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Osgood v. CHICAGO, DANVILLE, AND VINCENNES R. R. Co.
moval. The removal of the cause transfers the res as a necessary part of the proceed
ings. The petition for removal may be filed in vacation. " The bond must be good and sufficient security, but need not be approved by the state court. It is not essential (at least in the State of Illinois) that the record be certified other than
by the clerk of the state court, under the seal of the court. Nor is it necessary that the petition be verified by affidavit. On the 22d of February, 1875, plaintiff, a bondholder of the railroad company defendant,
filed a bill in a state court against defendant and others (trustees of mortgages given by it, including the president, treasurer, and directors), to foreclose the mortgages, and an injunction was issued and receivers appointed. On the 23d of February, a petition for removal was filed by certain non-resident defendants. February 24th the bill was amended by making divers judgment creditors defendants, one of whom, on the same day, filed a cross-bill. February 26th other creditors were made defendants with leave to file cross-bills. March 1st other persons petitioned to be made co-plaintiffs. No action was taken on the petition last mentioned, nor had more than the one cross-bill been filed ; but a demurrer had been argued and taken under advisement,
and the court had adjourned for the term. On March 22d, during vacation, a petition for removal under the Act of March 3, 1875,
was filed by the company, a corporation of the state in which the bill had been filed, in which the president, treasurer, and trustees joined. A bond, which had not been approved by the state court, was also filed, and a copy of the record without the certificate of the judge, bearing, however, the signature of the clerk and seal of the court. Held: (1.) It appearing that the rights of the judgment creditors were subject to the prior liens of the bondholders, that their interposition could not affect the power
of removal. (2.) That the fact that a cross-bill had been filed by a judgment creditor was equally
ineffectual to prevent the removal. (3.) That the cause was removable under the statute. (4.) That the petition for removal was seasonably filed. 75.) That the facts constituted a legal removal of the cause. The court discusses the statute in divers aspects, defining its scope and operation, the
relations of the federal and state courts thereunder, and other points.
THE facts are stated in the opinions.
The Act of March 3, 1875, appears in full in the American Law Times for April, 1875.
Mr. Crawford f Mr. McDonald, for plaintiff.
DRUMMOND, J. On the 22d of February, 1875, the plaintiff, as a bondholder of the railroad company, filed a bill in the Will County circuit court against the company and certain defendants (trustees of mortgages amounting to several millions of dollars, given by the railroad company, including the president and treasurer and members of the board of directors), to foreclose the mortgage. The bill charges various breaches of trust on the part of the officers of the company, and asks for an injunction to prevent them from negotiating certain bonds of the company, and for a receiver. The court, without notice to the defendants, issued the injunction and appointed receivers at the time the bill was filed. On the 23d of February, a petition was filed by some of the non-resident defendants to remove the suit into this court, which was refused by the state court. On the 24th of February, the bill was amended by making various judgment creditors defendants. On the same day, one of the judgment creditors answered and filed a cross-bill, praying the court to enforce the lien against the company, and that the receivers should pay the same. On the 26th of February, on petition, other creditors of the company
Osgood v. Chicago, DANVILLE, AND VINCENNES R. R. Co.
were made defendants, who asked leave to file cross-bills. These claims of the judgment and other creditors were all subsequent in point of time and right to those of the bondholders under the mortgages. On the 1st of March certain persons petitioned to be made co-plaintiffs.
There was no action of the court on the petition last referred to, and the only cross-bill filed was that of the 24th of February, already mentioned. There was a demurrer to the bill, which had been argued and taken under advisement by the court. There had also been some incidental motions made in the case, which need not be particularly referred to. The court had adjourned for the term. This was accordingly the position of the case when, on the 22d day of March, petitions were filed in the suit with the clerk of the court by the railroad company, a corporation of this state ; Judson, the president, and Tenney, the treasurer, and by the trustees, Roberts, Fosdick, and Fish, asking for the removal of the cause from the state court to this court, under the act of Congress of the 3d of March, 1875. The petitions alleged that the amount in controversy was of the value of more than $500; that the plaintiff was a citizen of Massachusetts; that the parties who had petitioned to be made co-plaintiffs were citizens of Pennsylvania; and that Judson, Tenney, and Fish were citizens of New York ; Fosdick a citizen of Connecticut, and Roberts a citizen of Illinois. Bonds were filed, conditioned as required by the act of Congress. A transcript of the record of the suit in the state court was filed in this court March 24. A motion is made to dismiss the suit, on the ground that this court has no jurisdiction of the case.
