1. The provision in the first clause of the second section of
the act entitled " An Act to determine the jurisdiction of circuit
courts of the United States, and to regulate the removal of causes
from state courts, and for other purposes," approved March 3, 1875,
18 Stat., part 3, 470,
"That any suit of a civil nature, at law or in equity, now
pending . . . in any state court where the matter in dispute
exceeds, exclusive of costs, the sum or value of $500, . . . in
which there shall be a controversy between citizens of different
states, . . . either party may remove said suit into the circuit
court of the United States for the proper district"
construed and held to mean that when the controversy about which
a suit in the state court is brought is between citizens of one or
more states on one side, and citizens of other states on the other
side, either party to the controversy may remove the suit to the
circuit court without regard to the position they occupy in the
pleadings as plaintiffs or defendants. For the purposes of a
removal, the matter in dispute may be ascertained, and according to
the facts the parties to the suit arranged on opposite sides of
that dispute. If in such an arrangement it appears that those on
one side, being all citizens of different states from those on the
other, desire a removal, the suit may be removed.
2. Until a case requiring it arises, the Court refrains from
expressing an opinion upon the second clause of said section.
3. The petition for removal,
infra, p.
100 U. S. 463,
held to be sufficient in form.
4. An application made before trial for the removal to the
circuit court of a cause pending in a state court at the passage of
said Act of March 3, 1876, was in time if made at the first term of
the court thereafter.
5. In order to bar the right of removal, it must appear that the
trial in the state court was actually in progress in the orderly
course of proceeding when the application was made.
6. The ruling in
Insurance Company v.
Dunn, 13 Wall. 214, that a party who, failing in
his efforts to obtain a removal of a suit, is forced to trial loses
none of his rights by defending against the action reaffirmed.
7. Under the laws of Iowa, a mechanic's lien for work done under
a contract takes precedence of all encumbrances put on the property
by mortgage or otherwise, after the work was commenced.
8. A statement in a contract between a railroad company and a
construction company that the former would pay the latter out of a
certain fund -- the subscription of a particular county along the
road -- is not such a taking by the latter company of a collateral
security as to vitiate its lien.
Page 100 U. S. 458
These cases present the following facts:
On the 6th of August, 1870, the Delaware and St. Paul Railroad
Company, an Iowa corporation, contracted with the Delaware Railroad
Construction Company, also an Iowa corporation, for the
construction of that part of its railroad lying in Delaware County,
Iowa. The contract contained full specifications of the work to be
performed and the prices to be paid, and concluded as follows:
"The prices above specified are to be in full compensation for
all materials and labor required to put the same into the work
herein contracted for, and complete the same in all respects as
provided in this contract. In order to enable the contractor to
prosecute the work advantageously, the said engineer shall make an
estimate from time to time, not oftener than once per month, as the
work progresses, both on work done and materials delivered on the
line of said railroad. The said party of the second part will pay
in current money eighty percent of the amount of said estimate;
twenty (20) percent of the estimates, as they are made to the party
of the first part, may be retained by the party of the second part
as damages in case of a forfeiture of this contract; which said
(20) twenty percent, together with the whole amount of this
contract, according to the terms thereof, and on the estimate of
the engineer, shall be paid to the party of the first part within
thirty days after all the work herein contracted for is completed
and accepted by the engineer. 'Qualified below.'"
"The above payments on estimates shall be made every thirty (30)
days at the office of the president of said Davenport and St. Paul
Railroad Company, in Davenport. The Davenport and St. Paul Railroad
Company may stop all work at any time, without payment of damages,
by giving thirty days' notice."
"Whenever five consecutive miles of work from the south line of
Delaware County are completed by the party of the first part and
accepted by the party of the second part, the party of the second
part shall pay the full amount of the contract price for said work
on said five miles within thirty days after said work is accepted,
without the deduction of said twenty percent, and for every
additional five consecutive miles of the south end of the work
completed by said first party, said second party shall pay in like
manner within
Page 100 U. S. 459
thirty days after the same has been accepted, and so on through
the county from south to north."
"Signed this sixth day of August, A.D. 1870."
"R. EDDY,
Pres."
"J. M. BRAYTON,
Sec'y"
"F. B. DOOLITTLE,
Treas."
"
Board of Directors of the Delaware Railroad Construction
Company"
"All the money for the work hereinbefore specified to be paid by
the citizens of Delaware County."
"H. PRICE"
"
Pres't Dav. and St. Paul R. R. Co."
The work under this contract was commenced Sept. 29, 1870, and
completed Oct. 31, 1872. On the 20th of December, 1872, the
construction company filed in the office of the clerk of the
District Court of Delaware County the statements and accounts
required by the laws of Iowa to secure a mechanic's lien on the
part of the railroad which had thus been completed. The balance
claimed to be due was $71,165.58.
On the 4th of June, 1872, there was filed for record in the
office of the Recorder of Delaware County a mortgage, bearing date
July 1, 1871, but acknowledged May 16, 1872, whereby the railroad
company conveyed its entire line of railroad, including with the
rest that built by the construction company, to William Dennison, a
citizen of the state of Ohio, and J. Edgar Thompson, a citizen of
the State of Pennsylvania, as trustees, to secure the payment of a
proposed issue of bonds, amounting in the aggregate to six millions
of dollars. Provision was made for the appointment of a new trustee
in case of the death of either of those named in the deed.
