Pierce Butler

“ The plaintiffs own 4,000 common and 10,850 preferred shares of its stock. August 25, 1932, the court entered a decree that defendant's business be wound up and its properties converted into money and distributed to its creditors and shareholders, appointed petitioners receivers, and directed a special master to state an account and to report to the court all claims against defendant. Respondents have presented claims. Petitioners oppose their demands and by counterclaims ask affirmative relief. ”

“ None of the transactions occurring since its first decision has been to the advantage of the Tower Hill Companies. The purchase of the Emerald stock was definitely harmful. Assets are hardly more than enough to pay preferred stockholders. ”

“ It is clear that, under the circumstances disclosed, the restrictions laid by the Circuit Court of Appeals upon the receivership court are not consistent with that freedom as to procedure that necessarily belongs to courts of equity administering receiverships. See Portland Wood Pipe Co. v. Slick Bros. Const. Co., supra. Its decree will be reversed and the case remanded to the District Court, with directions to proceed in accordance with this opinion. ”

“ The preferred stock of the West Virginia Tower Hill was, in preference to the common, entitled to cumulative dividends at the annual rate of $6 per share, and, upon distribution of assets, par plus unpaid dividends. ”

“ Distribution may not be made without decision upon the counterclaims. Nothing is more clearly a part of the subject-matter of the main suit than recovery of all that to the res belongs. Gasquet v. Fidelity Trust & Safety Vault Co., supra, 57 F. 80, 83, 84; Peck v. Elliott, supra; Hollander v. Heaslip (C.C.A.) 222 F. 808, 811.
The Circuit Court of Appeals rightly held that the District Court has jurisdiction to pass on all defenses against respondents' claims, but erred in holding it to be without jurisdiction to grant affirmative relief. ”