his property made by a debtor at any time within four months prior to the filing of the petition against him, and while insolvent, which are held null and void as against
It is objected that the trustee had no right to attack the validity of the chattel mortgage because it did not appear that he represented any but simple contract creditors. But the record before us shows that the entire record of the proceedings in the bankruptcy court was in evidence before the trial court, though it was not returned here, so that if it were necessary that the trustee should represent judgment creditors, which we do not decide that it was, it must be presumed that the trial court, in passing upon all the evidence, found that he did. This may explain why the point was not made in the trial court, and it comes too late here.
the creditors of such debtor by the laws of the state, territory, or district in which such property is situate, shall be deemed null and void under this act against the creditors of such debtor, if he be adjudged a bankrupt, and such property shall pass to the assignee and be by him reclaimed and recovered for the benefit of the creditors of the bankrupt. For the purpose of such recovery any court of bankruptcy as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction."
Section 70e: "The trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value. For the purpose of such recovery any court of bankruptcy as herein before defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction."
Section 19 of act of February 5, 1903: "That the provisions of this amendatory act shall not apply to bankruptcy cases pending when this act takes effect, but such cases shall be adjudicated and disposed of conformably to the provisions of the said act of July first, eighteen hundred and ninety-eight."