Roth v. Bank of Commonwealth

Roth v. Bank of Commonwealth

Opinion

 [*528]  The principal and, we hold, controlling issue in this appeal is whether the Anti-Injunction Act, 28 U.S.C. § 2283 (1976), prevents a federal district court from enjoining the prosecution by the federal court defendant of In personam state actions where those actions were commenced after the institution of the federal suit but before the preliminary injunction was issued and where it is held that none of the three express exceptions in the Anti-Injunction Act applies. In granting the preliminary injunctive relief, the trial judge relied primarily upon Barancik v. Investors Funding Corp., 489 F.2d 933 (7th Cir. 1973). We decline to follow Barancik and accordingly reverse.

The individual plaintiffs in the district court action [**2]  were purchasers of certain investment contracts for the ownership and maintenance of polled Hereford cattle from the defendant Calderone-Curran Ranches, Inc. ("the ranch"). Between August 1970 and late 1973 investments in the cattle were  [*529]  publicly offered by the ranch pursuant to four separate registrations with the Securities and Exchange Commission and accompanying prospectuses. The four offerings were similar in nature except that the cost of the cattle and maintenance charges for the animals varied under each investment contract. Under the investment scheme the notes to the ranch, which were themselves secured by the animals purchased, were in turn pledged or assigned to the defendant Bank of the Commonwealth ("the bank") by the ranch as collateral for substantial loans advanced by the bank to the ranch between 1969 and 1973.

The ranch filed a petition for an arrangement under Chapter XI of the Bankruptcy Act on August 8, 1975 and was adjudicated a bankrupt on August 5, 1976. The bank is the principal secured creditor of the ranch.

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