Vol. I.]

SWASEY V. NORTH CAROLINA Railroad Co.

[No. 8.

The stock was pledged for the "redemption of the certificates of debt." The certificates bound the State "for the payment of the sum therein mentioned, with interest thereon." Thus it is apparent that the interest is as much a part of the obligation of the certificate as the principal. If more is necessary to sustain this view, it is to be found in a subsequent part of the section, where it is provided that, "the principal of the certificate shall be redeemable," &c. If it had been supposed that the certificate only related to the principal, it would have been sufficient to provide for the time of the redemption of the certificate, the same as when in sec. 41, "the security for the redemption of the certificates" was designated and granted.

If then the certificate bound the State for the payment of both principal and interest, it would seem to follow most unquestionably that whatever was given as security for its redemption could be held for the performance of all its obligations.

But it is argued that the dividends are specially designated as security, and the only security, for the payment of the interest. The language of the act is that the dividends "shall be applied to the payment of the interest accruing on such certificates." This was additional security. Without it (as the State could not be sued) there was no power to compel this application. With it, there was. The officer in whose custody the dividends were placed, was, so long as the funds remained in his hands, amenable to the process of the courts to compel him to do what the law required of him.

It is again claimed that, as it was made the duty of the treasurer, until dividends were delivered, to pay the interest as it accrued out of any moneys in the treasury not otherwise appropriated, it could not have been intended that the stock should be held for anything but the principal. This, too, was additional security. Without it the bondholder had no power to enforce the payment of the interest. With it, after default, upon a proper showing, the treasurer could be compelled to apply the unappropriated moneys in his hands to discharge that obligation.

Neither can an argument in favor of the claim of the defendant be drawn from the fact that the stock is pledged for the redemption of the certificate. It is true the principal of the certificate was made redeemable at the end of thirty years, and that the interest thereon was payable semiannually. The certificate could not be redeemed until both principal and interest were paid.

Redemption and redeemable are therefore, in this connection, only other names for payment and payable, and the General Assembly appears to have used the words as though they conveyed the same meaning.

If the stock was not given in security for the interest, then the faith of the State was not pledged for its payment, for that, like the stock, was only pledged for the redemption of the certificate. So, too, if no payment of interest should be made during the whole thirty years, no part of the stock could be applied to its payment then, even though its value should be sufficient to discharge both principal and interest. If the stock is held at all for the payment of the interest it is held all the time and may be subjected at any time after a semi-annual instalment falls due.

For these reasons we are clearly of the opinion that the plaintiff and

Vol. I.]

WARREN v. Ives.

[No. 8.

those he represents are entitled to have their proportion of the stock, or so much as may be necessary, sold to pay the past due interest upon their bonds. They can act, however, only for themselves. So much of the stock as equitably belongs to them as security, they can control in this action, but no more. The security is divisible and should be apportioned to the various bondholders according to the amount of their respective claims. Each bondholder should have an amount of stock, which bears the same proportion to the whole stock that his bonds do to the whole bonds outstanding. We are not willing, however, to order that a sale be made until ample time has been given the State to provide, by levy and collection of taxes, the necessary funds for the payment of the interest now past due, and such as may fall due before the money can be realized and be applied. An account may be taken of the amount due for unpaid interest upon the bonds presented in this cause, and of such as will mature on or before the first day of April, 1875, and a decree entered that if full payment thereof is not made by that day, so much of the stock apportioned as security to the plaintiff and those he represents as may be necessary to pay the same, be sold. If on or before the day of sale it shall be made to appear to the court that the State has in good faith levied a tax to pay the arrears of interest on the debt, and provided for its collection, the sale will be further suspended until a sufficient time shall have elapsed for the collection to be made.

CIRCUIT COURT OF THE UNITED STATES. WESTERN DISTRICT OF MICHIGAN.

REMOVAL OF CAUSES.

[MARCH, 1874.]

POWER OF UNITED STATES COURT TO ACT DURING PENDENCY OF QUESTION OF JURISDICTION.

- WASTE.

WARREN v. IVES.

A United States court may exercise authority over property involved in a suit which has been removed to it, far enough to protect the rights of the parties, even if its jurisdiction in respect of such suit be uncertain and the question thereof pending. Thus it may, in an emergency, under such circumstances, issue its injunction to prevent waste.

