BEPUBLIC IRON MIN. CO. t'. JONES.
REPUBLIC IRON MIN.
(Oircuit (lourt, N. D. Georgia.
COURTS-FEDERAL JURISDICTION-SUITS BY ASSIGNEES-CONTRACTS.
An action for damages for the breach of a contract of lease is an action "founded on contract." in the sense in which that expression is used in the restriction contained in the first section of the act of March 3. 1875, which provides: "Nor shall any circuit or district court have cognizance of any suit founded .on contract in favor of an assignee, unless a suit might have been prosecuted in such court to recover thereon if no assignment had been made, except in cases of promissory notes negotiable by the law-merchant, and bills of exchange. " . In an action "founded on contract." brought by an assignee. the declara· tion must show that the suit could have been maintained by the assignor if no assignment had been made.
At Law. On demurrer to the declaration. BrOyles k Johnson, Graham k Graham, and J. D. Ofm,ym, for plaintiff. H(J]!lci'f18 k Glenn, J. M. &; J. W. Neel, B. H. Hill, and William Phillips, for defendant. .
NEWMAN, J. This case has been heard on a demurrer to the declaration; the ground of demurrer being that it is a suit brought by the assignee ofa contract, when suit could not have been prosecuted by the' assignor, and that therefore the court has no jurisdiction of the case. The following is a synopsis of plaintiff's declaration: Plaintiff is a corporationcreated by the laws of Missouri, and a citizen of that state. Defendant is a citizen of Georgia. On the 18th day of August, 1881, A. R. Silva, plaintiff's assignor, obtained a lease from defendant to certain Jand in Bartow county, Ga., which lease was for a term of five years, in writing, and under seal. The purpose of the lease was that Silva should mine for iron ores, have all necessary rights for railroads, houses, dams, sluiceways, etc. Silva was to pay defendant a royalty of 17 cents per ton. On the 6th day of January, 1882, Silva assigned in writing his interest in this lease to plaintiff. On said 6th day of January, 1882; plaintiff entered and took possession of said premises, and after that time performed all the covenants to be performed by Silva; but, notwithstanding this, on or about the 1st of September. 1882, the defendant with force entered the premises, and dispossessed plaintiff. Plaintiff, while in possession, had cleared the ground, opened mines, tested ores, erected houses, machinery, etc., and was by its dispossession by the defendant deprived of the use, issues, tents, and profits, etc. Defendant, after dispossessing plaintiff, commenced, and is still, mining upon said land, and retaining to himself the profits. An amendment to the declaration sets forth that on the 3d day of August, 1881, Silva made a contract with a furnace company in Tennessee, whereby he agreed to furnish 30,000 tons ofiron ore within a year, at $1.50 per ton, which contract was assigned to plainI
Reported by Will Haight, Esq., of the Atlanta bar.
