An action was brought by foreign attachment in the Court of
Common Pleas of Warren County, Pennsylvania, in the name of a
citizen of Pennsylvania for the use of the Lumberman's Bank, at
Warren, Pennsylvania, against a citizen of New York. The suit was
on a note given by the defendant to the plaintiff, to be paid "in
the office notes of the Lumberman's Bank at Warren." Some of the
stockholders of the Lumberman's Bank at Warren were citizens of the
State of New York. The defendant appeared to the action by counsel,
and having given bond with surety to the court of common pleas,
removed the cause to the Circuit Court of the United States for the
Western District of Pennsylvania. A motion was made in the circuit
court to remand the cause to the Court of Common Pleas of Warren
County, the circuit court having no jurisdiction of the cause on
the ground that the real party in the suit was the Lumberman's Bank
at Warren, an aggregate corporation, some of the stockholders of
the bank being citizens of the State of New York. It was held that
the circuit court had jurisdiction of the case.
The decisions of the Supreme Court have been uniform, and as
declared at the present term in the case of
Commercial &
Railroad Bank of Vicksburg v. Slocomb, that the courts of the
United States cannot exercise jurisdiction when some of the
stockholders in a corporation established in one state are citizens
of another state of which the party sued by the corporation is a
citizen.
A note to be paid "in the office notes of a bank" is not
negotiable, by the usage or custom, of merchants. Not being a
promissory note by the law merchant, the Statute of Anne, or the
kindred act of assembly of Pennsylvania, it is not negotiable by
endorsement, and not being under seal, it is not assignable by the
act of assembly of Pennsylvania on that subject relating to bonds.
No suit could be brought upon it in the name of the endorser. The
legal interest in the instrument continues in the person in whose
favor it has been drawn, whatever equity another may have to claim
the sum due on the same, and he only is the party to a suit at law
on the instrument.
On 6 May, 1839, a writ of foreign attachment was issued out of
the Court of Common Pleas of Warren County, Pennsylvania, in the
name of Guy C. Irvine for the use of the Lumberman's Bank at Warren
against Nathaniel A. Lowry, requiring bail in eighty thousand
dollars. The action was founded on a promissory note in the
following terms:
"$53,000 Warren, Pa., Sept. 6, '37"
"There months after date I promise to pay to the order of Guy C.
Irvine, Esq., fifty-three thousand dollars in office notes of the
Lumberman's Bank at Warren and payable at their banking house in
Warren."
"N. A. LOWRY"
"Endorsed on side 'GUY C. IRVINE'"
The Sheriff of Warren County attached certain real estate in the
county, and also returned that he had attached the goods and
chattels of Nathaniel A. Lowry in the hands of certain persons
named in the return. Among the garnishees was Guy C. Irvine.
Page 39 U. S. 294
On 24 October, 1839, Nathaniel A. Lowry, the defendant,
presented a petition to the Court of Common Pleas of Warren County
stating that he was at the commencement of the action, and at the
time of filing the petition, a resident and citizen of the State of
New York and that Guy C. Irvine, the plaintiff in the suit, is and
was at the commencement of the suit a citizen of the State of
Pennsylvania, and asking the court to accept the security offered
for entering his appearance in the circuit court of the United
States, and in all things complying with the acts of Congress in
such cases made and provided; he prayed the court to proceed no
further in the cause and to allow the removal of the cause to the
Circuit Court of the United States for the Western District of
Pennsylvania.
The court of common pleas granted leave for the removal of the
cause to the circuit court, and the defendant gave a bond with
security for the entry of the cause in the circuit court.
On the same day on which the petition of Nathaniel A. Lowry was
presented to the Court of Common Pleas of Warren County, the
affidavits of Robert Falconer, President of the Lumberman's Bank at
Warren, and of Walter W. Hodges, were filed.
The affidavit of Mr. Falconer stated that at the date of the
note on which the action was founded, he was president of the bank,
and the note was received from the defendant at the time it bears
date as a security for his previous indebtedness to the
institution, and that Guy C. Irvine had not then or at any time
since any interest in the said note except as guarantor for the
payment of the same and the solvency and sufficiency of the drawer
of the note.
