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But, it is said, however it might be if this reasoning were applied generally, it fails when it is confined to the small number who are in the institutions named and is not applied to the multitudes outside. It is the usual last resort of constitutional arguments to point out shortcomings of this sort. But the answer is that the law does all that is needed when it does all that it can, indicates a policy, applies it to all within the lines, and seeks to bring within the lines all similarly situated so far and so fast as its means allow. Of course so far as the operations enable those who otherwise must be kept confined to be returned to the world, and thus open the asylum to others, the equality aimed at will be more nearly reached.

MR. JUSTICE BUTLER dissents.

Judgment affirmed.

BURNRITE COAL BRIQUETTE COMPANY v. RIGGS ET AL.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.

No. 227. Argued March 11, 14, 1927-Decided May 2, 1927. 1. The objection to the bringing of a suit, dependent on diversity of citizenship, in the District Court in a State of which neither party is a citizen, goes to the venue, and may be waived by general appearance and other action. P. 211.

2. A federal District Court may, under its general equity powers independently of any state statute, entertain a bill of a stockholder against the corporation for the appointment of at least a temporary receiver in order to prevent threatened diversion or loss of assets through gross fraud and mismanagement of its officers. P. 212.

3. The fact that a bill seeking appointment of a receiver of a corporation is brought in a State other than that of the incorporation may lead the court to decline to interfere as a matter of comity or for want of equity; or it may require the court to limit the scope of the relief granted. But the fact of incorporation under the laws of another State does not preclude jurisdiction. P. 212.

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Opinion of the Court.

4. Where a receiver is appointed in a stockholder's suit by a federal court having jurisdiction, and the appointment is held on review to have been wrongly made, the court may, in the exercise of its judicial discretion, require that the receivers' charges be paid either by the corporation or by the unsuccessful plaintiff. P. 214. 5. And where a court, in the exercise of jurisdiction, has erroneously appointed a receiver, the acquiescence of the defendant may influence the court, in its discretion, to make the receivership expenses a charge upon the fund. P. 214.

6. A decree of the Circuit Court of Appeals reviewing a decree of the District Court which appointed receivers, and directing a dismissal of the bill "for want of jurisdiction," does not become the law of the case so as to require this Court, upon review of a second appeal from a decree allowing the receivers' expenses, to assume that the dismissal of the bill directed was properly for Iwant of jurisdiction. P. 215.

6 F. (2d) 226, affirmed.

CERTIORARI (269 U. S. 547) to a decree of the Circuit Court of Appeals which affirmed one of the District Court allowing receivers' expenses against a corporation in a stockholder's suit. See also 291 Fed. 754.

Messrs. James J. Lynch and George W. C. McCarter with whom Mr. Robert H. McCarter was on the brief, for petitioner.

Mr. Merritt Lane, with whom Mr. Joseph L. Smith was on the brief, for respondents.

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

This suit was brought in the federal court for New Jersey against the Burnrite Coal Briquette Company, a Delaware corporation, by Riggs, a stockholder. The bill charged gross mismanagement; prayed for the appointment of a receiver to conserve the assets; and asked, that "if deemed advisable" the court " proceed under the statutes of the State of New Jersey and that the

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receiver be given all the powers and be charged with all the duties imposed upon such a receiver by the statutes." Upon the filing of the bill, receivers were appointed, action by the corporation was enjoined, and an issue of receivers' certificates was authorized, all ex parte. After an elaborate hearing upon an order to show cause, the receivers were continued until final hearing. Upon final hearing, the charges of mismanagement were sustained and the receivership was again ordered continued,

with all the powers vested in them by previous orders by this court made, and with all of the powers conferred upon receivers by an act of the State of New Jersey, entitled, 'An act concerning corporations,' revision of 1896, its amendments and supplements thereto, and that the receivers continue to operate the business of said defendant corporation upon a re-organization or re-adjustment of the affairs of said corporation or such disposition as may be hereafter directed to be made of the affairs of said corporation by this court."

