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that the preliminary procedure is, in some
oases, much altered. An ambiguity arises in
§ 2 of the act of 1887, in consequence of the
fact that the right of removal is there limited
to suits '^of which circuit courts are given
jurisdiction by the preceding section." The
preceding section (§ 1 of the act) enumer-
ates suits of a civil nature, at law or in
equity, involving more than $2,000, arising
under the constitution, laws, or treaties of
the United States, or in which the United
States are plaintiffs, or between citizens of
different States, or between citizens of the
same State claiming lands under grants of dif-
ferent States, or between citizens of a State
and foreign States, citizens, or subjects.
^'It has been thought by some," says Judge
Wallace, 'Hhat this phrase restricts the right
of removal to suits in which the particular
circuit court to which a defendant seeks to
resort has not only jurisdiction of the sub-
ject-matter but also jurisdiction over the
person of the defendant. This is not a nec-
essary, and does not seem to be a sensible,
construction of the section. That phrase
was apparently used to dispense with a re-
capitulation of the several conditions which
determine the jurisdiction of the subject-
matter in the first section. The word ^juris-
diction' refers to jurisdiction over the sub-
ject-matter, to the general jurisdiction of
circuit courts, and means a jurisdiction which
would enable any circuit court to entertain
and determine the controversy if the parties
were before it."®

Citizenship as Ground of Removal, — ^The
first section of the act of 1887 provides that
^^ no civil suit shall be brought before either
of said courts fcircuit or district] against any
person by any original process or proceeding
in any other district than that whereof he is
an inhabitant." And a case decided soon
after the passage of the law held that, under
this section, the circuit court could not in
any case take cognizance of a suit brought
against a party in a district of which he was
not an inhabitant, and that the second section

8 YiDftl y. OontinenUl Co., 84 Fed. Rep. 238.

did not authorize tiie removal of a suit
brought in a State court against a party not
an inhabitant of the district ; since the right
of removal is limited to cases in which the
'^preceding" (first) section gives jurisdiction
to the circuit courts.^ But it was plain that
the learned judges, in this decision, over-
looked the sentence in the act next following
the one quoted above, viz: '^But where the
jurisdiction is founded only on the fact that
the action is between citizens of different
States, suit shall be brought only in the dis-
trict of the residence of either the plaintiff or
defendant." And accordingly the decision
cited above was disapproved in numerous
caaes,^ and was afterwards expressly over-
ruled by the same court which had rendered
it.^ It may now be regarded as practically
settled that these two clauses taken together
mean this: '^When the jurisdiction depends
upon the existence of a federal question, or
upon grounds other than the citizenship of
the parties, the defendant must be sued in
the district of his domicile ; but when 4he
jurisdiction depends upon the citizenship of
the parties, the suit may be brought in the
district in which either the plaintiff or the
defendant resides. "^^ It is to be noticed,
however, that the right of removal, under
this act, is restricted to non-resident defend-
ants ; and hence a defendant who resides in
the State in which suit is brought cannot re-
move the cause, although the plaintiff be a
resident of another State. *^

Suits by Assignees, — ^The first section of
the act of 1887 also contains the following
clause: ^'Nor shall any circuit or district
court have cognizance of any suit, except
upon foreign bills of exchange, to recover
the contents of any promissory note or other
chose in action in favor of any assignee, or

7Yaba Ck>unty v. Pioneer Gold Min. Co., 82 Fed.
Rep. 183.

8 Faled V. Chicago, etc. R. R., 82 Fed. Rep. 678;
Bank of Winona y. Avery, 84 Jd. 81; Short v. Chicago,
etc. R. R., Id. 225; Tiffany v. Wilce, Id. 280.

» Wilson V. Western Union Tel. Co., 34 Fed. Rep.

w St. Louis, V. * T. H. R. R. v. Terre Haute & I. R.
R., 88 Fed. Rep. 885, Gresham, J. See Halstead r.
Manning, 84 Fed. Rep. 565.

11 Weller y. Pace Tobacco Co., 82 Fed. Rep. 860.
See further Cooley v. McArthur, 85 Id. 872; Gavin v.
Vance, 88 Id, 84; Rawley v. Southern Pac R. R., Id.
305; Loomis v. New York Gas Coal Co.,/d. 858; Pitkin
Co. Min. Co. V. Markell, Id, 886; Swayne v. Boyhton
Ins. Co.. 85 /d 1; Seddon v. Virginia, etc. Co., 86 /<f.6.

