U.S. Supreme Court
Brown v. Fletcher, 235 U.S. 589 (1915)
Brown v. Fletcher
No. 454, 455
Argued December 1, 1914
Decided January 5, 1915
235 U.S. 589
The prohibition against the federal court's entertaining jurisdiction of actions brought by assignees to recover upon a promissory note or other chose in action, as now embodied in § 24, Judicial Code, does not apply to a suit to recover a specific thing or damages for its wrongful detention or caption. chanrobles.com-red
Under § 294, Judicial Code, which is the statutory rule for construing that Code, the slight changes between the wording of the Act of 1887 and that of § 24, Judicial Code, in regard to jurisdicion of the federal court of suits by assignees was not intended to bring about any change in the law, but merely the continuation of the existing statute. Federal statutes have always permitted the vendee or assignee to sue in the United States courts to recover property or an interest in property when the requisite value and diversity of citizenship existed. Barney v. Baltimore, 6 Wall. 280.
Section 24, Judicial Code, does not deprive the district court of jurisdiction to enforce an interest under an assignment by the cestui que trust of an interest in the estate to which the latter has a fixed right in the future. Such an assignment is not a chose in action payable to the assignee within the prohibition of § 24, but an evidence of the assignee's right, title, and estate in the property.
Conrad Braker, Jr., of New York, died testate July 21, 1890. The 15th item of his will provided that the sum of $50,000 should be held in trust and securely invested for the use of his son, Conrad Morris Braker, who was to receive the income until he attained the age of fifty-five, when the "principal should be paid to him and belong to him absolutely." If he failed to reach that age, the property was to be held for the benefit of his wife for life with remainder to Henry Braker.
The sixteenth item directed that "one-half of all the rest, residue, and remainder, both real and personal," of his estate should be held in trust for the use and benefit of Conrad Morris Braker, who was to receive the interest derived from said trust, until he attained the age of fifty-five, when "the whole amount, less $25,000, shall be paid and belong to him absolutely." If he failed to reach that age, then the property was to pass to another son.
The amount realized from the residuum, described in the sixteenth item, aggregated $120,000, and with the $50,000 described in the 15th item of the will, was invested in property (not described) which is now held by Austin B. Fletcher, the duly appointed testamentary trustee.
On April 18, 1901, Conrad Morris Braker assigned to chanrobles.com-red
Frank L. Rabe "seven-tenths of all the estate, right, title and interest which he had in and to the principal sum of $50,000 described in the fifteenth item of the will." Thereafter, Rabe transferred and assigned this interest to the New York Finance Company.
On February 25, 1902, Conrad Morris Braker executed an instrument in which, subject to the assignment of $35,000 above referred to, he
"granted, bargained, sold, assigned, transferred, and set over to the New York Finance Company all of his estate, right, title and interest of any kind, form or description whatsoever to the amount or extent of $35,000 in and to the legacy of $50,000, and also in and to a legacy of the part or share of the residuary estate to which he was entitled under and by virtue of the fifteenth and sixteenth paragraphs of the will of Conrad Braker, Jr., deceased."
By virtue of these two transfers, the New York Finance Company claimed to be the owner of such interest in the fund or estates created under the fifteenth and sixteenth items of the will.
The Finance Company thereafter made a note for $15,000, payable to William Brewster Wood, and secured the same by a transfer of its interests under the sixteenth item. It also made another note for $10,000 to Brown and Schermerhorn, trustees for Clara Schermerhorn, and secured the same by a transfer of its interest under the fifteenth item.
These notes were not paid when they fell due, and the New York Finance Company's equity of redemption was acquired by the respective holders of the two notes. In February, 1913, when Conrad Morris Braker attained the age of fifty-five, the respective holders of the notes and assignments demanded that the trustee should pay over to them that to which they were entitled by virtue of the instruments aforesaid. The trustee refused to comply, and thereupon the executors of Wood and the chanrobles.com-red
trustees of Clara Schermerhorn (all of whom were citizens and residents of Pennsylvania) brought suit in the United States District Court for the Southern District of New York against Fletcher, trustee, and Conrad Morris Braker, beneficiary, both being citizens and residents of New York.
The two bills were each prepared by the same counsel, and were identical except that the trustees of Schermerhorn sued for what had been assigned them under the fifteenth item. The executors of Wood sued for the interest assigned them in the money or property mentioned in the fifteenth and sixteenth items of the will. In both suits, it was alleged that the complainants had acquired title by virtue of the sale, transfer, and assignment executed by Conrad Morris Braker, and subsequent mesne conveyance. It was alleged that complainants had been informed that he claimed the transfers signed by him to be void because made to secure usurious debts. Both bills prayed that Braker should be enjoined from litigating the question of title in any other court; that the complainants' right under the assignments should be established by final decree, and that Fletcher, the testamentary trustee, should be ordered to pay over to the complainants what was due them by virtue of the respective assignments from Braker.
The court dismissed both bills, and in each case gave a certificate that the order was based "solely on the ground that no jurisdiction of the district court existed."
From that order, the complainants appealed to this Court. chanrobles.com-red