A suit in equity brought by C, a citizen of one state, against a
corporation of the same state, and T, a citizen of another state,
and W, to obtain a decree that C owns shares of the stock of the
corporation, standing in the name of W, but sold by him to T, and
that the corporation cancel on its books the shares standing in the
name of W, and issue to C certificates therefor, cannot be removed
by T into the circuit court of the United States, under § 2 of the
Act of March 3, 1875, 18 St. 470, because the corporation is an
indispensable party to the suit, and is a citizen of the same state
with C.
Page 115 U. S. 57
The only question involved in this appeal was the rightfulness
of the removal of the cause from a state court to a circuit court
of the United States. The facts which raise the question are stated
in the opinion of the Court.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
This suit was commenced by the filing in the Louisville Chancery
Court, in the City of Louisville, Kentucky, on the 26th of
November, 1880, of a petition in equity, by W. H. Crump against
James Wilson, and the Southern Dairy Company, a Kentucky
corporation. The substance of the petition was that Crump had,
under a contract with Wilson, assisted him in selling rights under
a patent which he controlled; that, by the terms of the contract,
Wilson was to receive $12,000 for the right for Kentucky, and
$8,000 for the right for Indiana, and all received above those sums
for either state was to be divided equally between Crump and
Wilson; that the rights for Kentucky and Indiana were disposed of
to the Southern Dairy Company, and 1,000 shares of its capital
stock, of $100 each, out of 2,000 shares, were issued to Wilson, in
payment for the rights, of which he had sold 100 shares for $5,000;
that he had received more in value than the $20,000; that he
refused to give to Crump any part of the stock or of the money;
that a large amount of the stock issued to Wilson still stood on
the books of the corporation in his name, and that Crump was
entitled to 300 shares thereof. The petition prayed that Crump be
adjudged to own 300 shares of the stock, and that the corporation
be ordered to cancel on its books the stock standing in the name of
Wilson, to that extent, and to issue to Crump certificates for 300
shares.
The corporation was served with process. The petition was then
amended by stating that no less than 250 shares of the stock still
stood in the name of Wilson, and process on that was served on the
corporation. It then filed an answer, stating
Page 115 U. S. 58
that 250 shares of his stock stood, when the petition was filed,
in the name of Wilson, on its books, and had not since been
transferred thereon; that before the suit was brought, one H. K.
Thurber bought the 250 shares from Wilson, and received from him
the certificates thereof, by endorsement and delivery, and still
held and owned them, and he had notified the president of the
corporation of that fact, and claimed the right to have the stock
transferred into his own name, and that it was willing to obey the
judgment of the court, but ought not to be ordered to cancel or
transfer the stock, unless Thurber should be brought before the
court to litigate with Crump the true ownership of the stock.
Crump replied to the answer of the corporation, and filed an
amended petition, making Thurber a party to the suit, and praying
the same relief as in his original petition. Wilson and Thurber
were then each personally served with process in the City of New
York. Thurber then came into the state court and filed a petition
and a bond for the removal of the suit to the Circuit Court of the
United States for the District of Kentucky, and the state court
made an order removing the cause, under the objection and exception
of the plaintiff. The petition proceeded on the ground that Crump
was a citizen of Kentucky and Thurber a citizen of New York, and
that there was a controversy in the suit between them, which was
wholly between citizens of different states, and could be fully
determined between them. Nothing was said in the petition for
removal about Wilson or the corporation.
Thurber then filed an answer in the circuit court, setting forth
that he had, on the 26th of October, 1880, purchased the 250 shares
from Wilson for value, and received from him the certificates
therefor, three in number, issued by the corporation to and in the
name of Wilson, with blank forms of assignment and power of
attorney on the back, which Wilson signed, and delivered to Thurber
with the certificates; that he was entitled to fill the blanks and
surrender the certificates, and have the shares transferred and new
certificates issued to him by the corporation, and that he
purchased the shares without any knowledge or information of any
claim by Crump
Page 115 U. S. 59
against Wilson. The answer prayed that the shares be decreed to
be the property of Thurber and not of Crump, and that the
corporation be ordered to cancel the certificates issued to Wilson,
and to issue to Thurber new certificates in their place. There was
a replication to this answer.
