Source: https://supreme.justia.com/cases/federal/us/151/368/
Timestamp: 2019-04-19 04:44:55+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 151 › Merchants' Cotton Press Co. v. Insurance Co.
(1) That whether the cause be looked at as a whole or whether it be considered under any adjustment or arrangement of the parties on opposite sides of the matter in dispute, there was no right of removal, on the part of the several plaintiffs in error, or either of them.
(2) That there is nothing in the interstate commerce law which vitiates bills of lading, or which, by reason of an allowance of rebates, if actually made, would invalidate a contract of affreightment or exempt a railroad company from liability on its bills of lading.
The case is stated at length in the opinion of the Court. For the purpose of understanding the brief of counsel, the condensed statement in the headnote is sufficient. There was also a motion to dismiss or affirm.
The writ of error in each of these seven causes, which were submitted together, presents the same federal questions, which are, first, whether the Supreme Court of Tennessee erred in sustaining the action of the Chancery Court of Shelby County of that state denying the petition of several of the plaintiffs in error to remove the cause to the Circuit Court of the United States for the Western District of Tennessee, and secondly in holding that certain alleged special rates, rebates, or drawbacks, allowed by Anthony J. Thomas and Charles E. Tracy, receivers of the Cairo, Vincennes & Chicago Railroad Company, through L. L. Fellows, their agent at Memphis, to Jones Bros. & Co., of that place, on cotton shipped over that line to various points in the east, were not in violation of the Interstate Commerce Acts regulating commerce between states of the Union, and did not render the bills of lading issued by the railroad for cotton transported or to be transported so illegal as to invalidate the same, and prevent any recovery thereon against the carrier.
called the "railroad company") covered 5,087 bales of the cotton destroyed, valued at $245,733.46.
In May, 1887, a contract had been entered into between the railroad company and its receivers, Anthony J. Thomas and Charles E. Tracy, on the one side, and the compress company on the other, by the terms of which the railroad company and its receivers agreed to give to the compress company all cotton to compress that the railroad company might have to transport out of Memphis in a compressed condition. The compress company, on its part, agreed to properly compress all such cotton, and also to insure the same for the benefit of the railroad company or owners, for a certain compensation to be paid weekly, which was intended to cover both the service for compressing the cotton and the insurance to be taken out thereon, in good and solvent companies, by the compress company. This insurance was to cover any loss while the cotton was under the control of the compress company and until delivered to the railroad company. The contract further provided that the railroad company and its receivers constituted the compress company its agent to receive all cotton intended for transportation over the railroad company's line, and to sign receipts therefor, on the production of which bills of lading would be issued by the railroad company. This contract was to continue in force until August 31, 1896.
Under and in pursuance of this contract, cotton was delivered to the compress company by the owners or their agents for transportation over the line of the railroad company from Memphis to points east, to the extent of 5,087 bales, for which dray tickets or receipts were given by the compress company, and on the production of which the agent of the railroad company issued bills of lading to the several and respective owners or consignees of such cotton.
The railroad company had an all-rail line from Memphis, and also a partly water and partly rail line, the water line extending from Memphis to Cairo, Illinois, at which point the railroad company's rail line commenced, and extended by means of its connection eastward.
The compress company had a similar arrangement for insuring cotton with other transportation lines, and in pursuance of its undertaking with the carriers it took out insurance on the cotton deposited with it for compression before being transported, aggregating the sum of $301,750, in forth-four different fire insurance companies, corporations of various states of the Union and of foreign kingdoms. The amount of this insurance fell far short of the value of the cotton deposited with it for compression and which was destroyed by the fire. In all of these policies of insurance taken out under and in pursuance of its contract with the carriers, the compress company was named as the assured, but in the body of each of the policies it was set forth and stated that the insurance on the cotton was for the benefit of the railroads, transportation lines, or owners. The insurance was to attach on receipt of the cotton by the compress company, and to terminate when the same was removed for transportation.
The various owners or consignees of the 5,087 bales of cotton covered by the bills of lading of the railroad company, with one or two exceptions, insured their interests in their respective lots of cotton in what is called in the litigation "marine insurance companies."
There was $301,750 of insurance thus taken out by the compress company for the benefit of the carriers, and at the same time there was a large amount of insurance taken out by the owners or consignees in the marine insurance companies on the bills of lading issued by the railroad company to the several owners of the cotton.
