NOTE.

RESTRAINING PROCEEDINGS IN STATE COURTS. This section applies to the restraint of suits, which, but for the injunction, the state court would have jurisdiction over, (In re Long Island, etc., Trans. Co. 5 FED. REP. 628,) and only such as are commenced in a state court before proceedings in the federal court have been commenced, (Fisk v. Union Pac. R. Co. 10 Blatchf. 518;) for, if a suit be commenced in the federal court, subsequent proceedings in a state court may be restrained. Id. "Proceedings" include all steps taken in a suit from its inception to final process. U. S. v. Collins, 4 Blatchf. 142. This section is an inhibition against staying a party in the conduct of the proceedings in a state court, as much as an inhibition against an injunction, mandamus, or prohibition directed to the state court, (Fisk v. Union Pac. R. Co. 6 Blatchf. 362;) and its interpretation is restricted by sections 640 and 646 of the Revised Statutes to cases where the jurisdiction of the courts of the United States is originally invoked for the purpose of staying proceedings in the state courts. Perry v. Sharpe, 8 FED. REP. 24. RESTRICTION OF AUTHORITY. A court of the United States cannot enjoin proceedings in a state court. Diggs v. Wolcott, 4 Cranch, 179; Rogers v. City of Cincinnati, 5 McLean, 337. So the supreme court cannot enjoin proceedings in a subordinate state court, although it has allowed a writ of error to the judgment of the appellate court. The Slaughter-house Cases, 10 Wall. 273. The circuit court has no jurisdiction over the proceedings of a state court. Bridges v. Sheldon, 18 Blatchf. 517; Watson v. Jones, 13 Wall. 679. Although the circuit court has no jurisdiction over proceedings in a state court, yet this section does not prevent it from releasing a defendant from process out of a state court violating its protection, or to prevent abuse of its privileges. Bridges v. Sheldon, 18 Blatchf. 517; S. C. 7 FED. REP. 45; Hurst's Case, 4 Dall. 387. So a circuit court may restrain parties from taking out criminal process under a state law which impairs the obligations of contracts, (Louisiana State Lottery Co. v. Fitzpatrick, 3 Woods, 222;) nor does this section prohibit the district court, after a transfer of the ship and freight under the "limited-liability act," from restraining the prosecution of any suit growing out of the disaster theretofore commenced and then pending in a state court, (In re Long Island, etc., Trans. Co. 5 FED. REP. 627.) A circuit court cannot issue an injunction to stay proceedings in a state court. The Slaughter-house Case, 1 Woods, 21. An injunction to restrain suits in the state court for the collection of taxes will not be granted, (Moore v. Holliday, 4 Dill. 52;) but, under special circumstances, a temporary injunction to restrain the collection of retrospective taxes was allowed. Id. Although a party files a bill of interpleader, yet he cannot restrain a defendant from prosecuting an action pending in the state court. City Bank v. Skelton, 2 Blatchf. 14. Where the jurisdiction of a court and the right of a plaintiff to prosecute his suit have once attached, that right cannot be arrested or taken away by proceedings in another court. Peck v. Jenness, 7 How. 625. So, if a marshal is sued in a state court for taking the goods of a third person on a writ of execution, the proceedings against him cannot be enjoined. Evans v. Pack, 7 Cent. Law J. 409. This section prohibits the issue of an injunction to restrain the sale of property under an

execution issued out of a state court, although application is made by a third party whose property is taken. Watson v. Bondurant, 2 Woods, 166; S. C. 30 La. Ann. 1; Daly v. The Sheriff, 1 Woods, 175; Perry v. Sharpe, 8 FED. REP. 23; contra, Cropper v. Coburn, 2 Curt. 465. The holder of a chattel mortgage cannot enjoin the sheriff from selling the property under execution on a judgment against the mortgageor. Ruggles v. Simonton, 3 Biss. 325. Courts of the United States have jurisdiction over executors and administrators where the parties have the requisite citizenship, and this jurisdiction is not barred by subsequent proceedings in insolvency in the state court. In such case the courts may interpose in favor of a foreign creditor to arrest the distribution of any surplus of the estate of decedent. Green v. Creighton, 23 How. 90. See Youley v. Lavender, 21 Wall. 276; January v. Powell, 29 Mo. 241.

