THOURON '/}. EAST TENNESSEE, V. & G.
'l1. EAST TENNESSEE,
V. & G. Ry.
«(Jircui( Oourt, E. D. Tennessee. April 27, 1889.)
REMOVAL OF CAUSES-LoCAL PREJUDICE-CITIZENSHIP OF PARTIES.
The complainants, some of whom were citizens of Pennsylvania, and The remainder aliens, on behalf of themselves and all other stockholders of the E. T·· V. & G. Ry. Co.· filed their bill in equity in 8 state court against the E. T., V. & G. Ry. Co., a corporation of Tennessee. the R. & D. R. Co.· and the R. & W. P. T. R. & W Co.· both corporations of Virginia. and the various directors of the three corporations. citizens of New York. Virginia. and Tennessee. to enjoin and restrain the E. T.· V. & G. Ry. Co. from ratifying and approving a pretended lease of their property to the R. &. D. R. Co.. and to compel the latter company to restore to the possession of the fotmer the property which had already been turned over by virtue of such lease. A motion for an injunction was made in the state court. which. after argument, was granted. Thereupon. and after the service of the injunction. one A.. G. S.· a citizen of the state of Tennessee. without the, knowledge or consent of the solicitors for the complainants. obtained an w'pal'te order making him a co-complainant in the suit.. The R. & D. R. Co.· having filed its answer, removed thl' suit to the United States circuit court on the ground that it was a suit pending in a state court, in which there was a controversy between 8 citizen of the state of Tennessee. i. e., A.. G. S.· and the petitioner, a citizen of the st&te of Virginia; that the amount of $2,000. exclusive of costs. was involved in said suit; and that by reason of local influence or prejudice the pe· titioner could not obtain justice in either the court in which the suit was brought or in any other state court to which. under the laws of Tennessee. it could be removed. The original complainants moved in the United States circuit court for an order remanding the cause. 'He&d. (1) that the cause was improperly removed to this court. and that it cannot take jurisdiction of the same; (2) that the removal of a cause from a state court on account. of prejudice or local influence. under the act of 1867, as re-enacted in subdivisionS, 6S9, Rev. St., could only be had, as settled by numerous decisions of the supreme court, when all the parties to the suit on one side are citizens of differ· ent states from those on the other; (3) that the language of the act of 1867, on which such decisions were based, having been copied into the act of 1887, the same construction must be given to the latter act; (4) that. while the original complainants were the only party plaintiffs, there was clearly no right of removal,on the part of the defendants or either of them; (5) that the joinder of A. G. S. as co-complainant. in a representative suit so brought, in no way change(1 the character, object. or purpose of the suit. and did not confer upon the defendant the R. & D. R. Co. the right to remove the suit to the federal court. Whe&an v. Railroad 00.. 85 Fed. Rep. 849, distinguished.
In Equity. On motion to remand. IngersoU & Peyton, Oharles M. Da Costa, and motion. Pope Barrow, opposed.
Dickson, for the
JACKSON, J. In October, 1888, the complainants, Nicholas Thouron, William J. Barr, and Edmund Allen, being then and now citizens of the state of Pennsylvania, in connection with C. Sligo de Pothonier and Frederick J. Burt, then and now aliens and subjects of Great Britain, on behalf of themselves and all other stockholders of the East Tennessee, Virginia & Georgia Railway Company similarly situated who might choose to come in and share in the benefit and expense of the litigation, filed their bill in the chancery court of Knox county, Tenn., at Knoxv.38F.no.9-43
ville, against the East Tennessee, Virginia & Georgia Railway Company, a corporation of Tennessee, the Richmond & Danville Railroad Company, and the Richmond & West Point Terminal Railway & Warehouse Company, both corporations of the state of Virginia, and against the directors of the three said corporations, said directors being then and now citizens of the state of New York, Virginia, and Tennessee, for the purpose ·of enjoinihg and restrainiI1 g. the East Tennessee, Virginia & Georgia Railway Company from ratifying and approving Rcertain contemplated lease of its road and property to the Riohmond & Danville Railroad Company, as the directory of said companies had agreed up<;m, on or about .the 17th October, 1888, on the.ground that said lease was,ultra vires, was in violation <;lOaw, and was an abuse of the powers of said directors, etc., and seeking to compel the RichmoQd& Danville Railroad Company to restore to the possession of the East Tennessee, Virginia & Georgia Railway Company the road and property which the lattar had already turned over to the former rinderandin pursuance of said lease agreement made by the directory alone of the two companies; and also seeking to prevent the West Point Terniipal Company from voting the shares of stock of the East -Tennessee; Virginia & Georgia Railway Company held and owned by' it in favor of said lease at the meeting of the stockholders of the latter company, called tonteet in December, 1888, for the purpose ofratifying and confirming,aaid.lease. The grounds on which the .complahlants,as sto;qkholders in the Ellst Tennessee, Virginia. & Georgia Railway Company, predicated their right to the relief sought, need not be especially noticed. The defendant corporations were brought regularly before the' court either by service of process or by voluntary appearance, and thereafter, ion motion- pf the complainants, the chancellor granted the preliminary injunction pra-yed for,.