Petition for rehearing and motion to modify judgment in this
case,
ante, p.
208 U. S. 38,
denied and further held in this case that:
Where property is in possession and under the control of the
federal court, the declaration of a lien upon that property is a
step toward the invasion of the court's possession thereof, and is
equally beyond the jurisdiction of the state court as an order for
the sale of the property to satisfy the lien would be.
In a proceeding in the state court, the ascertainment of the
amount due, whether judgment can be rendered, and the issuing of
execution against a corporation, whose property is under the
control of the federal court are questions exclusively for the
state court, and may be regarded as independent of the proceedings
for the enforcement of the lien.
Where claims are presented for adjudication to the circuit court
against property in its possession and there are conflicting
decisions of the state and federal courts as to the rights of the
parties, the circuit court must first determine which decision it
will follow. This Court cannot pass upon that question until it is
properly before it.
After the decision in this case, reported
208 U. S. 208 U.S.
38, the defendants in error petitioned for a rehearing and moved,
if that were denied, that the judgment be modified. The substance
of the motion was stated by counsel to be that the judgment should
be modified
"by specifically directing that the Supreme Court of Ohio affirm
so much of the judgment of the Circuit Court of Lucas County, Ohio,
as finds and adjudicates the rights of these defendants in error,
and each of them,
Page 208 U. S. 610
against the property and parties in said cause, as set forth in
the judgment entry, respecting the equities of the cause and right
of recovery, the ownership and the lien of the equipment bonds, and
the sums due thereon to the parties, respectively, with interest
and costs, and by further specifically directing that said Ohio
supreme court reverse the judgment of said circuit court so far as
it directs a seizure and sale of the property held by the plaintiff
in error in Ohio and affected by such lien, and limit the rights of
the defendants in error to the recovery on such modified judgment
in the federal circuit court found by this court to have
jurisdiction of the property."
MR. JUSTICE MOODY delivered the opinion of the Court.
In the original decision of this cause, we treated the
proceeding in the state court as one whose sole direct purpose was
to procure a sale of the railroad property in satisfaction of the
lien which the holders of the equipment bonds asserted against it.
We assumed that the judgment of the state court was one for the
sale of the property, and that the adjudication of the amounts due
the plaintiffs below, and of the existence of the lien claimed,
were merely incidental and preliminary to the judgment ordering the
sale. Believing, for the reasons given in the opinion, that such a
judgment was beyond the jurisdiction of the state court, we
reversed it. That such a conception of the proceeding and judgment
was not unnatural or strained appears quite clearly from a passage
in the brief of the learned counsel for the defendant in error,
filed in support of this motion. There it is said:
"No one can read the
Page 208 U. S. 611
foregoing abstract of the petition or the petition itself
without observing its purpose to set up the lien of the equipment
bonds with all other liens, also, to have the amount found due on
the equipment bonds sued on, and to enforce payment through sale of
the property, subject only to the liens of the two prior Ohio
mortgages and two prior Indiana mortgages; also, to have an
accounting and marshaling of liens and a distribution of the
proceeds. Plainly, then, the action contemplated the ultimate
seizure and sale of all the property now in question, subject only
to two underlying mortgage liens."
It is, however, urged that the judgment of the court below
should be directed to stand so far as it found the amount due to
the several plaintiffs in respect of the equipment bonds held by
them, and so far as it declared that those bonds were entitled to a
lien upon the property to secure payment. But, after renewed
consideration of the cause, we decline to modify our general
judgment of reversal. For the purpose, however, of avoiding
misunderstanding, and in hope that this prolonged litigation may be
hastened to an end, we think it fitting, without extended
discussion, to add a few observations to what was said in the
former opinion.
1. The declaration of a lien on the property is a step toward
the invasion of its possession, which we have held to be beyond the
jurisdiction of the state court. It was sought not for itself,
since it would have no significance except as a basis for the order
of sale of the property affected by it, but only as an essential
part of the order itself. The declaration of the lien must stand or
fall with the order of sale, and is therefore, with that order,
beyond the power of the state court.
2. The ascertainment of the amount due to the plaintiffs on the
issue of an execution against the Toledo, Wabash & Western
Railway Company may be regarded as independent of the proceedings
for the enforcement of the lien. Whether such a judgment can be
rendered upon a proceeding of this nature (
Giddings v.
Barney, 31 Ohio St. 80) is a question exclusively for the
state court.
Page 208 U. S. 612
3. If the claims of the defendant in error should be presented
to the circuit court of the United States, the question would arise
whether that court, in determining the rights of the bondholders
against the property, should follow the decision of this Court
(
Wabash, St. Louis & Pacific Railway Co. v. Ham,
114 U. S. 587), or
the decision of the state court (
Compton v. Railway
Company, 45 Ohio St. 592). That question is not here, has not
been argued by counsel, and we cannot now properly decide it. We do
not express or intimate any opinion upon it. It must, in the first
instance, be passed upon by the circuit court.
The petition for rehearing and the motion to modify the judgment
are
Denied.
