Under § 2 of the Act of March 3, 1887, c. 373, 24 Stat.
552, as corrected by the Act of August 13, 1888, c. 866, 25 Stat.
433, the jurisdiction of a circuit court of the United States, on
removal by the defendant of an action from a state court, is
limited to such suits as might have been brought in that court
under the first section.
A question of jurisdiction cannot be waived.
The Mexican National Construction Company, a citizen of
Colorado, assigned certain causes of action against the Mexican
Page 157 U. S. 202
National Railroad Company, also a citizen of Colorado, to
Davidson, a citizen of New York, September 11, 1891, and, on the
same day, Davidson began his action of attachment in the supreme
court of the State of New York against the railroad company, which
in due season removed the cause into the United States Circuit
Court for the Eastern District of New York. Davidson, the
plaintiff, recovered judgment for $151,832.41, upon a trial before
the court without a jury. From this judgment the railroad company
sued out its writ of error to the circuit court of appeals of the
United States for the Second Circuit, and Davidson also sued out a
writ of error on the ground that he should have had judgment for a
larger amount.
The circuit court of appeals certified to this Court in each
case the following questions:
"First. Whether or not the United States Circuit Court of the
Eastern District of New York had jurisdiction to hear and determine
the first cause of action."
"Second. Whether or not the United States Circuit Court of the
Eastern District of New York had jurisdiction to hear and determine
the second cause of action."
These questions were preceded by a statement of facts by that
court setting forth, among other things, that plaintiff sought to
recover upon two causes of action:
"1st. To recover, with interest from the 15th of October, 1886,
the amount of a debt owing the construction company by the Mexican
National Railway Company on 15th October, 1886, which the
defendant, in consideration of the transfer to it of certain
railroad property, agreed to pay with other debts up to the extent
of a certain fund which was put into its hands, and which was
sufficient in amount for that purpose. The other debts had been
fully paid before suit brought."
"2d. To recover $1,731, damages sustained by the construction
company (being its payment of the reasonable fees of an umpire and
stenographer) through the breach by the defendant of an agreement
between it and the construction company to adjust by arbitration
the controversy over the claim first mentioned. "
Page 157 U. S. 203
And that among the assignments of error duly filed in that court
by the Mexican National Railroad Company were these:
"That the court, upon the trial, entertained jurisdiction of
this cause; that the court, upon the trial, entertained
jurisdiction of the first alleged cause of action set forth in the
complaint; that the court, upon the trial, entertained jurisdiction
of the second alleged cause of action set forth in the
complaint."
But that the record showed that no question as to the
jurisdiction of the circuit court was raised upon the trial, and no
such question was referred to in the findings or opinion of the
circuit court.
The portions of sections one and two of the Act of March 3,
1887, as corrected by the Act of August 13, 1888, defining the
jurisdiction of district and circuit courts of the United States,
bearing upon the questions involved, are as follows:
"SEC. 1. That the circuit courts of the United States shall have
original cognizance, concurrent with the courts of the several
states, of all suits of a civil nature at common law or in equity,
. . . in which there shall be a controversy between citizens of
different states, in which the matter in dispute exceeds, exclusive
of interest and costs, the sum or value aforesaid, . . . and no
civil suit shall be brought before either of said courts against
any person by any original process or proceeding in any other
district than that whereof he is an inhabitant, 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
district of the residence of either the plaintiff or the defendant;
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 of any subsequent holder if such instrument be
payable to bearer and be not made by any corporation, unless such
suit might have been prosecuted in such court to recover the said
contents if no assignment or transfer had been made. . . ."
"SEC. 2. . . . Any other suit of a civil nature at law
Page 157 U. S. 204
or in equity of which the circuit courts of the United States
are given jurisdiction by the preceding section and which are now
pending, or which may hereafter be brought in any state court may
be removed into the circuit court of the United States for the
proper district by the defendant or defendants therein, being
nonresidents of that state. . . ."
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the court.
