and others v. ATLANTIO & Omo R. Co. and others.·
(Circuit OO'Urt, E. D. P,nns1/lflania.
October 19, 1881.)
REMOVAL OJ' CAU8Ke-JURISDICTION-AoT OJ' MARCH
8, 1875. The United States courts have no original jurisdiction under the act of March 8, 1875, (18 8t. 470,) in suits between citizens of one state and citizens of t.he same and of another state.
Demurrer to Bill in Equity. The bill was filed in the United States cirouit court for the eastern district of Pennsylvania by Samuel D. Karns and George C. Howe, the Atlantic & Ohio Railroad both citizens of Company, the Royal Land Company, and the Potomac, Fredericksburg & Piedmont Railroad Company, all three being oorporations of the State of Virginia; six individual defendants being the stockholders of said Atlantic & Ohio Railroad Company, one of them being a oitizen of Pennsylvania, and the remaining five being citizens of other Jacob H. Walter, and P. Y. Hite, all states, and L. Harry citizens of Pennsylvania. The eomplaint of the bill was, in brief, that complainants, who, as contractors, had built and completed the Potomac, Fredericksburg & Piedmont Railroad, had, on account of financial embarrassments, assigned their contract, together with a controlling interest which they owned in the stock of the Royal Land Company, a corporation which had purchased the railroad, to respondents Walter and Rite, as collateral security for money advanced, and in trust to sell the road, reimburse themselves and the complainants, and pay the surpluB to the Royal Land Company; that Walter and Rite had, in conjunction with the Royal Land Company, which they controlled by means of complainants' stock, made, in fraud of the trust, a formal sale and transfer of the said road to respondent L. Harry Richards, for a nominal consideration, but upon a secret trust for their own benefit; that Richards, acting as their agent, had contracted to sell the road to respondents, the Atlantic & Ohio Railroad Company, for $300,000. Complainants prayed for an injunction to restrain the purchaser from paying the consideration to Richards, and for,. receiver to receive the consideration money and hold H until fina: hearing. The court, after hearing, granted a preliminary injunction and
.Reported by Frank P. Prichard, Esq.,
ot the Philadelphia bar·.
appointed a receiver. Respondents then filed a demurrer to the bill on the ground that the court had no jurisdiction. Joseph De F. Junkin, E. Ooppee Mitchell, and George Junkin, for c Jmplainants. George Tucker Bispham, for Walter and Hite George L. Orawford and G'eorge M.Dallas, for L.Rarry Richards. T. Elliott Patterson and HughW. Steffey, for Atlantic & Ohio Railr,Jad Company. . BUTLER D. J., (orally.) When the bill in this case was first pre. sunted, it was observed that the plaintiffs were citizens of Pennsyl. vania, that some of' the defendants were citizens of Virginia and some citizens ofPennsyl\'ania. The question of jurisdiction at ollcepresented itself to the court, and the attention of counsel was called to it. Effort was made to obviate the objection by amendment, and the C8isewas argued upon the motion for prelimiary injunction. The court did not think the effected any change, and again called attention of counsel to the subjellt, being reluctant to retain jurisdiction, and especially to grant an injunction, while there was toom for seriousquestibn Q.s to the jurisdiction. I entertained doubt whether it was not my duty'before granting the injurictiont() consider and pas:s' npon the question, but supposed that'ibasmuch as counsel for 'J.. did not raise it, there might be inorEiroom for doubt than I saw. I took care, in the opinion, to say tliatthe action of the court was based only upon the questions discussed. Subsequently the question of jurisdiction was raised by demlirrer. The impression entertained at t'ile outset has, after listening to the discussio,n, ann after consideration, deepened into conviction, which is shared by .Judge McKennan. In my judgment the matter is not open to dCll:tbt. Our jurisdiction must be referred to the act of March 1875. The language of the first section of this act is itfentical with that of the first clause of the second section: The first section has not heretofore called for construction by the courts. The second section has repeatedly, and the decisions of the supreme court upon it have been Oases, 100 U. S. 469, although the judges uniform. In the were not unanimous,a majority'held that thestatute gives jurisdiction only where the' controversy' is one between Citizens of different states; where'all the defendants reside in a state other that where O)le or more reside in than that in which plaintiffs the same state as .aplainti1f; the'court haB no jurisdiction; that it is only where a controversy exists between citizens exclusively of differ-
·V. ATLANTIC & OHIO R. CO.
