Leutze v. Butterfield

Larremore, J.

The proceedings by the defendant to remove the action were proved on the trial and an exception taken to the refusal of the referee to find that this court had no jurisdiction in the premises.

The first question for consideration is necessarily that of jurisdiction. Is this court the proper tribunal for the adjudication of the rights' of the parties ? This depends upon the construction given to the act of' Congress passed March 3d, 1875 (U. S. Statutes, 1875, ch. 137), entitled “An act te determine the jurisdiction of Circuit Courts of the United States and to regulate the removal of causes from State courts and for other purposes.”

This act repeals all parts of previous acts inconsistent with or repugnant thereto, and if defendant has complied with its provisions, then the trial of this action by the referee, and all proceedings subsequent thereto, were coram non judice.

By this act (§ 1) the Circuit Court is given original cognizance of all suits of a civil nature when the matter in dispute exceeds $500, in which there shall be a controversy between citizens of different States, &c., but said court does not have cognizance of any suit founded on contract in favor of an assignee unless such suit might have been prosecuted in said court if no assignment had been made except in cases of negotiable paper.

Section 2 provides that any suit of a civil nature at law or in equity now pending or hereafter brought in any State court when the matter in dispute exceeds $500, and in which there shall be a controversy between citizens of different States, may be removed by either party into the Circuit Qourt of the United States for the proper district.

It is conceded that plaintiff could not have commenced this action in the Circuit Court, for as assignee of a claim other than negotiable paper the limitation of § 1 "would apply, and the court could not have cognizance of any such suit.

Is this limitation applicable to actions sought to be removed from the State courts ? The learned judge who denied the application for removal held the affirmative of this proposition. (Abbott’s New Cases, vol. 1, p. 18.)

The intention of the federal legislature in this respect is not clearly expressed in the act itself. But § 2 gives a defendant the right to remove any suit without distinction as to the character in which the plaintiff sues except that the-parties to the controversy must be citizens of different States.

The defendant was entitled as a matter of right to a change of forum (Stevens v. Phœnix Ins. Co. 41 N. Y. 149 ; Holden v. Putnam Fire Ins. Co. 46 N. Y. 1; Ayres v. Western R. R. Co. 45 N. Y. 260 ; Bell v. Dix, 49 N. Y. 232; Kanouse v. Martin, 15 How. U. S. 198; Gordon v. Longest 16 Peters, 104), unless such- right is controlled by the limitation above referred to, and that question should have been raised and decided in the Circuit Court (Bell v. Dix, supra ; Gaines v. Fuentes, 92 U. S. [2 Otto] 10).

It involves the construction of a statute of the United States as to the jurisdiction of a federal court, and should have been referred to that tribunal for adjudication. Defendant’s application met all the requirements of the act of March 3d, 1875, and a stay was thus imposed upon all further proceedings in this court. The defendant might have availed himself of the authority and direction of the substituted tribunal at an earlier stage of the action, and thus have-avoided the expense and delay of a fruitless litigation, but the cases above cited hold that the proceedings in this court are not a waiver of the objection to jurisdiction.

The judgment appealed from should be reversed.

Robinson, J.

The eleventh section of the Judiciary Act of Congress, passed September 24, 1789, conferred original jurisdiction on Circuit Courts, of all suits of a civil nature, when the matter in dispute, exclusive of costs, exceed the sum or value of five hundred dollars, and an alien was a. party or the suit was between a citizen of the State wherein it was brought and a citizen of another State, provided that no-Circuit Court shall 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 may have been prosecuted in such court to recover the said contents if no assignment had been made, except in case of foreign bills of exchange and section twelve of the same act authorized any suit commenced in any State court against an alien or citizen of another State, when the amount in dispute exclusive of costs exceeded the sum or value of five hundred dollars, to be removed by the defendant to the Circuit Court in the manner there provided. The act of July 27, 1866 (14 U. S. Stat. at Large 306), .extended the privilege of removal in certain •cases to aliens and citizens of another State joined as defendants with other defendants not entitled to its benefits, and this privilege was further extended by the act of March 2, 1867, under other certain circumstances, to cases where either a plaintiff or defendant was a citizen of another State than that of the other party, and made oath that he could not have a fair trial on account of local prejudice or influence. In Bushnell v. Kennedy (9 Wall, 387) the Supreme Court of the United States held that the restriction in section eleven of the act of 1789, against a Circuit Court taking cognizance of a suit instituted on behalf of an assignee unless it might, without such assignment, have been brought therein by the .assignor, did not apply to a case removed into the Circuit Court by a defendant who was an alien or citizen of another State, although the plaintiff, the assignee of the cause of action, could not have brought the action in the Circuit Court.

In Ayres v. The Western Railroad Co. (45 N. Y. 264), the Court of Appeals recognize the same principle, that the proviso or prohibition of the eleventh section not being found in the twelfth, and the reason for it not existing, the defendant’s right of removal (the other circumstances concurring) was complete. In Barclay v. Levee Commissioners (1 Woods’ R. [5th Circuit R.] 254), it was held that the provisions of the act of 1867, for the removal of causes from the State court, overrode the limitation in the eleventh section of the act of 1789, declaring that the Circuit Court should not have cognizance of actions on choses in action (except foreign bills) brought by an assignee, unless they might have been maintained by the assignor, if no assignment had been made.

An examination of the act of Congress of March 3d, 1875, which presents the question of jurisdiction raised by the defendant in this case, shows that the first section is but a substantial re-enactment of the eleventh section of the act of 1789 as above recited, and has reference solely to cases of original cognizance by Circuit Courts, and that section two is in principle but a brief embodiment of the right of removal conferred by the acts of 1789,1866 and 1867, with such further rights in that respect as the Constitution justified Congress in conferring upon the federal courts in respect to controversies between citizens and aliens, and between citizens of different States. While the acts of 1789 and 1866 limited such right of removal to defendants, that of 1867 also conferred it upon plaintiffs, in special cases, and the Act of 1875 in enacting that any suit of a civil nature then pending or. thereafter to be brought in a State court in which there was a controversy between citizens of different States, might be-removed by either party into the Circuit Court of the proper district, but extended within constitutional limits the right conferred on Congress in that respect by the Constitution. The principles decided in the cases above referred to, in the United States court and in our Court of Appeals, are plainly applicable to and control the construction of the second section of the act of 1875.

The right of the defendant to a removal of the present, action to the Circuit Court of the district seems to have been perfect, although the suit may have been one by plaintiff asassignee of a chose in action, in respect to which no suit could have been maintained in the Circuit Court by his assignor if no assignment had been made. He had complied with all the requirements of the act to effect such removal, and the case was one within the provisions of the act. Thereafter all proceedings in this court were coram non judice. (Fisk v. Union Pacific R. R. Co. 10 Abb. Pr. [N. S.] 457; Stevens v. Phœnix Fire Ins. Co. 41 N. Y. 119; Holden v. Putnam Fire Ins. Co. 46 N. Y. 1; Taylor v. Shew, 54 N. Y. 75.)

The judgment should for this reason be reversed.