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YOBK BILE MANUll"(J

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SEOOND NAT. BANE OJ/' PA.TEBSOB.

(Oireuit Oourt, D. Deu JerBey.

February 13,1882.)

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REMOVAL OJ' CAUSES-JUHISDICTION, WHEN ATTACHES,

Where a removal is authorized, the parties being citizens of different states, the matter in dispute exceeds $500, exclusive of costs, the petition is in due form, and a bond executed and filed, jurisdiction in the state court and attaches here, and all further proceedings in the state court are OOTOim M" JUdice.

I.

BAME-JURISDICTION OVER INCIDENTS.

The jurisdictional limitation to .500 has reference to the sum In dL!lpute between the plaintiff and defendant, and the right of applying creditors to come in and have their claims adjusted and allowed ia a mere incident over which this court will necessarily axel'ciae jurisdiction.

On Motion to Remand. John W. Taylor, for creditors. George S. Hastings, for defendant in attachment. Preston-- Stevenson, for plaintiff in attachment. NIXON, D. J. Two writs of foreign attachment were issued out of the circuit court of the county of Hudson, in favor of the Second National Bank of Paterson, against the New York Silk Manufacturing Company, a. foreign corporation owning property in New J ersey,the first on the third of October, and the second on the twenty-ninth of October, 1881,-under which the sheriff of the county of Hudson attached and made an inventory of the property of the defendant. Various motions were made in the circuit court to dissolve these attachments, to which it is only necessary to refer generally, and all of which were denied by the court. Pending an application for the appointment of an auditor for the sale of the attached property, petitions were presented showing proper cases for removal to this court, under the act of March 3, 1875, accompanied by a. bond duly executed and filed, and followed by appearance to the attachment suits in behalf of the defendant corporation; no objections seem to have been raised to the sufficiency of the petitions and bonds. The attorney for the attaching creditor procured from the clerk of the circuit cotlrt of the county of Hudson properly-certified copies of the records of the cases, and caused the same to be filed in this court on tbe fifteenth of December, 1881. A motion is now made by the party which petitioned for the removal to this court, to remand the cases again to the state court. The notice of the application is signed by "James B. Vredenburgh, attorney for the defendant," and

N. Y. SILK MANUF'a CO. V. SECOND NAT. BANK OF PATEBSON.205

states that the motion is founded "upon all the proceedings had ipthe cases, and upon the annexed rule." Appended to the notice appears a certified copy of a rule made by the judge of the state court, on the thirty-first of December, 1881, authorizing the defendant corporation to withdraw the appearance to the attachment suits as improvidently and irregularly entered. I have cOnsidered the arguments of counsel, and examined the case with care, and find nothing in the proceedings or in the order of the state judge, setting aside the appearance of the defendant to the attachment, which would justify me in grauting this motion. The suit is clearly within the class of cases where removal is authorized by the acts of congress. The parties are citizens of different states. The matter in. dispute exceeds $500, exclusive of costs. The petition is in due form, and no complaint has been made against the validity or security of the bond. The petition was signed by the defendant and presented to the state court, and a bond executed and filed for no other purpose than to transfer the case from that court to this, and jurisdiction ceased there and attached here as soon as these steps were taken. This has been the general tendency and result of the judicial construction of the removal statutes, both in the state courts and in the courts of the United States, for some years past. Judge Dillon, in his excellent treatise on Removal of Causes, § 15, says:
"If the case be within the act of congress and the petition is in due form, accompanied with the offer of the required surety or bond, the statute is that the state court must accept the surety, or the petition and the bond, and proceed no further in the case. Under such circumstances the state court has no power to refuse the removal, and can do nothing to affect the right, and its rightful jurisdiction ceases eo instanti. No order for the removal is necessary, and every subsequent exercise of jurisdiction by the state court, including its judgment, if one is rendered, is erroneous. And if the right of removal has once been perfect, it cannot be taken away by subsequent amendment in the state or federal court," etc.

The last utterance of the supreme court on this subject, to :which my attention has been called, is found in the case of Baltimore rXOhio R. Co. v. Koontz. The opinion of the court was delivered by theehjef justice on October 31, 1881, and is reported in the Albany Law Journal of December 17,1881. It is there distiD<ltly held.that the jUi"isdiction changes when the removalis demanded in proper form ; that it is transferred from the state to the federal court; and that all questions relating to the fact of rem.oval are to be determined by the last-named court.

206

FEDERAL REPORTER.

