[553] [554] exclusive right by keeping his patent a monop- I was sanctioned by the commissioner of patents The turning bolt was the essential feature of the Sargent lock. The defendant adopted Sargent's arrangement, and then reduced the price of the lock, forcing Sargent to do the same in order to hold his trade. The evidence shows that the reduction of prices by Sargent was solely due to the defendant's infringement. The only competitor with Sargent in the use of his turning bolt arrangement, during the period covered by the accounting, was the defendant. The decision that the plaintiff, as owner of the patent, was entitled to recover the damages, paid, at the same rate per annum that decrees James H. McKenney, Clerk, Sup. Court, U. S ABBY KNAPP, Piff. in Err., 0. HOMEOPATHIC MUTUAL LIFE IN- (See S. C. Reporter's ed. 411-415.) Life insurance construction of policy. We think the master made proper allowances for all other causes which could have affected the plaintiff's prices; that the proper deduction was made for the use of the Rosner device in A policy of insurance provided that after two anthe defendant's lock; and that the damages nual premiums had been paid, the insured should. awarded are no greater than the testimony war-titled to have the policy continued in force for a in case of default in payment of premiums, be enranted. period of time to be determined in a way provided, or to receive a paid up policy for the full amount less this policy shall be surrendered, and such paid of premium paid, but with this proviso: "that unup policy shall be applied for within ninety days after such nonpayment as aforesaid, then this policy shall be void and of no effect." Held, that make election within ninety days after default defailure of the insured to surrender the policy and de-prived her of the right to have the policy temporarily continued in force, as well as of the right to a paid up policy. Submitted Mar. 16, 1886. Decided Apr. 5, 1886. [No. 167.] was correct. The bill alleges infringement of the reissue the provisions of sections 4917 and 4922 of the There can be no doubt that claim 4 of the Ν IN ERROR to the Circuit Court of the United States for the District of Massachusetts. Statement by Mr. Justice Gray: This was an action brought March 19, 1878, by a citizen of Massachusetts against a corporation established by the laws of New York, upon a policy of insurance, by which the Company, in consideration of the representations made to them in the application for this policy, which is hereby made a part of this contract, and of the sum of $47.40 to them in hand paid by Abby Knapp, wife of Charles L. Knapp, and of the quarterly payment of a like amount on or before the sixteenth days of July, October, January and April in every year during the continuance of this policy," insured the life of the husband, for the sole use of the wife, in the amount of $5,000 for the term of his natural life, beginning on April 16, 1869, payable at the office of the Company in New York to her, if living, in thirty days after notice and proof of his death. The application declared that "neglect to pay the premium on or before the day it becomes due shall and will render the policy null and 14 void, and forfeit all payments made thereon, unless otherwise specially provided for in the policy." The canceling of the policy, in consequence of the husband's fraudulent representation that the wife was dead, had no effect upon her rights. It is not relied on by the defendant, and there is nothing in the case to show that it in any way influenced the conduct of the plaintiff by preventing her from paying the premiums or making the election required by the policy. The contract of insurance, made and to be performed in New York, between a corporation and a citizen of that State, is to be governed by the law of New York. By that law, in respect to the payment of or the neglect to pay premiums, a married woman stands like any other person insured. Baker v. Union Mut. Ľ. Ins. Co. 43 N. Y. 283. And there is no statute which affects this case. The decision, therefore, depends upon the true construction of the nonforfeiture clause in the policy. The policy contained the following clause: "This policy of insurance, after two annual premiumns shall have been paid thereon, shall not be forfeited or become void by reason of the nonpayment of premium; but the party insured shall be entitled to have it continued in force for a period to be determined as follows, to wit: the net value of the policy when the premium becomes due and is not paid shall be ascertained according to the combined experience' or 'actuaries' rate of mortality, with interest at 4 per cent per annum. Four fifths of such net value shall be considered as a net single premium of temporary insurance, and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of premium and the assumptions of mortality and interest aforesaid; or, at his option, may receive a paid up policy for the full amount of premium paid; Provided, that unless this policy shall be surrendered and such paid up policy shall be applied for within The single purpose of this