The affidavit of Mr. Hodges stated that William Hall, Vine
Elderken, Brown and Buckland, Starkweather and Brown, and sundry
other persons, were stockholders in the Lumberman's Bank at Warren,
and at the time of the institution of the suit were citizens of the
State of New York residing in that state.
The case being in the Circuit Court of the United States for the
Western District of Pennsylvania, at the November sessions of the
court, Mr. Biddle, for the plaintiff, moved to remand the cause to
the Court of Common Pleas of Warren County for want of
jurisdiction.
On the hearing of this motion before the circuit court, Mr.
McCandless, the counsel for the Lumberman's Bank at Warren,
produced to the court an Act of the Assembly of Pennsylvania passed
28 February, 1834, for chartering the bank; also an Act of Assembly
of Pennsylvania of 21 March, 1813, entitled, An act to recharter
certain Banks, and it was admitted that the bank commenced the
business of banking at Warren, in Pennsylvania, having been
organized under the act of 1824. The counsel for the bank also
produced the note on which the suit had been brought.
The counsel for the bank stated, and the defendant's counsel
admitted, that this suit was founded on the note.
"Whereupon, it appearing to the court that this suit is founded
on the note aforesaid, dated 6 Sept., 1837; that Guy C. Irvine was,
at the date of the institution of this suit, a citizen of
Pennsylvania,
Page 39 U. S. 295
and that N. A. Lowry was at the same date a citizen of the State
of New York, that said bank was erected and duly organized at
Warren, in Pennsylvania, under the Act of February 28, 1834,
aforesaid, and that six persons mentioned in the record and sundry
other stockholders thereof were, at the date of said suit, citizens
of the State of New York, and due consideration being had of the
premises, the court is divided in opinion, one of the judges
thereof being of opinion that this Court has no jurisdiction of the
case; that the rule, granted as aforesaid, be made absolute and the
record of this suit remanded to the court of Common Pleas of the
county of Warren; the other judge being of opinion that the court
has jurisdiction of the case and that the rule granted as aforesaid
be denied."
The judges of the circuit court certified this division of
opinion to the Supreme Court of the United States.
Page 39 U. S. 298
MR. JUSTICE BALDWIN delivered the opinion of the Court.
This suit was instituted in the Court of Common Pleas of Warren
County, Pennsylvania, whence it was removed to the Circuit Court
for the Western District of that state pursuant to the provisions
of the Judiciary Act of 1789, section twelve, and comes before this
Court on a certificate of division of opinion between the judges of
that court on a motion to remand the cause for want of
jurisdiction.
Irvine, in whose name the suit is brought, is a citizen of
Pennsylvania; the Lumberman's Bank of Warren is a corporation
chartered by a law of that state and located at Warren; part of the
stockholders are citizens of New York, of which state the defendant
is also a citizen. The suit is brought upon a paper, of which the
following is a copy:
"$53,000 Warren, Pa., 6 September, '37"
"Three months after date, I promise to pay to the order of Guy
C. Irvine, Esq., fifty-three thousand dollars in the office notes
of the Lumberman's Bank at Warren, and payable at their banking
house in Warren, Pa."
"N. A. LOWRY"
"Endorsed on side 'GUY C. IRVINE'"
The suit was commenced by the process of foreign attachment,
agreeably to the law of Pennsylvania; the property of the defendant
was attached according to its provisions, whereupon he appeared and
by his counsel moved for the removal of the cause, and having
complied with the requisitions of the Judiciary Act, the cause was
ordered to be removed to the circuit court.
Page 39 U. S. 299
By thus approving and submitting to the process of attachment,
the defendant waived any privilege to which he was entitled by the
section of the Judiciary Act, as held by this Court in
Toland v.
Sprague, 12 Pet. 330-331, so that on his appearance
and entry of bail, the attachment was dissolved and the cause will
thenceforth proceed as if it had commenced by the ordinary process
of the court, served on the defendant within the district. The
commencement of the action in the common pleas by attachment being
expressly provided for in the twelfth section of the Judiciary Act,
it must be considered, when removed into the circuit court, as an
original one.
