Case ID: barb_48/html/0132-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, J. Geo. G. Barnard, J. (dissenting.)", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Ayres vs. The Western Railroad Corporation.
    An action commenced in the Supreme Court, by one foreign corporation against another, cannot be removed for trial, into the Circuit Court of the United States, under the Act of Congress of 1789.
    But where the assignee of a foreign corporation, suing another foreign corporation, is a citizen of this state, the action may be removed, provided the claim is of such a nature [that the United States court can take cognizance of it.
    Tim 17th section of the Act of Congress, which provides that the Circuit Courts of the United States shall not “ 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,” applies to a claim against a railroad company, as a common carrier, to recover the value of goods entrusted to it for transportation; such a claim being a chose in action. Geo. G. Baenaep, J. dissented.
    Where a defendant applies for, and obtains, an order from the court giving him time to answer, and serves that order, with a notice signed by an attorney, as “ attorney for the defendant,” this is doing an act in the progress of the cause, and submitting to the jurisdiction of the court; which is equivalent to an appearance.
    The decision in Stevens v. The Phamix Ins. Co. (24 Sow. Pr. 617,) questioned. Per Baknabd,' J.
    THIS is an appeal by the plaintiff from an order made by Mr. Justice Barnard, removing this cause for trial to the circuit court of the United States for the southern district of Hew York. The action was brought by the plaintiff, a citizen of New York, in the supreme court, as the assignee of the Southworth Manufacturing Company, a Massachusetts corporation, to recover the value of certain property, delivered in 1861, hy the Southworth company, at Springfield, in Massachusetts, to the defendant, for transportation as a common carrier, to consignees in a western state. The goods thus delivered were, in fact, destroyed by fire by the burning of the defendants’, depot at East Albany, in July, 1861, and were of the value of more than $500. The defendant is a railroad corporation created under the laws of Massachusetts, ■and is a common carrier, and the action is the usual one against a common carrier for the loss of goods. The defendant, claiming to be a citizen of Massachusetts, made application under the act of congress for the removal of the cause for trial to the circuit court of the United States, and the order was' granted. Among other things it was shown that the defendant was the lessee under a perpetual lease, and operated the Albany and West Stockbridge Railroad Company, a New York corporation, having a railroad between Albany and the Massachusetts line, and for this reason, it was claimed that the defendant had lost the right of removing the cause into the federal court.
    After service of the summons and complaint, the defendant, upon an affidavit made by C. W. Reynolds, in which he swore that he had been- retained as the attorney of the defendant, in this cause, applied to a justice of this court, at chambers, for, and obtained an. order, dated June 25, 1866, extending the time for putting in an answer, twenty days. A copy of this order was served upon the plaintiff’s attorneys, with a notice thereof, signed “ C. W. Reynolds, Deft’s Att’y.”
    
      Bliss efe Gadwalader, for the appellant.
    
      John H. Reynolds, for the respondent.
    I. The authority for the removal of this case for trial to the circuit court of the United States, is given by the act of congress of 1789. (1 St at. at Large, 79, § 19. Brightly’s Dig. 128. Conk-ling’s Treatise, 3d ed. pp. 123, 126, 173, 179,475, 476, dec.)
    