clause is that, ninety days after such nonpayment as aforesaid, after two annual premiums shall have been then this policy shall be void and of no effect." paid, a failure to pay any subsequent premium A trial by jury having been duly waived, the shall not have the effect of avoiding the whole circuit court found the following facts: the insurance, but the assured shall have the right policy was issued April 14, 1869, in the City of to an insurance for such a sum and such a time New York, where the husband and wife then as the premiums already paid would equitably lived. It was taken out by the husband, who cover. The policy does not declare that it shall signed the application in the wife's name as her continue of itself, without any act of the asattorney. It was in the possession of the wife sured. On the contrary, it stipulates that "The in 1871, and of the husband before and after-party insured shall be entitled to have it conwards. The premiums were paid for several tinued in force for a period to be determined" years, mostly by the husband, but one or two by the wife. She lived apart from her husband nearly all the time after February, 1872. On January 16, 1874, a premium became due and was not paid. On February 26, 1874, the husband represented to the Company that his wife was dead; the Company believed the representation to be true, and he surrendered the policy, taking from the Company $260 in money, and a new policy, concerning which the only evidence was that it had been forfeited before his death, which happened September 17, 1874. Very soon after his death, the wife sent to the Company for information about the policy, and her agent was told by the Company that it was forfeited. A considerable time after this, being advised that she might have some rights under the policy, she gave due notice and proof of loss, and more than thirty days afterwards brought this action to recover the full amount insured. The net value of the policy when the Donpayment of the premium occurred, if reckoned in the mode pointed out in the policy, would have been sufficient to continue it in force until after the death of the husband. On these facts, the circuit court ruled as matter of law that the policy was forfeited by the Deglect to pay the premiums and to call for a raid-up policy, and rendered judgment for the defendant and allowed a bill of exceptions tendered by the plaintiff. by ascertaining, according to certain rules, the In short, the forfeiture of the policy, by a Then follows the proviso "that unless this policy shall be surrendered and such paid-up policy shall be applied for within ninety days after such nonpayment as aforesaid, then this policy shall be void and of no effect." It is contended on behalf of the plaintiff that time computed according to the sum paid. Messrs. Saml.W. Clifford, Jr., and Mark still remains insured for the full amount for [413] [414] [415] [430] [431] "That the petitioner i now, and was at the time when this actice was commenced, a citizen of the State of New York and a resident therein; and his codefendant is a citizen of South Carolina; and the plaintiff is also a citizen of the State of South Carolina. That under and by virtue of the Statutes of the United States and of the State of South Carolina, this suit is one in which there can be a final determination of the controversy, so far as the petiticner is concerned, without the presence of his codefendant as a party to the cause." ply for a paid-up policy, he original pricy Apr 1973. Stone proated to the court a pe- The state court proceeded with the suit notwithstanding the petition, and after a trial gave judgment against both defendants. During the whole of such proceeding Stone denied the jurisdiction of the court after the filing of his petition. The supreme court of the State affirmed the judgment of the common pleas; and to reJames H. McKenney, Clerk, Sup. Court, U. S. verse this judgment of affirmance the present writ of error was brought. WILLIAM STONE, Piff. in Err., 0. STATE OF SOUTH CAROLINA. (See 8. C. Reporter's ed. 430-433. A state court is not bound to surrender its jurisdiction of a suit on a petition for removal, until a case has been made which on its face shows that the petitioner has a right to the transfer. Yulee v. Vose, 99 U. S. 545, and Remoral Cases, 100 U. S. 474 [Bk. 25, L. ed. 356, 600]. It is undoubtedly true, as was said in Steamship Co. v. Tugman, 106 U. S. 122 [Bk. Removal of causes — when jurisdiction of state 27, L. ed. 89], that upon the filing of the pe court ceases-trial of issues-State as party-tition and bond-the suit being removable unseparable controversy. 1. A state court is not bound to surrender its jurisdiction of a suit on a petition for removal until a case has been made which on its face shows that the petitioner has a right to the transfer. der the statute the jurisdiction of the state Court of the United States immediately attaches; court absolutely ceases, and that of the Circuit but still, as the right of removal is statutory, before a party can avail himself of it, he must 2. All issues of fact made on the petition for re-show upon the record that his is a case which moval must be tried in the circuit court, but the state court is at liberty to determine for itself whether, on the face of the record, a removal has been effected; and if it decides against the removal, its action will, after final judgment, be re viewable in this court. 