tiff, and the profits of the contract were lost by the breach of the lease by defendant. It.u,said in one of the contracts attached that Silva is a citizen of Missouri, and in another that he is a citizen of Georgia, but it is not alleged anywhere that he could have maintained this suit. This is held to be necessary. Corbinv. County oj Black Hawk, 105 U. S. 659, and cases cited at the conclusion of the opinion, page 667 · There is no contention, however, that Silva could have prosecuted this suit. It has beenaSSUllledall through that he could, not, and that is taken as conceded. This suit was commenced in 1885, and the sole question discussed by counsel has been the application to the case of the language of the act of March 3,1875; as follows: "Nor shall any circuit or district court have cognizance of any suit rounded on a 'contract in favor of an assignee, unless asilit might have been proseeutl\d. in sucb court to recover thereon, if no assignment bad been made, except, in cases of promissory notes, negotiable by the law-merchant, and bills of. exchange. It Hil! urgeg by for plaintiff that this is not a suit "founded on contrac;:t" witl¥n the meaning of the ex(ract from.the act of 1875, just quoted. It is contended that this expression, "founded on contract," is limited in its meaning, and should be construed to cover only suits brought on the contract to recover the amount called for by the contract, or to have a'specific performance of its terms; and that it should: not be extended to embrace a suit for damages for, a breach of a contract. Tbis view oUhe law would give it a mueh narroweroonstruction than its languageand evident purpose justifies. A suit for, damages for breach of a contractwollld Seem to be, .for present purposes at least, as mucha, suit "founded on contract" as a suit to recover a specific amount called for ,by Ii contract.: Both are based on ,a contract, ,and require.itssupport to S.\1Stain them. Thiasuit is brought by the on .account.oT the deprivation of specified rights, which it says it acquired by the tenns of ·the contract in writing, which it sets out in fulLin the declaration. The of its action is the violation by the defendant of his agrEletnent ·Qontained ill the .contract. 'It is the fQundationofplaintiff's rights; l\nd, proceeded totrial,the first evidenc.e·Offered by it in the case would necessarily and properly be the contract. ,Butit is further urged ,tbatthisexpreasion, 'Ho'Unded on in the act.:of 1875, ·should be .construed in; connection ,with the language of the judiciary act · of 789, "the contents of any promiElsory :note ol::Qther chose in action," ·and also theJanguage:ofthe act oiMarc!) 3., 1887.: ,Why a was :made in. the language, restrictive of the jurisdiction, of. the court as to suits by assignees the act of 1875,iand why the language of the ·wiginal act of 1789 (so fll:r lit,$ applicable bere) ip the act . of. J 887, ia not apparent;espeeiltlly as to. the last enactment.. It Seem probable, however,<that thepurpoaein \lsiog the language. adopted ,in 187J5:wa:s to sirnpHfy: the ,to:avoid the. difficult questions ·fln<J. -nice which had arisen in' ii:lterpreting the expression, "the contents of any promissory note or other chose in action," as used in the original act. However thismaybe;itis difficult to See how the plain-
BEPtiBLIC IRON MIN." CO. 1I.IONES.
tiff is benefited by viewing the act of 1875 in connection with the other legislation on subject. It would seem that the construction which has been given to the act of 1789 by the supreme court would be fataHo the jurisdiction in this case, even if the suit had been brought while it was in force. Without discussing any of the former cases, the case of Co,tbin v. County of Black Hawk, supra, is decisive of the question made in the case at bal". In the opinion, page 665, the term" the contents" is thus defined: "The contents of a chose in action, in the sense of section 629, are the rights created by jt in oia party in whose behalf stipulations are made tight t() enforce in a liluit founded on the contract; and a in it, which 8uit to enforce such stipulations is a suit to recover such contents." ThiscOl,lstructionclearly covers the Case now. unQ.er considerlj,tion, for here the plaintiff seeks to enforce a stipulation, and the most important stipulation of the contract set out in its declaration, and made the mundation of its·claim. In the" later case of Shoecmjt v. Bloxham, 124 U. S. 730, 8 Sup. Ct. Rep. 686, in the opinion of the court, this language is . used: "Section 629 of the Revised Statutes. whirh was in force when the suit was commenced. declares tbat··, no court shall have cognizance of any suit to recover the contents of any promissory note or other chose ill action in faVor :of an suit might have been prosecuted in such court tl;) recovt>r the said contents, if no assignment had been made. except in ca.'ies of foreign hiIlsof exchange.' '1'he'terms used, ·the contents of any proluissory note or otherchose .inaction,' were designed to embrace the rights the, instruDlent conferredwntch were capable of enfurcement'by suit. '1'hey were' not bappily chol:!pn to eonvey this meaning, but they have recei ved a construction SUbstantially tv that purport in repeated decisiuns of this court. They were 80 construed, .in the recent case of C01'bin v. 