This action was based, as to its first cause, upon an alleged
indebtedness of $104,244.10, existing October 1, 1886, in favor of
the construction company and against the railway company, with
interest. The obligation to pay the indebtedness devolved upon the
railroad company by reason of an agreement, annexed to the
complaint, between the persons to whom the construction company had
disposed of the first mortgage bonds of the railroad company and
the construction company. This agreement provided for the
foreclosure of the mortgage upon the property of the railway
company and the formation of a new railroad company under the laws
of Colorado; the conveyance of the property bid in at foreclosure
sale to the new company; the issue of new first mortgage bonds by
the latter company; the sale of these to a certain amount, and from
the proceeds of such sale the deposit with the new railroad company
of a sum not exceeding $217,000, to be applied to liquidate the
indebtedness of the railway company. The complaint set forth the
agreement and the proceedings thereunder, resulting in the deposit
of the sum of $217,000, and alleged that of that sum "there
remains, to liquidate the indebtedness of the railway company," a
sum exceeding that for which the complaint demanded judgment. The
issue on the merits was therefore whether the construction company
was entitled to recover this
Page 157 U. S. 205
claim against the railroad company out of the fund of
$217,000.
Was the action brought, as to its first cause, "to recover the
contents of a chose in action," and could it have been originally
brought in the circuit court of the United States? If not, could
the jurisdiction be sustained on removal?
The language of section 11 of the Judiciary Act of 1789 was as
follows:
"Nor shall any district or circuit court have cognizance of any
suit to recover the contents of any promissory note or other chose
in action in favor of an assignee unless a suit might have been
prosecuted in such court to recover the said contents if no
assignment had been made."
1 Stat. 78, c. 20.
In
Sere v. Pitot,
6 Cranch 332,
10 U. S. 335,
an action was commenced in the District Court for the District of
New Orleans to foreclose a mortgage given by a citizen of Louisiana
to another citizen of the same state. The plaintiff was the general
assignee in insolvency of the mortgagor, and was an alien, and
Chief Justice Marshall, delivering the opinion of the Court,
said:
"Without doubt, assignable paper, being the chose in action most
usually transferred, was in the mind of the legislature when the
law was framed, and the words of the provision are therefore best
adapted to that class of assignments. But there is no reason to
believe that the legislature were not equally disposed to except
from the jurisdiction of the federal courts those who could sue in
virtue of equitable assignments, and those who could sue in virtue
of legal assignments. The assignee of all the open accounts of a
merchant might, under certain circumstances, be permitted to sue in
equity in his own name, and there would be as much reason to
exclude him from the federal courts as to exclude the same person
when the assignee of a particular note. The term 'other chose in
action' is broad enough to comprehend either case, and the word
'contents' is too ambiguous in its import to restrain that general
term. The contents of a note are the sum it shows to be due, and
the same may, without much violence to language, be said of an
account."
In
Sheldon v.
Sill, 8 How. 441,
49 U. S. 449, a
bill in equity had been filed in the circuit court of the United
States by the
Page 157 U. S. 206
assignee of a bond and mortgage for a decree of sale of the
mortgaged premises. The mortgagor and mortgagee were both citizens
of Michigan, and the assignee was a citizen of New York. It was
held that the court had no jurisdiction, Mr. Justice Grier
saying:
"The term 'chose in action' is one of comprehensive import. It
includes the infinite variety of contracts, covenants, and promises
which confer on one party a right to recover a personal chattel or
a sum of money from another, by action."
In
Corbin v. County of Blackhawk, 105 U.
S. 659, it was decided that a suit to compel the
specific performance of a contract or to enforce its other
stipulations was a suit to recover the contents of a chose in
action, and not maintainable, under section 11 of the act of 1789,
as reenacted in section 629 of the Revised Statutes, in the circuit
court by an assignee if it could not have been prosecuted by the
assignor had no assignment been made. And this was reaffirmed in
Shoecraft v. Bloxham, 124 U. S. 730. But
while the exception extended to all actions
ex contractu,
it has been held not applicable to a tortious taking or wrongful
detention of a chose in action against the right or title of the
assignee, where the injury is one to the right of property in the
thing, and the derivation of title unimportant.
Deshler v.
Dodge, 16 How. 622,
57 U. S. 631;
Ambler v. Eppinger, 137 U. S. 480.
In the Acts of March 3, 1887, c. 373, 24 Stat. 552, and August
13, 1888, c. 866, 25 Stat. 433, the provision is couched in these
words:
"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 of any subsequent holder if such instrument be
payable to bearer and be not made by any corporation, unless such
suit might have been prosecuted in such court to recover the said
contents if no assignment or transfer had been made."