3. An action in which a State is a party is not removable from a state to a federal court, on the ground of citizenship. 4. An action against partners for money paid to them as such is not removable, unless all the parties on one side of the controversy unite in the pe[No. 144.] tition for removal. Argued Mar. 6, 1886. Decided Apr. 5, 1886. comes within the provision of the statute. As was said in Ins. Co. v. Pechner, 95 U. S. 185 [Bk. 24, L. ed. 427], "His petition for removal when filed becomes a part of the record in the cause. It should state facts which, when taken in connection with such as already appear, entitle him to the transfer. If he fails in this, he has not, in law, shown to the court that it cannot proceed further with the suit.' Having once acquired jurisdiction, the court may proceed until it has been judicially informed that its power over the cause has been suspended." The mere filing of a petition for the removal of a suit, which is not removable, does not work a transfer. To accomplish this the suit must be one that may be removed, and the petition must show a right in the petitioner to demand the removal. This being made to appear on the record, and the necessary security having been given, the power of the state court in the case Mr. Chief Justice Waite delivered the opin-ends and that of the circuit court begins. ion of the court: IN ERROR to the Supr The case is stated by the court. This suit was brought by the State of South Carolina, in the Court of Common Pleas of Richland County, on the first of August, 1877, against Daniel T. Corbin and William Stone, partners, as attorneys at law under the name of Corbin & Stone, to recover a balance claimed to be due for moneys collected by the firm for the State and not paid over. On the 27th of All issues of fact made upon the petition for removal must be tried in the circuit court, but the state court is at liberty to determine for itself whether, on the face of the record, a removal has been effected. If it decides against the removal and proceeds with the cause notwithstanding the petition, its ruling on that question will be reviewable here after final judg ment under section 709 of the Revised Statutes. 14 Removal Cases [supra]; R. R. Co. v. Miss. 102 | WILLIAM WARING ET AL., Partners, as WARING BROTHERS, Appts., v. YORK ET AL. STOUGHTON J. FLETCHER ET AL., Part ners, as S. A. FLETCHER & Co., Appts. U. S. 141; Kern v. Huidekoper, 103 U. S. 485, and R. R. Co. v. Koontz, 104 U. S. 15 [Bk. 26, L. ed. 98, 354, 646]; Chesapeake & Ohio R. R. Co. v. White, 111 U. S. 137 [Bk. 28, L. ed. 879]. UNION TRUST COMPANY OF NEW If the state court proceeds after a petition for 33° removal it does so at the risk of having its final judgment reversed if the record on its face shows that when the petition was filed that court ought to have given up its jurisdiction. What effect the writ of certiorari provided for in section 7 of the Act of 1875, to require the ILLINOIS MIDLAND RAILWAY COMstate court to make return of the record to the circuit court, would have upon the further power of the state court to proceed, we do not now decide, as no such writ was issued in this case. น. PANY ET AL. (See 8. C. Reporter's ed. 434-481.) Railroads-consolidation-bond secured by mortgages receiver's certificates priority of lien -jurisdiction-practice-notice-costs. It only remains to consider whether on the face of this record it appears that the suit was removed from the state court by the presentaThe Peoria, Atlanta and Decatur Railroad Comtion of the petition of Stone, and about that pany, the Paris and Decatur Railroad Company, little need be said. It is not pretended that the and the Paris and Terre Haute Railroad Company, suit was one arising under the Constitution or three Illinois corporations, each constructed a cerlaws of the United States, and it certainly is tain line of road and issued bonds secured by mortgages thereon. Subsequently each of the other not one between citizens of different States. companies conveyed all of its property to the PeoThe State of South Carolina is the sole plaint-ria, Atlanta and Decatur Company, and that comiff; and the defendants are citizens, one of pany soon thereafter changed its name to that of the Illinois Midland Railway Company, and issued South Carolina and the other of New York. its bonds secured by a mortgage to the Union Trust The cause of action is joint, and only one of Company covering all of its property, including the defendants petitions for removal. There is that purchased from the other companies. Pendno statute which authorizes the removal of a court below, to which various stockholders, judg ing subsequent litigation in a state court and the suit between a State and citizens on the ground ment creditors, bondholders and others were or be of citizenship, for a State