TUG RlVER COAL & SALT. 00. II.
TUG RIVER COAL & SALT CO. T. BRIGEL et aL
(Circuit Court of Appeals, Sixth Circuit. May 7, 1895.)
An allegation that the citizenship ot a party or parties Is unknown Is Insufficient to sustain the jurisdiction ot the federal Ol>urts, .. the requisite citizenship must distinctly appear. II SAME. An allegation as to the residence or place of business of a party t. Dot the purposes of jurJadtctloD equivalent to an averment of citizenship, In the federal courts.
_ FBDERAL COURTs-JURIsDICTION-ALLEGATION 01' CITIZENSHIP.
WheI-e a bill to foreclose a mortgage makes judgment creditors and ail persons interested In the property parties defendant, the object being to sell a perfect title by cutting olr all adverse rights and liens, and to Bettle ail questions of priority In the proceeds of sale, all parties defendant are necessary parties, and, If any of them are citizens of the same state with any of complainants, the controversy Is not wholly between e1tlsena of dllrerent states.
4. B.ul:E-JURISDICTION. Act Marcil 3, 1815, providing that If an absent defendant doee not appear within a time llmlted after substituted service, as provided by the act, the court may entertain jurisdiction of the suit In the same manner as if the absent defendant had been served within the simply allows substituted service In certain cases where the court has jUrisdiction, and doos not purport to change or modify the law as to jurisdiction. 6. CosTs-RBVBRSAL FOR WANT OF JURISDICTION. A judgment was reversed on the sole ground that the federal Ol>urts had no jurisdiction, which point was raised for the tirst time on appeal. Held, that appellant must recover costs In the lower court, but that the costs of appeal should be equally divided.
Appeal from the Oirouit Court of the United States for the Distriot of Kentucky. In Equity. Bill by Leo. A. Brigel and Logan O. Murray, trustees, against the Tug River Coal & Salt Company and others, to foreclose a mortgage and for further relief. There was a decree for complainants, and the Tug River Coal & Salt Oompany appealed. Thomas F. Hargis (Baxter & Hutcheson, of counsel), for appellant. Hollister & Hollister and Walter A. De Camp, for appellees. Before LURTON, Oircuit Judge, and SEVERENS and OLABK, District Judges. OLARK, District Judge. This case is now before the oourt on a question of jurisdiction only, raised for the first time in this court on motion of appellant. The suit is brought to foreclose a mort· gage executed by the Tug River 0001 & Salt Oompany to Leo. A. Brigel, Logan O. Murray, and William O. Ireland, as trustees, to secure payment of bonds issued and sold by said company, amounting in the aggregate to '30,000 besides accrued interest. The mortgage conveys a tract of land embracing about 20,000 acres, known as the "Warfield Estate," with all improvements. Beyond the mortgage debt there were judgments and other claims agafnIt v.67F.no.6-40 .