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of any subsequeDt holder if such iDstrdment
be payable to bearer and be not made by any
corporation, unless snob suit might have been
prosecuted in such court to recover the said
contents if no assignment or transfer had
been made." Under this clause it is under-
stood that the federal court has ^^jurisdiction
of actions by assignees — where the assignor
was not competent to sue in that court —
only in cases of foreign bills of exchange and
negotiable securities payable to bearer and
made by a corporation," the latter being
^Hhe class of securities made by corporations,
railroad companies and the like, which are
sold in open market and negotiable by de-
livery." ^^ There was a similar prohibition
against suits by assignees, where the assignor
could not sue in the federal court, in the act
of 1875. But since, from the wording of
that act, this clause, relating to the original
jurisdiction of the circuit courts, could not
be read by implication into the following
section, governing the removal of causes, the
supreme court held that while an assignee
could not bring an action originally in the
circuit court unless the assignor could have
done so, yet he could bring the action in a
State court and thence remove it into the cir-
cuit court, if the other prerequisites existed.^
Now, however, under the act of 1887, this
will no longer be possible, since, as we have
seen, the second section of that act restricts
the right of removal to cases of which the
circuit court could take original cognisance
by the first section.

Separable Controversies. — ^The third clause
of the second section of the act of 1^7 pro-
vides for the removal of a '* separable con-
troversy," on ihe ground of diverse citizen-
ship,^ using precisely the same language as

ts BoUins V. Chaffee Co., 84 Fed. Bep. 91. It was
accordingly held that the court had no Jurisdiction of
an action by an assignee on a county warrantpayable to
the order of a person named therein and passing only
by indorsement, in the absence of an averment that
the assignor was qualified to sue in that court; but it
had jurisdiction of an action by the holder on one
payable to bearer, such being a negotiable security
made by a corporation.

i« Claflin v. Ins. Co., 110 U. S. 81 ; Dillon on Bemova^
•of Causes, § 58c.

^* **And when in any suit mentioned in this section
Hiere shall be a controversy which is wholly between
<;itizen8of different States, and which can be fully
determined as between them, then either one or more
of the defendants actually interested In such contro-
versy may remove said suit into the circuit court of
the United States for the proper district."

appears in the second clause of the Hecoikd
section of the act of 1875, except that ft
restricts the right of removal to tAie defend-
ant, instead of leaving it open to either party
as before. And it is held that this clause
applies to that class of cases only where there
are two or more controversies involved in the
same suit, one of which is wholly between
citizens of different States; and under the
act of 1887 the right of removal in the cases
last mentioned is limited to one or more of
the defendants actually interested in such
separable controversy and does not extend
to the plaintiffs therein.^ This decision
merely follows the line of cases which estab-
lished the construction of the corresponding
clause in the act of 1875.^

Prejudice and Local Infivsnce. — The most
perplexing and difficult of the questions which
have arisen under the act of 1887 are those
relating to the proper construction and inter-
pretation of the clauses regulating the re-
moval of causes on the ground of ^'prejudice
or local influence." Whether the Local
Prejudice act of 1867 (Rev. Stat. § 639,
subd. 3) is or is not repealed by the new
statute — whether or not the right now de-
pends upon the amount in controversy — ^what
is the proper practice in effecting the removal
— how it shall ''be made to appear'' to the
circuit court that such prejudice or local in-
fluence exists — these are all points which
stand urgently in need of a finally authorita-
tive decision. The topic offers an inviting
field for discussion, but as it has been treated
in an able and Interesting article from the
pen of Judge Maxwell, in a recent number of
this Journal,'^ I will content myself here
with merely collecting the cases for the
reader's benefit. ^^ There is, however, one

u Western Union Tel. Co. v. Brown, 32 Fed. Bep.
887. See also Anderson v. Appleton, Id, 806; Wood-
rum y. Clay, 88 Id. 897.

i« Barney v. Latham, 108 U. S. 205; Corbin v. Van
Brunt, 105 Id, 576; Fraser v. Jennison, 106 Id, 191;
Brooks V. Clark, 119 Id, 502; Ayres v. Wiswall, 112 Id.
187; DUlon on Removal of Causes, f 25a.

w 28 Cent. L. J., 109.