Thurber also filed a cross-bill in the circuit court, making as
a defendant only the corporation, but not Crump, setting forth
himself as a citizen of New York, and the corporation as a citizen
of Kentucky, and averring the facts as to his purchase of the stock
from Wilson for value, and as to the endorsement and delivery of
the certificates by Wilson to him, and praying for judgment against
the corporation, that it receive and cancel the certificates issued
to Wilson, and issue to Thurber other certificates, in their stead,
for the 250 shares.
The corporation answered this cross-bill, saying that it was a
mere stakeholder between the parties to the suit, and praying for a
proper judgment, which should protect it. There was a replication
to that answer.
Then Crump filed in the circuit court an amended bill, setting
forth that the transaction between Wilson and Thurber was for the
fraudulent purpose of protecting the stock for Wilson, and that the
certificates were held in secret trust by Thurber for Wilson.
Thurber answered that amended bill, denying its allegations. To
that answer there was a replication.
Proofs were taken, and on a hearing a decree was made dismissing
the bill of Crump, and adjudging that Thurber was the true owner of
the 250 shares, and was entitled to have the certificates issued to
Wilson therefor cancelled, and other certificates issued in lieu
thereof, on his application, and it was ordered that the
corporation cancel the certificates, and issue or deliver to
Thurber, or his order, such new certificates, and that Thurber and
the corporation recover of Crump their costs. Wilson had never
appeared or answered. Crump has appealed to this Court.
It is assigned for error that the circuit court did not have
jurisdiction of this cause under § 2 of the Act of March 3, 1875,
18 Stat. 470, and ought to have remanded it to the state
Page 115 U. S. 60
court. This objection is well taken. It is true that there is,
in the suit, a controversy between Crump and Thurber, but it is a
controversy to which the corporation is an indispensable party.
Crump brought the controversy into court as one between himself on
one side, and Wilson and the corporation on the other side, and
throughout Crump maintained that Thurber had no right to take the
place of Wilson, because the transactions between Wilson and
Thurber gave Thurber no greater right than Wilson had. The
controversy which Crump asked to have adjudicated was one in which
he should be declared to be the owner of the shares, and in which,
to give him the fruition of such decree, and enable him to stand as
the legal owner of the shares, and be recognized as such on the
books of the corporation, there should be a decree ordering the
corporation to cancel on its books the evidence of the ownership by
Wilson, and to issue to Crump certificates for the shares. The
jurisdiction of the circuit court must be determined, for the
purposes of this case, by the status of the parties, and the nature
of the relief which had been asked by the plaintiff at the time of
the application for removal. If the decree of the circuit court had
been in favor of Crump, it would have enforced a right in favor of
a citizen of Kentucky against a corporation in Kentucky. That
corporation could not have removed the suit by showing that a
citizen of New York was the other claimant of the stock. The event
of the suit, a decree in favor of Thurber, on the merits, against
Crump and the corporation, is not a proper test of the
jurisdiction. If Thurber had brought the suit originally in the
state court against Crump and the corporation, it could have been
removed; or he might have brought it originally against them in the
circuit court. But, in the present decree, Crump's bill is
dismissed on the merits, and, of course, he is adjudged to have no
rights against the corporation, and costs are decreed against him
in favor of the corporation.
This case falls distinctly within a series of rulings made by
this Court.
Blake v. McKim, 103 U.
S. 336;
Hyde v. Ruble, 104 U.
S. 407;
Winchester v. Loud, 108 U.
S. 130;
Shainwald v. Lewis, 108 U.
S. 158;
Ayres v.
Wiswall, 112 U.S.
Page 115 U. S. 61
187;
Hancock v. Holbrook, 112 U.
S. 229;
Thayer v. Life Association,
112 U. S. 717;
N.J. Cent. Railroad Co. v. Mills, 113 U.
S. 249;
Sully v. Drennan, 113 U.
S. 287;
Louisville & Nashville Railroad Co. v.
Ide, 114 U. S. 52;
St. Louis & San Francisco Railroad Co. v. Wilson,
114 U. S. 60;
Putnam v. Ingraham, 114 U. S. 57;
Pirie v. Tvedt, ante, 115 U. S. 41.
The decree of the circuit court is reversed, and the case is
remanded to that court with a direction to remand it to the state
court, for want of jurisdiction, with costs to Crump against
Thurber in the circuit court.