between citizens of different states, · · · either party may remove said suit into the circuit Qourt of the United States for the proper district. And when, in any suit men· tioned in this section, there shall be a controversy which is wholly between citizens of different states, and which can be fully determined as between them, then either one or more of the plaintiffs or defendants actually interested in such controversy may remove said suit into the circuit court of the United States for the proper district." The suit is a creditor's bill brought to reach property in the hands of the Keokuk Northern Line Packet Company, and certain other property held by Peyton S. Davidson, to be applied in satisfaction of judgments separately obtained by the plaintiffs against the Northwestern Union Packet Company in 1873 and 1874. The complaint charges that in March, 1873, there was a fraudulent transfer made by the defendant, the Northwestern Union Packet Company, of all its steamboats, barges and other personal effects to the defendant, the Keokuk Northern Line Packet Company, which ought in equity to be now applied in satisfaction of the plaintiff's judgments. And, also, that about April 1, 1873, there was a fraudulent conveyance by the Northwestern Union Packet Company of certain lots and real estate, situate at La Crosse, to the defendant Peyton S. Davidson, which they are also entitled to have applied toward the payment of their said claims. The Northwestern Union Packet Company has not been doing business for many years, was not served with process, and makes no appearance. The Keokuk Northern Line Packet Company contends that there is a controversy between citizens of different states, and, also, that there is a controversy in the case that is wholly between it and the plaintiffs, who are citizens of the different states, and which can be fully determined as between them, within the meaning of section 2 of the act of 1875, so as to entitle it to a removal to this court. The plaintiffs contend that the suit is one controversy, and that no removal can be allowed, vecause all of the defendants
SHELDON V. KEOKUK N. L. P. 00.
are not non-residents of the state of Wisconsin, where the plaintiffs reside. Upon a careful examination of the bill of complaint and of the removal statutes, I think the case comes within both the clauses of section 2 of the act of 1875.' I have not come to this conclusion without hesitation, because the supreme court have not yet placed a, construction upon the act, and because, according to the construction uniformly given to the original removal clause in the judiciary act of September 24, 1789, and subsequent acts amendatory thereof, there would be no right of removal in this case, for the reason that one of the defendants, Peyton S. Davidson, is a resident of the same state with the plaintiffs. Under that act the right of removal did not exist unless aU of the defendants were residents of a state other than the one in which the plaintiffs resided, and it is contended that the same construction is applicable to the law of 1875. But it cannot fail to be observed that the law of 1875 adopts the language of the con.stitution as though it were the intention of congress t<,> widen out the jurisdiction of the circuit court in removal cases, and make it commensurate with that conferred by that instrument. The law of 1789 provided that if a suit be commenced in any state court · · · by a citizen of the state in which the suit was brought, against the citizen of another state, the defendant might file a petition for removal, etc. It is manifest that the jurisdiction thus conferred falls far short of the constitutional provision, which extends the jUrlSdiction of the federal courts to all controversies between citizens of different states, where the amount or value in dispute exceeds the sum of $500, thus leaving a large reserve of power in the federal courts, which could not be exercised without furthElr legislation by congress. The law of July 27, 1866, provided for a removal on application of a defendant who was a citizen of a state other than the one in which the plaintiff resided, where the suit was one in which there could be a final determination of the controversy, so far as it concerned him, without the presence of the other defendants;
and allowed the case to proceed as to the resident defendants in the state court. This was the first material departure from the act of 1789. This act was amended by the act of March 2, 1867, so as to allow a removal on the application of either plaintiff or "defendant, on making and filing in the state court an affidavit that he had reason to believe, and did believe, that from prejudice or lucal influence he would not be able to obtain justice in the state court. This still further widened the jurisdiction by allowing a removal on the application of the plaintiff as well as defendant. The law of 1875 is broader and more comprehensive than all the others, and it would seem that congress, by employing the language they did, intended to avoid the construction so uniformly placed upon the previous acts, and to allow a removal wherever there should be, in the language of the constitution, a controversy between citizens of different states, although some of the plaintiffs or defendants, not being merely nominal"parties, should have a common state citizenship with some or all of the opposing party, plaintiff or defendant. Indeed, it seems difficult to give meaning and effect to the act of 1875, without enlarging the jurisdiction of the circuit court, from what it stood under the construction given to previous laws, to conform more nearly to the constitution itself, whose language congress for the first time adopts. In Lockhart v. Horn, 1 Woods, C. C. R. 628, Mr. Justice Bradley, in a case arising under the previous law, says: "Were this an original question I should say that the fact of a common state citizenship existing between the complainants and a part only of the defendants, provided the other defendants were citizens of the proper state, would not oust the court of jurisdiction. It certainly would not under the constitution. The case would still be a controversy between citizens of different states. But the strict constrnction put by the courts upon the judiciary act is decisive against the jurisdiction, and I am bound by it." But is such construction applicable to the act of 1875? Certa,inly not, if Mr. Justice Bradley is correct in saying that
SHELDON V. KEOKUK N. L. P. CO.