Soon after the destruction of the cotton, various suits were commenced in the state courts by the owners of the cotton destroyed, and the rights of the parties were to some extent settled and adjusted in the cases of Lancaster Mills v. Merchants' Cotton Press & Storage Co., 89 Tenn. 62, and Deming & Co. v. Merchants' Cotton Press & Storage Co., 90 Tenn. 306, 358.
owners or the consignees of the cotton -- were entitled to be subrogated to the rights of such owners or consignees, as against the railroad company under its various bills of lading, if that company was liable on such bills of lading. The supreme court further declared in that case that the compress company held the insurance in the forty-four fire insurance companies taken out by it for the benefit and indemnity of the railroad company or companies which had issued bills of lading on the cotton destroyed, and that, to the extent of its proper share or proportion of such fire insurance, the railroad company was entitled to have the same collected for its protection and indemnity; but, in respect to the liability of the railroad company upon its bills of lading to these marine insurance companies, the court could make no decree or render any judgment, for the reason that the railroad company was not a party to that cause. It however declared the rights of the marine insurance companies, and the liability of the compress company and of the fire insurance companies, and left the former companies to their remedy by way of subrogation against the railroad company upon its bills of lading, to be settled and determined by some new proceeding, and it was ordered that $210,224.37 of the fire insurance fund be reserved for the indemnity of the railroad company, if that line should be sued, and its liability to the marine insurance companies should be established.
of the State of Pennsylvania, the Marine Insurance Company, Limited, of London, resident of the United Kingdom of Great Britain and Ireland, the Phenix Insurance Company, a corporation by the laws of the State of New York, R. H. Deming and James H. Foster, partners as R. H. Deming & Co., residents of the State of Rhode Island, the British and Foreign Marine Insurance Company, Limited, of Liverpool, England, resident of the United Kingdom of Great Britain and Ireland, the Cairo, Vincennes & Chicago Line, of Illinois, Anthony J. Thomas and Charles E. Tracy, as receiver thereof, citizens of New York, the Merchants' Cotton Press & Storage Company, a corporation, of Tennessee, S. R. Montgomery, Napoleon Hill, and Thomas H. Allen, Jr., as trustees, citizens of Tennessee, together with six other alien marine insurance companies, and William Watson and E. R. Wood, aliens, and forty-five fire insurance companies of West Virginia, Pennsylvania, New York, Illinois, Louisiana, Wisconsin, Alabama, Connecticut, Ohio, Texas, Indiana, and of the United Kingdom of Great Britain and Ireland.
The bill, in the nature of a creditors' bill, after reciting the facts already presented, set out the various lots of cotton which the complainants and the other marine insurance companies had insured for the owners or consignees thereof, and which were covered by the bills of lading of the railroad company, which insurance they had paid to the owners upon the destruction of the cotton, and further alleged the contract between the compress company and the railroad company, and that the former was to keep the cotton insured for the benefit of the railroad company. The bill then proceeded to charge that, having paid the owners the insurance on the cotton destroyed, the complainants were entitled to be subrogated to the rights of such owners against the railroad company on its bills of lading, and to have the rights of the railroad company enforced against the compress company, and the various fire insurance policies which the latter company had taken out on the cotton for the benefit of the railroad company.
railroad company, being liable to the owners of the cotton, to whom it had issued bills of lading for the cotton while in the possession of the compress company, and the marine insurance companies, having paid the owners of the loss thereof, were entitled to be substituted to the position of the owners of the cotton as against the railroad company, and as against the compress company, and the fire insurance companies, which had issued policies to the compress company for the benefit of the railroad company.
It was further set out in the bill that after the loss occurred, the compress company wrongfully assumed to deal with the fire insurance fund by applying a portion thereof, amounting to $52,472.26, for the use of such owners of the cotton as had dray tickets from the compress company, and to whom no bills of lading had been issued, and who had no other insurance, and that each defendant fire insurance company had paid on its respective policies to the compress company about 15 1/2 percent of the amount of its insurance.
It was claimed in the bill that the compress company wrongfully assumed to thus deal with the fire insurance fund, and in disregard or violation of the decision of the supreme court of the state, which had held that the fire insurance collected should be held for the benefit of the transportation lines which had issued bills of lading for the cotton covered therein.
The bill further alleged that the compress company was neglecting its duty to collect the fund, and it and the fire insurance companies were confederating to prevent and avoid the payments by the fire insurance companies of their policies on the cotton represented by the railroad company's bills of lading.
liability of the compress company to any or all of them by reason of the failure to fully insure the cotton for which the carriers were liable.
It also claimed that of the $52,472.26 collected by the compress company and misappropriated to other losses, the sum of $4,394.12 of these collections should have gone to the railroad company on account of cotton covered by its bills of lading. The compress company was sought to be held liable for this amount.