ent stateg that the court has jurisdiction. This consh-uction of the second section must be taken as the construction of the first. The court has in two instances 'said so. An argument was pressed upon us, based on the second clause of the second section, intended to show that this clause contemplates a nore extensive jurisdiction than I have indicated, as conferred by the first clause of this section.. The argument :was, that if the second clause conferred such jurisdiction, it must be referred back to tie first, for it could hardly be intended that the court should exer'Cise a more extensive jurisdiction in cases Qf removal than in where suit is directly brought in the federal court. In the Removal Oases, cited, the court did not feel called upon toconstrlle the second dause of this section. I find, however, in the last volume of reports (Barney v. 103 U. S. 205) a case in which the clause has received a construction by the supreme court, viz., that by it congress intended to import into the act of 1875 the provision of the act' of JUly 27, 1866, (14 St.a.tLarge, 306,) that where there are several defendants, sollie residing in the :same state with the plaintiff and others in different states, and there are several distinct controversies in the suit, the parties to a distinct controversy, residing in different . states, may ask for a removal, (Barney v. Latham, 103 U. S. 205.) The conrtfurther holds that the act of 1875 goes beyond that-of 1866, a.nd authorizes thE!' transfer of the entire suit; so that, the parties being as above, and -there being a severable cont1"oversy between eitizens of the same state and between citizens of different states, the act of 1875 authorizes a removal of the entire suit. It istru:e, there. fore; that the second clause of the second section of the act of 1875 does -confer in cases of removal a jurisdiction m01'6 extensive than that -conferred by the first section. -This view cannot, however, affect the -construction of the first section. But even if the present suit had been brought in a state court, it could not have been because there is here but a single controversy between all the plaintiffs and all the defendants,.......oneinwhich all are jointly interested. O. J.. r (orally.) The arriyed at by Judge Butler is the !'esult of our joint consideration of the question, ,and I -concur in what he has said. Bill dismisse.d. ,
NOTE. If a of the plaintiffs are citizens of the'state where the suit is brought and a part of SOlM'other state thedefendantcanrtot'relDove the suit.
Middleton v. Middleton, 7 Week. N. 144. So, if an action is brought against partnerJ, the case cannot be removed if one of the partners is a citizen of the same state as the plaintiff. Ruble v. Hyde, 3 FED. HEP. 330.-rED.
EVANS v. FAXON and others.
(Oircuit Uourt, N.
]. REMOVAL OF CAUSE-REMAND.
February 13, 1882 )
When the jurisdiction of this court is not clear, ·from the facts as presented, as to whether one of the defendantll, a citizen of the same state as the plaintiff, is a necessary or only a formal party, and there is not a controversy wholly between citizens of different states and which can be fully determined as between them, the case will be remanded to the state court.
George O. Fry, for plaintiff. McConnell, Raymond <t Rogers, for defendants. DRUMMOND, C. J. The facts in this case, as disclosed by the bill, ale that the plaintiff, in 1873, being indebted to Walter Faxon, exe· cuted a deed of trust to Joel D. Harvey to secure the indebtedness, end by the terms of the deed of trust the trustee was authorized, upon the non-payment of any of the notes representing tbe indebtedness, to cause the real property named in the deed of trust to be sold, upon giving notice in the manner pointed out in the deed. The money becoming due and unpaid, the trustee in 1879, at the request of the creditor, gave notice of the sale of the property, and it was accordingly sold to Edwin Faxon for $2,400; and the bill alleges that the title stands on the record in his name. A bill was filed in the state court on the fifteenth of September, 1881, by the plaintiff, to redeem the land, and to set aside the sale because of informalities, and a non-compliance with the conditions prescribed in the deed of trust, on which alone the power to sell was to be exercised. On the fifth day of November, 1881, the trustee answered the bill, denying that there were any informalities, or that there was a non-compliance with the conditions prescribed in the deed of trust. The plaintiff and the trustee were and are citizens of Illinois. Edwin and Walter Faxon were and are citizens of Massachusetts. The two latter, on entering their appearance in the state court on the 'sixteenth day of December, 1881, made an application to remove the case to this court, and filed the proper petition and bond, alleging that the trustee