CONN. fl. CHICAGO, B.
Q. R. CO.
B. & Q. R. Co.
(Owcuit Oourt, S. D. Iowa, W. D. November 18, 1891.)
RBMOVAL 011' CAUSES-.A$SIGNMBNT OJ!' CLAIM-CITIZENSHIP-ExOESSIVE FREIGHT ClIARQE&7-CHOSES IN AOTION.
A oIaltn against a railroad company for overcharges in freight is not a "chose in within the meaning of the provision of the removal act of ISB8 that the circllit shall not have cognizance of a suit on "any promissory note or other choslHn action" in favor of an assignee, unless such a suit might have been main· tainlld.f no assignment been made; and an assignee of such claims may sue a non-resident company thereon, without regard to the .citizenship of his assignofll.
OJ!' RAILROAD CORPORATIONS-CONSOLIDATION-CONVEYANOB OJ!" ,
When a non-resident railroad cprpQration purchases and receives convE!yanQ6ll of aU the roads in the state owned by a domestic corporation,'the fact that it. establishes Agencies in the ..tate, and operates the roads under the laws thereof,does not ma1l;e it a domestic corporation, so as to take awayits right to remove to a tedera! court an action brought against it' in the state court by a citizen of the state. FU4!gerl(l.ldv. Bail.wa1l 00.; 45 Fed. Rep. 812, distingUished. .
At'Law. Action by J. W. Conn against the Ohicago, Burlington & Quincy Railroad Company for overcharges in freight, the claims having to him by the original owners. On plea in abatement to the jurisdiction and the evidence thereon. Plea overruled. AlamonOlark'and Clark Varnum, for plaintiffs. Smith" McPherson, for defendant. Before SPIIllAS and WOOLSON, JJ.
, SIi'IRAS,J. This action was brought originally in the district court of Mille' county, Iowa, and wae thence removed to this court OpOll the appHclltion of the defendant corporation, on the ground of diverse citizenship,it being averred in the petition for removal thatlhe plaintiffs, when the·suit was brought, and ever since, were, and have continued to be, citizens of Nebraska, and the defendant was and is a corporation created under the laws of the state of Illinois. The petition in the action contains a larKe number of counts, each one being based upon an alleged overcharge for freiKht shipped over the defendant's line of railroad by a number of individuals or firms, whose claims 1'01' damages for such alleged overcharges have all been assigned and transferred to the plaintiffs. The first question arising upon the record is whether, under the statute now in force, an action based upon assigned claims of this kind can be removed from a state to the federal court, regardless of the citizenship of the&:ssignors of the claims, or whether it is necessary, to sustain the jurisdiction, that it appear on the faceof the record the'! the assignors of the claims, as well as the assignees, are, and were when the suit was brought,citizens of a state or states other than that of the defendant. The proviso in the amendatory act of August 13, 1888, is that the Utiited States cirouit court shall not"Have cognizance of any suit, except upon foreign bUls of eXchange. to recover the contents of any promissory note or other chose in action in favor of anyasllignee. or of anyatibs6quent holder. if such instrument be payable v,48F.no.3-12
to bearer. and be not made by any corporation. unless such suit might have been prosecuted ,in, soob eourt if no,such,. Qf,transfer had been made.""" . ,.
H,'" ',,' '.