It was further claimed that several of the fire insurance policies were lost by reason of the compress company's not collecting the same, and that others were not taken out in good and solvent companies, and for those lost the compress company was sought to be made liable in favor of the railroad company.
Among various marine insurance companies which were named as defendants as standing in like position with the complainants was the Phenix Insurance Company, a corporation by the laws of the State of New York, which had policies outstanding in favor of the owners of 3,609 bales of cotton, of the value of $179,108. The Phenix Insurance Company, together with Deming & Co., on August 12, 1891, filed their answer and cross-bill against the same defendants setting out that it had paid the loss on that cotton, and claimed the same rights as were sought to be asserted in the bill of the complainants.
On August 7, 1891, the railroad company and Anthony J. Thomas and Charles E. Tracy, receivers thereof, together with the Delaware Mutual Safety Insurance Company, filed their answer and cross-bill in the case against the compress company and the fire insurance companies, which admitted the liability of the railroad company to the Delaware Mutual Safety Insurance Company to the extent of 500 bales, for which it had issued bills of lading, but denied generally its liability to the marine insurance companies on the bills of lading which it had issued.
"that attachment issue and be levied upon the interest of the Cairo, Vincennes & Chicago Line in the trust fund held by the Merchants' Cotton Press & Storage Company, and by garnishing the defendant fire insurance companies to answer and state what, if anything, they owe upon their respective policies applicable to the liability of the Cairo, Vincennes & Chicago Line, if liability shall be declared herein, or by any court with the parties requisite to the validity of the judgment before such court."
of the plaintiffs and others, to the end that the plaintiffs, and others similarly situated as the plaintiffs, may be fully paid the value of the aforesaid cotton covered under their respective policies of insurance, and distribute the residue, if any there be, to the holders of the certificates issued by the compress company, some of which are held by defendants Napoleon Hill and S. R. Montgomery, who are called upon to produce a specimen of them, and that the said Hill is asked to furnish a list of the holders of such certificates, that they may be made parties thereto, they belonging to a numerous class, and their names unknown to the plaintiffs. And the plaintiffs pray for such other relief, general and special, as may be consistent with the facts of the case."
The theory of the bill was that the railroad company and its receivers were liable to the holders of its bills of lading for the value of the cotton burned, and which was covered by them; that the marine insurance companies which had insured the cotton, and paid the losses thereon to the owners or consignees thereof, were entitled to be subrogated to the rights of such owners, as against the carrier; that the railroad company, through its agent, the compress company, was entitled to recover against the fire insurance companies under the policies they had issued to the compress company, as its agent, and for its benefit, and that the complainants, and those standing in like position, were entitled to reach the fire insurance fund through the rights of the railroad company, for whose benefit such fire insurance was taken out by the compress company.
"Petitioners state and show that the Merchants' Cotton Press & Storage Company is a citizen of the State of Tennessee; that the C. V. & C. Line is a citizen of the State of Illinois, and that the petitioners are citizens and subjects of foreign states, or of states other than the State of Tennessee or Illinois, the said Royal Insurance Company and the said London, Liverpool & Globe Insurance Companies being citizens and subjects of Great Britain, and the said Continental Insurance Company and said Fire Association being citizens of New York, the said Home Insurance Company being a citizen of Louisiana, and the said National Fire Insurance Company being a citizen of the State of Connecticut, and that the controversy is wholly between citizens of different states, or between citizens of one or more of the several states and foreign citizens and subjects, and that the same can be fully determined as between them."
"The Merchants' Cotton Press & Storage Company is the assured in the policies issued by said fire insurance companies, and the sole question, so far as concerns said fire insurance companies, is whether said Merchants' Cotton Press & Storage Company, a defendant upon the record, can recover against said fire insurance companies on their respective policies as set out in the bill of complaint in behalf of the plaintiffs and others in like situation, or in behalf of the C. V. & C. Line."
"Petitioners further state and show that the amount in the controversy, as between the said plaintiffs and each of the petitioners, exceeds the sum of two thousand dollars, exclusive of the interest and cost."
decree below upon the merits, and sustained the action of the chancery court in denying the application for removal on the ground that the real controversy in the cause was between the marine insurance companies and the railroad company and its receivers, that the object of the controversy was to charge the railroad company with the loss sustained by shippers and paid by the marine insurance companies, and incidentally to collect from the fire insurance companies such decree as might be obtained against the railroad company and its receivers, to the extent that the railroad company was a beneficiary in the fire policies taken out by the compress company.
