1. The jurisdiction of the federal courts cannot be affected by
state legislation, and they will enforce equitable rights created
by such legislation if they have jurisdiction of the subject matter
and the parties.
2. A., an alleged creditor of B., whose claim had not been
established at law, filed his bill against the latter, averring him
to be insolvent, and against C., a debtor of B., praying that the
debt due from C. be applied to the payment of that claim. There
being no assignment to A. by B. of his debt against C., and no lien
upon the fund in the hands of the latter,
held that the
bill could not be sustained.
The facts are stated in the opinion of the Court.
MR. JUSTICE SWAYNE delivered the opinion of the Court.
This case was decided by the court below upon demurrer to the
amended bill of the appellant. The case made by that bill, so far
as it is necessary to state it, may be embodied in a few words.
The appellant and Dunn, under the name of Smith & Co., on
the 6th of June, 1871, contracted with a corporation then known as
the Fort Scott and Allen County Railroad Company, afterwards the
Fort Scott, Humboldt, and Western Railroad
Page 99 U. S. 399
Company, to grade the line of its roadway extending from Fort
Scott in Kansas to Humboldt City in the same state and to build all
the necessary bridges and culverts and to complete the work by the
1st of July, 1872.
The railroad company, in consideration of the work to be done,
agreed to pay and deliver to Smith & Co. certain municipal
bonds, amounting, according to their face value, to $275,000,
to-wit, $125,000 in the bonds of Bourbon County, $25,000 in the
bonds of Humboldt City, $75,000 in the bonds of Humboldt Township,
$25,000 in the bonds of Salem Township, and $25,000 in the bonds of
Elsmore Township. Dunn assigned his interest in the contract to
Smith. The latter did all the work before the time specified. On
the 6th of June, 1872, the railroad company passed a resolution
accepting the work and acknowledging the fulfillment of the
contract.
The bonds of Humboldt Township and Humboldt City, amounting
together to $100,000, have been delivered to Smith pursuant to the
contract. The bonds of Bourbon County and those of Salem Township
and of Elsmore Township have not been delivered.
On the 24th of July, 1869, the Commissioners of Bourbon County
passed a resolution calling for an election on the 24th of August
following, under a statute of Kansas, to decide the question
whether the county should subscribe $150,000 to the capital stock
of any railroad company then or thereafter organized to construct a
railroad on the line specified in the contract of Smith & Co.
The election was accordingly held at the time appointed. The result
was in favor of the subscription. On the 13th, of October, 1870,
the Fort Scott and Allen County Railroad Company was duly
organized. On the 13th of October, 1871, the commissioners of
Bourbon County passed a resolution authorizing Joseph L. Emert to
subscribe for $150,000 of the stock. The subscription was made
accordingly. The county from time to time voted upon the stock. The
commissioners resolved to prepare, and in part to execute, the
bonds as soon as the necessary lithographing could be finished.
They promised Smith promptly to deliver them upon the completion of
the work within the contract time
Page 99 U. S. 400
They were present when the contract was entered into, and made
the same promise to Smith & Co. But for their repeated
assurances to this effect and the reliance of both Smith and Dunn
upon their good faith, the work would not have proceeded, and would
not have been done.
The county bonds have not been issued, and new and burdensome
terms have been imposed as conditions of that result. The railroad
company is hopelessly insolvent. There is no remedy left to the
appellant but to procure the bonds still in arrear. The prayer of
the bill is that the railroad company be decreed to assign its
claim for the bonds of Humboldt County to the complainant; that the
county commissioners be decreed to issue them, and that process
issue against the Fort Scott, Humboldt, and Western Railroad
Company (formerly the Fort Scott and Allen County Railway Company),
and against the County Commissioners of Bourbon County and against
that county.
The only question presented for our determination is whether the
demurrer was properly sustained.
Our judgment will be confined to a single point.
There is no privity between the County of Bourbon and the
complainant. There has been no assignment, legal or equitable, to
him by the railroad company of its claim against the county. If
there had been an assignment, the circuit court could not have
taken jurisdiction of the case, because the assignor, if there had
been no assignment, could not have maintained a suit upon the thing
assigned in that forum. Rev.Stat. 109;
Sere v.
Pitot, 6 Cranch 332. The relationship of the
complainant to the company is that he is its creditor while the
county is assumed to be, and perhaps is, its debtor. The
complainant has no lien upon the fund he is seeking to reach. His
case is therefore a common creditor's bill -- nothing more and
nothing less. There is no statutory provision in Kansas touching
such bills. The distinction there between legal and equitable
remedies has been abolished. 2 Dasslor's Statutes of Kansas, p.
643, sec. 3230.
The law of procedure there recognizes but two forms of action --
one is designated a civil, the other a criminal action. The former
relates to the assertion of civil rights by suit; the
Page 99 U. S. 401
latter, to criminal prosecutions. The circuit court of the
United states of that district has nevertheless full equity
jurisdiction. The federal courts have it to the same extent in all
the states, and state legislation cannot affect it.
Boyle v.
Zacharie, 6 Pet. 635. The states, however, may
create equitable rights which those courts will enforce where there
is jurisdiction of the parties and of the subject matter.
Clark v.
Smith, 13 Pet. 195;
Ex Parte
McNeil, 13 Wall. 236. This bill, as regards this
point, was well filed in the court to which it was addressed. But
nothing is better settled than that such a bill must be preceded by
a judgment at law establishing the measure and validity of the
demand of the complainant for which he seeks satisfaction in
chancery.
Wiggins v. Armstrong, 2 Johns. (N.Y.) Ch. 144;
Hendricks v. Robinson, id., 296;
Greenway v.
Thomas, 14 Ill. 271;
Mizzel v. Herbert, 12 Miss.
(Smed. & M.) 550;
Gorton v. Massey, 12 Minn. 147;
Skele v. Stanwood, 33 Me. 309;
Sexton v. Wheaton,
1 Am.Lead.Cas. (5th ed.) 59.
There are exceptions to this rule, but they do not affect its
application to the case in hand. It is therefore unnecessary to
pursue the subject further.
Decree affirmed.