The act of 1875 referred to suits "founded on contract," but the
act of 1887 restored the words of the act of 1789, "to recover the
contents of any promissory note or other chose in action," and we
do not think that the words "if such instrument be payable to
bearer and be not
Page 157 U. S. 207
made by any corporation" limit the comprehensiveness of "chose
in action," as construed under the act of 1789, and, as this cause
of action is based on contract, we are of opinion that it is within
the definition heretofore ascribed to the words "to recover the
contents of a chose in action." This being so, it follows that the
action could not have originally been brought in the circuit court
of the United States by Davidson, the assignee of a Colorado
corporation, against a Colorado corporation.
We inquire, then, whether the first cause of action was one of
which a circuit court of the United States could take cognizance
through removal from a state court.
By the twelfth section of the Judiciary Act of 1789, it was
provided
"that if a suit be commenced in any state court against an
alien, or by a citizen of the state in which the suit is brought
against a citizen of another state, . . . and the defendant shall
at the time of entering his appearance in such state court, file a
petition for the removal of the cause for trial into the next
circuit court, . . . it shall then be the duty of the state court
to accept the surety, and proceed no further in the cause, . . .
and the cause shall there proceed in the same manner as if it had
been brought there by original process."
And it was held in
Green v.
Custard, 23 How. 484, and
Bushnell
v. Kennedy, 9 Wall. 387, that the restriction of
the original jurisdiction of the circuit courts in respect of suits
by an assignee, whose assignor could not be sued in that court, did
not apply to a suit removed from a state court under the twelfth
section.
By the second section of the Act of March 3, 1875, c. 137, 18
Stat. 470, the exception out of the original jurisdiction as to
assignees of choses in action occupied the same relative position
as in the act of 1789, and the same conclusion was reached in
regard to it -- namely that the restriction upon the commencement
of suits contained in section 1 did not apply to the removal of
suits under section 2.
Claflin v. Commonwealth Insurance
Co., 110 U. S. 81;
Delaware County v. Diebold Safe Co., 133 U.
S. 473.
And see Goldey v. Morning News,
156 U. S. 518.
Page 157 U. S. 208
But the second section of the act of 1887 (as corrected in 1888)
contained a radical difference from section 12 of the act of 1789
and section 2 of the act of 1875 in confining the suits which might
be removed to those "of which the circuit courts of the United
States are given original jurisdiction by the preceding section."
As already stated, the last part of the preceding section provides
that no circuit or district court shall have cognizance to recover
the contents of a chose in action in favor of an assignee unless
such suit might have been prosecuted therein to recover such
contents if no assignment had been made, while the second section
provides for the removal of suits now pending or which may be
hereafter brought in any state court of which the circuit courts of
the United States were given jurisdiction by the first section.
This change was made in accordance with that intention to restrict
the jurisdiction of the circuit courts which has been so often
recognized by this Court.
Smith v. Lyon, 133 U.
S. 315,
133 U. S. 319;
In re Pennsylvania Company, 137 U.
S. 451,
137 U. S. 454;
Fisk v. Henarie, 142 U. S. 459,
142 U. S. 467;
Shaw v. Quincy Mining Company, 145 U.
S. 444;
Hanrick v. Hanrick, 153 U.
S. 192.
We must hold, therefore, as has indeed already been ruled,
Tennessee v. Union & Planters' Bank, 152 U.
S. 454,
152 U. S. 461,
that the jurisdiction of the circuit courts on removal by the
defendant under this section is limited to such suits as might have
been brought in that court by the plaintiff under the first
section. The question is a question of jurisdiction as such, and
cannot be waived.
Capron v. Van
Noorden, 2 Cranch 126;
Mansfield Railway Co. v.
Swan, 111 U. S. 379;
Metcalf v. Watertown, 128 U. S. 586. It
is true that, by the first section, where the jurisdiction is
founded on diversity of citizenship, suit is to be brought "only in
the district of the residence of the plaintiff or the defendant,"
and this restriction is a personal privilege of the defendant, and
may be waived by him.
St. Louis & San Francisco Railway v.
McBride, 141 U. S. 127.
Section 2, however, refers to the first part of section one, by
which jurisdiction is conferred, and not to the clause relating to
the district in which suit may be brought.
McCormick Machine
Co. v. Walthers, 134 U. S. 41.
Page 157 U. S. 209
As to the second cause of action, the sum sued for was under the
jurisdictional amount.
The result is that in each case both questions certified
must be answered in the negative.