a common state citizenship existing between the complabants and a part only of the defendants, provided, the other defendants were citizens of the proper state, would not, under the constitution, oust the court of jurisdiction. Here is an actual, substantial controversy existing between the plaintiffs, residents of Wisconsin, and the Keokuk Northern Line Packet Company, a citizen of Missouri, upon the determination of which depends title to a large amount of property, consisting of ,steamboats, barges, etc., turned over by the judgment debtor to the said defendant. Perhaps it might be said to be the main controversy in the case;· but I do not choose to rest the decision on that ground. If Peyton S. Davidson were a merely nominal party, the suit could be removed under the law as it has existed from the foundation of the government. But he is not. He is a proper party, with an actual interest in the controversy, so far as it relates to the alleged fraudulent transfer of the real estate to him in April, 1873. But, though a. proper party, he is, in my judgment, not a necessary party, so far as relates to the alleged fraudulent transfer of the steamboats and other personal property to the Keokuk Northern Line Packet Company. That transfer was made at a different time, to a different party, and upon a distinct and different consideration, and has no necessary connection with the transfer of the lots of land to Davidson, except that the transfer was made by the same judgment debtor. The suit as to Davidson might be discontinued and his name struck from the record, and the controversy which the plaintiffs would still have with the Keokuk Northern Line Packet Company could be fully determined, and all the rights of the parties interested be settled, without Davidson's presence. Under the law governing creditors' bills, any person may be made a defendant who is a party to any distinct, fraudulent conveyance, or has an interest in any property so fraudulently conveyed by the debtor, if he be privy to the fraud. But he is not a necessary party to other controversies in the same suit' relating to other and distinct fraudulent transfers to other persons. So any person may be joined as plaintiff
who has a judgment claim against the debtor, though entirely separate and distinct from the claims of the other plaintiffs. Such a suit is well calculated to present distinct controversies, in which some of the plaintiffs or defendants may have no real interest. The statute says that "when, in any suit, · · there shall be a controversy which is wholly between citizens of different stateR, and which can be fully determined as between them," etc. It does not sayan actual controversy, which would exclude merely nominal parties, nor the principal controversy, which would devolve upon the court the duty of determining between them which should be considered the main and which the subordinate controversy; but the language is "a controversy," which means any actual controversy in which both parties have an interest. And that there may be two or more such controversies arising in the same suit is manifest, and is clearly contemplated by the act. Now, whichever may be considered the principal controversy, here are two controversies arising in the same suit, to one of which Peyton S. Davidson is a necessary party, and in which the Keokuk Northern Line Packet Company has no particular interest, and another to which the Keokuk Northern Line Packet Company is a necessary party, but which can be fully determined as between it and the plaintiffs without the presence of Davidson. This would seem to bring the case within the meaning of the second clause of the section. And I am the more confirmed in this construction bJ' the views of Judge Drummond in Farmers' Loan a: Trust Company v. Pekin a: Southwestern Ry. Co. 12 Chig. Legal News, No.8, p. 65, (Nov. 8, 1879J But it seems just as clear that, if Peyton S. Davidson had joined in the application for removal, the case would come under the first clause of the section. Indeed, it seems a selfevident proposition that the first clause, adopting, as it does, the language of the constitution, which is the only source of power in such cases, confers all the jurisdiction which it was competent for congress to confer on the federal courts, except, perhaps, that the right of removal, under that clause,atta:Jhes
to the party, r: laintiff or defendant; so that, where some are residents and some non-residents, all might have to join in the application, which is not the case under the second clause. It might be claimed that the second clause amounts to a legislative construction of the first; that it does not include a case where some of the defendants or plaintiffs are non-residents, but one or more reside in the state with the opposite party. But it is not to be presumed that congress used the language of the constitution in a different sense from that in which the framers of that instrument used it, or that congress in the second clause intended to provide for cases not covered by the <lonstitutional provision. The effect of the second clause is to allow a removal in the <llass of cases therein described, on the application of one or more plaintiffs or defendants, without the concurrence of the others. There is, perhaps, another effect to be given to the second clause. It manifestly provides for the same class of cases as is provided for in the law of 1866. But instead of allowing a severance of the cause, it takes the whole case to this court; and the decisions thus far are to the effect that in this respect it supersedes the law of 18G6. Taking the section together, it would appear that it was the intention of congress, in all cases where there is a controversy between citizens of different states which is joint and indivisible in its nature, to allow a removal on the application of the party plaintiff or defendant. And when there are several controversies in the same suit that are properly severable in their character, to allow a removal on the application of any one or more plaintiffs or defendants actually interested in any one of such controversies, and who may reside in a state other than the one in which the other party to such controversy resides. Take a case of a suit brought in this state by a resident thereof against two makers of a joint promissory note, one of whom resides in Wisconsin and the other in Missourj. The action is joint. The interest of the defendants is not severable. If the view I have taken of the law be correct the case may be removed at the instance of the party defendant, both
