U.S. Supreme Court
Removal Cases, 100 U.S. 457 (1879)
100 U.S. 457
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. chanroblesvirtualawlibrarychanroblesvirtualawlibrary
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
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."
"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 chanroblesvirtualawlibrarychanroblesvirtualawlibrary
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, chanroblesvirtualawlibrarychanroblesvirtualawlibrary
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, chanroblesvirtualawlibrarychanroblesvirtualawlibrary
"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 chanroblesvirtualawlibrarychanroblesvirtualawlibrary
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."
"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
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"
"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
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
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, chanroblesvirtualawlibrarychanroblesvirtualawlibrary
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. chanroblesvirtualawlibrarychanroblesvirtualawlibrary