On the 15th of January, 1874, the construction company commenced
a suit in equity in the Circuit Court for the County of Delaware, a
state court to enforce its mechanic's lien, and in the petition
priority was claimed for this lien over that of the mortgage. In
this suit, the railroad company, Thompson and Dennison, as
trustees, the Davenport Railway Construction Company, an Iowa
corporation, and Lucius Howard, were named as defendants, but
process was served only on the railroad company. On the 28th of
January, the railroad company appeared and filed an answer,
substantially admitting the allegations in
Page 100 U. S. 460
the petition except as to the amount due. Credits were claimed,
however, beyond those acknowledged by the construction company, and
a reference was asked for a statement of the accounts. To this
answer a reply was filed January 30. On the 6th of February, the
construction company and the railroad company appeared by their
respective counsel, and a motion by the railroad company for a
reference being overruled, the court proceeded to receive evidence
in the cause. In this state of the case, it was agreed between the
parties then appearing, to-wit the construction company and the
railroad company, as follows:
"The case as to these parties is referred to Henry Harger, Esq.,
who appears in open court and accepts the appointment of referee,
with power to examine witnesses, books, and papers and accounts,
and upon the findings of said referee being reported to the judge
of this court, a judgment, by agreement of said parties in open
court, is to be entered for the amount due, and a decree for a
mechanic's lien to be made establishing such lien, the hearing to
commence on Monday morning, Feb. 9, 1874, at nine o'clock A.M., at
the office of said Harger in Delhi, Iowa, and to continue from day
to day until completed."
"And by said agreement of said parties the judgment is to be
entered as of the last day of this January Term, 1874, of this
court, and the cause is by order of court continued as to all the
defendants except said Davenport and St. Paul Railroad
Company."
The referee proceeded to the hearing and presented his report,
which was approved by the circuit judge on the 13th of February,
and the judge at the same time directed the clerk to enter a
judgment in accordance with the finding as of February 6, the last
day of the preceding term. On the 14th of February the referee
filed his report and the endorsement of the judge thereon with the
clerk, and the clerk entered a judgment in favor of the
construction company for $51,930.54, with interest at six percent
from February 6, and establishing a lien upon the railroad in the
county to secure the payment. A special execution for the sale of
the property in accordance with this judgment was also ordered. On
the 17th of February, such an execution was issued, and on the 4th
of May, the property was sold by the sheriff to the construction
company for $53,000,
Page 100 U. S. 461
and a conveyance made to its treasurer in trust. Afterwards the
property was conveyed by the treasurer to the Delaware County
Railroad Company, an Iowa corporation created and organized for the
purpose of taking the conveyance and holding the property. This new
corporation was composed of substantially the same stockholders as
the construction company.
On the 6th of April, 1874, an affidavit was made and filed in
the said by the attorney of the construction company, to the
effect
"that personal service of original notice in said suit cannot be
made upon the defendants, J. Edgar Thompson and William Dennison,
trustees of certain bondholders of said railroad, within the State
of Iowa, and they are nonresidents of said State of Iowa."
The next day a supplemental petition was filed in the cause, as
follows:
"And now comes the plaintiff in this suit and states that since
the commencement of this suit, to-wit, on the sixth day of
February, A.D. 1874, a decree has been rendered by this court
against the Davenport and St. Paul Railroad Company, a copy a said
decree being hereto annexed, and made a part of this supplemental
petition, by which judgment was rendered against said railroad
company in favor of said plaintiff for the sum of $51,930.54,
besides costs of suit, and the mechanic's lien claimed in the
original petition in this suit was established as claimed in said
petition."
"Wherefore plaintiff asks that the remaining defendants be
foreclosed of all rights of redemption of the property described in
said original petition; that said lien be established against the
remaining defendants in said suit; that it be declared paramount to
all claims of said defendant, and that plaintiff have such other
and further relief as may be equitable."
Notice to these defendants of the pendency of the original and
supplemental petitions was published in the "Delhi Monitor," a
newspaper published weekly at Delhi, Delaware County, four
successive weeks, commencing April 9 and ending April 30, requiring
them to appear and answer before the 19th of May then next, or
default would be entered against them, and judgment and decree
rendered as prayed for. On the 22d of May, proof of the publication
of this notice having been made, a decree was entered on default
granting the relief asked for and foreclosing the defendants,
Thompson and Dennison,
Page 100 U. S. 462
"from all right of redemption of, in, or to the said property,
and every part thereof" and declaring that the rights of the
construction company were "superior and paramount to any and all
claims or rights of said defendants to the same or any part
thereof." At the same time, the cause was dismissed as to the
defendant Lucius Howard. The Davenport Railway Construction Company
never appeared in the suit, and it nowhere appears what its
interest in the controversy was.
Thompson, one of the trustees, died May 23, the next day after
this decree was entered, and on the 26th of January, 1875, the
following proceedings were had in the cause on the application of
Dennison:
"Now, on this 26th day of January, 1875, comes William Dennison,
the surviving trustee for certain bondholders of the Davenport and
St. Paul Railroad Company, who were defendants in the
above-entitled cause, and files with the clerk of this court a
motion for a new trial in this cause, on behalf of the said William
Dennison, surviving trustee as aforesaid, and brings into court a
bond for security for costs of retrial of said cause, as required
by the statute in such cases made and provided, and offers to be
filed the answer of the said surviving trustee, William Dennison.
Whereupon, it appearing to the court that the service upon the said
surviving trustee was by publication only, and that he and those
whom he represents are entitled to a new trial under the law, and
it further appearing to the court that the said surviving trustee
has furnished security for the costs of new trial herein
satisfactory to the said plaintiff, it is ordered by the court that
a new trial in this cause be granted to the said surviving trustee,
William Dennison, that the answer offered by the said defendant be
filed, and that this cause stand continued to the next term of this
court."
On the 2d of February, the construction company filed a motion
in the cause, to strike the answer of Dennison from the files
because it was not verified. This motion was granted at the next
term of the court, on the 17th of May, and the construction company
thereupon asked for a judgment by default, but on the 19th of May
an amended answer was filed on leave, in which a defense was set up
against the priority of the lien of the construction company. On
the same day, Lewis H. Meyer, a citizen of the State of New York,
claiming to have been
Page 100 U. S. 463
appointed a trustee under the mortgage in the place of Thompson,
moved the court to be substituted for Thompson as a party to the
suit. On the same day, and during the regular term of the court,
Meyer and Dennison filed with the clerk a petition as follows:
"
In the Circuit Court of Delaware County,
Iowa"
"THE DELAWARE RAILROAD CONSTRUCTION CO."
v.