-and further ordered and directed t,he & Dariville Railroad Company to restore to the East Tennessee, Virginia & Georgia Railway iCompany the possession andcontrolo( the latter's road and property which had been turned over to it as lessee, so as to place the ,companies in statu quo pending the litigation. This was done incompliance with the order of the chancellor, and the"cause then proceeded in the state chancery court, (the several steps taken not being material to the present queiltion,) until December 1, ,1888, when one A. G. Sharp, a citizen of rrenriessee, and the alleged bolder and owner of 50 shares oftha coinmonstock of the East rrennessee, Virginia & Georgia Railway Company, presented his petition to said chancery court, asking to be made a party co-complainant in said suit, and offering to bear his proportion of the expenses thereof, to the end that hernight share the benefit sought or secured thereby. By an order of the court entered on the same day and date, said Sharp was made a; party'C04lomplainant in thecal:1se. Thereafter the Richmond & Danville Railroad Company filed its answer to the bill, said answer, byagreement of parties, and by order of the court, being filed as of the date December 29, 1888" The other defendant corporations had previously filed their answers. The cause being then at issue as between the complainants-, including said Sharp and the defendant corporations the Rich-
THOURON:'l1. EAST, TENNESSEE,' V. &;
mcind'&'Danvi1leRaihoadCompany ori the 25th January; 1889, before any final hearing or trial had been had in the state court, presented its petition, supported by the affidavit of its proper officer, to the ;circuit court of the United States for the district· of East Tennessee, asking··to have said suit removed to said circuit court on of prejudice and local influence which would prevent petitioners froni .obtaining justice in said ch/!-ncery court of Knox county, or in any oth,er state court of Tennessee to which petitioners might, under the laws of said state, have the right, because of such prejudice or local influence, to remove said cause. The petition set out that the petitioner was a corporation organized under and by virtue of the laws of the state of Virginia,and was a citizen of said state; that said A. G. Sharp was, at the commencement of said suit in the state chancery court, and still is, a citizen ofihe state of Tennessee; that in said chancery suit there was a controversy between the petitioner and said Sharp; that the amount involved in saidoontro;. versy exceeded the sum of $2,000, exclusive of interest; that because of prejudice and local influence petitioner could not obtain justice in said state court, etc.; and praying that said cause might be removed into the said circuit court of said district The existence of the prejudice and local influence were positively averred in the petition and as positively sworn to, in the very language of the act of 1887. Upon the.presentation of said petition thus verified the circuit court allowed the same to be filed, and required petitioner to enter into bond for costs as provided by law, and, upon its so doing, passed and entered the following order, under date of January 28, 1889: "It appearing to the court from the petition filed in this cause and the affidavit thereto attached, that from prejudice or local influence petitionAr, the Richmond and Danville Railroad Company, will not be able to oHain justice in t.he chancery court of Knox county, Tenn., 'or in any other state court .to which petitioner as defendant mayor could under the laws of the state of Tennessee have the right, on account of such prejudice or local influence, to remove this cause, and that it is therefore entitled to have the removal which it seeks, it is accordingly ordered that this cause be, and the same is hereby, removed from the said chancery courtol Knox county to this court, and that notice of this ordp,r be served upon said chancery court of Knox county, Tenn., and that said court and the clerk thereof be and is requested to furnish upon application of petitioner and the payment of the lawful fees therefor, a c()py of the record on lile in said court in this cause, to be filed in this court." This order was courteously recognized and acceded to by the presiding judge of the state court; a transcript of the record was promptly furnisht'd petitioner, and by it filed in this court. Thereupon the complainants other than said A. G. Sharp filed their petition and motion to remand said cause to the state court, in support of their motion various grounds, which it is not deemed necessary to notice and consider separately and in detail. They involve and present the general question whether the cause, as disclosed by the record now produced, and the situation of the parties to the suit,was either removable or properly removed to this court. On behalf of the Richmond & Danville Railroad Company it is claimed that the removal is warranted by