The supreme court of the state further held that the fire insurance companies occupied substantially the position of garnishees, and that their indebtedness upon their respective policies might be reached and held subject to such final decree as complainants might obtain against the railroad company, and that the fire insurance companies had no separable controversy, in the sense of the Judiciary Acts, which entitled them, or either of them, to remove the cause from the state court to the Circuit Court of the United States for the Western District of Tennessee.
115 U. S. 56, 115 U. S. 61; Fidelity Ins. Co. v. Huntington, 117 U. S. 280, 117 U. S. 282.
In this conclusion of the Supreme Court of the State of Tennessee we fully concur. The case made by the bill, and the relief sought thereunder in behalf of complainants and those standing in like situation with them clearly did not present any separable controversy. The plaintiffs in error, who were the petitioners for removal, put their right of removal mainly upon the ground that the case made by the original and cross-bills was virtually a suit by the compress company against the fire insurance companies; that as the compress company was a citizen of Tennessee, and each of said petitioning fire companies was a citizen of another state or an alien, the latter had a right to remove the cause. This we think is a clear misapprehension of the scope of the bill. It admits of no question that the fire insurance policies taken out by the compress company under its contract with the railroad company were, as expressed on the face of the policies, for the benefit of the carrier and were intended for its protection and indemnity. The compress company had therefore no personal interest whatever in the fire insurance policies as against the railroad company by virtue of the contract between the railroad company and the compress company, and by the terms of the fire insurance policies, the railroad company was the beneficiary under those policies to the extent necessary to indemnify it against liability for losses incurred directly to itself, or through its liability on its bills of lading. The railroad company had such an insurable interest in the cotton, and was to that extent the owner of the insurance standing in the name of the compress company or held in trust for it. This is settled by California Insurance Co. v. Union Compress Co., 133 U. S. 387, 133 U. S. 423.
The compress company, aside from the claims which were sought to be asserted against it personally as trustee of the fire insurance fund which was sought to be reached to the extent of the railroad company's interest therein, was a necessary and indispensable party to the suit, under the authority of Thayer v. Life Association, 112 U. S. 717, and Wilson v.
Oswego Township, ante, 151 U. S. 56, decided at the present term of the Court.
It admits of no question that the primary liability, or the right to reach the fire insurance fund, had also to be worked out in favor of the complainants and other marine insurance companies through the liability of the railroad company upon its bills of lading. The suit could not have proceeded a step without the presence of the railroad company, and certainly it presents no separable controversy as between the compress company and the several fire insurance companies.
be determined. Louisville & Nashville Railroad Co. v. Ide, 114 U. S. 52; Pirie v. Tvedt, 115 U. S. 41.
"having elected to sue jointly, the court is incapable of distinguishing their case, so far as respects jurisdiction, from one in which they were compelled to unite."
This ruling has been approved in Peninsular Iron Co. v. Stone, 121 U. S. 631, 121 U. S. 633.
In the present case, as in Peninsular Iron Co. v. Stone, the rights of each of the complainants and of other marine insurance companies occupying the same position depend, as against the petitioners for removal, on the alleged right of the marine companies to hold the railroad company liable, by way of subrogation, upon its bills of lading, and, as an incident to that liability, to collect the fire insurance fund to the extent of the railroad company's share therein.
"Although, as between themselves, they have separate and distinct interests, they joined in a suit to enforce an obligation which is common to all, . . . and while all the complainants need not have joined in enforcing it, they have done so, and this, under the rule in New Orleans v. Winter, 1 Wheat. 91, controls the jurisdiction."
The voluntary joinder of the parties has the same effect, for purposes of jurisdiction, as if they had been compelled to unite.
The right of removal must be determined by the pleadings at the time the petition is filed, Graves v. Corbin, 132 U. S. 585, and, testing the application made in the present case by this rule, we find no dispute or controversy set forth in the bill or in the petition for removal between the compress company and the fire insurance companies. On the contrary, these defendants are charged with confederating together for the purpose of relieving the fire insurance companies from liability on their policies.
"by the settled construction of this section [referring to separable controversies], the whole subject matter of the suit must be capable of being finally determined as between them [the parties seeking removal], and complete relief afforded as to the separate cause of action, without the presence of others originally made parties to the suit."
It may be, under the Judiciary Act of March 3, 1887, c. 373, 24 Stat. 552, and August 13, 1888, c. 866, 25 Stat. 433, as under the Act of March 3, 1875, c. 137, 18 Stat. 470, that the court may disregard the particular position of the parties as complainants or defendants, assigned to them by the pleader, for the purpose of determining the right of removal, Harter v. Kernochan, 103 U. S. 562, and the matter in dispute may be ascertained by arranging the parties to the suit on opposite sides of the dispute, and if by such an arrangement it appears that those on one side are all citizens of different states from those on the other, the suit may be removed. Removal Cases, 100 U. S. 457; Ayers v. Chicago, 101 U. S. 184.
together with the other defendants, as parties on the other side.