"LEWIS H. MEYER and WILLIAM DENNISON, Trustees."
"Now come your petitioners, Lewis H. Meyer and Wm. Dennison,
trustees, and state:"
"That the Delaware Railroad Construction Company and all persons
who have come in as intervenors in the above entitled cause are
citizens of the State of Iowa; that Lewis H. Meyer is a citizen of
the State of New York, and William Dennison a citizen of the State
of Ohio."
"That they have reason to believe and do believe that from
prejudice or local influence they will not be able to secure
justice, by reason of such prejudice or local influence."
"That said cause can be fully and finally determined in the
United States Circuit Court for the District of Iowa."
"That the amount in controversy in said cause amounts to more
than the sum of five hundred dollars, exclusive of costs, and they
make and file in this court a bond, with good and sufficient
security, for their entering in such circuit court, on the first
day of its next session, a copy of the records in said suit, and
for paying all costs that may be awarded by said circuit court, if
said court shall hold that said suit shall be wrongfully or
improperly transferred thereto, and also for the appearing and
entering special bail in such suit, if special bail was originally
requisite therein, and they pray of said court to accept said
petition and bond, and order the transfer of the said cause to the
said circuit court of the United States."
This petition was not signed or sworn to, but was accompanied by
a bond as follows:
"
In the circuit court of Delaware County,
Iowa"
"Know all men by these presents, that we, Lewis H. Meyer and
William Dennison, principals, and John E. Henry and Charles
Whitaker, as sureties, are held and firmly bound unto the Delaware
Railroad Construction Company, and all other persons whom it
may
Page 100 U. S. 464
concern, in the penal sum of one thousand dollars, to which
payment we bind ourselves and each of us by these presents. Given
under our hands this fifteenth day of May, 1875."
"The conditions of this obligation are these: the said Lewis H.
Meyer and William Dennison have applied to the circuit court of
said county to remove a certain cause pending in said court,
wherein the Delaware Railroad Construction Company are plaintiffs
and the said Lewis H. Meyer, trustee, successor to John Edgar
Thompson and William Dennison, trustees, and many others are
defendants, from the said circuit court to the Circuit Court of the
United States for the District of Iowa:"
"Now if said Meyer and Dennison shall enter in the said Circuit
Court of the United States for the District of Iowa on the first
day of the next term thereof a copy of the record of said suit, and
shall pay all the costs that may accrue or be awarded by said
circuit court if it shall hold that said suit was wrongfully or
improperly removed thereto, and shall also appear and enter special
bail in said circuit court, in said suit if special bail was
originally required therein, then this obligation shall be void;
otherwise in full force."
"WILLIAM DENNISON and L. H. MEYER,
Trustees"
"BY GRANT and SMITH,
Their Att'ys"
"C. WHITAKER"
"JOHN E. HENRY,
Sureties"
Whitaker, one of the sureties, made affidavit that he was a
citizen of Iowa, and worth double the amount of the bond over and
above all debts, and had property subject to execution. The further
proceedings in the state court are thus described in the
decree:
"And now, further, on the twenty-first day of May, 1875, this
cause coming on for further hearing, comes Lewis H. Meyer, by Grant
& Smith and L. M. Fisher, and asks to be made a party
defendants in this cause, and calls up his motion for that purpose,
filed in this cause on the nineteenth day of May, 1875, whereupon
plaintiff, by his attorney, objects to said Meyer's being a party
defendant in this cause for the reason that no evidence of the
appointment of said Meyer as trustee is before this court, and said
motion and the objections thereto having been duly considered by
the court, it is ordered that the application of said Meyer to be
made a party defendant be refused, and the objections thereto be,
and they are, sustained, to which ruling of the court said Meyer,
by his
Page 100 U. S. 465
counsel, excepts and asks that his exceptions in this behalf be
made a matter of record in this cause, which is accordingly done.
Plaintiff now offers in evidence the contract sued on in this
cause, whereupon the defendant, William Dennison, trustee, asks
leave to file an amended petition and bond for the transfer of this
cause to the United States circuit court, a petition and bond for
that purpose appearing to have been filed with the clerk of this
court on the twentieth day of May, 1875, one of the regular days of
the present term of court, to-wit, on the twentieth day of May,
1875, aforesaid; but no notice of the filing of the same having
been brought to the court, plaintiff, by its attorney, objects that
the bond is insufficient, one surety being an attorney, and not
eligible as a surety on a bond in court under the law; and further,
that the application to transfer this cause is too late, the cause
being now reached for trial, and the trial of the same commenced;
whereupon the court sustained the objections of plaintiff in this
behalf, to which ruling of the court the defendant, William
Dennison, trustee, by his counsel, excepts and asks that his
exception be made a matter of record, which is accordingly done,
when, pending further proceedings in said cause, court adjourns to
May 22, 1875."
"And now, on this twenty-second day of May, 1875, it being one
of the days of the regular May Term, 1875, of said court, the court
proceeds with the further hearing of said cause; whereupon
defendant William Dennison, trustee, now moves the court to proceed
no further with the trial of said cause, and asks that said
defendant be allowed to file a new bond for the transfer of said
cause to the United States circuit court, or to deposit money for
costs of the same. Plaintiff objects on the ground that the cause
is now on trial on its merits. Objection sustained, and said
defendant, by his counsel, excepts and asks that this, his
exception, be made a matter of record, which is accordingly done;
whereupon plaintiff, by his counsel, asks leave to file reply, to
the filing of which defendant, Dennison, by his counsel, objects.
Objection overruled, and defendant, Dennison, by his counsel,
excepts and asks that this, his exception, be made a matter of
record, which is accordingly done; whereupon plaintiff files reply,
and thereupon defendant, Dennison, by his counsel, asks leave and
files his amended answer, and the court now proceeds with the trial
of said cause on the issues joined therein, and, after full hearing
and argument of counsel, the same is duly submitted to the court,
and by consent of parties the court takes the same under
advisement, with the understanding that
Page 100 U. S. 466
judgment shall be rendered by the court in vacation, and entered
as of the last day of this term. And the court finds the issues in
favor of plaintiff, and files and renders his decision that
plaintiff's lien is paramount to that of defendant, and orders
judgment in favor of said plaintiff."