the last clause of the second section of the act of March 3, 1887, which provides as follows: "And where a suit is now pending, or may be hereafter bronght, in any state court in which there is a controversy between citizen of the state in which the suit is brought and a citizen of another state, any defendant being such citizen of another state may remove such suit into the circuit court of the United States for the proper district, at any time before the trial thereof. when it shall be made to appear to said circuit court that from prejndice or local influence he will not be able to obtain justice in such state court, or in any other state court to which said defendant may, under the laws of the state, have the right, on account of such prejudice or local- influence, to reo move said cause." The provisions of the act of 1887 were construed and applied by this court in the case of Whelan v. Railroad Co.,\ 35 Fed. Rep. 863, which is cited arid relied on as fully sustaining the present removal. The decisions on the circuit are not in harmony touching the mode of procedure to effect a removal under said act because of prejudice or local influence, or the necessity of giving notice of the application, or to the right of the side opposing the removal to traverse and in some form to try the question whether such prejudice or local influence actually exists. The cases, however, generally concur in the proposition that any defendant, being a non-resident of the state in which the suit is brought, who can make it appear to the circuit court that he cannot obtain justice in the state court, etc., because of prejudice or local influence, is entitled to have the suit removed, provided the requisite citizenship exists on the part of the plaintiff or complainant in the cause. After are· examination of the opinion in Whelan v. Railroad Co., as requested by counsel for complainant, we are not inclined to overrule or modify the ruling therein until the question presented has been definitely settled by the supreme court of the United States. But is the Whelan decision conclusive of the present case? In some respects the cases are similar, but in others they are materially different and clearly distinguishable. In the Whelan Case a citizen of Ohio was the sale plaintiff in a suit brought in the state court of Ohio against three corporations. Two of said corporations were citizens of Ohio, while the third defendant corporation, which sought and obtained the removal to the circuit court of the United States, was a citizen of the state of Pennsylvania. The application was based on prejudice or local influence under the abovequoted clliuse of section 2 of the act of 1887. The situation of the parties, plaintiff and defendants, in respect to the diverse citizenship required by the act was substantially the same as existed in the SewingMachine C08. Case, 18 Wall. 5.53, and the authority of that case would have been conclusive against the right of the defendant the New York, Lake Erie & Western Railroad Company to remove the suit, but for the change which the act of 1887 made in the law as it previously stood, in provid. ing that "any defendant" being a citizen of a state other than that in which the suit was brought might have the causes removed to the cir· cuit court upon making it appear to said court that because of prejudice or local. influence he could. not obtain justice in the state court. The
THOURON V. EAST TENNESSEE, V. & G. RY. 00.
opinion of the court in the Whelan Case shonld, perhaps, be read in the light of, and confined to, the situation and status of the parties then hefore the court. That opinion was certainly not intended to lay down the broad proposition that "any defendant" who could make the neceS<sary showing as to prejudice or local influence would be entitled to remove the suit from the state court to this court, if any or a single party on the plaintiff side of the case happened to be a citizen of the state in which such suit was brought and pending. In the Whelan Case the requisite citizenship on the plaintiff side of the suit existed both under the act of 1867, (subdivision 3, § 639, Rev. St.,) and under the last clause of the second section of the act of 1887. The court therefore had nooc-· casion .to go into or to consider the question here presented, as to how far or to what extent the right of "any defendant" to have a removal is affected by the presence of joint plaintiffs or complainants, some, not all, of whom are citizens of the state in which the suit is brought. It may be true, as urged by counsel for defendant in opposition to the motion to remand, that the.presence of a single resident plaintiff or complainant, though joined with other non-citizens of the state in which the suit is brought, injects into the case the poison of prejudice or local influence against which the non-resident was intended to be guarded or protected as effectually as though such resident was the sole party plaintiff; but, as the right of removal depends upon the legislation of congress giving the authority therefor, the point to be determined is not whether cases thus situated come within the mischief to be guarded against, nor whether the judicial power of the United States is sufficient to reach such cases. 