« ForrigeFortsett »
promissory notes in the aggregate amount of $5,400. The appeal was granted solely upon the question of jurisdiction.
The point involved requires a statement of facts at some length. They are substantially as follows:
Frederich Kolze sold and conveyed certain real estate to Day by warranty deed dated and acknowledged November 15, 1897, for a stated consideration of $45,000, namely, $1,000 in cash and the remainder in notes secured by trust deeds. To secure such notes Day executed three trust deeds to one Stade as trustee, conveying the real estate in question, which were dated November 17 and acknowledged and recorded November 24, 1897. Kolze thereupon intrusted the notes and trust deeds to Stade, a nephew, in whom he seemed to have great confidence, the notes being executed by Day to his own order and by him indorsed in blank.
On February 17, 1898, Stade took the notes and trust deeds securing the same and pledged them to Charlotte E. Hoadley as collateral security to his own notes, upon which Hoadley then advanced, or secured to be advanced, a large sum of money.
By deed dated and acknowledged November 23, 1897, but not delivered or recorded until June 30, 1898, Day reconveyed the premises to Kolze, and by deed of release, dated and acknowledged October 27, 1898, and recorded October 29, 1898, Stade as trustee fraudulently released said three trust deeds to Kolze, reciting a consideration of one dollar and other valuable considerations, and further reciting that the notes secured thereby had been cancelled.
By deed dated October 29, 1898, Kolze, now deceased, and the appellant, Lina Kolze, his wife, conveyed said premises to Louisa Kolze, their daughter, upon an expressed consideration of $12,000, although the grantee was not a bona fide purchaser, and said conveyance was made to her to hold for the benefit of the family.
For the ostensible purpose of securing the payment of the purchase money, said Louisa Kolze executed a trust deed to
secure her promissory note of $10,000, to Percy V. Castle, as trustee. This deed was dated October 27, 1898, acknowledged October 28, 1898, and recorded October 29, 1898, the appellant Fred H. Kolze, as administrator of the estate of his father, being the owner of said notes and trust deeds, subject, as was alleged, to the rights of the plaintiff Hoadley.
Subsequently, on or about April 21, 1899, the notes and trust deeds of Day, upon default by Stade in the payment of his note, were sold in accordance with the terms of the collateral note, and were bought in by and became the property of the appellee Hoadley.
The bill prayed that the release deed executed by Stade to Frederich Kolze be declared fraudulent and void as against the notes and trust deeds executed by Day and now owned by the plaintiff; that the rights of all the defendants be declared subject to those of the plaintiff under the notes and deeds held by her; that a receiver be appointed and an account had, and the defendants be decreed to pay whatever was due under the notes and trust deeds, and in default thereof that the premises be sold and the defendants be held liable for any deficiency upon such sale, and that they all be foreclosed of their right of redemption.
The defendants moved to dismiss the amended bill for want of a proper allegation of diversity of citizenship, which was overruled; and thereupon defendants interposed a plea to the jurisdiction upon the ground that the defendants were all citizens of the State of Illinois; that the suit was brought by plaintiff as the assignee of one William P. Smith, to whom the notes had been hypothecated by Stade to secure his (Stade's) note, and also to secure Smith for the faithful performance by Stade of a certain contract of employment; that upon the failure of Stade to pay his note and carry out his contract said mortgage notes and trust deeds signed by Day were sold on or about April 21, 1899, and were bought in by and became the property of the plaintiff; that Stade and Smith, "the successive assignors” of the appellee, were citizens of the
Argument for Appellants.
State of Illinois, the same State of which Day, the maker of the notes was also a resident, and that by reason of the fact that said suit could not have been prosecuted in a Federal court, if no transfer or assignment had been made, the Circuit Court had no jurisdiction of the case.
This plea was held to be insufficient, and the defendants failing to answer, were defaulted, and a decree thereafter entered to the effect that Stade as trustee had fraudulently released the trust deeds; that the trust deeds were valid as liens upon the premises; that the rights of Louisa Kolze, subsequent grantee under the warranty deed, as well as the deed of Kolze, were subject and subsequent to the rights of the plaintiff as the owner of the notes and deeds signed by Day; that the property be sold and the defendants foreclosed of their equity of redemption.
Thereupon defendants appealed to this court solely upon the question of jurisdiction.