It seems to have been the intention, in the recent act, to consolidate into one act all the previous general acts of Congress conferring jurisdiction upon the circuit court, and at the same time to give the court jurisdiction in some cases where no previous act of Congress had conferred it. The court has now jurisdiction in suits between the citizens of different states, without regard to the fact whether or not one of the parties is a citizen of the state where the suit is brought. The act also authorizes a case to be removed from the state to the federal court under such circumstances. The Judiciary Act of 1789, as construed by the supreme court, required that each of the parties plaintiff should have the right to sue each of the parties defendant, in a suit between citizens of different states, and equally so in the case of removal from the state to the federal court under the authority conferred by the twelfth section of that act. The act of 1866 declared that when a suit was brought in a state court by a citizen of that state against a citizen of another state, and a citizen or citizens of the same state as the plaintiff, that if the controversy might finally be determined between the plaintiff and the citizen of the other state without the presence of the co-defendants, it might be removed to the federal court. The recent act of Congress declares that in any suit mentioned in the law when there shall be a controversy which is wholly between citizens of different states, and which can fully be determined as between them, then either one or more of the plaintiffs or defendants actually interested in such controversy may remove the suit into the federal court. This is the first time that Congress has authorized a defendant, a citizen of the state where the suit is brought, to remove the case from the state to the federal court. As this is a case where there are several defendVol. II.)
Osgood v. CHICAGO, DANVILLE, AND VINCENNES R. R. Co.
have joined in controversy them, and theany, would seem The officers
ants, some of whom have not joined in the petition for removal, the question is whether there is a controversy wholly between the plaintiff and those who have petitioned for a removal and which can be fully determined as between them. The controversy in this case, as between these parties, is whether the bonds referred to in the bill are valid debts against the company, and the mortgages can be foreclosed and the claim enforced against the company; and whether the officers of the company have been guilty of any of the breaches of trust alleged against them. The officers named as defendants, and the railroad company, would seem to be parties whose rights, as between them and the plaintiff, can be fully determined as being a controversy wholly between them. The other parties who have joined in the petition for removal are mere trustees. It is a controversy wholly between citizens of different states.
The fact that there are various judgment creditors, whose rights are subject to the prior liens of the bondholders cannot affect the power of removal, — their rights remaining unchanged. Neither can the fact that a judgment creditor has filed a cross-bill, for then it would always be in the power of a.creditor to prevent the operation of the statute. The difficulty arising from the possession of the res or property by the state court is more apparent than real. If the res has been seized as an incident of the controversy between the citizens of different states, then the removal of the cause into the federal court transfers the res with it as a necessary part of the proceedings, and the fact that collateral issues, as connected with the res, have sprung up in the state court, cannot destroy the right of removal, provided the parties seeking it bring themselves within the terms of the statute. The language of the third section is that the petition for the removal must be filed in the state court before or at the term at which the cause can first be tried. It may prove in some cases, particularly those of equity, difficult to determine the term when the cause can first be tried. It is not claimed in this case that the petition was not filed in due time, but it is objected that it was filed in vacation, and not during any term of the court, and that there was no action of the court upon the petition or on the bond. I do not think the objection can be sustained on either ground. The law requires the petition to be filed in the suit, and it may be before the term, and, in fact, it is often desirable immediately after a suit is commenced in the state court to remove it into the federal court before there is any action of the state court in the case. It is true, that under the statute the bond must be good and sufficient security, but it does not declare that it shall be approved by the judge. It requires the state court to accept the petition and bond and proceed no further in the case. Now suppose the state court should refuse to accept the petition or the bond, or should decide that a bond, valid under the law and with good and sufficient security, was not so, would that deprive the party of the right of removal ? Clearly not. This statute seems to have been passed with a full knowledge of the difficulties growing out of the action or non-action of the state courts under previous laws, and with a determination to make the power of removal independent of the action of the state court. It is not stated in every case under this statute, as in those of 1789 and of 1866, that certain facts are to appear to the satisfaction of the court. And this is the more apparent from the authority conferred (No. 6.