"It is therefore ordered and adjudged and decreed that the lien
of said plaintiff is paramount to that of the defendant, William
Dennison, trustee, &c., and it is ordered, adjudged, and
decreed that the former decree and judgment of this court, rendered
at the May Term, A.D. 1874, be confirmed and that the plaintiff's
claim for a mechanic's lien, as prayed in his petitions, be
established as against the said defendants, upon the property
described in the decree in this suit at the February Term of this
court, A.D. 1874, and as therein established, against the Davenport
and St. Paul Railroad Company, and that the defendants be for ever
barred and foreclosed of and from all right of redemption of, in,
or to said property, and every part thereof; and that the rights of
plaintiff be declared to be superior and paramount to any and all
claims and rights of said defendants to the same or any part
thereof; and that the defendant, William Dennison, trustee,
&c., pay the costs of the retrial of this suit. Thus ordered,
adjudged, and decreed, this fourteenth day of October, A.D.
1875."
From this decree Dennison appealed to the supreme court of the
state, and there contended, among other things, that the court
below lost its jurisdiction by the filing of his petition and bond
for the removal of the cause to the circuit court. The court,
however, decided otherwise and affirmed the decree below. To
reverse this judgment of the supreme court, a writ of error has
been sued out of this Court, and that cause is the first of those
mentioned in the title.
After the refusal of the state court to withhold further
proceedings in the cause, Meyer and Dennison obtained from the
clerk of that court a copy of the record, and on the 9th of October
filed it in the clerk's office of the Circuit Court of the United
States for the District of Iowa. This was the second day of the
next session of that court after the petition for removal, but the
delay in filing was explained by an affidavit of the clerk of the
state court exonerating the defendants from all blame. The cause
was thereupon docketed in the circuit court of the United States.
On the 13th of October, 1875,
Page 100 U. S. 467
the construction company moved that court to dismiss the suit
for want of jurisdiction. This motion was overruled, and on the
14th of January, 1876, the parties stipulated that the case should
stand
"as it stood at the time of the trial in the court below after
the filing of the petition for removal, but with Lewis H. Meyer, a
defendant, joining in the answer of Dennison,"
this agreement, however, "not to be regarded as a waiver of the
plaintiff's objections to the right of this court to try this
cause." Some further amendments were made in the pleadings, and
some further stipulations entered into by the parties to speed the
cause, and on the 8th of June, 1876, after hearing both parties, a
decree was rendered annulling the decrees of the state court and
establishing the lien of the mortgage over that of the construction
company. From that decree the construction company appealed to this
Court, and that appeal is the second of the causes named in the
title.
On the 4th of May, 1875, proceedings were commenced by Meyer and
Dennison in the circuit court of the United States for the
foreclosure of their mortgage. To this suit the railroad company,
the construction company, and the Delaware County Railroad Company,
with others, were defendants. In an answer, the construction
company asserted the priority of its lien, and the Delaware County
Railroad Company claimed title to the railroad in Delaware County
under the sheriff's sale in the suit in the state court, free of
the lien of the mortgage. On the 8th of June, 1876, this part of
the controversy in the Meyer and Dennison suit was heard in the
circuit court, and resulted in a decree establishing the
superiority of the mortgage lien over that of the construction
company and the setting aside of the decrees of the state court
against Thompson and Dennison, as well as the sheriff's sale and
deed under which the Delaware County Railroad Company claimed. From
this decree the construction company and the Delaware County
Railroad Company appealed, and that appeal is the last of the suits
mentioned in the title. No other part of the suit commenced by
Meyer and Dennison has been brought up on this appeal, except that
which relates to the priority of liens and the title of the
Delaware County Railroad Company.
Page 100 U. S. 468
MR. CHIEF JUSTICE WAITE, after stating the case, delivered the
opinion of the Court.
Three principal questions are presented by these cases. They
are:
1. Was the suit pending in the state court one which could by
law be removed to the circuit court of the United States?
2. If it could, was the application for removal made in time,
and was it sufficient in form to effect a transfer? and,
3. If the transfer was lawfully made, are the decrees of the
circuit court, giving the mortgage priority over the mechanic's
lien and the title of the Delaware County Railroad Company,
right?
These will be considered in their order.
1. As to the right of removal.
The Act of March 3, 1875, 18 Stat., part 3, 470, was in force
when the application for removal was made, but not when the new
trial was granted to Dennison. The second section of that act
contains, among others, the following provision:
"That any suit of a civil nature, at law or in equity, now
pending . . . in any state court, where the matter in dispute
exceeds, exclusive of costs, the sum or value of five hundred
dollars, . . . in which there shall be a controversy between
citizens of different states, . . . either party may remove said
suit into the circuit court of the United States for the proper
district."
This we understand to mean that when the controversy about which
a suit in the state court is brought is between citizens of one or
more states on one side and citizens of other states on the other
side, either party to the controversy may remove the suit to the
circuit court without regard to the position they occupy in the
pleadings as plaintiffs or defendants. For the purposes of a
removal, the matter in dispute may be ascertained and the parties
to the suit arranged on opposite sides of that dispute. If in such
arrangement it appears that those on one side are all citizens of
different
Page 100 U. S. 469
states from those on the other, the suit may be removed. Under
the old law, the pleadings only were looked at, and the rights of
the parties in respect to a removal were determined solely
according to the position they occupied as plaintiffs or defendants
in the suit.
Coal Company v.
Blatchford, 11 Wall. 174. Under the new law the
mere form of the pleadings may be put aside, and the parties placed
on different sides of the matter in dispute according to the facts.
This being done, when all those on one side desire a removal, it
may be had if the necessary citizenship exists.