^ The principal decisions on the *Mocal prejudice''
clause of the act of 1887 are the following: Fisk v.
Henarie, 82 Fed. Rep. 417; Hills v. Richmond A D. R.
R., 88 Id. 81; Short v. Chicago, etc. R. R., 88 Id. 114;
8. C, 84 Id. 225; County Court v. Bait, k Ohio R. B.,
85 Id. 161; Fisk v. Henarie, 85 /d. 280; Malone v.
Richmond & D. R. R., 35 /(i.625; Whelan v. New
York, L. £. & W. R. R., 85 Idk 849; Southworth v.
Reid, 86 Id. 451 ; Shedd v. Fuller, 88 Id. 000.

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No. 13

curious feature of the act of 1887 which de-
serves notice here, especially as it seems to
be a momentary relapse from the policy of
restriction and discouragement elsewhere so
apparent in the statute. It is this : Whereas
the act of 1867 (Rev. Stat. § 639, subd. 3)
required that, in cases where there were sev-
eral defendants, all must possess the requi-
site citizenship and all must join in a petition
to remove on the ground of prejudice or local
influence, now the act of 1887 extends the
right to ^*any" defendant possessing the req-
uisite citizenship ; and the right of removal
under this clause is not confined to cases
where there is a separable controversy be-
tween the plaintiff and the defendant seek-
ing the removal, as such cases are provided
for by § 2, clause 3 of that act, and the pro-
viso in clause 4, in relation to . remanding as
to resident defendants, where the parties can
be separated, refers only to a remand after
the suit as a whole has been removed by the
non-resident defendant. ^^ Nor is this pro-
vision unconstitutional, although by virtue
of the removal the circuit court obtains ju-
risdiction of the entire cause, including con-
troversies between plaintiff and the resident
defendants. It only gives effect to the con-
stitutional provision respecting controversies
between citizens of different States, and with
that view the single federal ingredient, the
citizenship of defendant in another State, is

Timelof Removal. — Under the act of 1875,
§ 3, parties desiring to remove the cause
were required to file the necessary petition
'^before or at the term at which said cause
could be j first tried and before the trial
thereof." Now, under the act of 1887, the
defendant must take this action '*at the time
or any time before the defendant is required
by the laws of the State or the rule of the
State court in which such suit is brought to
answerfor plead to the declaration or com-
plaint of the plaintiff." * It will be observed
that this is an important restriction of the
right, and that the defendant must now ex-

i» VFbelan y. New York,lL. E. A W. R. R., 85 Fed.
Rep. 849; Fisk v. Henuie, 82 Id. 411,

» Wbelan v. New York, L. E. ft W. R. R., 86 Fed.

n Act of March 8, 1887, § 3. Except, however, io
the case of a removal on the f^ound of local prejudiee,
when the petition may be filed "at any time before the
trial" of the aetioB.

ercise his election, as to removing, at a much
earlier stage of the cause than was before re-
quired. It is held that ''by the true con-
struction of the new act, a defendant must
file his petition within the time in which, by
the laws of the State or the rules of the State
court, he is required to serve or file his orig-
inal answer or plea, not within the time when
he is required or may elect to file an amended
or supplemental answer." ^ So far as re-
gards a petition for removal on the ground
of prejudice and local influence, under the
new act (which must be filed ''at any time
before the trial" of the cause), it has been
held that the application is made in time if
made while the case is pending for trial, al-
though there may have been any number of
mistrials or trials in which the verdict was
set aside or the jury disagreed.®

JurisdictiofuU Amount, — Under the act of
1875, the amount or value ih controversy
which was necessary to give original juris-
diction of the action to the federal court, or
jurisdiction by way of removal from a State
court, was $500 "exclusive of costs," but
the courts held that accrued interest might
be included in making up that sum.^ The
requisite amount is now set at $2,000 "ex-
clusive of interest and costs." And further^
by the statute, the amount in dispute must
exceed the last- named sum ; and an action for
the recovery of exactly $2,000, with interest,
is not removable.^ But an action may be
maintained in the circuit court where the
plaintiff's claim exceeds the jurisdictional
amount, although it is made up of distinct
demands of less value individually than
$2,000, and although the plaintiff may have
acquired such demands by assignment.^ In

S3 Wolf V. Chisolm, 90 Fed. Rep. 881. See thi»
clause further construed in Dwyer y. Peshall, 32 /d.
497; Lookout Mountain B. R. v. Houston, Id, 711;
McKeen v. Ives, 86 Id, 801 ; Garvin v. Vanoe, 83 Id. 84;
Simonson v. Jordan, 30 Id, 721.

