A suit for the foreclosure of a mortgage commenced in a state
court was removed to the circuit court, where a motion to remand it
was made and overruled. A final decree in favor of the complainant
was passed, whereunder the mortgaged property was sold. From the
order confirming the sale an appeal was taken.
Held that
the final decree, not disclosing a want of jurisdiction of the
court below as to subject matter or parties will be examined here
only to ascertain whether the sale conformed to its provisions.
The facts are stated in the opinion of the Court.
MR. JUSTICE HARLAN delivered the opinion of the Court.
This suit was commenced on the 21st day of November, 1874, in
the Circuit Court for De Witt County, Illinois, by Malcolm C.
Turner, James Turner, and others, constituting the firm of Turner
Bros., against the Indianapolis, Bloomington and Western Railway
Company, the Farmers' Loan and Trust Company, and others. The
complainants, suing in behalf of themselves and all other
bondholders and creditors of the railway company, asked a decree
for the foreclosure of several mortgages, covering as well its
property and franchises as the road and franchises of the
constituent companies, by whose consolidation it was created.
The Farmers' Loan and Trust Company appeared and answered. It
also filed a cross-bill, making all necessary parties defendant
thereto, and, as trustee in some of the mortgages creating prior
liens upon the main line of the consolidated road, it prayed for a
decree of foreclosure, a sale of the mortgaged property, and a
proper distribution of the proceeds arising therefrom among the
several classes of creditors of the railway company. Subsequently,
on the 26th of April, 1876, it filed a petition, accompanied by a
sufficient bond, for the removal of the suit into the Circuit Court
of the United States for the
Page 106 U. S. 553
Southern District of Illinois, and thereafter, it is asserted,
the state court proceeded no further. A transcript of the
proceedings having been filed in the circuit court of the United
States, a motion was there made to remand the cause, while the
Farmers' Loan and Trust Company moved that the court take
jurisdiction. By an order entered on the 19th of July, 1876, the
former motion was denied and the latter sustained.
On the 18th of July, 1877, a final decree was passed,
ascertaining the amounts due and unpaid on the mortgages to the
Farmers' Loan and Trust Company. By that decree it was ordered and
adjudged that the railway company, within twenty days thereafter,
pay the trustee the amount so ascertained ($6,234,625), with
interest from the date of the decree; that in default of such
payment, the equity of all the defendants to the cross-bill in the
mortgaged property be forever barred and foreclosed, and the
property -- which included all the rights, effects, and franchises
of the consolidated company, and of its constituent companies, as
to the main line of road -- be sold as an entirety, the same being,
in the opinion and judgment of the court, incapable of sale
separately or in division without material injury to its value.
It was further decreed that the mortgaged property be sold
without appraisement and without reference, and not subject to any
law of Illinois or Indiana, conferring the right of redemption from
mortgage sales.
On the 8th of May, 1878, the original decree was amended by way
of further direction for its execution.
The sale occurred on the 30th of October, 1878, was reported to
court on the succeeding day, and on the 1st of November, 1878,
exceptions thereto were filed by James Turner and the railway
company. On the 23rd of December, 1878, the exceptions were
overruled and an order entered confirming and approving the sale in
all respects.
On the 3d of February, 1879, Turner and the railway company
filed their joint petition, praying an appeal from the final order
confirming the sale. The appear was allowed, and the bond tendered
was approved, not to operate as a supersedeas. Subsequently the
purchaser received a deed and took possession of the property under
the direction of the court.
Page 106 U. S. 554
It may be stated that a similar decree was entered in the
Circuit Court of the United States for the District of Indiana in a
suit pending therein between substantially the same parties and
relating to the same property. That suit was commenced on the 18th
of November, 1874, in the Circuit Court for Montgomery county,
Indiana, and thence removed into the federal court upon the
petition of the Farmers' Loan and Trust Company.
Notwithstanding the record is very voluminous, it is believed
that this statement is sufficient to indicate the grounds upon
which this Court rests its determination of the case.
Numerous errors have been assigned in behalf of the appellants,
James Turner and the Indianapolis, Bloomington and Western Railway
Company. The first and most important one relates to the
jurisdiction of the circuit court of the United States. Their
contention is that under the Act of March 3, 1875, the state court
could not have been deprived of jurisdiction to proceed unless the
petition for removal was filed "before or at the term at which such
cause could be first tried and before the trial thereof;" that the
petition of the Farmers' Loan and Trust Company was not so filed;
consequently, it is insisted, jurisdiction in the federal court
could not have attached. It is further argued that the pleadings
disclose the fact that there was no such controversy in this suit,
between citizens of different states, as would authorize its
removal from the state court under the Act of March 3, 1875, or
under that of March 2, 1867, even if the latter is in force for any
purpose.
Without admitting the soundness of these propositions, we are of
opinion that the questions of jurisdiction now raised cannot be
determined upon an appeal merely from the order confirming the
report of sale. Whether the suit was one which the Farmers' Loan
and Trust Company was entitled to have removed -- that is, whether
the circuit court of the United States could rightfully proceed
after the petition for removal, accompanied by a sufficient bond,
had been filed in the state court -- was a question directly
presented to that court for judicial determination upon the motion
that the cause be remanded. The denial of that motion constituted
an adjudication by the federal court that the facts existed which
were necessary to give jurisdiction. And had the question not been
thus formally
Page 106 U. S. 555
presented, it was the duty of the circuit court to dismiss or
remand the cause, as justice might have required at any time during
its progress, when it appeared that the suit did not really or
substantially involve a dispute or controversy properly within its
jurisdiction.
Williams v. Nottawa, 104 U.