    II. The defendant, being a corporation created by and under the laws of Massachusetts, is a citizen of that state, and entitled to the same rights in respect to the right to the removal of a cause as a natural person. (The Louisville, &c. R. R. Co. v. Latsen, 2 How. (U. S.) R. 497, 554, 555, 558. Rundle v. Del. and Raritan Canal Co., 4 id. 80. Salmon Falls Man. Co. v. Goddard, 14 id. 446. Philadelphia, &c. R. R. Co. v. Derby, Id. 468. Marshall v. The Baltimore and Ohio R. R., 16 id. 314. Dennistoun v. N. Y. and N. H. R. R. Co., 1 Hilton, 62. Conroe v. National Ins. Co., 10 How. Pr. R. 403, per Bockes, J. People v. Utica Ins. Co., 15 John. 359. Mott v. Hicks, 1 Cowen, 573. State of Indiana v. Woram, 5 Hill, 33, 38. Ontario Bank v. Bunnell, 10 Wend. 186. Sherwood v. Sar. and W. R. R., 15 Barb. 650. Angelí dc Ames on Gorporations, § 467. Whedan v. Camden and Amboy R. R. Co., Philadelphia Legal Intelligencer.) 1. The fact that the defendant transacts business in this state is of no importance. The right of removal depends upon citizenship, and a party cannot at the same time be a citizen of two states. 2. The case of Stevens v. The Phœnix Ins. Co. (24 How. Pr. R. 517,) does not apply to this, even if it was a sound decision. The application in that case was refused to a foreign insurance company, upon the ground that by appointing an agent under our statutes upon whom process might be served, it had waived the benefit of the act of congress. The correctness of this we deny. 3. But it will be seen that the general scope of the opinion favors a right of removal in a case like the present, save the intimation that a foreign corporation by sending its agents here and transacting business in this state may lose its citizenship in the state where created and to that extent acquire a residence here. This remark was wholly obiter, and was obviously made without due consideration and is against the reason of the thing and the adjudged cases. A corporation is by the law of its being doomed to reside within the jurisdiction creating it, and incapable of migrating.
    III. It is said also that the plaintiff is an assignee, and for that reason there can be no removal. This objection rests upon the words of the 11th section of the act of 1789, (Statutes at Large, 78 ; Brightly’s Digest, 12,) which is 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/' The answer to this objection is that this is not a suit to recover the contents of a promissory note or other chose in action, but to recover damages for the wrongful detention of property, and the statute does not apply. (Deshler v. Dodge, 16 How. 622. Clark v. The City of Zanesville, 4 Am. Law Reg. 501.)
   Ingraham, J.

The defendants are incorporated under the laws of Massachusetts. The plaintiff is a citizen of New York, and was assignee of a company incorporated under a law of Massachusetts. The defendants moved for an order to remove the cause into the United States Court. The motion was, granted, and the plaintiff appealed.

It is clear that between the original parties, as both were corporations created by the laws of Massachusetts, this action could not have been removed. But inasmuch as the plaintiff, who is assignee of the claim, is a citizen of New York, the case is within the statute, unless the United States Court is prevented from taking cognizance of the action under the 17th section of the United States statute, which says the court shall not have cognizance of any suit to recover the contents of a promissory note, or o.ther chose in action, in .favor of an assignee, unless a suit might have been prosecuted if no assignment had been made. The question, then, arises, is this action brought to recover upon a chose in action ? A chose in action, or a thing in action, is a term used in contradistinction to a chose, or thing, in possession, and is applicable to cases where the title to the money or property is in one person and the possession is in another, which, by contract, he is bound to deliver to the owner.

In Campbell v. Perkins, (8 N. Y. Rep. 430,) it was held, that a claim against common carriers, although in form for a wrong, was founded on contract. It was founded on an engagement, and is technically a claim. If so, then the claim is a chose in action transferred to the assignee, and bringing the case within the exception of the statute. It is similar in its nature to that of Anderson v. The Manufacturers’ Bank, (14 Abb. Pr. R. 436.) That action was against the defendant for not protesting a note. The ground was negligence. So, here, the action is for not delivering goods according to agreement.

I think, also, there is good ground for holding that the defendant, by obtaining time to answer, by an order from the court, and serving that, with a notice signed by an attorney, as attorney for. the defendant, did what was equivalent to an appearance. It was doing an act in the progress of the cause, and submitting to the jurisdiction of the state court, and was equivalent to an appearance. (Cooley v. Lawrence, 5 Duer, 610.)

The order should be reversed.

Clerks, J. concurred.

Geo. G. Barnard, J. (dissenting.)

In order to bring this case within the principle of the case of Anderson v. Manufacturers’ Bank, (14 Abb. 436,) it must be determined that this action is brought to recover the contents of a promissory note, or other chose, in action, and if this is its character, it was conceded on the argument that the defendant was not entitled to remove the cause for trial into the federal court. The action is brought against the defendant as a common carrier, for damages, on account of the non-delivery of goods delivered to it by the Southworth Manufacturing Co. at Springfield, in Massachusetts, for transportation to a western state. It is alleged in the complaint that the defendant'has wholly failed and refused to transport or deliver the goods, on account of which the Southworth Manufacturing Co. sustained the damages claimed, and that the said Southworth Manufacturing Co. has duly sold, assigned and transferred to the plaintiff all its interest in said goods, wares and merchandize, and its claim, demands and cause of action, against the defendant.