The to' suits upon'al$signed causes of action is expressly confined to those brought to recover the contents in :4-mbler v; Eppinger, of a promiElBorynote or other chose in ,action i )37 11 Sup. Rep. 173, it is heldthaOM phrast;l ."chose in action"oannot be construed to include rightsofaotion founded on _ sOIJle wrongf111 act or som,El ,rieglect /)f bllt must be limited to suits founded uponcoritracts containinKwithin themselves 'some dutyto 'qe perfQrtrlWi.',In DesMet' 16 How. 622, aod BU8hneU v. KeJnnedy, 9 Wall. 387, the saine cOnstruction was gi-ven to thesil'nilai' phrase found in"tbeelevelitba'elltion of the act of ,1789;80 tbafii'is thus Clearly deoided by the supreme, court that the 'linlitatjQufoupdin the atit ofl888;a:nll'already cited.cannot;Qe made applicable 'to ,clittms of tile, nature of,those declared on hi' the- present action, which are for damages resulting from the alleged violation of the to charge !onlyJegalrates for the transpW'taUou,pfprQpetty over its line of " '. '; pre$ented' by· plea to the. jurisdiction is that the Railroad ,Compan1-must be, deemed to be a citizen and resid,@ntoObe states..o fIowa and -Nebraska, as well as of the state of Illinois; that the litigation: is not, therefQre, between citizens ofdifferent states; that the defendant QQl'POl'ation is.aresident'oHowa"and, consequently, this court is without jurisdiction. The evidence submitted plea. is, a. created Qithe delaws oqhe ,state corpol;a.tiol). had" from 1.8,&5 to 1874.: the power :tq,Jease lind operate ,lines ,9frailwliy adjoilling and undertpe 3Qt: pLMarch 3Q;, J875 , it ·right tq property, franchi!les,9,f the les!lors in ,adjoiJ;lipg E!tates. thu!;! it, tobe,corn,e in fact t4e owner pf Buch Hnlls of"ailway, It jthllr appears from: the evidence tbere;wa,s organized: under the laws Ci)ftbe state of Iowa, in the year ,l&Q3"acorporatioll. as the Burlipgton & Missouri the owner of;a line. of fron;itpe city of ],3U;l1Ungt()!,l, Iowa, to a within 15 mil(ls qfjCouncil Bluff!;l;tqat.OD 3.1st day Of'December, 1872, bearing date,tl;1e Bur& ;Upgtqn & Quincy Oom itslineof railway, all the apPllrtein ,perpetuity; that,on of written II;lstrumept corporatiOJ1S "th,e. Bl,lrlington ;&,: and .4l;Quincy Company its line of railway and Iowa, w,hi9h .has ever since been tUp and, by the l!\,tter company,a.nd 1ri so 'doitig' the fIght 'of t;lminent dQlcllam .hIlS places in Iowa,. hay,.
CHICAGO,B. & Q. R ·. CO.
ing local establishments and officials in the state. Upon these facts, it is claimed by plaintiffs that the Chicago, Burlington & Quincy Railroad Company has in fact been consolidated with the Burlington & Missouri Company, and by the exercise of corporate power in Iowa has become an Iowa corporation, or, at least, that it must, for jurisdictional purposes, be deemed to be so far adopted as a creation of the laws of Iowa that it cannot claim to be a non-resident of the state. . The ruling and decision of the supreme court in Nashua, « L. R. Corp. v. Boston & L. R. Corp., 136 U. S. 356, .10 Sup. Ct. Rep. 1004, is decisive of this proposition. In that case it appeared that by act of the legislature of New Hampshire certain persons had been incorporated for the purpose of building so much of a line of railway, extending from Nashua, in New Hampshire, to Lowell, in Massachusetts, as was within the boundaril's of the former state; and, by act of the legislature of Massachusetts, the same persons had been incorporated under the same name, for the, purpose of building that portion of the line lying within the boundaries of Massachusetts. Some two years later the legislature of each of said: states passed acts intended to unite the two corporations, in which the stockholders in the New Hampshire corporation were declared to be stockholders in the Massachusetts corporation, and vice verBa, and the two corporations were declared to be united into one by the name of the Nashua & Lowell Railroad Company. It also appeared that, by written agreement between the companies, it was provided that the two roadsshollld be operated as a single line by a common agent to be appointed by the directors of both companies, and provision was made for a complete merger of the business and property into one whole, under one joint management. Subsequently the New Hampshire company brought a suit in equity, in the circuit court of the United States for the district of Massachusetts, ,against the Massachusetts corporation, for a settlement of accounts, and a plea to the jurisdiction was filed, in which it was averred that the original corporati,ons had been consolidated into one jointcorporntion, which must be deemed to be a citizen of both states uniting in its creation. After a very full consideration of the previous decisions, of the court upon the subject of the consolidatioG of corporations, it was held"That. whatever effect may be attriblltl'd to the legislation of Massachusame name with that of the com· setts in creating a new corporation by plainant, .()f in allowing a uniun of its business and property With that of the complainant, it did not change the existence of the complainant as a COl"POration uf New Hampshire, nor its as a citizen of that state, for the enforcement of its rights of action in the national courts against citizens of other states; Indeed, no other state could. by its legislation, change the character of that corporation,:however great the rights and priVileges bestowed upon it. The new corporation created by Massachusetts, though bearing the same nllll}e, composed of the same stockholders, and designed to accomplish the samelimrposes. is not the same corporation with the one in New Hampshire. Identity.of name. powers, and purposes does not crl'ate an identity of ()rigin ol.:existence, any mOre. than any othl'r statutes. alIke in langual'te. passl'd by 4iJIerent legislative bodies. can properly be said to owe their eltistence to ·b'ot'h.To each statlite; and to the corporation created by it, there can bebutlol1e legislative pateralty. III '" .. ' From the caaes we ,bavecited. it
law railroad corporations created by two or more states, though joined in their stock, and in the division of their profitll, 80!l8 to be practically a single corporation. do not lose their it;Ieptity, and that each one has its existence an,d its standing in the courts of the country only by virtue of the legislation of the state by which it is created. The union of name, of officers, of business. and of property does not change their distinctive character as separate corporations."