'County ofBlack Hawk, 105 U. S. 659, wberethe BUlJjPct is fullyconsid"red, and the decisions cited. There, a suit brought to enforce the spedtic performance of a contract was held tIl be a Buit to rec\)ver the contents of a chose in action, and tberefore not maintainable, underthe in question, in tIle circuit ('ourt of by an ass' griee, if it could 1I0t have been proS'ecnted there by "the assignors bad no aSSignment been made." The case of Simons v. Paper Co., 33 Fed. Rep. 193, in the circuit court oUh'eEastern aistrict of, Michigan, was brought after the passage of the act 01 March3;18M7 ,and in that case it was held that "an aetionto re'cover damages for a refusal to accept and pay for merchandise purchased to recover the contents of a chose in acunder an oral contract is tion) withiri,the meaning onhe act of March 3, 1887, and a circuit court has no jurisdiction of such suit in favor of an assignee, unless it might have been prosecuted. in;such court, ifno assignment had been made." In the 'opinion, the court reviews the decisions of the su preme court on the net of 17S.'9iarid derives therefrom authority for deciding as above. 80 that if, as; has been urged by plaintiff here, a suit, to come within the restriction':of the'nctof.:1875, must be to recover "the contents"of the.contracl;:it "'ould seem that, following the interpretation repeatedly .given the term "centents," thia,suitcould not be maintained.. The decision in.the case of BlackWck,v.S1ooU, 127 &Sl1p.iCt.Repi.
1096, ao far as it touches upon the question here presented, would seem to be adverse to plaintiff's rights to maintain this suit. That case was brought under the act of 1875, and, while the direction of the supreme court to dismiss the bill for want of jurisdiction seems to have been mainly upon another ground, yet"so far as it affects this case at all, it is not favorable to the plaintiff's rights. Other reasons have been urged for giving thia restriction the limited meaning contended for by plaintiff, some of which would be important if doubt was entertained as to its construction in this connection; but none of the reasons suggested can have force in view of what appears to be the plain meaning and intent bf the language used. It seems clear, therefore, tha't this demurrer must be sustained, and it will be so ordered. The circuit judge, with whom I have consulted, concurs in the elusions reached.
'V. COUNCIL BLUFFS INS. Co.
(Oircuit Court,NoD; 10000a, E. D. March 18, 1889.) .
CoURTS-FEDERAL JURISDICTION'-SUITS BY ASSIGNEES-AUXILIARY PROCEEDINGS.
ThQugh an assignee. cannot institute an action in the feder,al courts because of diverse citizenship. undertbe act of 1875, unless his assignor could have done so. yet, the action havillg been brought in the state court, and the assignee and the defendant being citizens of different sta.tes, the cause is removable. and. having been removed, and having afterwards been continued for the purpose of enabling plaintiff to file a bill for a reformation, which it was held was necessary before. be could maintain such action, such bill is auxiliary to the first action. and i.s properly brought in the federal court. Wh.ere an action on an insurance policy has been brought withinths time limited by the policy. a bill for reformation of the policy, in aid thereof. is not barred though. lifter such time. Such bill is not a suit on the policy within the meaning of the limitation.
S.·INSURANCE-AcTION ON POLICy-LIMITATION.
In Equity. On demurrer to bill. Bill by Rosenbaum Bros. against the Council Bluffs Insurance Company. For opinion on motion to set aside the order granting leave to file the bill, see ante, 7. Charles A. Clark and F. A. Hormel, for complainants. Sapp &- PU8ey and Henderson, Hurd, Daniela &- KieBel, for defendant.
SHIRAS, J.. The bill in tbis cause was filed by complainants for the purpose of reforming a.policy of insurance, issued by the defendant company: in the name of upon an elevator building and other property situated in Benton county, Iowa; the property having been destroyed by fire. G.G. Abraham, who is named in the policy as a mortgagee, the policy andhis:interest in the contract of insurance to com. plainants, who brought an action at law against the company,averring therein the be covered by the insurance was