the company amounting to a large sum. The relief aslted is foreclosure of the mortgage and sale of premises, and other equitable relief, as will appear further on. The question involves the original jurisdiction of the circuit court of the United States for the district of Kentucky, in which the suit was brought. This question alone being now considered, it is only necessary to refer to so much of the record as presents this issue and is material to its decision. The case is one where jurisdiction depends on diverse citi· zenship of the parties. The caption of the bill, with the allegations as to citizenship, the objects of the Buit, and relief are given just as made, as follows:
"Bill of Complaint. "Leo. A. and Logan C. Murray, Trustees, Complainants, vs. The Tug River Coal and Salt Company, a corporation created by and existing under the laws of the state of Kentucky; Kentucky & Cincinnati Natural Gas & Fuel Company, a corporation created by lind existing under the laws of the state of Kentucky: James D. Barrett, Leo. A. Brigel, A. Lee Barrett, E. G. Piper, John B. Wellman, .Lane & Bodley, Nordyeke, Harmon & Company, Gale Brothers, A. H. Hogan, John Mead, Levi A. Ault, and Frank B. Wiborg, Defendants. Bill in chancery to foreclose a mortgage on real estate, for the appointment of a receiver, and for an injunction and equItable relief. "To the Honorable, the Judges ot the Circuit Court ot the UnIted States within and for the DIstrict ot Kentucky: Your orators, Leo.A. Brlgel and Logan C. Murray, humbly complalnIng, represent unto your houors: (1) That the said Leo. A. Brigel is a citizen of the state of Ohio, and resIdes in the city ot Cincinnati. That Logan C. Murray is a citizen ot the state of New York, and resides in the city of New York. That the detendants the Tug River Coal and Salt Company and CincInnati Natural Gas & Fuel Company are corporations created by and existing under the laws of the state ot Kentucky, and are citizens ot the state ot Kentucky. That the saId James D. Barrett Is a cItizen of the state ot Kentucky, and resides In Martin county. That the Christian names ot A. Lee Barrett, E. G. Piper, and A.. H. Hogan are unknown to complainants, nor do the complainants know the respective residences or places of business of saId E. G. Piper, A. H. Hogan, John Mead, and John B. Wellman. That they are Ignorant also of the names ot the constituent members ot the respective firms ot lAule & Bodley, Nordyeke, Harmon & Company, and Gale Brothers, and do not know the citizenshIp ot their respective constituent members, nor theIr places ot business, excepting that Lane & Bodley 1s a partnership doing business tn the city ot Cincinnati, state ot Ohio; that LevI A. Ault and Frank B. Wiborg are citizens 01' the state of Ohio, both residing In Hamilton county, In that state; that Leo. A. Brigel is a citizen of the state or OhIo, and resides In the city ot Clnclnnati;and. that A. Lee Barrett is a citizen 01' the state ot Kentucky, and resides in Martin county, in that state. That all of said parties defendants claim some Interest In the land, the subject-matter ot this suit, and are made parties defendant hereto in order that, after answering tully the allegations In this bill ot complaint contained, theyDlay severally be required to set up such claim as they may respectlvelyhave, to theeI!-d that, under the sale hereinafter prayed, a good titie to the lands described .bereln may be given to the purchaser, and, all parties being betore the court, their respective rights, 1t any, may be passed upon In one suit, agreeably to the usages and practice 01' courts ot equity. · · · (4) That the said mortgage be toreclosed. That the equity of redemption ot the saId the Tug River Coal and salt Company In said property be for(lver barred and cut oir. That an appraisement ot the said property be made ill conformity with the laws 01' the state of Kentucky, and that on a day to be fixed by the court the said real estate and property be sold in wIth the terms ot saId deed of trust or and that out ot the proceeds thereot there be paid: First. the costs and expenses (jf this suit, including a reasonable compensation to the saId trustees and their counsel; second, the coupons and interest due
TUG RIVER COA.L '" SA.LT CO. 11. BRIGEL.
llpnn !'o'lid bonrl,,;
thIrd. the bonds tllemselyes. pm rata: fourth. to such other Lien holders as may establish their claims ana l1ens tn this cause iu the order ot their respective priorities; and, fifth, the balance, tr any, to said the Tug River Coal and Salt Company or its assigns. (5) And for all other and further orders which to your honors may seem meet, and for all other relief to which your orators may be entitled in equity and conscience, and under the laws and practice of Kentucky, and under t!le CIrcum· stances of the case; and< your orators will ever pray."
