US SUPREME COURT DECISIONS

In a foreclosure suit, pending when the lands and property were in possession of a receiver, the State of Georgia, while declining to become a party, presented a petition asking that he be required to withdraw from the possession of a part of the property whereon executions for state taxes had been levied prior to his appointment. The petition was denied and dismissed. Held that the action of the circuit court cannot be reviewed upon the appeal of the state for the reason, if there were no other, that the order did not conclude the rights which she acquired by virtue of the executions or of the levies made thereunder.

The suit out of which this appeal arises, was commenced on the 15th day of February, 1877, in the Circuit Court of the United States for the Southern District of Georgia, by Morris K. Jesup, a citizen of New York, and the surviving trustee in a mortgage or deed of trust executed on the 20th day of December, 1867, by the Atlantic & Gulf Railroad Company, a Georgia corporation, conveying to trustees and the survivor of them its main line and certain branches, together with their appurtenances, rolling stock, equipment, etc., respectively, in trust to secure the payment of bonds in a large amount made by the company and payable on the 1st day of July, 1897, with interest semiannually at the rate of seven percent per annum. The deed contained the usual provisions requiring the trustees, upon default in the payment of the stipulated interest, to enforce the security for the benefit of the bondholders. The bill asked for the appointment of receivers, and accordingly, on the 20th day of February, 1877, an order was entered, appointing receivers of the entire property and effects of the railroad company embraced in the deed of trust or mortgage, with power, and charged with the duty to manage and operate the same, subject to the orders and directions of the court. The receivers took possession, and subsequently the order of February 20, 1877, made at chambers, was renewed and confirmed by an order of court entered on the 20th day of April, 1877.

A supplemental bill was afterwards filed enlarging the scope of the suit and asking a decree of foreclosure and sale.

On the 3d of June, 1879, the railroad and its branches, chanrobles.com-redchanrobles.com-red

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with their respective appurtenances, being then in the actual possession of and operated by the receivers under the direction of the circuit court of the United States, the State of Georgia, by its Attorney General, presented a petition stating that, prior to the appointment of the receivers, executions had issued from the office of its comptroller general against the railroad company for taxes alleged to be due the state, the validity of which taxes was contested by the company, and the issue arising thereon was then pending before the courts of the state; that two of such causes -- those involving the validity of the taxes for the years 1874 and 1875 -- were taken by the corporation upon writ of error to the Supreme Court of the United States, in which Court at its (then) last term, a judgment was rendered sustaining the right of the state to the taxes in question; that executions were also issued by the state against the company for the years 1876, 1877, and 1878, but as the grounds of defense were the same in each, the latter were allowed to rest and abide the decision in the two former causes, except that the execution for 1876 was in the hands of the sheriff, and had been levied upon certain property of the company before the appointment of the receivers in the foreclosure suit.

The prayer of the petition was that the state be allowed to establish these facts by reference to the records and proceedings in this cause, and also by the records and proceedings in the state courts and the Supreme Court of the United States

"for the purpose, and the purpose alone, of showing, as the state claims, that this Honorable Court has no jurisdiction under the law, by its process of the appointment of receivers or otherwise, to hinder, delay, or prevent the execution of the process provided by the law of the state for the collection of its revenue. . . . The said State of Georgia,"

the petition proceeds,

"in obedience to that comity and respect that should govern her courts toward those of another concurrent jurisdiction and to promote that harmony which should ever prevail between herself, as one of the members of this Union, and the federal government, respectfully insists that she cannot be required, in order to obtain her rights in the premises, to become a party complainant or defendant in the litigation now

Page 106 U. S. 460

pending before this Honorable Court, because, as she maintains:"

"1. This Court has no jurisdiction, by the powers of injunction or otherwise, to hinder, delay, or prevent the collection of her revenue."

"2. As the record shows that certain executions had been levied by the sheriff in obedience to process from the state courts, upon which issues had been joined by the defendant corporation, their jurisdiction could not be affected by a suit filed subsequently in the courts of the United States, [and] the appointment of receivers and a sale by the latter jurisdiction would be inoperative and void."

"3. It is against public policy to require a state, in the collection of her revenue, to await the slow and tedious process necessary to determine the numerous issues made in this cause between private litigants."

The prayer of the state was that the court pass such an order as would fully protect its rights in the premises.

The record contains no part of the proceedings in the causes in the state courts to which the state's petition referred. All that it contains in the way of documents or papers relating to taxes against the company are certain executions from the office of the Comptroller General of Georgia, with the returns thereon, viz., an execution for the taxes of 1874, amounting to $32,764.10, returned by the sheriff, levied, October 6, 1874,

"upon lots No. 23 and 24, Atlantic Ward, City of Savannah, county and state aforesaid, and will sell the said described property on the first Tuesday in November, 1874, before the courthouse door, in terms of the law;"

an execution for the taxes of 1875, amounting to $8,754.55, returned levied November 15, 1875,

"upon the buildings known as the machine shop, locomotive house, and car shop, situate, lying, and being at the Atlantic and Gulf Railroad depot in the City of Savannah, county and state aforesaid, and will advertise and sell the same, in terms of the law, the property of the defendant;"

the execution for the taxes for 1876 for $9,080.31, $18,160.62 penalty for default in paying the tax, returned, as levied, January 8, 1877, upon lots 23, 24, 33, and 36, in Savannah; the execution for taxes for 1877, amounting to $9,333.12, and $27,990.36 as a penalty for nonpayment of taxes and costs, the last execution being returned, "property, by order and decree of the United States court, in the hands of receivers," and execution chanrobles.com-redchanrobles.com-red

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for taxes of 1878 for $7,070.26, and $21,228.78 as penalty for nonpayment of taxes and costs. Upon this last execution no return appears to have been made.

On the sixth day of June, 1879, this order was made in the court below:

"The State of Georgia, having petitioned for leave to proceed with certain executions for taxes, after argument and consideration, it is ordered and decreed that the said petition of the State of Georgia be denied, and the same is hereby dismissed."

On the same day a final decree of foreclosure was made, by which, among other things, it was, in substance, declared that the company was indebted to the state in the following principal sums for taxes: for 1874, $32,764.71; for 1875, $8,754.55; for 1876, $9,080.31; for 1877, $12,441.16; for 1878, $7,076.26; in all, the sum of $70,116.99 -- the sums specified in the several executions for taxes, omitting the penalties claimed in those for 1876, 1877, and 1878. It was further declared that the company was liable for the principal of such tax as might be assessed by the comptroller general of the state for the year 1879; that such taxes were prior to all other liens, except judicial costs, and should be paid out of the proceeds of sale and any balance of money and assets in the hands of the receiver, next after the payment of such costs, and that neither penalties or interest were due on the taxes for any of the aforesaid years.

Afterwards, on the 22d of August, 1879, the state presented to the court its petition for appeal, as follows:

"The State of Georgia having filed a petition denying the jurisdiction of said circuit court of the United States and claiming the right of said state to proceed with said executions notwithstanding the property of said defendant corporation was in the possession and control of said court through receivers appointed thereby, and the said circuit court having passed a decree, so far as the rights and claims of said state in the premises were concerned, denying and refusing said claim set up, and said State of Georgia, being advised that she has a good and valid cause of appeal, now comes . . . and prays this Honorable Court to grant an appeal in said cause to the Supreme Court of the

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United States, on such terms and conditions as required by law."