It is thus obvious that the plaintiff is the vendee of the goods, to he transported, or of the claim to damages, after the defendant had violated its agreement to transport them, and had lost them, or converted them to its own use. This brings the case clearly within that of Deshler v. Dodge, (16 How. U. S. 622.) In that case, the suit was brought by the plaintiff, a citizen of New York, against the defendant, a citizen of Ohio, in replevin for a quantity of bank bills issued by banks in Ohio, and the plaintiff’s title was derived by assignment from the Ohio banks. It was entirely clear that the assignors (the Ohio banks) could not have maintained any action against the defendant, for the recovery of the bills, for the reason that both the banks and the defendant were citizens of the same state, and the case was therefore in this aspect precisely like the present; and the only question to be determined was, whether it came within the provisions of the act of congress forbidding jurisdiction to the federal courts, in suits by an assignee to recover the contents of a promissory note, or other chose, in action.

It was held by the Supreme Court of the United States, that the circuit court had jurisdiction of the action. Mr. Justice Nelson, delivering the opinion of the court, says: (16 How. 631:) “ We are of opinion that the clause of the statute has no application to the case of a suit by the assignee of a chose in action, to recover possession of the thing in specie, or damages for its wrongful caption or detention, and that it applies only to cases in which the suit is brought to recover the contents, or to enforce the contract contained in the instrument assigned. In the case of a tortious taking or wrongful detention of a chose in action against the right or title of the assignee, the injury is one to the right of property in the thing, and it is therefore unimportant as it respects the derivation of the title ; it is sufficient if it belongs to the party bringing the suit, at the time of the injury.

The distinction as it respects the application of the 11th section of the judiciary act to' a suit concerning a chose in action is this : where the suit is brought to enforce the contract, the assignee is disabled, unless it might have been brought in the court if no assignment had been made ; but if brought for a tortious taking or wrongful detention of the chattel, then the remedy accrues to the person who has the right of property or of possession at the time, the same as in a case of a like wrong in respect to any other sort of personal chattel.”

It is difficult to see why this decision is not decisive of the present appeal, for it is entirely clear that this is an action to recover damages for the detention or non-delivery of personal property, and not for the recovery of the contents of a chose in action within the meaning of the act of congress. The plaintiff is not the assignee of the original contract for the transportation of the goods, but the assignee of the goods themselves and of the cause of action, arising from their conversion by the defendant or the refusal to deliver them on demand.

It is thus obvious that the plaintiff acquired no right by assignment until after the original' contract had been broken, and the right thus acquired was to the goods in specie or to damages for their unlawful detention. Such an action, according to the decision of the Supreme Court of the United States, is not an action to recover the contents of a chose in action, and is not within the exception named in the act of" congress. It may also be observed that actions against a common carrier, for the loss of goods, although sometimes said to be of an amphibious character, still belong to the class of actions ex delicto, and hence cannot be regarded as for the recovery of the contents of a chose in action, except upon the assumption that every right to recover damages, is in one sense a chose in action. It is very obvious that it was not intended to forbid jurisdiction to the federal courts in all cases of actions prosecuted by an assignee ; for if such was the intention it would have been so declared. The true construction was given to the statute by Mr. Justice Nelson, in the opinion before referred to, and by that we must be guided.

It is also urged that because this action is prosecuted by an assignee, the circuit court of the United States has no jurisdiction, This assumes that no action by an assignee can be maintained in the federal courts, and the assumption is entirely unfounded. As before shown, an action to recover damages for the caption and detention of property, is not for the recovery of the contents of a chose in action, and not within the exception in the act of congress, and if not, there is no objection to the jurisdiction. The jurisdiction is forbidden, only in specified cases, and it is enough to say that it is not one of them.