33 Fisk V. Henarie, 82 Fed. Rep. 417. This was also
the oonstruction which prevailed in regard to the sim-
ilar language used in the act of 1867. See DUlon on
Removal of Causes, § 60; Yannevar v. Bryant, 21 Wall.

** Dillon on Removal of Causes, § 51.

V Lazensky v. Supreme Lodge, 82 Fed. Rep. 417.

s> Bemheim v. Bimbaum, 30 Fed. Rep. 885. In an
action for damages to property by a railroad company
occupying a street, the ad damntim of the writ and
declaration was laid at $1,500, in ignorance of the act
of congress of 1887 increasing the minimum limit of
the Jurisdiction to $2,000; button motion to dismiss.

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Vol. 28.



a recent decision Mr. Justice Harlan ob-
serves, '*I think it is equally clear that the
right of removal on the ground of prejudice
or local influence does not exist in any case
unless the sum or value of the matter in dis-
pute exceeds $2,000 exclusive of interest and
costs." ^ This point is by no means clear
of doubt. But upon a careful consideration
of the whole context, it seems very probable
that this was the real intention of the legisla-
ture, however blindly that purpose may have
been expressed.

Appellate Jurisdiction of Supreme Court. —
Under the act of 1875, the order of the cir-
cuit court dismissing or remanding the cause
to the State court was reviewable by the
United States Supreme Court on writ of error
or appeal, as the case might be. Now, how-
ever, by the act of 1887, this clause is re-
pealed and instead thereof it is provided that
whenever the circuit court ^^shall decide that
the cause was improperly removed, and order
the same to be remanded to the State court
from whence it came, such remand shall be
immediately carried into execution, and no
appeal or writ of error from the decision of
the circuit court so remanding such cause
shall be allowed." ^ And it is held that the
proviso in § 6 of the act of 1887, concerning
the jurisdiction over suits which had been
removed from a State court prior to the pas-
sage of the act, relates only to the jurisdic-
tion of the circuit courts, and does not confer
upon the supreme court jurisdiction over an
appeal from a judgment remanding a cause
to the State court. ^

H. Campbell Black.

the plaintiff asked leave to amend by iDcreasing the
ad damnum: Held, that the ameDdment should be
allowed, since it did not satisfactorily appear from the
nature of the case and the circumstances shown that
the damages were not in fact larger than the original
claim. It is only when the court can plainly see that
its jurisdiction is being fraudulently invoked that it
will deny the amendment or dismiss the cause. Davis
v. Kansas City, S. & K. R. R., 32 Fed. Rep. 863.

^ Malone v. Richmond A D. R. R., 85 Fed. Rep. 625.

*» Act of March 3, 1887, S 2, cl. 6. See Morey, v.
Lockhart, 128 U. S 56.

2» Wilkinson v. Nebraska, 123 U. S. 286.



Supreme Court o/TIUnoUt January 2fit 18S9,

A mutual benefit society, organized under a statute
which provides that ^'associations and societies which
are intended to benefit the widow, orphans, heirs and
devisees of the deceased members thereof, and where
no annual dues or premiums are required, and where
the members shall receive no money as profit or other-
wise, shall not be deemed insurance companies," and
whose certificate filed with the secretary of State de-
clared the purpose of the organization to be "to give
financial aid and benefit to the widows, orphans and
heirs or devisees of deceased members," issued a cer-
tificate to a member which contained a clause agree-
ing to pay him, on his arriving at the age of seventy
years, a sum equal to the number of members in his di-
vision: Held (1), that such certificate is valid as a
certificate payable to the member's widow or cbildreuj
upon his death, but void as a certificate payable to him
after arriving at the age of seventy years; and (2) that
the society, although it had, from time to time, re-
ceived assessments from the member, under such cer-
tificate which were paid over to persons entitled, under
like certificates, was not estopped from invoking the
doctrine of ultra vires.