S. 209. Further, the final decree necessarily involved,
and was itself, a judicial determination, as between the parties,
that the suit was one of which that court might take cognizance.
That decree, unmodified and unchallenged by any direct appeal
therefrom, should, upon this appeal only from the order confirming
the sale, be deemed conclusive, between the parties and their
privies, as to all matters in issue and by it adjudicated,
including the questions of jurisdiction now pressed upon our
attention. Such, we think, must be the rule, especially under
existing statutes regulating the jurisdiction of the courts of the
United States. Whether or not a cause, commenced in a state court,
could have been tried at some term thereof prior to the filing of a
petition for removal; whether the parties to a particular suit,
without regard to their position as plaintiffs or defendants, can
be so arranged on different sides of the controversy as to make a
proper case for removal upon the ground of citizenship; whether
there is in the suit a separable controversy between citizens of
different states to which the judicial power of the United States
extends -- are often questions difficult of solution.
Removal
Cases, 100 U. S. 457. We
have held in numerous cases that upon the filing of a petition and
bond for removal in the state court, the suit being removable under
the statute, its jurisdiction ceases. And to the end that litigants
may not in such cases be harassed by doubts as to which court has
authority to proceed, the party against whom the removal is had is
at liberty to move that the suit be remanded, and the act of 1875,
for the first time in the legislation of Congress, declares that an
order of the circuit court remanding a cause may, in advance of the
final judgment or decree therein, be reviewed by this Court on writ
of error or appeal, as the case may require the one or the other
mode to be pursued. Prior to that act, the remedy in that class of
cases was by mandamus to compel the circuit court to hear and
determine the cause.
Babbitt v. Clark, 103
U. S. 600;
Page 106 U. S. 556
Railroad Company v.
Wiswall, 23 Wall. 507;
Insurance
Company v. Comstock, 16 Wall. 258. When the circuit
court assumes jurisdiction of the cause, the party denying its
authority to do so may, after final decree and by a direct appeal
therefrom, bring the case here for review upon the question of
jurisdiction, the amount in dispute being sufficient for that
purpose.
Railroad Co. v. Koontz, 104 U. S.
5. In the present case, we have seen that the appeal is
only from the order confirming the sale. Appellants elected not to
appeal from the final decree, although it necessarily involved
every question affecting the jurisdiction of the circuit court.
That decree is consequently not before us for any purpose except to
ascertain from an inspection thereof whether the sale was conducted
in conformity with its provisions. In such cases, upon an appeal
not from the final decree but only from an order in execution
thereof, the court will not examine the record prior to such decree
to see whether the petition for removal was filed in due time, or
whether it makes a case of federal jurisdiction by reason of the
presence in the suit of a controversy between citizens of different
states, but will assume that the final decree, being passed by a
court of general jurisdiction and not showing upon its face a want
of jurisdiction as to subject matter or parties, was within the
power of the court to render. Whether the order confirming the sale
would have been erroneous had the decree itself disclosed
affirmatively a want of jurisdiction is a question which need not
be decided.
What we have said disposes of numerous other assignments of
error, such as that the court erred in decreeing that the property
of the railroad company be sold without appraisement and without
reference, and not subject to the laws of Illinois and Indiana
conferring the right of redemption from sales of mortgaged real
estate; in ordering the railroad and other property to be sold
without first ascertaining what claims existed which were prior in
lien to the mortgages foreclosed; in amending the decree of
September, 1877, after the expiration of the term at which it was
entered; in ordering the cross-bill of the Farmers' Loan and Trust
Company to be taken by default as against the complainants in the
original bill, after it appeared that they had become bankrupts,
and their property and rights
Page 106 U. S. 557
had passed to an assignee in bankruptcy, who was not made a
party to the cause; in decreeing the personal property to the
railroad company to be sold, and in subsequently delivering it to
the purchasers, in disregard of the alleged rights of appellants
under the chattel mortgage executed to Thomas on the sixteenth day
of November, 1874; in refusing to entertain appellant Turner's
petition to intervene, filed on the day of sale, and in directing a
foreclosure and sale of the property for the principal and interest
of the debt secured by the mortgage, when, as is claimed, it did
not appear that the principal had become due.
We do not stop to consider whether these objections find any
support in the record, since it is sufficient to say that if any
such errors exist, they necessarily inhere some in the final decree
of foreclosure and sale and others in the orders which preceded it.
They cannot be examined upon an appeal merely from the order
confirming the report of sale. Our authority extends, as we have
shown, no further than to an examination of the exceptions filed by
appellants to the report of sale, from the order confirming which
this appeal is taken. And some of these exceptions plainly have
reference, not to the sale itself, but to the final decree of
foreclosure, such, for instance, as that the terms of sale were too
onerous; that the property was sold subject to various claims, the
amount of which was wholly uncertain, and that the court had no
jurisdiction in the case. The only exceptions which properly relate
to the sale are that the price at which the property was struck off
and sold -- $1,000,000 -- was inadequate and insufficient, and that
the property was not advertised for a sufficient length of time. It
is enough to say that the record discloses no ground upon which
these exceptions could have been sustained. One exception was to
the effect that the purchasers at the sale constituted a committee
acting as agents of bondholders of the railway company, and that
the report of sale did not disclose the names of the principals for
whose use the property was purchased or the amount to which each of
said parties was beneficially interested. We are unable to perceive
anything of substance in this exception. Since the sale was in all
material respects in conformity with the final decree, from which
no
Page 106 U. S. 558
appeal was prayed, and since the record discloses no ground upon
which its fairness can be impeached, the court below properly
overruled the exceptions and confirmed the sale. The order appealed
from must consequently be
Affirmed.