It does not admit of question that the defendants are proper and material parties to a bill framed as this is, making the charges and asking the relief which it does. The object is to sell a perfect title, cut off and extinguish all adverse rights or liens, including the judgment creditors' right to redeem, and to settle all questions of priority in the proceeds of sale. Subpoena was served on some of the defendants. Substituted service was had on Piper, Lane & Bodley, Ault, and Wiborg as nonresidents of the district Others appeared, and no action was taken as to part of the defendants. The suit was dismissed as to Mead and the Gas Company. It does not appear distinctly what the claim of Ault and Wiborg was, beyond the fact that at one time they were holders of some past-due coupons secured by the mortgage. J. D. Barrett, Brigel, and Piper filed petitions in the case, setting up claims as creditors, Brigel and Piper by judgment, and parts of the claims of Brigel and Barrett are for taxes paid for the company, and Brigel's claim was allowed priority over the bonds to the extent of the taxes. The other defendants, except A. Lee Barrett, are shown by the report of the special master to be judgment creditors, with liens on the real from the date of judgment It appears in the record proper that Piper and Lane & Bodley were citizens of Ohio, the latter answering as the Lane & Bodley Company, a corporation of that state. The citizenship of the other defendants alleged to be unknown to complainant does not appear in the record. Their claims were I!resented to the master, and allowed, doubtless, on copies of the judgments. While not filed as a creditors' bill, formally, the case was so treated, with the usual reference, report, and decree ordering sale, and the case comes to this court by appeal. The complainants' own statement of their case shows that s.ome ot the parties defendant, namely, Leo. A. Brigel, Ault, and Wiborg, are citizens of the same state with Brigel, one of the complainants, and that the citizenship of other defendants is unknown, and the question of jurisdiction is thus presented in two aspects.. For the purpose of this question Brigel, sued as defendant in his individual right in a bill brought in his right as trustee, occupies the same position as if sued by another person in that right The jurisdiction depending on diversity of citizenship alone, this must distinctly and affirmatively appear in the record proper. Horne v. George H. Hammond Co., 155 U. S. 393,15 Sup. Ot 167; Wolfe v. Insurance Co., 148 U. S. 389, 13 Sup. Ct 602; Menard v. Goggan, 121 U. S. 253, 7 Sup. Ct. 873; Everhart v. College, 120 U. S. 223, 7 Sup. ct. 555; Grace v. Insurance Co., 109 U. S. 278, 3 Sup.Ct. 207. In Wolfe v. Insurance Co., Mr. Ohief Justice Fuller, delivering the opinion, says:
··It Is essent1al, Incasell whe1'$tbe jurisdiction depencls.upon the citizensbJp of the parties, that such citizenship, or the facts. Which 1Ji lepl. IDteDdment
constitute It, should be distinctly and positively avelTed In the pleadings, Of should appear with equal distinctness in other parts 01' the record. It is not sufficient that jurisdiction may be infelTed argumentatively trom the averments."
And, as the controversy must be one whoHy between citizens of different states, each party plaintiff must be competent to sue, and each defendant subject to suit. Smith v. Lyon, 133 U. S. 315, 10 Sup. Ot. 303; Iron 00. v. Stone, 121 U. S. 631, 7 Sup. Ot. 1010; Coal Co. v. Blachford, 11 Wall. 172. In the last-named case the court, through Mr. Justice Field, said:
"In other words, it there are several coplaintiffs, the intention 01' the aet is that each plaintiff must be competent to sue, and, it there are several c0defendants, each defendant must be liable to be sued, or the jurisdiction cannot be entertained."
Recent decisions of this court are to the same effect. Shipp v. Williams, 10 C. C. A. 247, note, 62 Fed. 4; Pittsburgh, O. & 1::11:. L. Ry. Co. v. Baltimore & O. R. 00., 10 C. O. A. 20, 62 Fed. 705. In the last case cited, Judge Lurton, speaking for the court, said:
"The very late case 01' Wilson v. Oswego Tp., 14 Sup. Ct. 259, is a case much in point. There federal jurisdiction was held to be defeated as to a defendant whom the court thought an unnecessary party to the relief sought by the complainant, yet a proper party because of its interest In the controversy. We are clearly 01' opinion that, wbile the Central Ohdo was not a necessary party to the accounting between the Baltimore & Ohio Railroad Company and the Pittsburgh, Cincinnati & St. Louis Railway Company, yet it was, in view 01' Its Interest In the issues upon that account, a proper party."