It is also said that if the right of removal is doubtful, the order should not be granted, and a suggestion of this kind was made in the case of Anderson v. Manufacturers’ Bank, (14 Abb. Pr. 436.) If this case is not within the exception in the act of congress, there is no doubt of the right of removal.. It is for the court to determine whether the defendant brings the case within the law, entitling it to have the action removed ; and if this appears, the question is free from doubt. If, on the contrary, the case is not entitled to be transferred to the federal court, it is equally clear that the order should be refused. It is for the court to say which of these alternatives, is presented, and when a conclusion is reached, all doubt is removed and the duty is plain.

If upon the papers presented, the defendant is by law entitled to have the cause removed, the state court loses all-jurisdiction, and all further proceedings in it are coram non judice and void, and the judgment pronounced will be reversed. (Gordon v. Longest, 16 Peters, 97.) And if the case is improperly removed, the circuit court will remand it to the state court, and if in such case the circuit court should improperly entertain jurisdiction, the Supreme Court • will correct the error. (Pollard v. Dwight, 4 Cranch, 429.) It is thus perceived that if this court should improperly refuse to transfer' a cause, its.judgment in favor of the plaintiff will be ineffectual, and if it should improperly send a case for trial to the circuit court of the United States, that court will correct the error, and remand the case to us. It is thus apparent that in no event can the right of either party be ultimately lost; and this disposes of the objection made by the plaintiff’s counsel on the argument, that if this cause should be improperly removed, the right of the plaintiff might be lost, by the running of the statute of limitations. For if the circuit court shall refuse to entertain jurisdiction of this case if transferred, it will be remanded, and no new action in this court need be commenced.

The objection that the petition for the removal was brought too late is not tenable. The summons and complaint were served on the 5th of Juné, 1866, and the time to answer would expire on the 25th. On that day, on an affidavit showing the intention of the defendant to apply for a removal of the cause to the federal court,-' a chamber order was obtained from a justice of this court extending the time to answer twenty days, which was duly served. This was not entering an appearance in the action ; it was only a proceeding to prevent the entry of.judgment to enable the defendant to comply with the act of congress and apply for a transfer of the cause. On the 5th of July, the appearance of the defendant was entered, by a special order, and on that' day the petition and bond were filed. This must be regarded as sufficient; for otherwise, under our practice, a defendant entitled to have his cause tried in the federal court would wholly lose the benefit of the provisions of the act of congress, if for any reason he was unable to file his petition within twenty days after he was served with a complaint. It would be strange if an extension of the time to answer for the very purpose of enabling a defendant to apply for a removal of the cause should be regarded as such a submission to the jurisdiction of the state court as will deprive him of the benefit secured by act of congress. It must be observed, also, that our practice has radically changed since the act of congress was passed, and it is not now entirely clear what, under the present system, is the “ entering of an appearance in a state court.” It certainly is not done by obtaining an order extending the time to answer, and perhaps there is no other way of complying with the provisions of the statute than was done in this case. At all events we regard it as sufficient.

The defendant is a corporation created by the laws of the state of Massachusetts, and is therefore a citizen of that state. This is now too well settled to be longer questioned, and it is not questioned in this case. It is said, however, that, because the defendant is the lessee of, and operates, a railroad organized under a law of this state, it does not come within the act of congress. The right of removal depends upon the citizenship of the parties, and not upon the extent of the business they transact in this state; and it is not perceived how it can be said that a citizen of Massachusetts, doing business of any kind within this state, has waived his right to remove a cause to the federal court. Any such construction would nullify the act of congress. It is quite true that it has been decided at a special term, (24 How. Pr. 517,) that a foreign insurance company doing business in this state, and having appointed an agent under a special statute upon whom process might be served, lost the right to remove a cause to the courts of the United States. It is unnecessary to say whether this case was rightly decided or not, and there may be grave doubts as to its correctness. Yet the case is wholly unlike this ; for here the defendant has waived nothing if coming into this state by its agents and doing business is not to be deemed a waiver of the right, secured by the act of congress, and clearly this is not so.

[New York General, Term,

November 5, 1866.

The order appealed from should be affirmed with $10 costs.

Order reversed.

Ingraham, Clerhe and Q. <■?. Barnard, Justices.]