ON CAUSE REMOVED. A circuit court will not order a stay of all proceedings in a state court in a cause removed into the circuit court, (Fisk v. Union Pac. R. Co. 6 Blatchf. 362; Perry v. Sharpe, 8 FED. REP. 23;) but after removal it has jurisdiction to continue in force an injunction allowed by the state court before the removal. Smith v. Schwed, 6 FED. REP. 458; and see Rev. St. §§ 640, 646; Act of March 3, 1875, § 4; 18 St. 571. If plaintiff, after removal, brings an action in the state court, upon a judgment rendered therein before removal, defendant may file a bill in the circuit court to restrain the proceedings. French v. Hay, 22 Wall. 250. Where a state court improperly refuses a petition for removal, and renders final judgment in a replevin suit, and orders plaintiffs to restore the property, and, on their refusal to do so, defendant sues on the replevin bond, the federal court may restrain the proceedings on such suit, the injunction being merely an ancillary proceeding, and not forbidden by this section. Kern v. Hindekoper, 2 Morr. Trans. 618. IN BANKRUPTCY COURTS. Except in cases arising under the bankrupt law a court of the United States cannot enjoin a party from proceeding in a state court, (Haines v. Carpenter, 91 U. S. 254; Dial v. Reynolds, 96 U. S. 340; Chaffin v. St. Louis, 4 Dill. 19; Tifft v. Iron-clad Manufacturing Co. 16 Blatchf. 48; Hyde v. Bancroft, 8 Bank. Reg. 24;) but it has been held that the bankrupt act does not authorize district courts to issue injunctions to state courts, nor to actors or parties litigating before them, (In re Campbell, 1 Bank, Reg. 166; In re Burns, Id. 174; Peck v. Jenness, 7 How. 625; Erwin v. Lowry, 7 How. 172;) and that a state court having acquired jurisdiction a United States court has no authority to oust it, (Clark v. Bininger, 3 Bank. Reg. 518; Tenth Nat. Bank v. Sanger, 42 How. Pr. 170; Ex parte Dudley, 1 Pa. L. J. 302.) The express authority of bankruptcy courts to restrain proceedings in state courts under the bankrupt law extends only to suits against the bankrupt himself, (Rev. St. § 5106; Gilbert v. Quimby, 1 FED. REP. 114;) and the implied authority extends only to proceedings to realize the assets and bring them into the custody of the bankrupt court, (Rev. St. § 4972; Gilbert v. Quimby, 1 FED. REP. 114.) So, although a party has issued an attachment from a state court to reach a dividend in bankruptcy, he cannot be restrained by injunction from the federal court. Gilbert v. Quimby, 1 FED. REP. 111. It may prohibit a creditor by injunction from proceeding under an execution issued out of a state court, (Irving v. Hughes, 2 Bank. Reg. 61;)

or enjoin a sheriff and parties litigant from selling the property on execution, (In re Mallory, 61 Bank. Reg. 22; In re Lady Bryan Min. Co. 6 Bank. Reg. 252; In re Atkinson, 7 Bank. Reg. 143.) It may allow the goods to be sold under the execution or may enjoin proceedings thereunder. In re Schnepf, 1 Bank. Reg. 190. Before the appointment of assignees the petition for the injunction must be filed by the bankrupt, but after their appointment it may be filed by the assignees. In re Bowie, 1 Bank Reg. 628. The commencement of the bankruptcy proceedings operates as a supersedeas of process in the hands of the sheriff, and an injunction against all other proceedings until the question of the bankruptcy shall be disposed of. Jones v. Leach, 1 Bank. Reg. 595. The bankrupt court may restrain a claimant of a lien obtained by collusion with the bankrupt from proceeding elsewhere to enforce the lien. Samson v. Clark, 6 Bank. Reg. 403. The control of the district court, sitting in bankruptcy, over proceedings in the state court over liens and mortgages existing upon the property of the bankrupt, is exercised, not over the state courts themselves, but upon the parties, through injunction or other appropriate proceedings in equity. Ex parte Christy, 3 How. 292. Where the circuit court has jurisdiction of a case in bankruptcy, an error in granting an injunction can only be reviewed after a final decree. Ex parte Schwab, 98 U. S. 240.-[ED.

FARMERS' LOAN & TRUST Co. v. OXFORD IRON Co. and others.

(Circuit Court, D. New Jersey. July 20, 1882.

FORECLOSURE SALE-POSTPONEMENT.

Where the sale of mortgaged premises under a foreclosure decree, appointed for a particular date, would be ultimately detrimental to all interests to all interested, and good cause is shown therefor, the petition of defendants for a postponement of the sale to a future day fixed will be granted.

In Equity.

Turner, Lee & McClure, for complainants.

Cortlandt & R. Wayne Parker, for defendants.

NIXON, D. J. This matter is before me on the petition of the Oxford Iron Company, and the firm of Selden T. Scranton & Co., defendants in the above suit, praying that the sale of the mortgaged premises be further postponed.