cannot in the nature came parties, the property was controlled and of things be a citizen of any State, In Ames operated under direction of said courts by successive receivers, who issued eighteen distinct series v. Kansas, 111 U. S. 449 [Bk. 28, L. ed. 482], of receiver's certificates on account of repairs, taxes, the removal of a suit arising under the Consti- betterments and operating expenses. Many of the tution and laws of the United States brought questions presented here arise out of the issue of said receiver's certificates, the contest being subby a State against a corporation amenable to its stantially one between the Paris and Decatur bondown process, was sustained; but this was be- holders and those who claim priority of lien as cause of the subject matter of the action, and holders of said certificates or otherwise; and this court holds: not because of the citizenship of the parties. Neither is there any separable controversy in the case such as might, if the necessary citizen-charge of railroad property to make necessary re2. That the power of a court of equity having ship existed, allow Stone alone to remove the pairs does not depend upon the consent of those suit without joining Corbin with him in the interested, nor upon prior notice to them. petition for removal. The money sued for was evidence, as to the propriety of the expenditures 3. That a subsequent opportunity to be heard, on received by the defendants as partners, and they and of making them a first lien, is judicially equiva are liable jointly for its payment, if they are li- lent to prior notice, the receiver and those lending able at all. Such a case is not removable un- money to him, on certificates issued on orders made without prior notice, taking the risk of the final less all the parties on one side of the contro- action of the court. But such action will only be versy unite in the petition. Removal Cases, 100 affected by such objections to the merits of the U. S. 457 [Bk. 25, L. ed. 593]; Blake v. McKim, orders as would have been availing if made before their entry. 103 U. S. 336, and Hyde v. Ruble, 104 U. S. 409 [Bk. 26, L. ed. 563, 824]. The judgment of the Supreme Court of South Carolina is affirmed. True copy. Test: James H. McKenney, Clerk, Sup. Court, U. S. 1. That certificates issued for necessary repairs are entitled to priority. 4. That the bill filled in the state court by Hervey (the holder of a majority of the stock of the corporations), and certain judgment creditors, was suffi cient to enable the court to administer the property as a trust fund and marshal the debts, making proper parties before adjudging the merits. 5. That certificates issued to pay tax liens are entitled to priority. 6. That third persons, not connected with the case or with the parties, who bought directly from the receiver his certificates, were not bound to see to 41 UNION TRUST COMPANY OF NEW the application of the proceeds. YORK, Appt., 0. ILLINOIS MIDLAND RAILWAY COM PANY ET AL. 7. That holders of certificates sold within the limit of discount fixed by the court, are entitled to their face with interest. 6. That certificates issued to replace earnings diverted from paying for operating expenses and ordinary repairs, to pay for necessary betterments or improvements, leaving large debts on account of SIMON BORG ET AL., Partners, as S. BORG such expenses and repairs, are entitled to priority. 9. That, in view of the facts of the case, the Paris and Decatur bondholders cannot insist that the want of affirmative assent by them or their trustee deprived the court of power to create, on the corpus mortgage lien." ILLINOIS MIDLAND RAILWAY COM- of the property, any lien taking priority over the PANY ET AL. 10. That while the ordinary expenses of the re ceiver in operating the road are first payable out of income, if any, the corpus may be resorted to when the items are proper, after scrutiny and opportunity for those opposing to be heard. 11. That wages due the employés of the Illinois Midland Company within six months immediately preceding the appointment of the first receiver, were properly allowed priority. 12. That the terms of the orders appointing the various receivers did not impair or exclude the ample authority of the court to order said ordinary expenses and "six months' labor claims" paid out of of the property itself, with priority. not so exchanged, surrendered and canceled. Mr. H. S. Greene, for the Wabash, St. Louis & Pacific R. Co. Mr. Justice, Blatchford delivered the opin- [43 ion of the court: The Peoria, Atlanta and Decatur Railroad Company was incorporated as an Illinois corporation, in 1869, to construct a railroad from Peoria, in Tazewell County, in a general southeasterly direction, through Atlanta, in Logan 13. That the final decree of the court below prop- County, to Decatur, in Macon County. Such erly provided that the receiver's certificates, so made liens prior to the bonds, should be borne by of the road as was constructed was built in 1873 the three several railroad properties in proportion and 1874, from a point five miles east of Peoria, to their relative lengths, although the terminal on what is now the Wabash, St. Louis and rentals and charges of the different roads were rela-Pacific Railroad, to a place called Maroa, on tively unequal. 