THE facts appear in the opinion.

WITHEY, J. In 1872 Stewart Ives commenced suit by bill in equity in the state court of Mecosta County, against George B. Warren and others, claiming to be the owner of a tract of some four thousand acres of land, by title derived from Chauncy P. Ives, and alleging that said Chauncy P. Ives, prior to the conveyance to Stewart Ives, had, by deed, absolute on its face, of date July 15, 1859, conveyed the same land to George B. Warren and Frederick B. Leonard, to secure indebtedness from the grantor to the grantees. The bill claims such prior conveyance to be

Vol. I.]

WARREN v. IVES.

[No. 8.

but a mortgage, prays for an accounting, offers to pay any balance found due to Warren and Leonard, and asks that the deed to them be decreed to be cancelled.

Warren and the other defendants, being citizens of New York, petitioned to have the cause removed to this court, which was opposed, but the state court held the petition to be sufficient, and ordered the removal. In May, 1873, the papers were presented and allowed to be filed in this court. This was followed by a motion of Ives to remand for non-compliance with the act of Congress providing for the removal of causes from the state to the national courts. After hearing that motion, my impression was that the cause ought to be remanded, but the question raised was new and the case an important one. I therefore reserved the motion for hearing before the circuit judge, and ordered it placed on the reserved list. Owing to Judge Emmons' continued absence, the motion has not been heard.

On the 25th February last, the cause and parties being thus situated, Mr. Warren, by leave, filed his cross-bill in this court against Stewart Ives and others, in which he sets up his title in fee to the land in question; claims the conveyance of July 15, 1859, from Chauncy B. Ives to Warren and Leonard, was not only absolute in form, but made, executed, and delivered as such, and not for the purpose of securing indebtedness. Statements are made in the bill for the purpose of showing the absolute character of the deed, and of the intention of the parties to it. The lands are shown to be principally valuable for their standing pine timber, and defendants, or some of them, have, during the winter of 1873-4, cut and removed a large quantity of the timber, and were, when the bill was filed, still at work cutting and removing the timber. Complainant prays that his title be confirmed, and that defendants be restrained from committing waste, and from sawing, selling, or using the saw-logs already removed, etc. A provisional injunction was issued, and an order granted on defendants to show cause. They have answered, and filed affidavits against the injunction. The showing is conclusive on the question of waste, and if the court has power to protect the lands from depredation, pending a settlement of the question of title, it should be exercised.

Jurisdictional questions are urged by defendants' counsel, and these I proceed first to dispose of. It is claimed that the bill filed by Warren is a cross-bill, and as such cannot be sustained, for the reason that there has been no removal of the cause of Ives against Warren and others from the state court. Again, that, as an original suit, this court has no jurisdiction of complainant's bill, inasmuch as it covers the same subject matter and is between the same parties in interest as the suit brought by Ives in the state court.

When the bill of complaint of Warren was presented to me for leave to file, and for an order for a provisional injunction against waste, I understood it to be framed with a double aspect, asking that the bill stand as a cross-bill if the motion to remand was denied, or as an original bill in case that motion should prevail. By reference to page 26 of the printed bill, it will be seen that such must have been the original intention of the pleader, but its language very singularly asks that the bill may stand as a cross-bill in either event. Thus framed, the clause wants appropriateness and proper expression. After what complainant's counsel has said

Vol. I.]

WARREN v. IVES.

[No. 8.

