Guaranty Trust Co. v. North Chicago St. R. Co.

Citations

• 130 F. 801
• 65 C.C.A. 65
• 1904 U.S. App. LEXIS 4226

Syllabus

<p>1. Federal and State Courts — Priority of Jurisdiction — Enjoining Suit in State Court.</p> <p>The pendency in a federal court of a creditors’ suit against a street railroad company, for which a receiver has been appointed, but whose road is being operated under a 99-year lease, by a receiver of the lessee appointed by the same court in another creditors’ suit against such lessee, does not exclude the jurisdiction of a state court to entertain a suit by stockholders to enjoin the delivery of an amended lease which has been agreed to by the company’s directors, extending the term for a long period at a greatly reduced rental, and releasing stocks deposited in trust by the lessee to secure its performance, on the ground that such extension is ultra vires, and was obtained by the lessee by secretly and fraudulently securing control of the board of directors, and also to enjoin the lessee from voting certain stock for the ratification of such lease, since such suit does not interfere with the possession of the property by the federal court, nor with the receivers in its management, nor affect any issue which can be adjudicated under the pleadings in the creditors’ suit; and the federal court is without jurisdiction to enjoin the prosecution of such suit on petition filed in the creditors’ suit by the company defendant.</p> <p>2. Creditors’ Suits — Administration of Property — Powers of Court.</p> <p>While a court which has obtained possession of street railroad property through receivers appointed in separate creditors’ suits against the lessor and lessee of such property has power to settle differences between the lessor and lessee when arising in the administration of the two estates, it has no power to compel the lessor to execute a new lease extending the term from 99 to 984 years, and materially reducing the rental during such long term; its custody of the property being temporary only, for the purpose of conserving it, if not sold, until creditors are paid.</p>