defendants joining in the application. Possibly it might be removed upon the application of the non-resident defendant alone. It is not necessary to decide that question. But suppose one defendant to be the maker, residing in Missouri, and the other the indorser, residing in Wisconsin, both of whom, under the law of this state, may be sued in the same action. Here the obligation and interest of the parties are several, and the controversy between the plaintiff and maker might be entirely distinct from the one between the plaintiff and indorser, and fully capable of determination as between them without the presence of the other defendant. And the case falls properly under the second clause, and wonld be removable on the application of the defendant who is a resident of Missouri, without joining his co-defendant. Under the law of 1866 the case would proceed in the state court against the indorser; but under the act of 1875, which does not countenance the severance of causes, the entire case would come to this court. The removal clause in the judiciary act of 1789 allowed a removal on the application of the defendant where he resided in the state other than the one in which the plaintiff resided, and in which the suit was brought. And the supreme court held the "defendant" here meant the party defendant; and that, where there was more than one, they must all be residents of another state. Similar constructions have been placed upon the laws of 1866 and 1867. But the constitution extends the jurisdiction of the circuit courts to controversies between citizens of different states; and the first clause of the second section of the act of 1875 provides for a removal in all cases by either party, whenever there is a controversy between citizens of different states. Here is a controversy between citizens of different states. Here is a controversy, and a vital one, between two citizens of Wisconsin and a citizen of Missouri. And the reasons for conferring jurisdiction upon the federal courts, apply just as strongly to such a case as to one where all the defendants are citizens of another state. The fact that, in order to take jurisdiction in such cases, the court must also take along with.
SHELDUN V.KEORUA N. L. P.
it jurisdiction of a controversy between citizens of the samestate, is no objection to the exercise-of the jurisdiction. If, in order to take the jurisdiction intended to be granted by the constitution, it becomes necessary to take jurisdiction of some controvel'sies in the same suit between citizens of the same state, why, the court is quite as competent to deal with these as any other; and there are several other highly important classes .of cases where jurisdiction of controversies between citizens of the same state is expressly conferred by the constitution on the federal courts. The question is simply one of what a fair construction of the constitution is, keeping in mind the purpose had in view by the framers. The language is not at all ambiguous, and seems fairly to include all controversies between citizens of different states, not excepting those where some of the parties to the controversy, plaintiff or defendant, have a common state citizenship with some or all of the opposite party. This seems to be the view taken by Mr. Justice Strong, in the case of Taylor v. Bockjeller, 7 Cent. Law Jour. 34:9; and, also, of Judge Dillon, in his work on the Removal of Causes, where, on page 30, he says: "But all the legislation previous to the act of 1875 was such that the supreme court was not necessarily obliged to decide this question; and it is, in our judgment, properly to be considered as still open. It will be extremely embarrassing and unfortunate if the supreme court shall feel constrained to assign such narrow limits to the constitution. Looking at the purpose in the grant of the federal judicial power in the constitution, and the benefits which .are felt to flow from the exercise of this jurisdiction, and the embarrassments which would result from a close and rigid construction of the con. stitution in t.his regard, we think the supreme court would be justified in holding that a case does not cease to be one be. tween citizens of different states, because one or some of the defendants are citizens of the Bame state with the plaintiffs, or some of the plaintiffs, provided the other defendants are citizens of another or other states." Mr. Justice Strong, in Taylor v. Roclifeller, says:
"Whether, since the act of the right of removal extends to all cases in which some of the necessary or indispensable defendants are citizens of the same state with the plaintiffs, or some of them, is no doubt a very important question, not yet decided. It does not, if the rule of constrnction applied to the Judiciary act of 1789, and the acts of 1866 and 1867, is applicable to the latter act. But the latter act, for the first time, adopts the language of the constitution, and seems to have been intended to confer on 'the circuit courts all the jurisdiction which. under the constitution, it was, in the power of congress to bestow. "Certainly the case mentioned would be & controversy between citizens of different states, and the reasons which induced the framers of the constitution to give jurisdiction to the federal courts of controversies between citizens of different states apply as strongly to it as they do to a case in which all the defendants are citizens of a state other than that in which the plaintiffs are citizens; and if that instrument is to be construed so as to carry out its intent, it would seem the question should be answered in the affirmative." It is a subject of regret that these questions, of so much daily interest to the profession, should not, before this, have been put at rest by the only authority finally competent to deal with them. But, until the supreme court shall have placed a construction upon the statute, the opinion of two judges of such eminence and ability is entitled to very great weight. The case will be docketed in this court.
