Johnson v. Manhattan Railway Co.

Background

A company suing to preserve and manage a struggling transit company asked a court to appoint receivers — people or entities who take over operations to protect assets for creditors and the public. A senior federal circuit judge assigned himself to the district court, heard the receivership applications, and named individual receivers. Other local district judges had adopted rules directing such applications to a particular judge or barring assigned judges from acting without senior district judge approval, and some local litigants then sued to void the senior judge’s orders.

Reasoning

The Court addressed whether a senior circuit judge may assign himself to sit in a district court when he concludes the public interest requires it, and whether local district rules can defeat that assignment. Relying on the statutory assignment power and long-standing practice, the Court held the assignment was valid, the assigning judge’s finding that public interest required it is conclusive in a collateral attack, and district rules that conflict with the federal assignment statute could not prevent an assigned judge from acting to appoint receivers in that case.

Real world impact

The decision leaves in place the receivership orders and prevents collateral suits from undoing them unless it is shown the judge lacked statutory power. It affects parties in large receiverships, district judges, and assigned circuit judges by confirming that federal assignment statutes prevail over conflicting local rules. The Court also emphasized that this assignment power should be used rarely and with care given the sensitivity of large public-property receiverships.

Dissents or concurrances

One Justice concurred in the result; two Justices did not participate. The opinion urged the assigned judge to consider withdrawing to avoid continuing embarrassment.