Mr. John T. Richards for appellants:
The Circuit Court shall have no jurisdiction over suits for the recovery of the contents of promissory notes or other choses in action brought in favor of assignees or transferees, except over (1) suits upon foreign bills of exchange; (2) suits that might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made, and (3) suits upon choses in action payable to bearer and made by a corporation. Sec. 1, act of March 3, 1887, c. 373, 24 Stat. 552, as corrected by act of August 13, 1888, c. 886, 25 Stat. 433. Newgass v. New Orleans, 33 Fed. Rep. 196; New Orleans v. Quinlan, 173 U. S. 191; 1 Foster's Federal Practice, 3d ed., 82.
The phrase "suits to recover the contents of a chose in action” includes suits to foreclose mortgages. Black on Mortgages, 567; 1 Foster's Fed. Prac., 83. Hence when mortgagor and mortgagee are citizens of the same State, an assignee of the mortgagee, though a citizen of another State, cannot maintain a bill for foreclosure in the Federal courts. Black
on The Law of Mortgages and Deeds of Trust, 567, citing Sheldon v. Sill, 8 How. 441; Shoecraft v. Blocham, 124 U. S. 730; Blacklock v. Small, 127 U. S. 96; Hill v. Winne, Fed. Cases, No. 6503.
Where Federal jurisdiction is dependent upon the citizenship of the plaintiff's assignor at time of commencement of suit, the citizenship of the latter must affirmatively appear somewhere in the record. Robertson v. Cease, 97 U. S. 649; Anderson v. Watt, 138 U. S. 702; North American Trans. Co. v. Morrison, 178 U. S. 267.
The defect is ground for a motion to dismiss at any stage of the proceedings. Florida Cent. R. R. Co. v. Bell, 176 U. S. 327; Blackburn v. Portland Gold M. Co., 175 U.S. 574; Municipal Ins. Co. v. Gardiner, 62 Fed. Rep. 954.
But the court should of its own motion dismiss the suit whenever it discovers the defect. N. Am. Trans. Co. v. Morrison, 178 U. S. 267; act of 1875, 18 Stat. 472, c. 137. The dismissal in accordance with the above section may be ordered upon motion of the defendant or by the court of its own mo tion. Wetmore v. Ryder, 169 U. S. 120; Nashua &c. Ry. Co. v. Boston, 136 U. S. 356, 374; Mexican Cent. R. R. Co. v. Pinkney, 149 U. S. 200; Lake Co. Commrs. v. Dudley, 173 U. S. 243.
The design of the act of 1875 was to impose a peremptory duty to dismiss whenever it is properly made to appear that the court has no jurisdiction. Lake Co. Commrs. v. Dudley, 173 U. S. 243; Morris v. Gilmer, 129 U. S. 315, 325; Anderson v. Watt, 138 U. S. 694. It is the duty of the Supreme Court on appeal to see that the jurisdiction of the Circuit Court has in no respect been imposed upon. Morris v. Gilmer, supra; Nashua &c. Ry. v. Boston, supra.
Mr. Herman W. Stillman for appellee:
The three acts passed relating to the enforcement of promissory notes and choses in action in the United States courts, by assignees, are $ 11 of the Judiciary Act of 1789; the act of
March 3, 1875; and the act of March 3, 1887, as corrected by the act of August 13, 1888. See New Orleans v. Quinlan, 173 U. S. 191.
The purpose of the restriction as to suits by assignees was to prevent the making of assignments of choses in action for the purpose of giving jurisdiction to the Federal courts, and in construing it the courts will look to the spirit of the act, and will consider the real relation of the parties. If it appears from all the circumstances that the assignment could not have been colorable for the purpose of conferring jurisdiction, then, the reason of the restriction being gone, the jurisdiction of the United States courts will attach. Holmes v. Goldsmith, 147 U. S. 150; Farmington v. Pillsbury, 114 U. S. 138.
The restriction against suits by assignees of promissory notes or choses in action in United States courts, “unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made,” has reference to diverse citizenship only. No disqualification of the assignor, other than want of diverse citizenship, will prevent suit by the assignee. Chase v. Sheldon Roller-Mills Company, :56 Fed. Rep. 625; Bowden v. Burnham, 59 Fed. Rep. 752.
The language of the act implies, in order that the denial of jurisdiction at the suit of an assignee shall apply, that, but for the assignment, a claim would exist on the part of the assignor against the original debtor. When a claim would not exist on the part of the assignor, had no assignment been made, the reason of the act will be wanting, and jurisdiction will attach. Cases supra and National Bank v. Stove Works, 56 Fed. Rep. 321.
Jurisdiction depends upon the status of the parties at the commencement of the suit. Emsheimer v. New Orleans, 186 U. S. 33.
The Circuit Court of the United States has jurisdiction of a suit brought by the indorsee of a promissory note against his immediate indorser, whether a suit would lie by the in