Magid v. Westmoreland
Magid v. Westmoreland
Opinion of the Court
The only thing for decision by this court is the granting of an injunction against a proceeding in the state court. With reference to the suit of Westmoreland, all contention has been adjusted, and that is eliminated from the decision; it being stated that that proceeding has been abandoned,'except so far as it may involve the costs and $200 deposited in the state court, over which this court could not, in any event, have any control.
With reference to the other state court proceeding, it is claimed that the prohibition of ’ injunctions contained in section 265 of the Judicial Code (Comp. St. § 1242) is not applicable because the proceeding in the state court seeks to disregard adjudications made in this court and to invalidate a title decreed and conveyed by this court. The right and the propriety of enjoining proceedings in the state courts, which do have the effect of invalidating adjudications made in the federal courts and sales made by them is not open to doubt. The question with which I am confronted is whether or not this proceeding does do that.
In the federal court a mortgage was foreclosed for the benefit of bondholders. Great difficulty was experienced in finding a purchaser for the mortgaged property, but no general reorganization was undertaken or submitted to the court for its approval. The bondholders organized themselves into two classes, one represented by a committee, and another which may be referred to as the Magid interests. Upon the first effort at sale the Magid interests were the successful bidders at a price- of $210,000. This bid, however, was made on the faith of an erroneous recital in the decree of foreclosure that mortgage coupons owned by them had precedence. When, upon deliberate adjudication, it was held otherwise, the Magids were allowed to withdraw their bid, and the property was again put to sale. This time it brought $200,000 upon the bid of the bondholders’ committee. That bid was confirmed, after certain delays and upon complaints of certain parties, the court ordering it to be consummated and carried out. The bondholders’ committee had difficulty in raising the cash necessary to complete the payment of the bid, having deposited all bonds controlled by them as part payment. They finally seem to have made an arrangement with S. M. Magid, who theretofore had not been a participant in the proceedings, whereby their bid was transferred to him and he carried out the payment of cash and received the deed.
While much of the negotiation was brought to the attention of the court, no element or part of it was submitted to adjudication. The fair effect of all the orders is that the court was insisting upon the performance of the bid and that Magid and the bondholders’ committee had made arrangements satisfactory to themselves whereby the bonds already deposited should be retained as part payment, and Magid should pay the balance of the bid and receive a deed for the property in his name. This was done. The receiver’s deed recites the payments made by the various parties, and then conveys the property to S. M. Magid, and the deed purports to convey only the title held by the Appalachian Corporation, held and enjoyed, or entitled to be held and enjoyed, by it, or of which it was seized at the time of the entry of the original foreclosure decree, or at the time of the commencement of the suit in which said decree was entered, and as fully and absolutely as said receiver may or ought by virtue of said decree and appointment sell, release, and convey it. I do not find in this deed any effort to convey any title save that of the corporation, or to affect in any manner the rights as between themselves of other parties to the litigation.
It seems to me that there is nothing in this situation to justify the interference by this court with the forum selected by the parties to litigate this other collateral dispute. An injunction will accordingly be refused. •
Reference
- Full Case Name
- MAGID v. WESTMORELAND
- Status
- Published