Appeal from the District Court of the United States for the District of New Jersey; William H. Kirkpatrick, Judge.
Before WOOLLEY and DAVIS, Circuit Judges, and THOMSON, District Judge.
It must, of course, be understood, that the decision of the court in the proceedings in which the receivers were appointed is not open for reconsideration, either directly or indirectly, on these appeals. That chapter is closed. The well-established principles of the law, as there enunciated and applied, fully justify the conclusion reached, if any justification is necessary.
But in order to better understand the present status of the parties, and their resulting rights, a brief review of the action of the court in that case, and the legal situation which impelled that action, might be of value here.
The central, and practically the sole, question for determination in this case, is the question of the court's jurisdiction in the original action. That being determined, there is no question as to the legal results which follow.
William J. Robb, the plaintiff, filed, on February 25, 1925, an unverified bill against the corporation, supported as to certain averments by his own accompanying affidavit, praying for the appointment of receivers and an injunction against the corporation and its officers, based mainly on its alleged insolvency.Immediately, on the same day, the court, without notice to the Noxon Company, or to any of its stockholders or creditors, and without verification of the allegations of the bill as to insolvency, etc., entered a final decree on the merits, appointed receivers, and issued an injunction against the defendant and its officers in the broadest possible form, preventing them from exercising the company's franchises or doing business of any kind.
It will be observed that in addition to the fact that the defendant was not before the court when the receivers were appointed and the injunction issued, there was not even a notice to the defendant to show cause.The only notice required in the decree was a rule on the creditors and stockholders to show cause why the receivers should not be continued, a copy of the decree being directed to be mailed to such creditors and stockholders.
Without elaboration of the facts set forth in our former opinion, on which the judgment therein was based, an examination of the record discloses with clearness that no subsequent act of the corporation could in any way be construed as an approval or ratification of the proceedings, by which its property was wrested from it, without notice or an opportunity to be heard.
We thus reach the question of jurisdiction.
The elements of jurisdiction, as laid down in Corpus Juris, vol. 15, p. 734, are: (1) The court must have cognizance of the class of cases to which the one to be adjudged belongs; (2) The proper parties must be present; (3) The point to be decided must be in substance and effect within the issue.
It is further stated that in a personal action, jurisdiction of the subject-matter and of the person are absolutely essential to the power of the court to decide a legal controversy. Unless both exist, it is the imperative duty of the court to decline to do more than ascertain and declare that it has no power to examine and decide the merits of the case.
With reference to jurisdiction of the subject-matter, or cause of action, it is stated: "Jurisdiction of the subject matter is the power to hear and determine cases of the general class to which the proceedings in question belong; the power to deal with the general subject involved in the action."
In the sense in which the term is ordinarily used, jurisdiction may be concisely stated to be the right by a court to act and adjudicate concerning the ...