NOTE.-See Ruckman v. Palisade Land 00. ante, 367: Bwrks v. Flood, ante, 541; Ruckman v. Ruckman, ante, 687.
UNION PACIFIC RAILROAD COMPANY V. MOU01rlB.
(Oircuit Oourt, S. D. New Y01'k.
February 21,1880.) of congress,
JURISDICTION-CORPORATION CREATED BY AOT OF CONGRESS-A.CT OJ'
3, 1875.-A suit by a corporation, created by an is a suit arising under the laws of the United States.
Motion to remand. Emott, Hammond « Kidder, for plaintiff. Francis N. Bangs, for defendant. BLATCHFORD, J. This is a suit commenced in the supreme Court of New York, and removed into this court by the defendant. The plaintiff now moves to remand it to the state court. The complaint in the suit, put in the state court, alleges that the plaintiff is a corporation created by an act of congress. The suit is brought for an accounting for certain moneys and securities alleged to belong to the plaintiff, and to have been fraudulently received and converted by the defendant, and for the cancellation of a note alleged to have been wrongfully issued and to have been fraudulently obtained from certain officers of the plaintiff by the defendant and others. The petition for removal states that the plaintiff is a corporation created by an act of congress, and that the suit and the matters in dispute therein arise under the laws of the United States. The ground on which the motion to remand is based is that the matters in dispute in the suit "in nowise concern, or are involved in, or are controlled by, any of the laws of the United States, except in so far as the same may be concerned by the fact" that the plaintiff was incorporated by an act of congress. The second section of the act of March 3,1875, (18 U. S. St. at Large, 470,) provides for the removal of a suit "arising under the constitution or laws of the United States" by either party to such suit. This enactment is warranted by the provision of section 2, of article 3, of the Constitution of the United States, that the judicial power of the United States "shall extend to all cases, in law and equity, arising under this con-
stitution, the laws of the United States," etc. Under the principles laid down in the decision in Osborn v. Bank of the United States, 9 Wheat. 738, 819, it must be regarded as settled that a suit by a corporation created by the United States is a suit arising under the laws of the United States. The allegations of the petition above recited are sufficient to show that the suit arises under a law of the United States. The case is not like that of Gold-Washing Co. v. Keyes, 6 Otto, 199. In that case the corporation was not one created by an act of congress, and the petition for removal, which was made by the corporation and others, did not state facts sufficient to show that the case, which was a suit against the corporation and others, arose under the laws of the United States. In the present suit, the mere allegation that the plaintiff is a corporation created by act of congress shows that the cuit ill Qne arising under the laws of the United States. The motion to remand the suit is denied.
(District Oourt, D. Kentucky. April 14, 1880.)
PARTNERSHIP-OONJOINT FIRM-INDIVIDUAL PARTNERs.-There would seem to be no legal difficulty in the way of treating two firms as individual partners in a conjoint firm, if such be the obvious intention of the parties. SAME-BANKRUPTCY OF nIE)fBER OF FIRM-OLAIM PnOVED BY FIRM m COMPETITION WITH OUEDITOUS OF OONJOINT FIRM-OOMPROMlsE.-One of such firms cannot, in competition with the creditors of the conjoint firm, prove a claim for the part payment of the partnership debts, against a bankrupt member of the otllcr firm, where such creditors had released such partnership from all further obligation, upon the express consideration that tlle individual liability of the bankrupt for the residue of such partnership debt should not be impaired. SAME-SAME-UNLAWFUL PREFERENCE-HEV. ST. § 5128.-Such contract, made within four months of tlle filing of the petition in bankruptcy, did not constitute a preference in favor of the partnersllip creditors under section 5128 of the Hevised Statutes. BANKRUPTCy-DIVIDEND DECLARED UNDER A TRUST-PROOF OF WHOLlll CLAIM.-A. creditor cannot prove the full amount of his claim against