In the present case, it appears that the suit was originally
brought by a citizen of Iowa against another citizen of Iowa and
citizens of Pennsylvania and Ohio. There were then, according to
the pleadings, two matters about which there might be dispute --
one between the construction company and the railroad company, both
citizens of Iowa, as to the amount due the construction company and
the actual existence of a mechanic's lien, and the other between
the construction company and the trustees of the mortgage, citizens
of different states, as to the priority of the mortgage over the
mechanic's lien. But before the trustees of the mortgage were
actually brought into court by service of process, the dispute
between the construction company and the railroad company had been
finally disposed of. The amount due the construction company had
been ascertained so far as that company and the railroad company
were concerned, the mechanic's lien established, and the property
sold under the lien to pay the debt. There was after that nothing
left of the suit except that part which related solely and
exclusively to the priority of the mortgage lien, and as to this
the controversy was between the construction company on the one
side, and the mortgage trustees on the other. If the railroad
company still continued a party to the suit, it was a nominal party
only, and its interests were in no way whatever connected with
those of the trustees. It did not, therefore, occupy a position in
the controversy on the same side with them. This being the case, it
is apparent that in the then condition of the suit the only
controversy to be settled was between the mortgage trustees,
citizens of Pennsylvania and
Page 100 U. S. 470
Ohio, on one side, and the construction company and railroad
company, citizens of Iowa, on the other. As such, under the
construction we have given this provision of the statute, the suit
was removable by reason of that provision. This makes it
unnecessary to give an interpretation to that part of the same
section of the act of 1875, which, for the purposes of statement,
may be read as follows:
"That any suit of a civil nature, at law or in equity, now
pending or hereafter brought in any state court, when the matter in
dispute exceeds, exclusive of costs, the sum or value of $500, . .
. in which there shall be a controversy which is wholly between
citizens of different states, and which can be fully determined as
between them, then either one or more of the plaintiffs or
defendants actually interested in such controversy may remove said
suit into the circuit court of the United States for the proper
district."
We reserve the consideration of this provision until a case
requiring it arises. This suit, when the petition for removal was
filed, was one in which the only controversy to be decided was
between citizens of different states, and therefore provided for in
the first clause. Necessarily a removal would take the whole suit
to the circuit court, because, in its then condition, the suit
related to a single controversy only. Whether, as argued, a removal
could also have been had under the last clause we do not
decide.
2. As to the removal.
The third section of the act of 1875, so far as it is applicable
to this case, reads as follows:
"That whenever either party . . . entitled to remove any suit
mentioned in the next preceding section shall desire to remove such
suit from a state court to the circuit court of the United States,
he or they may make and file a petition in such suit in such state
court before or at the term at which said cause could be first
tried, and before the trial thereof for the removal of such suit
into the circuit court, to be held in the district where such suit
is pending, and shall make and file therewith a bond, with good and
sufficient surety, for his or their entering into such circuit
court on the first day of its then next session a copy of the
record in such suit and for paying all costs that may be awarded by
the said circuit court if said
Page 100 U. S. 471
court shall hold that such suit was wrongfully or improperly
removed thereto, and also for their appearing and entering special
bail in such suit, if special bail was originally requisite
therein, it shall then be the duty of the state court to accept
said petition and bond, and proceed no further in such suit, and
any bail that may have been originally taken shall be discharged;
and the said copy being entered as aforesaid in said circuit court
of the United States, the cause shall then proceed in the same
manner as if it had been originally commenced in said circuit
court."
The petition filed in this case was sufficient in form. Enough
appeared on its face to entitle the petitioner to his removal.
While it included a statement of belief that, from prejudice or
local influence, justice could not be secured by a trial in the
state court, no affidavit to that effect was filed; and this
statement could be rejected as surplusage, leaving still good cause
for the removal on account of the citizenship of the parties.
Although Meyer's name was included as a petitioner, that of
Dennison was included also; and, as Meyer was not a party to the
suit, his name could be rejected as surplusage, and the petition
left to stand as that of Dennison alone. The paper was evidently
drafted and put on file under the belief that Meyer would be
substituted for Thompson as a party to the suit. This having been
unexpectedly refused, it was presented to the court by the counsel
of Dennison, without amendment, as in legal effect the petition of
Dennison alone. This, we think, might lawfully be done. Under the
circumstances, it was the duty of the court to treat the
application as coming from Dennison only.
The petition was not signed. No objection was made on this
account in the state court, and it came too late in the circuit
court. If it had been made in the state court, the defect -- if in
fact there was one -- would no doubt have been cured at once by the
signature of counsel. The petition was in writing. On its face, it
purported to be the petition of Meyer and Dennison, and it was in
fact the petition of Dennison. This the court knew because it was
actually presented by the counsel of Dennison and was accompanied
by a bond purporting also to be signed in the name of Meyer and
Dennison. In short, everything in the whole proceeding showed that
it was in
Page 100 U. S. 472
fact what, under the circumstances, it purported to be -- the
application of Dennison, made in good faith, for the removal of the
cause.
The bond was sufficient in form. The condition was such as the
statute required. There was no special bail in the case. Nothing
was therefore to be secured by the bond but the filing of the
transcript in the circuit court on the first day of its then next
term and the payment of any costs that might be awarded by that
court in case it should hold that the suit had been wrongfully or
improperly removed. No objection was made to the sufficiency of the
surety. The only complaint seems to have been that one of the
persons who signed the bond as a surety was an attorney of the
court, which was forbidden by the laws of Iowa and the practice of
the state court. Without determining whether this would have
justified the court in not accepting the bond, if he had been the
only surety, it is sufficient to say that the act of Congress does
not make it necessary that two persons should sign the bond as
sureties. "Good and sufficient surety" is all that is required, and
this is satisfied if there is one surety able to respond to the
condition of the bond. The question here is not whether the court
below had the right to pass upon the sufficiency of the surety, but
whether, upon the facts as they appear in this record, it was
justified in refusing to accept this bond. We are now examining the
case after judgment below in reference to errors which are alleged
to have occurred in the progress of the cause. If the state court
refuses to accept a bond offered by a petitioner for removal which
has "good and sufficient surety" in law, it is error that may be
reviewed here. That court has no discretion in such a matter. Its
action is governed by fixed rules. Here, as no objection was made
to the pecuniary responsibility of the one person who signed as
surety, and was competent under the laws of Iowa to do so, it was
clearly error for the court to refuse to accept the bond because a
second surety was an attorney of the court. Such being the case, we
are clearly of opinion that so far as the form of the application
was concerned, the state court was not justified in refusing to
accept the petition and bond, and in proceeding further in the
cause.