'fhis may all be conceded, and the question still remains whether under or by existing legislation on the subject of removals on account of prejudice or local influence any provision has been made which braces or applies to suits in which there are several joint plaintiffs or co-complainants, only a portion of whom are citizens of the state in which' the action is brought. In considering this question the court must observe and apply the well-settled rule for the construction of statutes that clauses of the later or present act should be given the established meaning of the earlier act from which they are copied. In so far, therefore, as the act of March 3, 1887, copies old clauses or provisions of the act of 1867, (subdivision 3, § 639, Rev. St. ,) it must be regarded as a legislative re-enactment of the meaning which the supreme court had previously given to these clauses. The last clause of the second section of the· act of March 3, 1887, (a;bove quoted,) which, as we think, operated as It repeal of subdivision 3, § 639, Rev. St., embodying the act of March 2, 1867, introduces well-defined changes in the old law, such as taking from the non-resident plaintiff the right to remove, the character of the affidavit required, the court to which the application for removalcis to be made, confining the right of removal upon "any defendant" being a citizen of another state who can make the requisite showing as toprejudice or local influence, and allowing the removal to take place, perhaps, without reference to the amount involved in the suit. But, in respect to the character of the suit and the parties thereto, the language oithe two
vol. 38. \ acts :is th-emune. The act of 1867 provided" that where a 'suit is now, pending Q.t'linIlY hereafter be brought in any state court in which there is a contr6versy,between a citizen 'oBhe state in which .the suit is brought and a Citizen of another state," etc., the citizen of, such other state, whether plaintiff or defendant, making the required affidavit, and within the time prescribed, was allbw:ed to remove the suit. Now, the first portion of ithe last clause of section 2 of the act of 1887 employs the same,descriptive terms as to the suit and parties, as follows: "And where a suit is now liending or maybe hereafter brought in any state court in which there is a controversy-between a citiz of the state in which the 'n suit is brought and a citizen of another state," any defendant being a citizen or another state may effect the removal in the mode and manner described. ,The suit described in both acts as to the parties is "between a citizen of the state in which it is brought and a citizen of another state." InconstruinK' the act of 1867 the supreme court of the United States has uniformly held that if on each side of such suit there be more than one persOn, then all the persons on one side must be citizens of the state in ,which the suit is brought, and all the parties on the other side citizens of some other state, and the latter, having the right of removal, were required to unite in the petition therefor. See Sewing-Machine Co8. Ghse, 18 \Viall. 553; Vannevar v. Bryant, 21 Wall. 41; Society v. Grove, 101 U. S. 610,611; Myer8 v. 8'wann, 107 U. S. 546, 2 Sup. Ct. Rep. 685; Society v. ,Price, 110 ,U. S. 61, 3 Sup. Ot. Rep. 440; Jefferson v. Driver, 117 U. S. 272,6 Sup. Ct. Rep. 729; Iron 00. v. Ashburn, 118 U.S. 54,6 Sup. Ct. Rep. 929; Hancock v.Holbrook, 119 U.,S. 586, 7 Sup. Ct. Rep. 341. Under the rules laid down in these cases, that the removal of a cause from a state court on the ground of prejudice or local influence could, under the act of 1867, be had only when all the parties to the suit on one side are citizens of different states from those on the other,.it is perfectly clear that the citizenship of the co-complainant in the present case would, under the former law, have defeated the right of removal, even if the Richmond & Danville Railroad Company had been the sole defendant.Under the of, 1887, adopting the same language found in the act of 1867, so far as the citizenship of parties on the plaintiff side of the suit is concerned, it is difficult to escape the conclusion that the same rule would apply, and that where the citizenship on the plaintiff side of the suit is such as"would prevent the removal under the act of 1867, it would be equally, effective to defeat the right under the act of 1887. In the present case the original complainants who commenced the suit in tha, state court were citizens of Pennsylvania, and aliens. While they were the only complainants there was clearly no right of removal on the part of defendants, or either of them. The controversy involved did not relate .to or concern either the validity or amount ofcomplainant's several holdings of stock in the East Tennessee, Virginia & Georgia Railway Company, but, on behalf of themselves and all other stockholders similaxly situated ,who might .choose to join with them in sharing the expenses and benefits of the litigation, they began suit to set aside a lease
EAST TENNESSEE, V.
