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LION BONDING & SURETY CO. V. KARATZ, 262 U. S. 77 (1923)

U.S. Supreme Court

Lion Bonding & Surety Co. v. Karatz, 262 U.S. 77 (1923)

Lion Bonding & Surety Co. v. Karatz

Nos. 574, 467

Argued March 2, 1923

Decided April 23, 1923

262 U.S. 77


1. Insolvency of a corporation is not an equitable ground for appointing a receiver at the suit of a simple contract creditor. P. 262 U. S. 85. Pusey & Jones Co. v. Hanessen, 261 U. S. 491.

2. In a suit by a creditor alleged to be on behalf also of others similarly situated, seeking to collect a debt from an insolvent corporation through a receivership and by having the debt declared a lien on its assets, the amount in controversy, determining the jurisdiction of the district court, does not depend on the corporation's

Page 262 U. S. 78

assets or liabilities, but is the amount of the plaintiff's claim as shown by the.bill. P. 262 U. S. 85.

3. Where the bill discloses that the amount in controversy is less than the jurisdictional amount, a general allegation to the contrary is of no avail. Id.

4. A suit in the district court which is dependent on a receivership in the district court of another district fails with the dismissal of the bill in that case. P. 262 U. S. 87.

5. The provision of Jud.Code § 56 extending the operation of a receivership to other districts in the same judicial circuit applies where there is fixed property extending, as a unit, into different states, like railroads or pipelines, but not where the assets are those of an insurance company, described as cash, mortgages, securities, bills receivable, real estate, stocks and bonds. P. 262 U. S. 87.

6. The general rule is that a receiver cannot sue in a foreign jurisdiction, and this is not overcome by an order of the court appointing him purporting to embrace in the receivership all property of the defendant wherever situate, and authorizing the receiver to apply to other courts in aid of the order. P. 262 U. S. 87.

7. Where a state court of competent jurisdiction has, by appropriate proceedings, taken property into its possession through its officers, the property is thereby withdrawn from the jurisdiction of all other courts. P. 262 U. S. 88.

8. Where a state court of Nebraska, under Comp.Stats. Neb.1922, §§ 7745-7748, first took possession of records and assets of a local insurance company through the State Department of Trade and Commerce for the purpose of conducting the business temporarily, and later, by a supplemental decree made on a supplementary application, ordered the Department to liquidate it, held that receivers appointed by a federal court in the interim were not entitled to possession of the res, and that their suit in a federal court against the company and the Department for the purpose of acquiring possession could not be maintained, and that the legality of the state court's action in continuing its control could not be thus questioned or attacked collaterally. P. 262 U. S. 89.

281 F. 1021, 280 F. 540, reversed.

Certiorari to two decrees of the Circuit Court of Appeals, the first affirming a decree of the District Court for Minnesota appointing general receivers for a Nebraska insurance company, the second reversing a decree of the District Court for Nebraska which dismissed a bill

Page 262 U. S. 79

brought by the receivers for the possession of the company's property.

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