Alexander v. Hillman, 296 U.S. 222 (1935)
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Alexander v. Hillman*
Nos. 15 and 16
Argued October 17, 18, 1935
Decided December 9, 1935
296 U.S. 222
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In a suit in the District Court in which receivers were appointed to collect and distribute the assets of a corporation, claims were filed by individuals who as directors and officers had controlled and dominated the corporation’s affairs, and by other companies also controlled and used by them. In response to the claims, the receivers filed in the same court an ancillary bill, separately numbered but not praying process, in which they set up counterclaims for the value of assets of the corporation which they averred the individual claimants fraudulently and in violation of their duties as officers and directors had, through complicated transactions, converted to the use of themselves and the two corporate claimants. Upon being served by mail with copies of the ancillary bill and an order directing them to plead to it, the claimants appeared specially and moved to quash upon the ground that they were inhabitants of another State, within the purview of § 51, Jud.Code.
Held:
1. The court had jurisdiction of the subject matter -- the claims and counterclaims. P. 237.
2. The ancillary bill, while in form not inappropriate for the commencement of a suit, served as a pleading in the main suit to put the claimants to proof of their claims and to assert the right of the receivers to affirmative relief. P. 239.
3. Causes of action arising from the derelictions of officers and directors of corporations, such as those alleged, are cognizable in equity for the reason that the receivers have no adequate remedy at law, and also because property was obtained fraudulently, and therefore cannot, in equity and good conscience, be retained. P. 240.
4. Both the individual claimants and the corporate claimants alleged to have been their tools are to be dealt with just as if they were technically trustees for creditors and stockholders. P. 240.
5. Judicial Code § 51, in the provision that
no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant . . . ,
is inapplicable, since the claimants were not summoned, but, by presenting their claims, waived the privilege conferred by that provision and subjected themselves to all the consequences that attach to an appearance. P. 240.
6. The provision of Equity Rule 30 with respect to counterclaims in answers does not cover counterclaims to claims filed against receivers, but the omission so to extend the rule gives rise to no implication that receivers may not assert and enforce, against those who appear and demand part of the res, counterclaims for portions of the receivership estate that they wrongfully took and still withhold. The right of the receivers to have affirmative relief in the receivership court is supported by the same, or at least similar and equally strong, reasons as those that constitute the foundation of the rule. P. 241.
7. As a general rule, equity, having jurisdiction of parties to a controversy, will decide all matters in dispute between them, and decree complete relief. P. 242.
8. Nothing is more clearly a part of the main suit in this case than recovery of all that belongs to the res; the matters in controversy may be tried and determined more conveniently in the receivership court than elsewhere. Pp. 242-243.
75 F.2d 451 reversed.
Certiorari, 295 U.S. 725, to review a decree modifying a decree of the District Court which dismissed for want of jurisdiction over the persons of the respondents an ancillary bill brought by receivers of a corporation setting up counterclaims against three individuals and two corporations who had presented claims.