12 F. 8 -

8

FEDERAL REPORTER.

FOUNTAIN

v.

TOWN OF ANGELIOA.

(Circuit Oourt, N. D. Ne'I1J York. April, 1882 )
1. RElloVAL 01' CAUSES-AsSIGNEES AS PARTIES.

A plaintiff who has been introduced into a controversy by assignment or transfer merely that he may acquire a standing and telation to the controversy , to enable him to prosecute it for the beneficial interests of the original party, improperly and collusively made a party to the suit.
2.

SAME-COLLUSIVE ASSlQNMENT.

Where the plaintiff has no substantial interest in the coupons sued on,but obtained the legal title to enable him to maintain the action, and where ,'he bought them without any inquiry as to their validity or value, and pretended to pay for them by a check whiCh he never paid, it is the duty of the court to dismiss the suit. '

Spencer Olintan, fot plaintiff; 'Hamilton Ward, for defendant. WALLACE, C. J. By the fifth section of the of March 3, 1875, to detemnine the jurisdiction of circuit courts of the United States, it is declared that if at any time in the progress of a!case, either originally commenced in a circuit court or removed there from state conrt, it shall appear that such suit does not really involve a dispute or controversy properly within the jurisdiction of the court, or the parties to said suit have been improperly or collusively made or joined, either as; plaintiffs or defendants, for the purpose of creating. a case cognizable or removable under the act, the said circuit conrt shall proceed no further, but shall dismiss the suit or remand it to the court from which it was removed. Thisl,tction presents the question whether the plaintiff has been improperly or collusively made a party for the purpose of creating a case cognizable by this court within the meaning of the section reo ferred to. It is said by the supreme court in Hawes v. Oontra Oosta Water 00. 25 Alb. Law J. 14:6, [So C. 11 FED. REP. 93, note,] that this statute strikes a blow at improper and collusive attempts to impose upon this court cognizance of cases not justly belonging to it. Before this act was passed it was settled law that although a transfer ot the subject of the controversy may have been made for the purpose of vesting an interest in parties competent, by reason of their domicile, to litigate in the federal courts, that circumstance would not defeat the jurisdiction if the transaction invested the assignee with the real interest in the subject-matter; yet, if the assignment

FOUNTAIN V; TOWN OF A.NGELIOA..

9

was colorable 6nly, and the real interest still remained in the assignor, jurisdiction would not be entertained. Barney v. Baltimore City, 6 Wall. 280. The section in question, therefore, was quite unnecessary if it was only intended to reach a case in which the plaintiff, by assignment, obtained merely a colorable title to the' subject of the controversy. It is not difficult to discern the purpose of the section. It had long been notorious that the jurisdiction of the circuit courts was constantly invoked for the benefit of, parties not within the class which the constitutional grant of jurisdiction to, the federal courts was intended to include; by parties who, because they were citizens of the same state as their could only :reso1-t to the courts of the state, but who, for some ulterior to resort, to the federal courts. The device of transferring ,the supjeqt of the controversy to a citizen ofa-nether state, a friendly coadjutor, who, while acquiring the legal, title;, was expected to litigate for the benefit of the original party. Thrts, new parties were introduced into controversies in which they had stantial interest, merely to bring cases intp the}ederal It cannot be doubted that the provision in questIon intended to meet and prohibit a jurisdiction sought aJ;ld obtained by suohcol· lusive methods. It should be held that a plaintiff who has been introduced into a controversy by an assignment or transfer merely that he may acquire a standing and relation to the controversy which will enable him to prosecute it for the bim'eficial interests of the orig. inal party, "has been improperly and collusively made a party for the purpose of creating a case cognizable under the act." No better illustration of the class of cases which the section was intended to meet could be presented than the present case affords. It is palpable upon the evidence that the plaintiff has no substantial interest in the coupons which are sued upon, conceding that he acquired the legal title to them so as to enable him 'to maintain' the action. He bought them at the solicitation of one Dick, without any inquiry as to their validity or value, and without any negotiation concerning the price to be paid. He pretended to pay for them by a check which he has never paid, which was made for the full face amount of the dishonored and contested coupons, which was paid, if paid at all, by a bank of which Dick was a director and the plaintiff was an aflSistant cashier; and which, after the expiration of three years, he has never heard of since he gave it.' He testifies he hap no personal interest in the transaction. He was infol'med the coupons would have to be collected by suit. He placed them in the hands of