So, where the object of the suitis to recover possession of property, real and personal, parties in possession, although as stakeholders, claiming no interest, are not formal, but indispensable, parties. Massachusetts & S. Oonst. Co. v. Oane Creek Tp., 155 U. S. 283, 15 Sup. Ct. 91, following Wilson v. Oswego Tp., 151 U. S. 56,14, Sup. Ot 259. And the same rule was applied in Wetherby v. Stinson, 10 O. O. A. 243, 62 Fed. 173. This is a case, therefore, where it affirmatively appears from complainants' bill that the court is without juisdiction. The rule being that the requisite citizenship to sustain jurisdiction of the federal courts must distinctly appear, it follows essarily that a suit of this character cannot be maintained in the courts of the United States upon an allegation that the citizenship of the party or parties is unknown. In such case nothing appears, and there is clearly a lack of jurisdiction, and it is in effect so held. Oonwell v. White Water V. O. 00., 6 Fed. Oas. 372, 4 Bisa. 195; Speigle v. Meredith, 4 Biss. 120, Fed. Cas. No. 13,227. The particular allegation as to Piper, Hogan, Mead, and Wellman is that their "residence or place of business" is unknown. Citizenship is probably meant, notwithstanding it is established that the terms are not synonymous, and that an averment of residence is not the equivalent of an averment of citizenship for the purposes of jurisdiction in the courts of the United States. Denny v. Pironi, 141 U. S. 121, 11 Sup. Ot 966; Grace v. Insurance Co., 109 U. S. 278, 3 Sup. ot 207. Strictly, therefore, no allegation is made as to the citizenship of the parties just named. It is insisted by appellees that the trustees on one side, and the Tug River Coal & Salt Oompany, the mortgagor, on the other, are the only necessary parties,
TVG RIVER COAL &: SALT CO. IJ. BBIGJl:L.
and that the presence of the other parties does not defeat jurisdiction. In view of what has been said as to the object of the suit, and the relief asked, we think this position is wholly untenable. The question of necessary parties is not determined by any designation of the bill as a foreclosure, or vendors' bill, etc., but upon the object stated and relief sought in the particular case. Within certain limits this may be restricted, or enlarged, as complainants may choose. If the bill had been for foreclosure merely, and against the mortgagor company, although brought as a creditors' bill, the jurisdiction, having once attached, would not have been defeated by interventions by these parties for the purpose of litigating their claims. Stewart v. Dunham, 115 U. S. 61, 5 Sup. Ot 1163; Hardenbergh v. Ray, 151 U. S. 112, 14 Sup. Ot 305. This ill what really happens generally in practice. The case here is very different. Section 8 of the act of March 3, 1875, has no bearing on the question as is supposed. The act simply allows substituted service in certain cases where the court has jurisdiction, and does not purport to change or modify the law as to jurisdiction, and it is to be borne in mind that the necessary citizenship is a constitutional, as well as statutory, requirement. Greeley v. Lowe, 155 U. S. 73, 15 Sup. Ct. 24. It is urged that the defendant creditors may be arranged on the side with the trustees, their interest being the same. We have seen that exactly the character of interest claimed by Ault and Wiborg does not fully appear. There can be no doubt that, as the bill states the case, these parties are interested adversely to the. trustees. This is the only reasonable construction of the bill; and whether this might be shown subsequently to be untrue, for the purpose of removing the jurisdictional objection, it ill not necessary to decide. The bill asks that the right of redemption be cut 01f; that these defendants set up their claims and liens; that the court pass on all questions, so that the purchaser may obtain title free from all such claims; and (not mentioning other points) Leo. ABrigel and J. D. Barrett set up claims, parts of which are for taxes paid, and which would be entitled to priority over the bonds. We think their interests are so far different and adverse as to prevent their being arranged