We think also the application was made in time. It is
conceded
Page 100 U. S. 473
that the petition was filed during the first term of the court
at which the suit could be tried, after the act of 1875 went into
operation. It has, so far as we know, been uniformly held on the
circuit, and to our minds correctly, that in suits pending when the
act was passed, the application was in time if made at the first
term of the court thereafter.
Baker v. Peterson, 4 Dill.
562;
Hoadley v. San Francisco, 3 Saw. 553;
Andrews v.
Garrett, 2 Cent.Law Jour. 797;
The Merchants' &
Manufacturers' National Bank v. Wheeler, 13 Blatch. 218;
Crane v. Reeder, 15 Alb.Law Jour. 103. This disposes of
one objection made to the time when the petition was filed.
It has, however, been argued with great earnestness that the
petition for removal was not actually presented to the court
"before trial." We agree that as a general rule the petition must
be filed in a way that it may be said to have been in law presented
to the court before the trial is in good faith entered upon. There
may be exceptions to this rule, but we think it clear that Congress
did not intend, by the expression "before trial," to allow a party
to experiment on his case in the state court, and if he met with
unexpected difficulties, stop the proceedings and take his suit to
another tribunal. But, to bar the right of removal, it must appear
that the trial had actually begun and was in progress in the
orderly course of proceeding when the application was made. No mere
attempt of one party to get himself on the record as having begun
the trial will be enough. The case must be actually on trial by the
court, all parties acting in good faith, before the right of
removal is gone.
Upon the facts in this case, it is apparent to our minds that
the trial had in no sense begun when Dennison presented his
petition formally to the court for a removal. It is equally
apparent that the counsel for the construction company attempted to
get up a race of diligence with his adversary, in which he should
come out ahead. As soon as the court decided not to admit Meyer as
a party to the suit, he seems to have offered the contract sued on
in evidence; but unfortunately for him, in so doing he did not keep
himself inside the orderly course of proceedings. It is evident
that at that time, the cause was not up for hearing on its merits,
and it nowhere
Page 100 U. S. 474
appears that the court accepted then the offer of the counsel to
put in his evidence. Before any action was taken by the court on
that subject, Dennison presented his petition, which had been on
file ready to be presented, as soon as the motion of Meyer was
decided. Immediately after the application of Dennison was disposed
of, the court adjourned until the next day; and when it again met,
Dennison renewed his application. This being refused, the
construction company asked leave to file a reply, which up to that
time had not been done and which was necessary to complete the
pleadings and make up the issues for trial. That being done, and a
motion by Dennison for leave to amend his answer overruled, the
court proceeded "with the trial of said cause on the issues joined
therein." A statement of these facts is sufficient to show that
when Dennison presented his petition in form to the court, the
trial had in no just sense begun. As in the case of
Yulee v.
Vose, 99 U. S. 539, "the
most that can be said is that preparations were being made for
trial."
It is further claimed that the citizenship of Dennison in Ohio
was not proved. As in the case of the sufficiency of the bond, the
question here is not whether, if the statements of the petitioner
in that particular had been denied, it would have been competent
for the state court to institute an inquiry on that subject, but
whether, on the facts as they appear on the face of this record,
which also shows how they should have appeared to the court below,
that court was justified in proceeding further in the suit. We
fully recognize the principle heretofore asserted in many cases
that the state court is not required to let go its jurisdiction
until a case is made which upon its face shows that the petitioner
can remove the cause as a matter of right. But here, to say nothing
of the statements in the petition which were not disputed, the
record is full of evidence that Dennison was a citizen of Ohio. In
the mortgage, Thompson is described as of Pennsylvania, and
Dennison as of Ohio. In addition to this, in order to bring them
into court, the affidavit of the counsel for the construction
company was put on file, in which it is directly stated, under date
of April 6, 1874, that personal service of process could not be
made on them within the state, and that they were nonresidents.
Page 100 U. S. 475
Under these circumstances, it was certainly error for the state
court to retain the cause because it was not shown that the
citizenship of the adverse parties was in different states. The
citizenship of the two corporations in Iowa is averred by the
construction company in its own pleadings.
It is still further claimed that even though the lower court
ought to have accepted the petition and bond and withheld all
further proceedings in the suit, that error was waived by the
subsequent appearance of Dennison and going to a hearing, and that
for this reason it was right for the supreme court not to reverse
the judgment because of the original fault. This question is
settled by the case of
Insurance Company v.
Dunn, 19 Wall. 214, where it is distinctly held
that if a party failed in his efforts to obtain a removal and was
forced to trial, he lost none of his rights by defending against
the action. This record is full of protests on the part of Dennison
against going on with the suit, and of exceptions to the ruling
which kept him in court. Indeed, it is difficult to see what more
he could have done than he did do to get out of court and take his
suit with him. He remained simply because he was forced to remain,
and is certainly now in a condition to have the original error of
which he complained corrected in any court having jurisdiction for
that purpose. In addition to this, we now know that he did take his
suit to the circuit court and carried his adversaries with him. It
is true, by reason of the fault of the clerk of the state court, he
was unable to file his transcript of the record in the circuit
court on the first day of the term, but he did so on the second,
and had the cause regularly docketed, after which a trial was had,
all parties appearing. It is also true that the construction
company objected to the delay, but that objection was, as we think,
properly overruled. While the act of Congress requires security
that the transcript shall be filed on the first day, it nowhere
appears that the circuit court is to be deprived of its
jurisdiction if, by accident, the party is delayed until a later
day in the term. If the circuit court, for good cause shown,
accepts the transfer after the day and during the term, its
jurisdiction will, as a general rule, be complete and the removal
properly effected.