It appears that on the first of April, 1876, the Oxford Iron Company, a corporation of the state of New Jersey, doing business at Oxford, in the county of Warren, and being the owner in fee of certain real estate, including farms, lands, mines, and mining rights, situate in the said county of Warren, caused to be issued bonds of the corporation amounting in the aggregate to $750,000, payable April

1, 1896, with interest semi-annually, at the rate of 7 per cent. per annum, on the first days of October and April; and at the same time duly executed a mortgage to the Farmers' Loan & Trust Company, a corporation of the state of New York, upon all its real estate and appurtenances, to secure the payment of the said bonds and accruing interest. Only a small portion of these bonds were sold, the bulk being assigned and pledged by the company to its numerous creditors as collateral security for loans made, or for its general indebtedness in carrying on its business. Owing to the great depression in the iron trade of the country, and especially in that department of industry which the Oxford Company was organized to carry on, it failed to meet its liabilities, and became so much embarrassed in September, 1878, that the chancellor of the state, on proper proceedings before him, issued an injunction restraining its officers from any further exercise of the franchises of the corporation, and appointed Mr. Benjamin G. Clarke receiver.

The company failing to pay the interest on the bonds as it fell due, the Farmers' Loan & Trust Company, the trustee, at the request of a large majority of the holders, filed a bill in this court for the foreclosure of the mortgage, and a final decree has been entered for the sale of the mortgaged premises,-the decree setting forth that there was due to the complainant corporation, in trust for the several bondholders, the sum of $171,377.50, for interest. thereon to October 1, 1881; that none of the principal of said bonds was due; that the mortgaged premises were so situate that they could not be sold in parcels without prejudice to the parties interested in procuring the highest and best price for the same; and that a part could not be sold to satisfy the amount due without a material injury to the remaining part. Execution was duly issued thereon, directed to the marshal of the district, and he has advertised the whole of the premises to be sold on the twenty-first of July instant.

The petitioners represent that the mortgaged premises are a very valuable property, costing the company upwards of $1,700,000, and that their sale, at the present time and under existing circumstances, would be alike disastrous to the interests of the corporation and its creditors:

(1) Because such a sale should not take place in midsummer, when business is largely suspended, and capitalists and business men are away at the usual summer resorts. (2) Because the receiver, who has had the manage ment of the affairs of the company, under the supervision of the chancellor of the state, since 1878, and to whom purchasers would naturally apply in

endeavoring to ascertain the value of the plant, is absent in Europe, and will not return before the first week in September. (3) Because persons proposing to purchase, and making inquiries in regard to the productive value of the property, would be misled by the last report of the business, filed by the receiver in the court of chancery, for the year ending September 1, 1881; that although said report shows upon its face a loss of $25,000 from carrying on the business during the previous year, there was, in truth, a gain for the year; that the apparent deficiency was caused by the receiver applying about $10,000 of the profits to the building of a new and more efficient blast-furnace, to the permanent betterment of the plant. (4) Because the accounts of the managing superintendent show that the receiver has now got the property in such good working order that during the months of the current year its average profits have been little short of $10,000 per month; and that the receiver's report to be made to the chancellor on the first of September next will reveal such net profits as greatly to enhance the value of the premises in the estimation of purchasers at the sale. And (5) because the petitioners are now engaged, with good prospect of success, in forming a syndicate to purchase the mortgaged premises at such a price as will relieve them of all embarrassment and enable them to meet their liabilities in full, with the corporate and partnership assets, without the sacrifice of their private estate.

These different grounds are supported to some extent by the testimony, but the fact in the case which largely influences me to grant the motion is this: On the hearing of the rule to show cause why the adjournment should not be ordered, Judge Hand appeared for the bondholders, to resist the postponement, and in reply to the suggestion of the counsel of the petitioners, that no bidders could be got to the sale at this season of the year, he stated that the bondholders had formed a combination for mutual protection of interests, and, if needs be, would make the property bring at least a half million of dollars; and that the confirmation of the sale was with the court, and if the price was not satisfactory, any sale would be nugatory. Now, I think, it would be ultimately detrimental to all interests to have a sale take place which the court could not approve, because of the inadequacy of the price. Experience has shown that such judicial interferences, in the absence of fraud, are ordinarily not successful in promoting the end which is sought to be accomplished; but if the sale should go on under the present circumstances, and a bid not exceeding the amount suggested was obtained, and proceedings were taken to hinder a confirmation, I should regard the reasons stated and the arguments used for the postponement as of much force when urged against the confirmation of the sale. It is better for all parties that the court should listen to them now, rather than then.

The rule to show cause is made absolute.