agreed upon between the directors of two of the defendant corporations, and to prevent the lessor, a Tennessee corporation, by vote of its stock. holders, from,ratifying and adopting said lease. Such being the object. and purpose of the suit, the lessor and lessee were both necessary and indispensable parties. There was no separable controversy between them and each of the several complainants; nor was the present removal sought or obtained on the ground of any separable controversy between the Richmond & Danville Railroad Company and all or either of the complainants. The suit, as originally infltituted, was representative in its character, and entitled all parties similarly situated to intervene therein, and share its benefits upon such terms as to costs as the court might see proper to impose. But so intervening and becoming co-complainants in no way change the character, object, or purpose of the suit. They merely,and at most, make themselves joint actors from that time forward with the complainants who originally commenced the proceedings. It is doubtful whether, in representative suits of this character, such subsequent intervenors have any right or authority, before decree establishing their rights, to control the proceedings in any way. In Daniell's Chancery Practice, (4th Eng. Ed.,) 232, it is said that "in suits of this nature the plaintiff, as he acts on his own motion, and at his own expense, retains (as in other cases) the absolute dominion of the suit until decree, and may dismiss the suit.at his pleasure." In 'Premain v. El.8UranceO>., 11 Hun, 286, the supreme court of New York seems to have applied this rule even· after other parties similarly situated' haa been admitted into the cause as co-plaintiffs. But we think the true principle is that the original parties in such representative suits retain absolute dominion and control until decree, or until others taking the benefit of the proceedings are made actual parties to the cause; that upon and after the coming in of new parties, they properly have a joint voice and management with the original plaintiffs in the further progress of the cause. The coming in of new or additional parties into representative suits is ancillary to the jurisdiction acquired between the original parties, and, as said by the supreme court in Stewart v. Dunham, 115 U. S. 64, 5 Sup. Ct. Rep. 1163: .
, "It would be merely matter of form whether the new parties should come in as co-complainants. or before a master, under a decree ordering a reference to prove the claims of all persons entitled to the benefit of the decree. If the latter course had been adopted, no question of jurisdiction could have arisen. The adoption of the alternative'is, in substance, t.he same thing.", '
That was a creditors' bill oommenced in the state court, then removed to the circuit court, where certain other creditors, who could not have gone into the federal court because of their citizenship, Were admitted as co-complainants. The removal authorized on account of prejudice or local influence has never been considered or held as extending orapplicable to cases like the present, where the right and authority ofthe state court to proceed did not at all depend upon whether the intervening citizen of the state was or was nota party to the cause. Although' he may have been a, 'dissenting or minority stockholder, opposed to the -loose
. FEDERAL, REPORTER,
sought to be annulled, Sharp, neither before nor after becoming a party complainant in the suit, was a necessary party thereto, nor could he, after having made himself a co-complainant therein, have dismissed or discontinued the suit agninst the wishes of the other complainants who instituted the same. If, as we think, under the loeal prejudice clause of the net of 1887 there can be no removal unless all the necessary parties on the side of the plaintiff are citizens of the state in which the suit is brought, it follows that the act of Sharp in becoming a co-complainant in this case did not confer upon the defendant the Richmond & Danville Railroad Company the 'right to remove the suit to this court. Other grounds of objection to the removal are presented and urged on behalf of complainants, but in the opinion of the court they are not well taken, and need not be specially noticed and considered. No action is taken on the plea to the jurisdiction on the ground of Sharp's collusive joinder in order to effect the removal. The conclusion of the court is that this suit. was improperly removed to this court, which cannot take jurisdiction of the same, and that the motion to ramand it is well taken, and should' be sustained. It is accordingly ordered and adjudged that this suit be and the same is· hereby remanded to the chancery court of Knox; county, Tenn., at the cost of the Richmond & Danville Railroad Company. The foregoing and conclusion also disposes of the' removal made and had at the instance of the Richmond & West Point Terminal Railway .. & Warehouse Company, and a similar decree to the above is directed in that case.
(Oircuit Court, No D. Iowa, E. D. May 27,1889.)
COURTS-FEDERAL JURISDICTION-SUITS BY ASSIGNEES-PLEADING.
In an action in a circuit court, brought under the provisions of act Congo 1875, authOrizing an assigntle of a chose in action to sue. the complaint must ST-OW tbatthe 'assignor possessed the requisite citizenship to have maintained the action in that court.
Lewis « Pfund and Henderson, Hurd, Daniels« KieBel, for plaintiff. GUger « Harrison, for defendant.
On demurrer to amended petition.
SmRAs, J. ,This cause was heretofore submitted to the court upon a demurrer to the original petition, and in passing on the question thus presented it was held that the four-years limitation found in the section of the statute of Wisconsin under which the guardian's bond was executed must be held, in favor of the sureties, to be part of the conditions of the bond, and t4at the surety might avail himself of this defense in