The Court of Appeals reversed the decree entered upon the final hearing and directed that the bill be dismissed for want of jurisdiction. The decision was not rested upon the ground that a State cannot enlarge the remedial right to proceed in a federal court sitting in equity, see Pusey & Jones v. Hanssen, 261 U. S. 491; nor upon the ground that a State cannot modify the substantive rights of a stockholder as against a foreign corporation merely because it happens to have property within the State. Compare Maguire v. Mortgage Co., 203 Fed. 858. The reversal was placed solely upon the ground that the corporation had been found by the District Court solvent at the time of the filing of the bill; that the statute of New Jersey, as interpreted by its courts, conferred no power upon its own courts to appoint receivers of foreign corporations unless they were insolvent; and that the juris

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Opinion of the Court.

diction of the federal court was determined by that of the state courts. 291 Fed. 754.

After the coming down of the mandate, directing dismissal for want of jurisdiction, the District Court allowed the account of the receivers who had been active during a period of nearly two years; directed payment by the corporation of the receivers' obligations then outstanding, their expenses, the costs, and compensation for their own services and those of their counsel, amounting in all to nearly $80,000; declared these amounts a lien upon the corporation's property; and ordered that, in default of payment, the property be sold to satisfy the charges. Upon a second appeal, that decree was affirmed by the Court of Appeals. 6 F. (2d) 226. The corporation contended that since the District Court was held to be without jurisdiction, it had no power to allow the account and order the payment out of the fund. Lion Bonding and Surety Co. v. Karatz, 262 U. S. 640, 642. This Court granted a writ of certiorari. 269 U. S. 547.

The main question for decision is whether, in view of the Court of Appeals' direction to dismiss the bill for want of jurisdiction, it was error to allow thereafter the receivers' account and direct the payment. There was an objection to the jurisdiction, which, if it had been seasonably taken, must have prevailed. Camp v. Gress, 250 U. S. 308. The plaintiff was a citizen of New York; the defendant a Delaware corporation; the federal jurisdiction rested wholly on diversity of citizenship; and neither party was a citizen of New Jersey. Thus, there was a sound objection to the venue. If that objection had been duly made, and had been insisted upon, an error of the lower court in overruling it could not justify charging the corporation now with payment of any charge on account of the receivership. But that objection to the jurisdiction, being to the venue, could be waived.

Opinion of the Court.

274 U.S.

Central Trust Co. v. McGeorge, 151 U. S. 129; Kreigh v. Westinghouse & Co., 214 U. S. 249, 252–253. And, before it was taken by the answer, it had been waived by a general appearance and other action. This was

conceded.

The reversal with direction to dismiss for want of jurisdiction, ordered on the first appeal, was put upon an entirely different ground. The Court of Appeals held that there was lack of jurisdiction of the subject matter. It assumed that the jurisdiction of the federal court was dependent upon the state statute. This was error. A federal district court may, under its general equity powers independently of any state statute, entertain a bill of a stockholder against the corporation for the appointment of at least a temporary receiver in order to prevent threatened diversion or loss of assets through gross fraud and mismanagement of its officers.1 There were allegations in the bill adequate to support a suit of that character; and there was nothing in the bill inconsistent with its being entertained as such. The only reference in the bill to the state statute was in one of its eleven prayers. After the waiver of the objection to the venue, there was federal jurisdiction over the parties and of the subject matter; and there was equity jurisdiction.

The fact that a bill seeking appointment of a receiver of a corporation is brought in a State other than that of the incorporation may lead the court to decline to interfere as a matter of comity or for want of equity; or it may require the court to limit the scope of the relief

1

See Dodge v. Woolsey, 18 How. 331, 341-344; Zeckendorf v. Steinfeld, 225 U. S. 445, 459; Citizens' Savings & Trust Co. v. Ill. Cent. R. R. Co., 205 U. S. 46; Clark v. National Linseed Oil Co., 105 Fed. 787; New Albany Waterworks Co. v. Louisville Banking Co., 122 Fed. 776; Callins v. Williamson, 229 Fed. 59.

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