US SUPREME COURT DECISIONS

When a plaintiff who has no real interest in the subject matter of a suit pending in a circuit court of the United States permits his name to be collusively used for the purpose of giving jurisdiction, the suit should be dismissed under the provision of § 5 Act of March 3, 1875, 18 Stat. 472.

After a decision by a state court that certain bonds issued by a municipal corporation were void as issued under an unconstitutional act, several bondholders, citizens of the state, cut the coupons from their bonds and transferred them to a citizen of another state, who gave to the agent of the owners of the coupons a note of hand for much less than the face value of the coupons and an agreement that if he should succeed in collecting the full amount of the coupons, he would pay him fifty percent of the amount collected from the corporation. The new holder thereupon brought suit on the coupons in his own name against the municipal corporation in the circuit court of the United States

Held that this was within the prohibition of § 5, Act of March 3, 1875, 18 Stat. 472, as to parties improperly or collusively made for the purpose of creating a case cognizable by a circuit court of the United States.

This was a suit upon coupons for semiannual interest on the bonds of the Farmington Village Corporation, and among the defenses set up was one to the effect that the plaintiff was not a bona fide holder of the coupons in suit, but that they were placed in his hands merely for the purpose of bringing a suit in the circuit court of the United States. The case was tried by the court without the intervention of a jury and came here with a special finding of facts and a certificate of division of opinion between the judges holding the court upon certain questions arising at the trial. Among the questions certified was this:

"Whether the plaintiff can maintain an action in this Court upon the coupons declared upon, the bonds or instruments to which they were attached not being assigned to him, but having been issued to and always held by citizens of Maine."

The facts applicable to this question, which appeared in the special findings, were these: chanrobles.com-red

Page 114 U. S. 139

The bonds from which the coupons were cut were issued by Farmington Village under a private statute passed by the Legislature of Maine authorizing the village corporation to raise money to aid in the extension of the road of the Androscoggin Railroad Company to some point within or near the limits of the village. The bonds were issued by the assessors and treasurer of the village to a committee of citizens who were authorized to sell and dispose of them for the purpose mentioned in the statute. Before the committee received any of the bonds from the assessors and treasurer, and before July 1, 1870, which was the date of the bonds, Jonas Burnham and eleven others, all citizens, owners of property subject to taxation, and taxpayers in the village corporation, filed a bill in equity in the Supreme Judicial Court of the State of Maine, in Franklin County, against the railroad company, the assessors and treasurer and the committee of the village, to enjoin them from issuing the bonds, on the ground of a want of authority of law for that purpose. This suit was entered at the July term, 1870, of the court, and held under advisement until the 3d of August, 1872, when the bill was dismissed without prejudice. After this, on the 12th of August, 1872, other taxpayers filed another bill of the same general character against the same defendants and the village corporation to obtain substantially the same relief. To this bill the village corporation filed an answer and the railroad company a general demurrer. The case was heard by the court as the July term, 1873, and kept under advisement until August 27, 1878, when a decree was rendered sustaining the bill and granting the injunction prayed for. The opinion of the court is reported in 70 Me. 515, and is to the effect that the statute authorizing the village corporation to aid the extension of the railroad was unconstitutional and void. This opinion was concurred in by only four of the eight judges composing the court at the time of the hearing. One judge who sat in the cause died while the opinion was in his hands for examination, and his death made the four judges a majority of the court at the time of the decision.

Notwithstanding the pendency of the original suit, the bonds were put out, and, with the exception of a few only, chanrobles.com-red

Page 114 U. S. 140

were bought by citizens of Farmington and members of the village corporation. The coupons in suit were collected from various holders of the bonds, all residents of Farmington and citizens of the State of Maine, about May, 1880, and transferred to the plaintiff, a citizen of Massachusetts, separate from the bonds. The plaintiff gave his note and agreement for these coupons to the agent of the holders who had taken them to dispose of, as follows:

"$500 BOSTON, May 5, 1880"

"For value received, I promise to pay to P. Dyer five hundred dollars in two years, with interest."

"E. F. PILLSBURY"

"BOSTON, May 5, 1880"

"Whereas I have this day bought of P. Dyer, of Farmington, coupons of the Farmington Village corporation to the amount of $7,922, and given him my note for the same, as a further consideration for said coupons, I agree that if I succeed in collecting the full amount of said coupons, I will pay him fifty percent of the net amount collected above said five hundred dollars, and pay him as soon as I collect the money from said corporation."

"E. F. PILLSBURY"

This suit was begun July 1, 1880. chanrobles.com-red

Page 114 U. S. 141