APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF KENTUCKY
Fuller, Harlan, Brewer, Brown, White, Peckham, McKenna, Holmes, Day
MR. JUSTICE HARLAN, after making the foregoing statement, delivered the opinion of the court.
THIS case arises out of the conflicting claims by the Circuit Court of the United States for the Western District of Kentucky, and the Circuit Court of Jefferson County, Kentucky, Chancery Branch, as to the right to administer the property and affairs of the Evening Post Company, a corporation of Kentucky.
The Federal court having possession, by its Receiver, of the property of that company, declined to surrender possession to the Louisville Trust Company, the Receiver appointed by the state court. From the final order dismissing the intervening petition of the latter company, the present appeal was prosecuted. That order stated: "This appeal is granted solely upon the question of jurisdiction over the subject-matter of the trust estate of the Evening Post Company in controversy, and the question of whether this court, or the said Jefferson Circuit Court, Chancery Branch, First Division, has prior jurisdiction in [is] the single question upon which this cause is decided as to the said Louisville Trust Company; this court holding that its jurisdiction over the said trust estate of the Evening Post Company is prior and exclusive of the said Jefferson Circuit Court, Chancery Branch, First Division, all of which is hereby certified on the appeal of the said Louisville Trust Company as Receiver, &c., to the Supreme Court of the United States for review as required by law."
It will be more satisfactory and conduce to a clear understanding of the precise grounds upon which our decision must rest if the principal facts in the history of this controversy be stated.
On the 30th day of April, 1903, at a meeting of the stockholders of the Post Company, a resolution was adopted -- all the stockholders except the owners of forty-eight shares concurring -- by which the Columbia Finance and Trust Company was appointed liquidator of that corporation, with authority to conduct its business and affairs for the benefit of stockholders until its property could be sold and possession delivered to the purchaser in accordance with the statute of Kentucky. The liquidator was directed from the proceeds of sale to pay the debts of the corporation, and to distribute any balance remaining among stockholders according to their legal rights. It took immediate possession of all the property, books and papers of the Post Company.
On the 10th day of May, 1903, another corporation was organized under the laws of Kentucky. It is referred to in the record as the New Evening Post Company. To that company the liquidator on May 18th, 1903, leased the property and assets of the old company, until a sale should take place.
Prior to the making of that instrument, to wit, on May 12th, 1903, the executors and executrix of the estate of W. N. Haldeman commenced a suit in the Jefferson (Kentucky) Circuit Court, Chancery Branch, First Division, against the old Post Company, the Columbia Finance and Trust Company, Richard W. Knott, J. M. Atherton, John R. Knott, Eugene Q. Knott and Laura G. Boyle -- the plaintiffs and the individual defendants being respectively owners of stock in the old company. The object of that suit, as disclosed by the petition, was to obtain a settlement of the accounts of the company and of its liquidator; and to that end the plaintiffs asked a reference of the cause to the commissioner of the court to audit and settle the accounts of the Columbia Finance and Trust Company, and after such auditing and settlement, that the assets of the company be sold, and the proceeds distributed according to law. The plaintiffs further prayed that pending the action and until the final liquidation of the affairs of the old company and the sale of its assets, the court determine whether its affairs should be continued in operation, and if so that the management of the plant be under the direction of the court; further, that a preliminary order be entered, commanding and directing the defendants and each of them to allow the plaintiffs reasonable access to and an examination of the books, papers, documents and affairs of the old company, including all documentary information in connection therewith in the possession of defendants or of either of them.
On the 19th of May, 1903, upon due notice, the plaintiffs moved for an order directing the defendants to allow the plaintiffs, their counsel and accountant, reasonable access to and inspection of the books, records and documents of the old company, relating to its assets, liabilities and business affairs. To that motion the defendants objected, and the motion was assigned for hearing on May 23d, 1903. On the day last named the parties appeared, the plaintiffs filed affidavits in support of their motion, and the defendants interposed a demurrer to the petition, as well as filed their several answers. The motion and demurrer were heard in part, and the further hearing of them was postponed until May 25th, 1903. On the latter day, the hearing not being concluded, the cause was postponed until the 30th of May, on which day it was submitted on the pending motion of plaintiffs, on defendants' demurrer to the petition, and on a motion of the Columbia Finance and Trust Company, entered on that day, for leave to file an amended and supplemental answer. By an order entered June 4th, 1903, the plaintiffs' motion, made on the 19th day of May, 1903, was sustained, and the defendants, and each of them, were commanded and directed, until the further orders of the court, to allow and afford the plaintiffs, their attorneys or accountant, during business hours, reasonable access to and an inspection of the books, records and documents of the Post Company, touching its condition and business affairs, and especially touching its assets and liabilities, and the considerations paid or received therefor. The demurrer of the defendants was also overruled, and the objection to the filing of the amended and supplemental answer of the Columbia Finance and Trust Company, trustee, tendered May 30th, 1903, was sustained.
While the above motion in the state court was pending, Stuart R. Knott, a citizen of Missouri, and not a party to the suit in the state court, obtained, May 26th, 1903, in the Circuit Court of the United States for the Western District of Kentucky, a judgment against the old company for $6,000 with interest from April 30th, 1903. Upon that judgment execution immediately issued and was returned the next day, May 27th, 1903, "no property found." And on the latter day the present suit was commenced by him in the United States Circuit Court, against the Evening Post Company, Columbia Finance and Trust Company, R. W. Knott, B. G. Boyle and E. Q. Knott, each defendant being a citizen of Kentucky. The prayer of the bill was that the court at once appoint a Receiver of all the rights, properties, franchises, books of account, records, documents, choses in action and all other things belonging to the Post Company, forthwith to report what such property is, and what arrangement can be made for the continued publication of said paper until a decree could be entered directing a sale herein; that all proper equitable relief may be had looking to the administration of the estate of the company and the payment of its just debts; and to that end the sale of its property and the bringing of any money produced by such sale into the registry of the court for distribution among creditors.
On the 28th day of May, 1903, all the defendants in the suit in the United States Circuit Court assenting thereto, a Receiver of the property and assets of the Post Company was appointed by that court, and the defendants were directed forthwith to deliver to him all such property and assets of every kind and description. That Receiver took immediate possession and, under the authority of the court, entered into a contract with the new company for the publication of the paper until the assets of the old company were sold.
The plaintiff in the suit in the state court entered, June 13th, 1903, a formal motion to appoint a Receiver to take charge of and manage the property and affairs of the Post Company; and on June 18th the defendants in that suit appeared and objected to the motion upon the ground that the assets of the company were already in the possession and under the control of a Receiver appointed by the United States Circuit Court in the suit instituted by Stuart R. Knott. This objection was overruled, and the state court, by order entered June 27th, 1903, appointed the Louisville Trust Company receiver, with authority to claim and take possession of the property and assets of the Post Company. By the same ...