Is ev,ident tbatby the
Under the doctrines thus announced, it is entirely clear that the fact that the defendant corporation, created under the lawsofthe state of Illinois;' is engaged in the operation of lines ofrailroad in the state of lowa,andin that respect is exercising practically all the corporate pow': erscollferred by the laws 'of Iowa upon corporations, created under such lawB, does not make the defendant an Iowa corporation. It remains an Illirioiecorporation, exercising in Iowa, under the permission and autholfityofthe laws thereof, corporate powers, but it exercises them as a foreign Mrporation. Even, if the evidence showed,whichit does not, that the purpose, mice entertained, of consolidating ,the Ghicago, Burlington& Quincy and Burlington & Missouri Companies had been carried to' a completion, the result attained would have been the union of the two companies in the work done, but not a consolidation olthe original,corporations into a new corporate entity; for thaVsdeclared by the supreme court to be beyond the power olthe legislatures of Illinois and Iowa to accomplish. What, in fact, was finally done by the agreements between the Chicago, Burlington & Quincy and Burlington & Missouri Companies was that the latter conveyed its line ofrailwayto the former, which on its part agreed to operate the line under the conditions in the agreement contained. Under the rule laid down in the case just cited, the Burlington & Missouri Company, as an Iowa -corporation, could· sue the Chicago, Burlington & Quincy Company, as an Illinois corpc1ration, in the federal courts in Illinois, and the latter could sue the former in the federal courts in Iowa. In the light of this decision, it cannot be successfully argued that, under any conceivable circumstances, the Chicago, Burlington & Quincy Company, created a corporation under the laws of Illinois, can become an Iowa corporation. Being an Illinois corporation, and that only, it is, for jurisdictional purposes, to be deemed to be a citizen of, Illinois, and therefore; when sued in the state courts in Iowa by a citizen of a state other than Illinois, ,it has the right of removal if the suit involves Ii sum or value in exces's of $2,000. , It is urged, however, that, granting that the, defendant company can only be considered to be an Illinois corporation, nevertheless it has become a resident of Iowa, because it is ,engaged in: the transaction of business in Iowa, has established offices in the state, has acquired property in Iowa, and·· exercises corporate powers and .franchises .in connection therewith. The supreme court of the United States has repeatedly held that a corp:orll,tioncannot change its, cItizenship or resldence by in business in states other than that of lts .creation, For a citation of these decisions, reference may be madetp,the cases of·Booth. v. Manu,· JaeturingOo.,40 Rep. 1, and 43 Fed. Rep. 695.
CONN '11. CHICAGO, B. & Q. R. CO.
