the month of September, 1878, he loaned to the defendant James H. Marley $5,000, with the promise to complainant that the bond and mortgage to be given by Marley as security for the loan should be made directly to her as part of said settlement; that the bond and mortgage were in fact executed by Marley and wife to John F. Boylan, who shortly afterwards, in pursuance of an understanding and agreement with her husband, signed, sealed and acknowledged an assignment of the same to the complainant, whereby the title to the mortgage became vested in her; that afterwards, on demand, he refused to surrender the papers to her, claiming ownership in himself, by purchase for valuable consideration from Elisha Ruckman, which she charges is a mere contrivance between the defendant Boylan a.nd her husband to deprive her of the benefit of the gift. The prayers of the bill are, (1) that the defendant Elisha Ruckman may be decreed to pass over to the complainall't the bond and mortgage, if the same are in his possession or under his control; (2) that the defendant John F. Boylan may be decreed to deliver up to complainant the bond, mortgage and assignment thereof, if the same continue in his possesion or under his control; (3) that if the assignment heretofore made by the said Boylan to the complainant has been destroyed, he may be decreed to execute and surrender to her a second assignment, so as to fully vest the legal title in her; (4) that as between the complainant and defendants Ruckman and John F. Boylan, and every person who has obtained a secret interest in the bond and mortgage, a decree may be made vesting the title, Ilnd the debt secured by the same, in the complainant; and (5) that it may be decreed in what sum the said Marley was indebted to the complainant upon said bond and mortgage, and thai; he may be protected by a decree from all loss in the pay--nent of the mortgage debt to the complainant. The answer of Boylan admits the due execution of the bond and mortgage to him by Marley and wife, and states that he had no interest in the transaction at that time, as Ruckman furniehed the money for the loan; that he understood, either
BUOKMAN V. BUCKMAN.
from his father or Ruckman, that the object in taking the mortgage in his name was to avoid any liability to attach· ment of the debt by one Burgholtz, a judgment creditor of Ruckman; that at the request of Ruckman he executed and delivered to him, about the same time, an assignment of the bonq and mortgage to 'the complainant; that Ruck· man held them until February or March, 1879, when he pro. posed to return to him the assignment of said bond and mortgage, cancelled and destroyed, and to redeliver to him that he (Boylan) ,the bond 'and mortgage, in should give to him his promissory notes for the said sum of , $5,000, bearing even date with the bond and mortgage, and payable in one year; that, regarding the bond and mortgage as a good investment, he accepted the offer, delivered · his notes in good faith, and took the papers in his possession as his own property, and that he still holds the same. It thus appears that the subject.matter of the suit is the ownership of the bond and mortgage, which is claimed by the complainant on the one hand, and by Boylan on the other. They are citizens of different states. The pleadings reveal a controversy in the suit "wholly between them," and which can be "fully determined as between them," and in which the petitioner Boylan "has an actual interest." These facts bring it within the second clause of the second section of the act of 1875, unless it ceases to be It suit between citizens of different states, because there happens to be other defendants in the cause, one of whom is & citizen of the same state with the complainant. This question may still be regarded as an open, one, although the tendency of judicial opinion is in favor of the jurisdiction of the courts of the United States in such a case. The congress, in its last legislation on the subject, adopted, substantially, the language of the eleventh section of the third article of the constitution, and thus seemed to design to confer upon the circuit court all the jurisdiction which the constitution warranted. I had occasion to examine the question with some care, in It recent case, and I came to the conclusion that when the real controversy in It suit was
between oitizens of different states, these parties were entitled to have the cause adjudioated by the oourts of the United States, although there might be other persons in the suit who were citizens of the same state with a person or persons on the opposite side. Bank of Dover v. Dvdge, Meiys et al. 25 Int. Rev. Rec. 304. To the same effect was the opinion of Judge Drummond, in Osgood v. The Railroad Company, 6 Biss. 339, in which he says: "If the whole suit is removed because of the principal controversy between. citizens of different states, and in order fully to determine that, as between them, other controversies' between citizens of the same state arise in the suit, there is no objection to the federal court ta.king jurisdiction of the latter. It is a matter of oommon praotioe to do this in the settlement of legal and equitable rights. Having control and jurisdiction of the principal, the incidents go with it." And see Taylor v. Rockefeller, 18 Am. Law Reg. (N. S.) 309. There is another view of the oase, which, perhaps, will sustain the removal. The petitioners are Ruokman and Boylan. The only other defendant is the mortgagor, Marley, and he oan hardly be regarded as a necessary party to the suit. He oertainly has no interest in the controversy between the oi,her parties. The object in' bringing him in was to obtain an order restraining him from paying the mortgage debt to anyone until the question of ownership was determined. Such injunction was oqtained upon filing the bill. He has not answered, and in regard to him the only decree asked for is that he may be protected by the court, in the event of his paying the bond and mortgage' to the complainant. It is of no importance to, him whether the final decree shall declare the oomplainant or Mr. Boylan to be the owner. He has the money to pay only once, and he will be entitled to the surronder and oanoellation of the mortgage when that payment is made. It is a well settled principle that the jurisdiction of the oourt of the United States cannot be defeated in cases of this sort by joining unnecessary parties. Warmly v. Wormly..