14. That the legality of the sales of their properties the Illinois Central Railroad, thirteen miles by the other companies to the Peoria, Atlanta and north of Decatur. It did not reach either PeoDecatur Company cannot now be questioned by the ria or Decatur, and the company owned no staParis and Decatur bondholders, their acquiescence pending the litigation and the contraction of debts tion grounds or terminal facilities at either place, by the receivers, with respect to the whole line op- but used, by lease, five miles of what is now erated as a unit, amounting to an estoppel. 15. That the expenses of the various receiverships, the Wabash, St. Louis and Pacific Railroad, to incurred under the direction of the court for the reach Peoria, and thirteen miles of the Illinois benefit of all the roads, should be borne by each in Central Railroad, to reach Decatur. On the proportion to its length, such expenses not being 25th of April, 1872, the company executed a chargeable to the purchasing company alone. 16. That 994 bonds of the Paris and Decatur issue mortgage to James F. Secor, as trustee. The held by Waring Brothers, having been surrendered mortgage recited that the company had comand exchanged for Illinois Midland bonds, were menced to construct a railroad to "extend from canceled and are now invalid and cannot be placed on a footing with other Paris and Decatur bonds Cunningham's crossing, five miles from the City of Peoria, on the Toledo, Peoria and Warsaw Railway, thence southeast, to a point at or near to the City of Decatur," "a distance of about sixty-seven miles," and it covered the company's franchises, and its road and property, as constructed and to be constructed, acquired and to be acquired, "commencing at Cunningham's crossing, five miles from the City of Peoria, on the Toledo, Peoria and Warsaw Railway, to the City of Decatur," "a distance of sixty-seven miles.' It was given to secure 1,300 coupon bonds of the company, of $1,000 each, payable to bearer, amounting to $1,300,000, carrying semi-annual interest at 7 per cent per annum, and payable May 1, 1902. The mortgage provided that on default continuing more than sixty days in the payment of any interest on any bond, the trustee, on the request of the holders of a majority of the bonds, might and should take actual possession of the mortgaged property, and operate the road, and receive its income, to pay the bonds, or, on the written request of the holders of at least one half of the outstanding bonds, cause the mortgaged property to be sold at public auction, and convey it to the purchaser, and, "after deducting from the proceeds of said sale the costs and expenses thereof, and of managing such property," ap 17. That no valid objection lies to the clause in the decree which provides that the several properties shall be offered for sale separately and then en masse; that the highest bid received for the entire properties shall be accepted, if it exceeds the aggregate of the highest bids for them when offered separately; and that the proceeds shall then be applied in proportion to said separate bids. 18. That certain claims for terminal faciles, track rents, traffic balances and labor performed, are entitled to priority. 19. That claims for certain large amounts borrowed from various banks by one of the receivers without previous authority of the court are not entitled to priority, although they were applied toward the payment of the proper expenses of the receivership. 20. That eight receiver's notes aggregating a large amount, although representing, in the main at least, proper expenses of the receivership are not entitled to priority, the receiver having borrowed the money for which they were given without previous authority of the court. 21. That claims for rent and extraordinary depreciation of rolling stock, right of way and certain other claims, are not entitled to priority. 22. That, with the exception of debts for taxes and receiver's certificates issued to pay taxes, there should be no priority or preference among debts and claims allowed precedence over mortgage bonds of any road, notwithstanding certain orders made by the court below. [Nos. 1212, 1213, 1214, 1225.] Submitted Jan. 11, 1886. Decided April 5, 1886. APPEALS from the Circuit Court of the United States for the Southern District of Illinois. The history and facts of the case appear in the opinion of the court: Messrs. Wheeler H. Peckham, and Edward S. sham, for the Union Trust Company. Messrs. Edward S. Isham, Robert T. Lincoln and Leopold Wallach, for Simon Borg and others, partners, as Borg & Co. Messrs. John M. Palmer and Josiah M. Clokey, for William T. Sylvester and others. Messrs. John M. Butler, John T. Dye and W. P. Fishback, for Fletcher and Churchman. Messrs. H. Crea and Charles A. Ewing, for Waring Brothers. ply the proceeds to pay the principal and inter est of the bonds. The mortgage also provided The Paris and Decatur Railroad Company [43 [439 |