Page 100 U. S. 476
We must therefore hold that the supreme court of the state erred
in not reversing the judgment of the circuit court of the county
and sending the cause back with instructions to that court to
proceed no further with the suit.
3. As to the priority of liens.
It is conceded that by the laws of Iowa, a mechanic's lien for
work done under a contract takes precedence of all encumbrances put
on the property by mortgage or otherwise after the work was
commenced. Such has been the uniform course of decisions by the
highest court of the state.
It is also conceded that, by a statute of the state, Code 1874,
sec. 385, there can be no mechanic's lien in favor of one who takes
collateral security on the contract under which he does his
work.
Such being the law, it is clear that as the mortgage was not
recorded until June 4, 1872, and work under the contract of the
construction company was commenced Sept. 29, 1870, the mechanic's
lien must have precedence unless the construction company took
collateral security on their contract or something equivalent was
done.
It is contended that the words, "all the money for the work
hereinbefore specified to be paid by the citizens of Delaware
County," which appear above the signature of the president of the
railroad company to the contract, give the construction company
collateral security, and thus vitiate the lien. We cannot so
interpret the contract. In the body of the instrument, the
obligation of the railroad company to pay is absolute and
unconditional. The additional clause does not purport to transfer
to the construction company the moneys that are due or that may
become due from the citizens of Delaware County. No control is
given the construction company over these moneys. The most that can
be said of the clause is that it contains an implied obligation on
the part of the railroad company to use the money which came into
its hands from the citizens of Delaware County to discharge its
obligations under the contract, and a corresponding obligation on
the part of the construction company to wait a reasonable time for
the collection of these moneys before putting the railroad company
in default for nonpayment.
Page 100 U. S. 477
In
Christmas v.
Russell, 14 Wall. 69, we said:
"An agreement to pay out of a particular fund, however clear its
terms, is not an equitable assignment; a covenant in the most
solemn form has no greater effect. . . . The assignor must not
retain any control over the fund, any power to collect, or any
power of revocation. If he do, it is fatal to the claim of the
assignee."
It seems to us that this is conclusive of the present case. The
railroad company has nowhere by its agreement given the
construction company any power to collect. The amount due is
nowhere specified; neither does it appear from the instrument
itself what was the nature of the obligations the citizens of
Delaware County were under to make the payment. It is not even said
that the payments thus to be made grew out of any obligations of
the citizens of Delaware County to the railroad company. According
to the construction claimed, the addition of those somewhat
indefinite words at the end of the contract, and after a part of
the signatures had been affixed, must have the effect of changing
the whole tenor of the contract as set out in the body of the
instrument and substituting the citizens of Delaware County as
obligors and bound absolutely for the payment of the work to be
performed, instead of the railroad company. Such we cannot believe
was the intention of the parties, and everything which occurred
afterwards is entirely inconsistent with any such idea. It now
appears from the evidence that there had been very considerable
subscriptions to the capital stock of the railroad company by the
citizens of Delaware County, and that taxes had been levied by the
county, or some of the townships in the county, to aid in the
construction of the railroad. It also appears that all of this
money was collected by and paid to the railroad company. In no
single instance, so far as we can discover, was it paid to the
construction company. The full amount subscribed and levied was not
sufficient to pay all that was due that company. Much of it was
paid over, but all of it was not. Of the amount paid the
construction company by the railroad company, a very considerable
portion was collected from other sources.
Without pursuing the subject further, it is sufficient to say
that in our opinion, the construction company has done nothing
Page 100 U. S. 478
to waive or deprive it of the right to assert a mechanic's lien,
and that the decrees of the circuit court establishing the
superiority of the lien of the mortgage were wrong, and must be
reversed. As the sale under the execution from the state court, by
which the Delaware County Railroad Company now holds and claims
title was made in a suit to which the trustees of the mortgage were
not at the time parties served with process, the sale did not cut
off their interest as mortgagees of the property sold. Neither are
they bound by the decree in the state court finding the amount due
the construction company. The Delaware County Railroad Company took
by its purchase only such title as the construction company had to
convey, and as the interest of the mortgagees was not cut off by
the sale to the construction company, it is not cut off by the
transfer to the Delaware County Company.
We therefore order and adjudge as follows:
1. That the judgment of the Supreme Court of Iowa be reversed
with costs, and that the cause be remanded with instructions to
reverse the decree of the Circuit Court of Delaware County and
direct that court to proceed no further with the suit.
2. That the decree of the circuit court of the United States in
the second of these cases be reversed with costs, and that the
cause be remanded with instructions to ascertain the amount due the
Construction Company under its contract, and to enter a decree
establishing the lien of that company as prior in right to that of
the mortgage, and in default of payment of the amount due by a day
to be named, directing the sale of that part of the railroad
company which lies in Delaware County, to pay the debt. Such
provision for redemption is to be made as is allowed in such cases
by the laws of Iowa.
3. The decree of the circuit court in the remaining case is also
reversed with costs, and the cause remanded with instructions to
enter a decree establishing the lien of the Construction Company as
superior to that of the mortgage, and declaring the title of the
Delaware County Railroad Company, by reason of the sheriff's sale
in the state court to be invalid and not sufficient to pass title
as against the
Page 100 U. S. 479
lien of the mortgage, and for such other proceedings as justice
requires.
MR. JUSTICE STRONG concurred in the judgment, but not in the
construction given by the majority of the Court to the second
section of the act of 1875, respecting removals from state
courts.
MR. JUSTICE BRADLEY concurred in the judgment, and delivered the
following opinion in which MR. JUSTICE SWAYNE concurred.