This brings us to the question raised in the argument of the
plaintiff's counsel, whether that Court can exercise any
jurisdiction over the case on the ground that the defendant and
some of the stockholders of the bank are citizens of New York,
which would be a fatal objection to the jurisdiction if the
corporation is to be considered as the plaintiff and sole party in
interest. On this subject, the decisions of the Court have been
uniform, and, as declared in the present term in
Vicksburg
Bank v. Slocomb, 14 Pet. 60, have settled this
point decisively; nothing then remains but to ascertain from the
record, as certified, whether the bank is the real plaintiff, for
if they are not, then as Irvine is admitted to be a citizen of
Pennsylvania and Lowry of New York, the jurisdiction is
undoubted.
The paper on which the suit is brought is not negotiable by the
usage or custom of merchants; it is payable to order; the promise
is to pay so many dollars, but not to pay any certain sum of money;
it is a promise to pay the amount "in the office notes of the
Lumberman's Bank at Warren," which are not money, and at most a
chattel. Not being a promissory note either by the law merchant,
the statute of Anne, or the kindred act of assembly of
Pennsylvania, it is not negotiable by endorsement, and not being
under seal, it is not assignable by the act of assembly on that
subject relating to bonds. The bank therefore cannot sue in its own
name in virtue of the endorsement of Irvine in blank; nor could
they so sue if it was specially endorsed to them, because the legal
right of action would still remain in Irvine, though the equitable
interest in the thing promised may have passed to the bank. This
case, however, is not of that description; the only evidence of any
transfer of the contents of the note is the blank endorsement of
Irvine and the affidavit of the President of the bank, in the
latter of which it is stated that the note was received by the bank
from the defendant, at the time it bears date, as a security for
his previous indebtedness thereto, and that Irvine had not then or
since any interest in said note except as a guarantor for its
payment and the solvency and sufficiency of the drawer.
In referring to the affidavit, we are not to be understood that
whatever may be its contents, they would influence our decision;
yet assuming the case to be as there stated, the legal right of
action is in Irvine; the paper is not the evidence of an
original
Page 39 U. S. 300
debt, contracted by a discount thereof or its reception as
payment of a preexisting debt due the bank. It is only a collateral
security by adding the name of Irvine as endorser. Standing as such
to the bank, their rights are derivative through him, and as the
endorsement passes only an equity, the legal interest is in him; he
is the real plaintiff in a court of Law, in which legal rights
alone can be recognized. This consideration points to the true line
of discrimination between this and the case of
Brown v. Strode, 5 Cranch 303, which was a
suit against an executor on his administration bond, given to the
justices of the peace of the county where the testator died, and
who were citizens of the State of Virginia, as well as the
defendant. The jurisdiction of the circuit court was sustained on
the ground that though the plaintiffs and defendants were citizens
of the same state, the former were mere nominal parties, without
any interest or responsibility, and made by the law of Virginia the
mere instruments or conduits through whom the legal right of the
real plaintiff could be asserted; as such their names must be used,
for the bond must be given to them in their official capacity; but
as the person to whom the debt was due was a British subject, he
was properly considered as the only party plaintiff in the action.
Whatever right of action existed in virtue of the bond passed by
the operation of the law of Virginia directly to the person for
whose benefit it was given, through the conduit appointed for that
purpose. For such and kindred cases the person or officer thus
selected by the law as its agent is not a party to the suit, and no
transfer of the bond or other security to the person entrusted is
necessary to invest him with a complete legal interest or right of
action; but cases of this description cannot be applied to actions
like the present, in which the interest and responsibility of the
parties to the paper depends on their contract, and the law neither
dissolves or transfers any legal right of action on or to the party
who accepts it as security for payment of a preexisting debt.
We are therefore of opinion that the circuit court has
jurisdiction of the case, and direct that it be so
certified.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Western
District of Pennsylvania, and on the point and question on which
the judges of the said circuit court were opposed in opinion, and
which was certified to this Court for its opinion, agreeably to the
act of Congress in such cases made and provided, and was argued by
counsel. On consideration whereof, it is the opinion of this Court
that the said circuit court has jurisdiction of the case. Whereupon
it is ordered and adjudged that it be so certified to the said
circuit court accordingly.