at the argument, that the bill was designed to be in the alternative, I shall so regard the case, and permit an amendment at once and without terms. Touching the status of the suit brought by Mr. Ives in the state court, and sought to be removed to this by Warren and others, it is urged that inasmuch as I intimated the petition to be defective, on the argument of the motion to remand, any exercise of jurisdiction now by the court over that case would be inconsistent with such expressed views, and primâ facie unauthorized. This objection assumes the bill filed by Warren to be a cross-bill and nothing more, whereas it was, as already explained, presented and allowed to be filed either as a cross-bill or as an original bill, depending upon the disposition which should ultimately be made by Judge Emmons of the motion to remand. As I shall show when the second objection is discussed, jurisdiction attaches to Mr. Warren's bill as an original bill if the suit by Ives is dismissed to the state court. But I entertain the view that, as a cross-bill, the court would be justified in asserting jurisdiction. The question is new, for I find no authorities to govern me: but, prima facie, the suit of Mr. Ives has been removed from the Mecosta circuit court, and is pending here. That court ordered the cause removed, and it was so far consummated that the papers were taken from that into this court, and here filed and the case docketed. The state tribunal, by an order of removal granted after a hearing, judicially declared itself without further jurisdiction, and would not now probably assert further jurisdiction. The case is one clearly within the act of Congress providing for the removal, and defendants in that suit have attempted, and, as they claim, successfully, to comply with the statute. This court has so far entertained the cause as to hear a motion to remand, after allowing the papers to be filed, and without deciding the motion, has allowed a provisional injunction to protect rights for the time being. The simple fact that the jurisdiction of this court is challenged does not raise a prima facie case against it, nor do I quite appreciate why a previous intimation against retaining the cause, but which intimation is not a decision, should have the effect claimed of preventing the court from giving such incidental protection as the rights of the parties require, while the jurisdictional question is pending and undetermined. For the present the controversy is pending here primâ facie, and while courts are careful not to exercise a doubtful jurisdiction, they will not, while parties are before them under a claim of right, refuse to protect the interests of the parties in an emergency like the present one, from the fact that jurisdiction is questioned or even doubtful.

But, as I have already said, the bill by complainant Warren is not to be regarded merely as a cross-bill for the purposes of this motion. Whether it will stand here as a cross or as an original bill depends upon the future disposition of the motion to remand. It is claimed, however, that by the well recognized rule of comity, this court will not entertain a suit where it appears the same parties in interest are litigating the same subject matter in a state court. The proposition is fully conceded, and if we are to regard this bill as an original and not as a cross-bill, then the rule of comity insisted upon fails to defeat jurisdiction, for the reason that it appears that the question of an injunction to restrain waste is not involved in the suit by Ives against Warren and Leonard; and although

Vol. I.]

WARREN v. IVES.

[No. 8.

the title to the land is in controversy in that suit, this court may properly entertain a suit between the same parties having for its object the prevention of waste pending the litigation in the state tribunal. Citizenship of the parties and the amount in controversy, as well as the subject matter, injunction, gives to complainant the right to invoke the jurisdiction and power of this court to protect his rights in the land; and so far as those rights are not involved in the other suit, this court has no right to refuse what the act of Congress imposes as a duty.

It is true this bill is framed to meet an emergency, and, therefore, is not more than an injunction-bill, inasmuch as it asks no other relief than an injunction. The undetermined question on the motion to remand the Ives suit induced and justified framing the bill in this present aspect.

Should the Ives suit. be remanded, it would be competent for complainant to so amend the prayer of his bill as to render it simply an injunctionbill, and under the circumstances attending the case, the court would so administer the rules of practice as to accomplish the end and purpose of jurisdiction instead of defeating them. It is one of the distinguishing features of equity that it adapts itself to the circumstances and rights of parties, when once its jurisdiction attaches, so that if it cannot give the precise remedy asked, it will grant such as the very right of the matter demands under the general prayer for other relief. Upon the whole I am not in doubt as to jurisdiction.

Authorities were cited and discussion had touching the absolute or conditional character of the deed of July 15th, 1859, by Chauncy P. Ives to Warren and Leonard; it is enough to dispose of that question for the present, that the showing here leaves that consequence in doubt. "Who owns the land?" is the principal and vital question at issue, and when the evidence shall be before the court, it can be more intelligently determined. Thus far the showing on both sides is necessarily incomplete, and, as it is ex parte, is unsatisfactory for the purpose of passing on the absolute or conditional character of such deed. This belongs to the final hearing, and should await that stage of the cause. Meanwhile neither party ought to be suffered to remove the timber, which is the chief value of the land. So far I feel constrained to go under the showing. But Mr. Ives having been suffered to remove timber during the winter of 1873-4, and having a steam-mill to be stocked from the logs got in part from the lands in question, to enjoin him from sawing and disposing of this lumber, would work great if not irreparable injury to him. I am not disposed to do that which will break up his business, under all the facts and circumstances of the case. Mr. Warren is not without remedy at law for the value of the timber cut, or by replevin for the logs, if he is owner. If the deed is but a mortgage, then the land and remaining timber, worth not less than one hundred and twenty thousand dollars, are ample security for his debt.

The injunction will be modified to prevent cutting the timber, and continued.