Now as thus arranged, we have two alien corporations on the side of the complainants, and two alien fire insurance companies (the London, Liverpool & Globe Insurance Company and the Royal Insurance Company) on the side of the defendants. Under such position, the alien petitioners would not be entitled to removal. Besides, it is settled by King v. Cornell, 106 U. S. 395, that subdivision two of section 639 of the Revised Statutes was repealed by the act of 1875, so that an alien sued with a citizen had no right of removal, and this subdivision two of that section was not restored by the Act of March 3, 1887. Hence, an alien in the position of the alien petitioners in the present case would have no right to remove the cause on the ground of a separable controversy.
Again, the parties being arranged, as above, according to the matter in dispute, we have the Phenix Insurance Company, of New York, in the position of plaintiff, with the Mutual Fire Insurance Company, of New York (No. 809), the Continental Insurance Company (No. 810), and the Fire Association (No. 811), corporations of the same state, applying for the removal. It is too clear to require the citation of authorities that in this position of the New York corporations, those occupying the position of defendants had no right of removal.
Connecticut defendants, viz., the National Fire Insurance Company (No. 808) and the Newport News and Mississippi Valley Company, and the relief sought made both of these corporations necessary and indispensable parties. The Connecticut corporations could not, in this situation of the parties, if no other objection existed, be entitled to remove the cause.
"That neither of the parties to the controversy, if it be separable -- a question which we do not decide -- have petitioned for removal, and the right to remove a suit on the ground of a separable controversy is by the statute confined to the parties actually interested in such controversy."
It is therefore, we think, clear that whether the cause be looked at as a whole or whether it be considered under any adjustment or arrangement of the parties on opposite sides of the matter in dispute, there was no right of removal on the part of the several plaintiffs in error or either of them.
special rate and rebate is denied, and it is a matter of controversy and conflict of evidence, and it is also insisted in answer to this by plaintiffs that the interstate commerce law does not apply, for the reason that the evidence disproves any 'common contract' over the river and rail rate. We are of opinion, however, and rest our decision upon the ground, that if it were assumed that the law was applicable, and the fact of agreement for rebate and special rate proven, it would not prevent liability on the part of the carrier for the freight received and covered by insurance in the hands of the carrier's agent. The law makes such agreements as to rebate, etc., void, but does not make the contract of affreightment otherwise void, and we think there is nothing in the law or the policy of it which requires a construction that would excuse a carrier from all liability when it made such a contract in connection with that for receipt and transportation of freight. Such a construction would encourage, rather than discourage, such unlawful agreements for rebates. The carrier might prefer them to liability for the freight. Such a contract for rebate would be void, and could not be enforced, but we think the shipper could nevertheless recover for loss of his freight through the carrier's and insurer's negligence. No different construction has yet been put upon the interstate commerce law so far as we are advised, and we decline to give it any other."
We concur in the correctness of this conclusion of the state supreme court.
still more difficult to understand how the compress company or the fire insurance companies could avail themselves of the arrangement, even regarding it as illegal, between the agent of the railroad company and Jones Brothers & Company. They were not parties to it, and they were not affected by it, in any way, shape, or form.
There is nothing in the interstate commerce law which vitiates bills of lading, or which by reason of such allowance to Jones Brothers & Company, if actually made, would invalidate the contract of affreightment, or exempt the railroad company from liability on its bills of lading.
The principles laid down in Interstate Commerce Commission v. Baltimore & Ohio Railroad, 145 U. S. 263, fall far short of establishing that the alleged allowance of rebate to Jones Brothers & Company would render the railroad company's bills of lading invalid and defeat the right of the marine insurance companies who had paid the losses to subrogation against the railroad company on bills of lading issued to the owners or consignees of the cotton, who are not shown to have known of or consented to the railroad company's agent's giving such rebates.
* The opinion in this case is also entitled in No. 808, National Fire Insurance Co. v. Insurance Company of North America; No. 809, Mutual Fire Insurance Co. v. Insurance Company of North America; No. 810, Continental Insurance Co. v. Insurance Company of North America; No. 811, Fire Association of New York v. Insurance Company of North America; No. 812, Liverpool and London and Globe Insurance Co. v. Insurance Company of North America; No. 813, Royal Insurance Co. v. Insurance Company of North America. All these cases were brought from the Supreme Court of the Tennessee by writs of error, and all were submitted at the same time with No. 807, and on the same briefs.

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