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PENNSYLVANIA V. WILLIAMS, 294 U. S. 176 (1935)

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U.S. Supreme Court

Pennsylvania v. Williams, 294 U.S. 176 (1935)

Pennsylvania v. Williams

No. 394

Argued January 14, 1935

Decided February 4, 1935

294 U.S. 176


1. A bill of complaint brought by a shareholder for the appointment of receivers to liquidate an insolvent building and loan association, allegations of diversity of citizenship and requisite jurisdictional amount being unchallenged, is within the jurisdiction of the federal District Court. Jud.Code, § 24; 28 U.S.C. § 41(1). P. 294 U. S. 180.

2. Whether a shareholder of the insolvent corporation, rather than a judgment creditor, may properly bring the suit, and whether under the state law the present shareholder has the status of a creditor, are questions which go to the propriety of the action of the court as a court of equity, and not to its jurisdiction as a federal court. P. 294 U. S. 181.

3. Objection to the equity jurisdiction of the District Court may be waived by the parties by consent or by failure to make it seasonably. P. 294 U. S. 181.

4. The authority of the federal District Court to hear and make disposition of a cause within its jurisdiction is not subject to collateral attack, nor to diminution or control by state statutes, and error in the exercise of that jurisdiction can be remedied only by appeal. P. 294 U. S. 182.

5. A shareholder in an insolvent Pennsylvania building and loan association brought a bill of complaint in the federal District Court for that State, alleging diversity of citizenship and the requisite jurisdictional amount and praying for the appointment of receivers to liquidate the business and for an injunction restraining creditors and others from interfering with or taking possession of the property. Statutes of Pennsylvania provided a procedure for the liquidation of such associations, under the direction of a Secretary of Banking and substantially similar to receivership proceedings in the federal courts. There was no contention that the state procedure was inadequate, or would not be diligently and honestly followed. Held, upon the petition of the Commonwealth invoking its discretion, the District Court should have relinquished its jurisdiction in favor of the state administration of the corporate assets by the state officer. Pp. 294 U. S. 182, 294 U. S. 186. chanroblesvirtualawlibrary

Page 294 U. S. 177

6. The public interest require that federal courts of equity exercise their discretionary power with proper regard for the rightful independence of state government in carrying out their domestic policy. P. 294 U. S. 185.

7. A federal court of equity should be slow in the exercise of jurisdiction when it involves an unnecessary interference by injunction with the lawful action of state officers. P. 294 U. S. 185.

8. In the present case, the District Court may retain jurisdiction only for the purpose of directing the surrender of the assets and property with all convenient speed to the state officer, the receivers to retain only sufficient of the assets to pay their reasonable fees and any obligation lawfully incurred by them, and for the purpose of promptly discharging the receiver and settling their accounts, whereupon the suit should be dismissed. P. 294 U. S. 186.

72 F.2d 509 reversed.

Certiorari, 293 U.S. 547, to review a judgment affirming a judgment of the District Court, 4 F.Supp. 779, denying the Commonwealth's petition for leave to intervene in a proceeding for the liquidation of an insolvent building and loan association and for an order directing the federal court receivers to surrender the assets to the state Secretary of Banking.

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