8 Wheat. 421. In Wood v. Davis, 18 How. 469, the supreme court says "that formal parties, or nominal parties, or parties without interest, united with the real parties to the litigation, cannot oust the federal' courts of jurisdiction if the citizenship or character of the real parties be such as to confer it within the eleventh section of the judiciary act." If then, as here, all the defendants who are actual parties to the controversy in the suit join in the petition, may not the removal take place under the first clause of the section, in which the conditions of removal are that the suit shall embrace a controversy between citziens of different states, and one or other of the parties shall petition for the removal? The suggestion was made on the argument that as the petition for removal alleged as a.uthority for the same one of the grounds stated in the first clause of the second section of the act, if the court found, upon inquiry, that the cause did not fall within these provisions, it should be remanded, without looking further and ascertaining whether the record disclosed any other ground on which the removal could be based. I do not so understand the la.w. The question in this court is not whether the counsel for the petitioners comprehends and assigns the true reasons for the removal, but whether the whole record reveals a case over which the court has jurisdiction. No matter how irregularly the petition brings up the suit, when it is here the only question is whether it involves a controversy properly within the jurisdiction of the court. If it does, it will not be remanded because a mistake was made by the counsel of the petitioners in assigning grounds for the removal which prove to be untenable. Such is a fair construction of the provisions of the fifth section of the act, and such, I understand, was held to be the law by Judge Drummond, in Osgood v. The Ry. Co. 6 Biss. 336. The motion to remand is denied.
FEDERAL &EPORTER. ANSHUTZ v. HOERR.
(Circuit Court, W. D. Pennsylvania. February 17, 1880.)
BA:KKRUPT ACT - "INSOLVENCY" DEFI:SED. - "Insolvency, within the meaning of the bankrupt act, means inability to pay debts in the ordinary course of business, and unless the debtor is able to pay such debts as they mature, with money, he is insolvent in the contemplation of said act, notwithstanding he may have lands and goods sufficient in time to meet all his liabilities." ' SAME-FRAUDUI,ENT JUDGMENT-EXECUTION-AcTION BY ASSIGNEE FOR PROCEEDS OF SALE.- An assignee in bankruptcy may m::tintain an action against a judgment creditor of the bankrupt, for the proceeds 01' value of property sold under a judgment of the state court, where such judgment was ohtained in fraud of the bankrupt act, although the . property was subject, at the time of the sale, to the lien of a valid exeeution, subsequent to that of the defendant. ACTION BY ASSIGNEE-AMOUNT OF DEFENDANT'S LIABILITy.-In such action the defendant is only liable for the amount of the fund received by him, where part of the proceeds of the execution sale went to satisfy the claim of another creditor.
Opinion sur motion for a new trial, and on questions of law reserved. P. C. Lazear and D. T. Watson, for plaintiff. R. B. Petty and J. F. Slagle, for defendant. ACHESON, J. This is an action on the case brought by Theodore F. Anshutz, assignee of Nicholas Wurzel, Sr., a bankrupt, against Philip Hoerr, to recover the value of certain personal property of the bankrnpt, seized and sold by the sheriff of Allegheny county, by virtue of an execution from the court of common pleas No.1, of said county, upon a confessed judgment in favor of Hoerr, alleged to be void under the bankrupt law, as giving an unlawful preference. The case was tried before the late Judge Ketcham, and ,. verdict rendered for the plaintiff for the sum of $1,675, subject to the opinion of the court upon questions of law reserved. The defendant having moved for a new trial, that motion and the reserved questions were argued before me. The ground mainly relied on in support of the motion for ,. new trial is the supposed error of the court in affirming the plaintiff's second point, which was in these words: "That
ANSBUTZ V. HOERR.
insolvency, within the meaning of the bankrupt act, means inability to pay debts in the ordinary course of business; a.nd, unless the debtor is able to pay such debts as they mature, with money, he is insolvent in the contemplation of said act, notwithstanding he may have lands and goods sufficient, in time, to meet all his liabilities." Nicholas Wurzel, Sr., was a merchant, and, therefore, as applicable to him, the foregoing point contains an accurate statement of the law. Hardy v. Glcw'k, 3 B. R. 387; Webb v. Sachs, 15 B. R. 168; Foot v. Martin, 13 Wall. 47. In the last the jury that, "if the cited case the judge below bankrupts could not pay their debts in the oridinary course of business, that is, in money, as they fell due, they were insolvent." This instruction was approved by the supreme court as applied to traders and merchants. It seems to me the reasons assignei fora new trial are insufficient, and the motion is overruled. In order properly to understand the questions of law reserved, it is necessary to state the following facts: Philip Hoerr's judgment against Wurzell was for the sum of $790.96. It was. entered' and execution issued thereon December 22, 1875. On the same day, but at a later hour, August Klein entered judgment and issued execution against Wurzell for $1,500. The day following, Lindsay, Sterrett & Co. entered judgment and issued execution against Wurzell for $2,200. Under and by virtue of these three executions the sheriff seized and sold the personal property, consisting mainly of his stock of merchandise of the defendant Wurzell. The amount realized by the sheriffs sale was $1,301.98, which the sheriff appropriated and paid as follows, to wit: $223 90 To costs, .. Philip Hoerr, 803 46 274 62 · August Klein,
$1,301 98 The assignee of the bankrupt claims that the Klein judgment and execution were in fraud of the bankrupt act, and v.l,no.8-38