as suggested. Moreover, conceding that such arrangement might be made, and we would have creditors, citizens of Kentucky, placed with complainants, and this would involve the case in the same difficulty that now exists: Another and decisive reason against any such method of meeting the objection is that the citizenship of a number of the defendants is not known, and not disclosed by the record. It cannot be known whether placing such parties on the opposite side would tend to sustain or defeat jurisdiction. In any view, therefore, we are clearly of opinion that the circuit court never rightfully acquired jurisdiction of the case. Whether, with the case back in the circuit court, the complainant could amend and limit the relief to foreclosure, and the mortgagor as defendant, and thereby make a case within the jurisdiction of the circuit court, we are not called upoo to decide. On reversal for want of jurisdiction, the general rule is to allow cosJs the improperly instituting or removing
the suit, for the reason that it was the duty of such party to place on record the facts necessary to sustain the jurisdiction of the court. Kellam v. Keith, 144 U. S. 568, 12 Sup. Ot. 922; Bradstreet Co. v. Higgins, 114 U. S. 263, 5 Sup. ct. 880; Iron Co. v. Stone, 121 U. S. 631, 7 Sup. Ot. 1010; Horne v. George H. Hammond Co., 155 U. S. 393,15 Sup. Ot. 167; Chappell v. Waterworth, 155 U. S. 102, 15 Sup. Ct. 34. It was held, however, in Peper v. Fordyce, 119 U. S. 471, 7 Sup. Ct. 287 (citing Mansfield, C. & L. M. Ry. Co. v. Swan, 111 U. S. 379, 4 Sup. Ct. 510, and Hancock v. Holbrook, 112 U. S. 229, 5 Sup. Ot. 115), that, "up.on a reversal for want of jurisdiction in the circuit court, this court may make such order in respect to the costs of the appeal as justice and right shall seem to require." And in Wether· by v. Stinson, 10 C. C. A. 243, 62 Fed. 173, the circuit court of ap· peals reversed the decree for want of jurisdiction, and refused to allow costs, though the reason is not stated. In this case the record is voluminous. Appellant has had the entire record brought up and printed. Appellant made no objection to jurisdiction in the circuit court, and did not call the court's attention to lack of juris· diction. While the defendant appellant must recover costs in the court below, we do not think it should be allowed full costs in this court. The costs of the appeal will be divided equally. Reversed, and the case remanded to the circuit court of the United States for the district of Kentucky, with instructions to dismiss the bill, unless, upon application for leave to amend the bilI, leave to so amend it as to exhibit a case within the jurisdiction shall be granted by that court.
BAYES v. COLUMBUS, L. & M. RY. CO. et aJ. (Circuit Court, N. D. Ohio, W. D. May 18, 1895.) No. 1,080.
COURTB-JURISDICTION-POSSESSION OF PROPERTY INVOI,VED.
A sult was instituted In a federal court against a railway company for the purpose of marshaling liens and bringing its property to a sale. A receiver was appointed. who took possession of the property of the company, consisting chiefly of an unfinished roadbed. Pending such suit, application was made to the federal court for leave to make the receiver a party to a Bult In a state court, instituted under a state statute, for the purpose of condemning and appropriatIng a part of the roadbed as abandoned. HeW, that the court should not permit the property held by It for the benefit of creditors and lienors to be subjected to the jurisdiction of another court, and'to possible dismemberment, but should hasten the proceedings for a sale, under Its own direction, in order that the rights of all parties might be preserved.
This was a suit by Otho L. Hayes, receiver of the Lima National Bank, against the Columbus, Lima & Milwaukee Railway Company, to marshal liens and bring about a sale. A receiver of the property of the defendant having been appointed, the Lima & Northern Rail· way Company applied for leave to make such receiver a party to an action pending in a state court. Hoyt, Dustin & Kelley, for receiver. Cable & Parmenter, for complainant. W. B. Richie,o. N. Haskell, and Watts & Moore, for Lima & N., By. 00.