This is an agreed case decided in the circuit
court in favor of plaintiff in error, Charles W.
Bookhold, and judgment rendered for 91,836.
An appeal was taken to the appellate couit, where
the judgment was reversed, but not remanded.
The case is in substance as follows : Defendant in
error became incorporated March 30, 1874, under
the general incorporation act, as a corporation
not for pecuniary profit ; the object of the incor-
poration bein^, as stated in its application, to
give financial benefit to the widows, orphans,
heirs, or devisees of deceased members. On April
9, 1874, it adopted a constitution, whereby it was
provided that upon the death of a member, or
upon his arriving at the age of seventy years, pay-
ment should be made of the benefits therein pro-^
vtded for. The membership was divided into
divisions, and each member was required to pay
a certain amount upon the death of a member of
his division, or upon such member's arriving at
the age of seventy years. More than a year after
the adoption of this constiution, and while all
certificates of membership contained this provis-
ion, plaintiff in error became a member of said
society, received his certificate of membership,
and paid his assessments under the same, without
any change in the amount, until he had arrived
at the age of seventy years. He then made proof
of that fact, and demanded payment, which was
refused. The contract provides that upon the
happening of that event the board of directors
shall pay to the member a sum equal to one dollar
for every member of the class to which he be-

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No. 13

longed, bat the payment U not made to depend
upon the collection of the assessment; there being
a surplus fund provided which was applicable to
that purpose. Some time after plaintiff became a
member a controversy sprang up between the so-
ciety and the auditor of State, as to the legality of
that provision of the constitution which provided
for the payment of benefits to living members,
whereupon the officers of the society ceased issu-
ing certificates in that form; but, with the excep-
tion of that clause, all subsequent certificates were
identical with that held by plaintiff* Certain ef-
forts were also made to strike out that provision
from the constitution and by-laws, but those
efforts failed, except that it was transferred from
the constitution to the by-laws. Plaintiff always
objected to any such change, and insisted upon
his rights under the original contract, and when
the society refused to pay him this amicable suit
was instituted to try his rights.

ScHOLFiELD, J., delivered the opinion of the

Two questions are presented by this record:
First. Was the clause in the policy in suit, whereby
defendant in error assumes to promise to pay to
plaintiff lu error *^one dollar for each member of
division A,^' etc., within the power vested in de-
fendant in error by its charter, and therefore
obligatory upon it when the policy was delivered?
Second. If it was not within the power vested in
defendant in error by its charter, and therefore
not obligatory upon it when the policy was deliv-
ered, has the promise since become obligatory
upon the d^endant by subsequent acts of the
parties? They will be considered in the order

1. The familiar rule is, a corporation, public or
private, possesses and can exercise no other
powers than those specifically conferred in its
charter, or such as are incidental or necessary to
carry into effect the purpose for which the corpo-
ration was created. Among oCher corporations
which may be organized under chapter 32, Rev.
Stat. 1874, are corporations not for pecuniary
profit. The provisions in that respect, pertinent
here, are found in sections 29, 30, and 31. Section
29 provides that the certificate that shall be filed
by the promoters of the corporation with the sec-
retary of State shall state, among other things,
^Hhe particular business and objects for which it
is formed.*^ Section 30 provides that, upon filing
this certificate, the secretary of State **shall issue
a certificate of the organization of the corpora-
tion, society, or association, making a part thereof
a copy of all papers filed in his office in and about
the organization thereof, and duly authenticated
under his hand and seal of State. • * * Upon
complying with the foregoing conditions, the
corporation, society, or association shall be
deemed fully organized, and may proceed to busi-
ness. * * *^' Section 31 invests corporations
thus created with the usual attributes and powers
of corporations, and concludes thus: ^^Associa-
tions and societies which are intended to benefit

the widows, orphans, heirs, and devisees of the
deceased members thereof, and where no annual
dues or premiums aie required, and where 'the
members shall receive no money as profit or
otherwise, shall not be deemed Insurance com-
panies.^* The organization of the defendant in
error was in strict pursuance of these statutory
provisions. The certificate filed by the promoters
with the secretary of State declared the purpose
for which the corporation Is formed to be ^'to give
financial aid and benefit to the widows, orphans,
and heirs or devisees of deceased members.**
This is the measure of the powers vested in the
defendant in error. The certificate of the secre-
tary of State could not, and it does not assume to,
extend the corporate powers to any other purpose
or object. The policy or certificate in suit, so far
as material to be read in this connection, is as
follows : '^This certificate of membership witness-
eth that the Canton Masonic Mutual Benevolent

Online LibraryAugustus John Cuthbert HareThe Central law journal, Volume 28 → online text (page 81 of 151)