It necessarily results from this that all proceedings in the state court, after a' due demand for removal by either party, are comm non judice. Its jurisdiction is lost"and no order by that court-I say it with great personal respect for the learned judge who made the order in this case-can be invoked as ground for an application to remand. The suggestion was made at the hearing that if I could not find grounds for remanding the case, on the proceedings or action of the state court, I could at least authorize the defendants in this court to withdraw the appearance heretofore entered in the and thus allow the outside creditors to come in and share in the proceeds of the attached property. But there are two difficulties in the way: the first is that all the presumptions in the case lead to the conclusion that the appearance was authorized in effect if not in express terms; the second is that the attaching creditors have acquired an exclusive lien upon the property under the attachment actor the state of New Jersey, of which this cor.rt has no right, if it had the 'disposition to deprive them. The provisions of sections 14, 85, 38, and 39 of the" Act for the "relief of creditors against absconding and absent debtors," (Rev. St. ,'N. J. 42,) show that when the defendant in attachment entel'S an appearance to the suit without the execution of the bond prescribed by the thirty-third section of the act, the property seized by virtue of the remains in the custody of the officer and under the control of ,the court, and is held for the satisfaction of the claims of the plaintiff in attachment, and ofeuch persons as, before the appearance, have entered rules in the minutes of the court to be admitted as creditors under such attachment.; All other creditors are then' excluded from participating in the proceeds of the res until the plaintiff and such applying creditors are paid in full. This may seem inequitable and unjust to other meritorious creditors, who have for any reasons refrained from becoming parties to the proceedings, but it is the reward which the law gives to the diligent. When the defendant corporation signed the petition for removal, and executed the bond, and gave instructions to the attorney to take the necessary steps to effect the removal of the suit, into this court, it was probably not aware of the legal consequences of the act, and had no thought of depriving other creditors, who had not become parties to the attachment proceedings, of sharing in the pro rata distributionol the assets. In other words, a mistake in law was made; but I do not understand that I have any power to corre ct mistakes in law, if by so doing I take away from other innocent parties any

N. Y. SILK MANUF'Q<JO.V,SF;PQNDN4'r, BANK OF PATERSON.

;291

tights which they had acquired by such mistakes. It was further urged upon the argument that there was lit prac-tical 'difficulty arising that this from the peculiar features of the New Jersey act, i,n court had jurisdiction over a suit begun by attachment in a state trithirty-eighth section makes it lawful for any defendant in bunal. to the suit of the plaintiff, or attachment to enter an or any applying creditor, without giving bond for the return of the property; and after such appearance to suit or suits the plaintiff and creditors shall proceed in all respects as if commenced by summons. The difficulty, earnestly pressed, was that some of the applying creditors had entered a rule for claims for les8 than $500, and that there was no power in this court to exercise jurisdiction ina controversy between parties in a remoy-al case where the SUni in dispute was less than that amount. No question of that kind has yet appeared in the case, and it will be time enough to meet it when it arises. I have no hesitation, however, to anticipate it by saying that the jurisdictional limitation of the statntato $500 has reference to the sum in dispute between the plaintiff in 'attaqhment and the defendant; that the right of applying creditors to come in and to have their claims adjusted and allowed is a mere incident, to the principal suit, and that the court, having acquired jurisdiction over the principal suit, necessarily exercises it over the incident. The motion to remand is refused. An application is .pending for the appointment of an auditor, lItnd for the sale of the proparty as perishable, under the provisions' olthe thirty-ninth section of the New Jersey act concerning attachments. The sheriff of the county of Hudson holds the goods and chattels levied on under the writ of attachment, and I perceive no 'rea;son why an order should not be granted appointing him auditor, and directing him to sell the property according to law.

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FEDERAL BEFOBTEB.

BENEDICT 'V.

WILLIAMS and another.February 2, 1882.)

(Circuit Oourt, S. D. New Yurko

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PIUVITY OF CONTItACT-ASSIGNEE OF CHOSE IN ACTION.

Where defendants W. and K., citizens of different states, had entered into a contract, by the terms of which the latter was to conduct cerla'in litigation on behalf of the former, and to receive part of the avails thereof for so doing, and thereafter K. had entered into a contract with l\L to assist in the conduct of such litigation for a share of such avails, with the knowledge of W" and M. had assigned his share of such avails to the orator, B., held, that there was sufficient privity of contract to maintain the suit agaiJlst K. as his tl'llstee, and against W. as a debtor to his trustee for him.
2. REMOVAL OF CAUSE CEDURE. DISTINCTIONS BETWEEN LEGAL AND EQUITAllLE PRO-

Where an action commenced in a state court, in which the distinctions be· tween legal and equitable proceGure are done awa)' with, 4s removed to a cir. cuit court of the United States, it is removed to that side of the court where the appropriate relief, if due, can be obtained.

In -Equity. On demurrer to bill. William A. Beach, for pla,intiff. Edward M. Shepard, for defendant. WHEELER, D. J. This cause has been heard on demurrer to the bill. It was commenced in the state court, and removed to this court. The bill shows that the defendant Williams, a citizen of Connecticut, made a contract with the defendant Kernochan, a citizen of Massachusetts, by the terms of which the latter was to conduct litigation in behalf of the former against the Kansas Pacific Railway Company, as counsel, and to receive one·fourth part of avails thereof for so doing; that by a contract between Kernochan and Edwin R. :Meade and Henry E. Knox the latter two were to assist in the conduct of the litigation, and to share equally with the formel' in the one-fourth part of the avails; that the litigation was conducted by them with the knowledge of Williams, and proceeded until the sum of $27,500 was received from it as the avails of it, by him; that Meade sold and assigned his share of these avails to the orator, a citizen of New York; that Knox has been fully settled with, and that Meade's share has not been paid over. The principal grounds of demurrer assigned are that there was no privity of oontract between either Williams and Meade or Williams and the orator; that Williams is only liable to Kernochan, who may be liable over to Meade or to the orator; and that the orator's remedy, if he has any, is at law. The want of privity relied upon, how""Reported by S. Nelson White, Esq., of the New York bar.