I concur in the judgment in these cases, but dissent from so
much of the opinion as seems to assume that one condition of
federal jurisdiction, in the removal of a cause from a state court,
under the first clause of sec. 2, act of 1875, is that each party
on one side of the controversy must be a citizen of a different
state from that of which either of the parties on the other side is
a citizen. This portion of the act gives the right of removal to
either party in any suit in which there is "a controversy between
citizens of different states." In my judgment, a controversy is
such, as that expression is used in the Constitution and in the
law, when any of the parties on one side thereof are citizens of a
different state or states from that of which any of the parties on
the other side are citizens. It is true, if there are other parties
on opposite sides of the controversy who are citizens of a common
state, it may also be a controversy between citizens of the same
state. In other words, a controversy may be, at the same time, both
a controversy between citizens of the same state and between
citizens of different states. But the fact that it is both does not
take away the federal jurisdiction. Neither the Constitution nor
the law declares that there shall not be such jurisdiction if any
of the contestants on opposite sides of the controversy are
citizens of the same state, but they do declare that there shall be
such jurisdiction if the controversy is between citizens of
different states. The gift of judicial power by the Constitution,
and the gift of jurisdiction by the law, are in affirmative terms,
and those terms include as well the case when only part of the
contestants opposed to each
Page 100 U. S. 480
other are citizens of different states as that in which they are
all of different states. And I see no good reason why both the
Constitution and the law should not receive a construction as broad
as that of the terms which they employ. On the contrary, I think
there is just reason for giving to those terms their full effect.
The object of extending the judicial power to controversies between
citizens of different states was to establish a common and
impartial tribunal, equally related to both parties, for the
purpose of deciding between them. This object would be defeated in
many cases if the fact that a single one of many contestants on one
side of a controversy being a citizen of the same state with one or
more of the contestants on the other side should have the effect of
depriving the federal courts of jurisdiction. This absurdity became
so glaring under the construction formerly given by this Court to
the Judiciary Act of 1789 in the case of corporations, when every
stockholder was held to be a party, that the Court was at length
impelled to regard a corporation as a citizen of the state which
created it, without regard to the citizenship of its members --
thus getting rid of the troublesome stockholder who happened to be
a citizen of the same state with the opposite party and who almost
always appeared in the case.
If we give the same construction to the present law which was
given to the Judiciary Act, we shall certainly meet with like
embarrassment and difficulty in exercising the fair and proper
jurisdiction of the federal courts. No cases are more appropriate
to this jurisdiction or more urgently call for its exercise than
those which relate to the foreclosure and sale of railroads
extending into two or more states, and winding up the affairs of
the companies that own them, since, in addition to the convenience
of a single jurisdiction's having cognizance of the whole matter
(which could readily be conferred if it is not so) the local
tribunals in such cases, however upright and pure, are naturally
more or less favorably affected towards the interests of their own
citizens, and yet it is almost always essential, on order to do
complete justice in these cases, to call before the court some
parties on opposite sides of the controversy who are citizens of
the same state. If this fact is to deprive the federal courts of
jurisdiction, without regard to
Page 100 U. S. 481
the numerous and important contestants on opposite sides who are
citizens of different states, the value of the institution of
national courts, for taking cognizance of controversies between
citizens of different states, will be greatly impaired.
But it seems to me clear that in construing the present law, we
are not bound by the construction given to the old Judiciary Act.
The words of that act, conferring jurisdiction upon the circuit
courts in respect of citizenship, were not the same as those used
by the present law or by the Constitution. It only conferred
jurisdiction when "the suit is between a citizen of the state where
the suit is brought and a citizen of another state." The singular
number only was used, and the courts, in applying the law to cases
in which there was a plurality of plaintiffs or defendants,
construed it (perhaps justly) as requiring that each plaintiff and
each defendant should have the citizenship required by the law. But
now it is not so. The present law follows the words of the
Constitution and gives jurisdiction to the circuit courts in the
broadest terms, namely whenever in any suit there is "a controversy
between citizens of different states," and this broad and general
expression, as I think I have shown, gives jurisdiction where any
of the contestants on opposite sides of the controversy are
citizens of different states.
The only objection this construction which has been seriously
pressed is drawn from the argument
ab inconvenienti --
namely that if in a controversy where the contestants are numerous,
a single case of diverse citizenship between opposite parties
should give federal jurisdiction, the courts of the United States
would be overwhelmed with business, litigants would be
unnecessarily drawn away from the domestic tribunals, and the
intent of the Constitution would be subverted. Now whilst I am
satisfied that the apprehended inconveniences are greatly
exaggerated, the inconveniences which would result from a contrary
interpretation to that contended for would be at least equally
great in depriving the federal courts of jurisdiction by a single
case of common citizenship between opposite parties, though a large
majority of the opposing litigants are citizens of different
states, and thus one inconvenience would balance the other, and we
should still be left to
Page 100 U. S. 482
seek the true construction of the Constitution and the law from
the words which they use. But the inconveniences would not be
equal. To deprive the federal courts of jurisdiction by a partial
community of citizenship between the opposite parties would in many
instances actually defeat the very object which the Constitution
and the law have in view.
Even if it should happen that, upon the construction contended
for, many cases might be brought into the federal courts in which a
partial community of citizenship did exist between the opposing
parties, what harm would ensue? Ought it not to be presumed that
the courts, which are courts of the common country of all the
parties, will as well do equal and exact justice between them as
the state courts could do? If the judicial force is not sufficient
to meet the exigency, let it be increased. If the courts are not
held at sufficiently convenient places, that difficulty can easily
be removed. The phrase in question, "controversies between citizens
of different states," is a constitutional one, and the construction
which we may give to will affect the judicial powers of the federal
government for all time, and any temporary inconvenience arising
from existing arrangements, which can be remedied by legislation,
ought not to stand in the way of a fair construction of the organic
law.
But it is not necessary to pass upon this question in this case.
The present controversy is wholly between citizens of different
states, and we are all agreed as to the decision that ought to be
made. When the question does come squarely before us and it becomes
necessary to decide it, it is to be hoped that it may receive the
fullest consideration.