OSGOOD v. CHICAGO, DANVILLE, AND VINCENNES R. R. Co.
on the circuit court, by the seventh section, to issue writs of certiorari to the state courts with power to enforce them, and from what is stated in the same section as to the time of removal if the circuit court of the United States shall hold its next term within twenty days after the petition and bond are filed in the state court. The fifth section was intended to protect a party in case of the improper removal of a suit from the state to the federal court, but the language of that section is peculiarly significant as affecting the motion now before the court. The copy of the record has been filed in this court, and the law seems to indicate under what circumstances only, in such an event, the case should be remanded back to the state court. It is when it shall appear to the satisfaction of the federal court that the suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of the court, or that the parties have been improperly or collusively made, or joined, for the purpose of creating a case cognizable under the act. It is true that the act prescribes the manner in which the removal shall be made, and the directions of the law should be complied with. But the fifth section does not authorize the court to remand or dismiss the cause, for the reason that it may appear that there was any irregularity in the means taken to procure the removal. The purpose obviously was, if the record was filed in the federal court under the law, and the court could see that it had jurisdiction of the case, it should retain it, notwithstanding there might be defects in the manner of removal.
It is also objected that the record from the state court, while certified by the clerk under the seal of the court, has not also the certificate of the judge. This last has never been considered necessary where the record comes from a court of this state. The attestation of the clerk under the seal of the court is sufficient in any court of this state, and is so in this court. A further objection is that the petition for removal is not verified by affidavit. That is not required by the act of 1789, or the act of 1866, nor is it by the act of 1875, though it was by the act of 1867. The Sewing Machine cases, 18 Wallace, 552; 1 Am. L. T. R. N. S. 389. So that on the whole I think it is the duty of the court to allow the case to stand as between the plaintiff and the parties defendant who have petitioned for its removal into this court, and to overrule the motion to dismiss ; and it will be so ordered.
defpe is alsork under last has of thi
OPD, J. It has been the case, on two and it is not remo
After the foregoing opinion was prepared, on application of plaintiff's counsel, a reargument was allowed before Drummond and Blodgett, JJ., subsequent to which the following supplemental opinion was delivered:
DRUMMOND, J. It has been insisted on the reargument, that this court cannot take jurisdiction of the case, on two grounds :
1st. The case itself is of such a character that it is not removable under the statute.
2d. The case cannot be removed independent of the action of the state court.
The first clause of the second section of the act of 1875, states when a case can be removed to the federal court. It must be a suit of a civil nature at law or in equity, pending at the date of the act, or brought thereafter in the state court. The matter in dispute must exceed $500. Vol. II.]
Osgood v. CHICAGO, DANVILLE, AND VINCENNES R. R. Co.
It must be a suit arising under the Constitution or laws of the United States, .... or in which there shall be a controversy between citizens of different states. .... This clause refers to a removal by either party ; that is, by the whole of what constitutes the one side or the other.
The second clause of that section states when a case can be removed by either party, less than the whole. There must be in a suit in the state court a controversy wholly between citizens of different states, and such that it can be fully determined as between them; if so, then any one or more of the plaintiffs or defendants actually interested in the controversy may remove “ said suit” into the circuit court of the United States.
There was here a civil suit in equity pending in the state court at the date of the act, where the matter in dispute exceeded, exclusive of costs, the sum or value of $500.
Was there in this suit a controversy wholly between citizens of different states? The plaintiff was a citizen of Massachusetts, the railroad company a citizen of Illinois. The railroad company had executed to trustees certain mortgages on its property to secure an indebtedness due from the company, of which the plaintiff held a part. He was not a trustee of either of the mortgages. The trustees and some of the officers of the company made defendants, and all of them citizens of different states from that of the plaintiff and the company, petitioned for the removal of the cause.
Now, the controversy between these parties was wholly as to the debt and the validity of the mortgages and the enforcement of the same.
The trustees represented the other creditors as well as the plaintiff. It was then in effect a controversy wholly between the trustees as the representatives of the creditors, and the railroad company. There can be no doubt that, so far as it relates to citizenship, it was entirely competent for the plaintiff to bring his suit in this court instead of the state court. And having done the latter, that it was equally competent for the defendants, as the case then stood, to remove it to the federal court. Was this right lost by the subsequent facts which appear in the case ?
After the bill was filed receivers were appointed, and certain judgment and other creditors were made defendants, one of whom filed a cross-bill.
The mere possession of the property clearly could not affect the result, as appears from the fourth section of the recent act. That was connected wholly with the controversy of the original parties, and did not prevent it from being exclusively between them. It does not appear that any of the creditors were citizens of the same state as the plaintiff, but conceding that there was a controversy in the suit whether the judgments were valid liens on the property, and whether the debts of the other creditors were binding on the company, and that some of the creditors were citizens of the same state as the company, was the right of removal gone ?
It is said that the language of the second section of the act of 1875 is different from the act of 1866, the former declaring that either one or more of the parties “ may remove said suit ” into the federal court. It is insisted that means the whole suit and not the part which involves merely a controversy between citizens of different states, and therefore, if there should be incidentally a controversy in the suit between citizens of the