The facts of this case do not bring the same within the rule statEd by Judge CALDWELL in Fitzgerald v. Railway Co., 45 Fed. Rep. 812, in which it is held tbat a company formed by the consolidation of three corporations, and engaged in a common enterprise, is to be deemed a citizen of each state by which the separate corporations were created. The rule governing cases of this kind is the same as that applicable to natural persons. If A. is a citizen of the state of Illinois, he does not acquire citizenship in Iowa by becoming interested in business in Iowa, or by buying property therein; and, if he is sued in a state court in Iowa by a citizen of that state, he has the right to remove the into the federal court, if the amount involved is sufficient, and such right cannot be defeated by evidence showing the owIiership of property by him in Iowa, or the transaction of business by him in that state. But if A., a citizen of minois, B., a citizen ofIowa, and C., It citizen of Nebraska, enter into a partnership for the transaction of business in one or all of the named states. and suit is brought against them as partners, for the enforcement ofcllJ,ill1s or rights existing against the partnership, in a state court of anyone of the named states, then the right of removal would not exist, not because the partnership could be said to be a citizen or resident of each one of the named states, but because.one of the partners was a citizen of the state wherein the suit was brought, and, by reason of his Citizenship and consequent residence, the right ofremovnl would be defeated. If, in like manner, an Illinois corporation, an Iowa corporation, and a Nebraska corporation should enter into a partnership for the purpose of uniting .and operating connecting lines. of railway owned by them in the three states named, then the company or consolidation thus formed, if sued upon any claim pertaining to the common or partnership business in the courts of anyone of the three states under whose laws the corporations forming the partnership had been severally created, could not remove the suit into the federal court, because one of the parties defendant in that case would be a citizen and resident of the state wherein the suit was pending. The facts shown in evidence in the present case would not justify the .court in holding that the Chicago, Burlington & Quincy Company and the Burlington & Missouri Company had entered into a partnership for the operation of the lines of railway originally owned by the named corporations. The two corporations are not in partnership, nor engaged in' a joint enterprise. The Burlington & Missouri first leased, and then sold, its line of railway in Iowa to the defendant company, and the latter is the sole corporation engaged in the business of operating the united lines of railway,and it is the only corporation declared against in the present action. It is therefore held that the plea to the jurisdiction is not well taken, and the same is overruled.
I concur in the foregoing opinion.
FEDERAl. REPORTER,· vol.
(ot.rcuU COUrt, S. D. Iowa;O. D. November 18, 1891.1 .
JUR1SDIOTION.,..BILL TO CANCEL JUDGMENT IN STATB COURT.
When the requisite jurisdictional amount Is involved\.and the citizenship of the parties is diverlle, a federal oourt has power to grant reuef against a judgment obtained in a state oourt by means of fraud.
A bill tor relief against a judgment at law alleged that oomplalnant and another were sued for ciamages for a joint assault and battery; that cOtnplainant's codefendant therein paid the plaintiff $100 in full settlement of the damages, and that. 'b.vagreement between the latter two this settlement wail kept secret from complainant. and the suit prosecuted· against him for their joint benefit; thatjudgmant was obtained for $4,000, and partly ellforced by execution sales of complainant'sllmds; that complainant, having thereafter discovered the fraud, applied for a new trial, which was dellied; and that be is without remedy in that oourt. Held, thattbe bill stated a ground for equitable relief against the judgment and sales.
In Equity. Snit by ·John L. Young against P. Sigler to set aside a judgment at law on the ground of fraud in procuring it. On demurrer to bill. Demurrer overruled. Cole, Me Vey &: Cheshire andT. H. Grmt, for complainant. Kauffman &: Guernsey and Harvey &: Parrish, for defendant. Belore SHIRAS and WOOLSoN,JJ. . SHIRAS, J. It is averred in the bill herein filed that on the 19th day of March, 1885, one William: Lee brought an action in the circuit court of Decatur county, Iowa, against Lyman P. Sigler, the defendant herein, and John :Lo' Young, the- now complainant, to recover damages in the sum of 810,000 tOr a joint assault alleged to have been committed upon the person of said Lee by said Sigler and Young; that on the 12th day of October, 1886, while said action was pending and yet untried, the said Sigler and, said Lee entered into an arrangement whereby it was agreed that said Sigler should pay to said Lee the sum of $100 in full satislaction of all damages caused to said Lee by rensonof said alleged assault, andthnt said sum was paid by said Sigler and by said Lee received in full satisfaction and accord of said cause ofaction; that it was further agreed between said Sigler and said Lee thatthefaet of such settlement, payment, and discharge of said joint cause of action should be kept concealed from said Young; thltt said action for damages shoul<1 therenlter be prosecuted against said Young for the common benefit of said Lee and Sigler. who should mutually share all the fruits and bp,nefits attainable therein; that complainant was kept in entire ignorance of these facts, and that in October, 1886, ,he was forced togo to trial, not knowing that the cause of action had been in fact satisfied and the case dismissed as to his co-defendant; that said Lee, with the secret and fraudulent co-operation of said Sigler, and with the peI:jury and false testimony offered by thein,obtained from ihejury a verdict for $4,000; . that in fact the said complainant was innocent of the charge laid against him, and that, if said Lee suffered any damages by reason of the alleged assault, the same were due to the acts of the said Sigler; that complain-