Matter of Dunn

212 U.S. 374 (1909)

MATTER OF DUNN.

No. 10, Original.

Supreme Court of United States.

Argued January 11, 1909. Decided February 23, 1909. APPLICATION FOR A WRIT OF MANDAMUS AGAINST THE HONORABLE EDWARD R. MEEK, DISTRICT JUDGE & C.

Mr. C.W. Starling for petitioners.

Mr. Rush Taggart, with whom Mr. John F. Dillon and Mr. W.L. Hall were on the brief, for respondent.

MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the court.

It is agreed by all that there is in this case no separable controversy, and the important question is whether, upon the facts stated, a removal can be ordered, notwithstanding the individual defendants were made parties to the suit, and were not residents or inhabitants of the Northern District of Texas when sued.

The question arises under the act of Congress of 1888, relative to the removal of cases from state to Federal courts. 25 Stat. 433, chap. 866. This act, as its title shows, was passed for the purpose of correcting the enrollment of the act approved March 3, 1887, 24 Stat. 552, chap. 373, which amended the act approved March 3, 1875, 18 Stat. 470, chap. 137. The first clause of the first section of the act of 1888 gave to the Circuit Courts of the United States "original cognizance, concurrent with the courts of the several States, of all suits of a civil nature, at common law or in equity, where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars, and arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority. . . ."

The second section of the act provided "that any suit of a civil nature, at law or in equity, arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, of which the Circuit Courts of the United States are given original jurisdiction by the preceding section, which may now be pending, or which may hereafter be brought, in any state court, may be removed by the defendant or defendants therein to the Circuit Court of the United States for the proper district. . . ."

If the question were as to the right to remove a case to the Federal court where the sole defendant was a corporation created by an act of Congress, there can be no dispute as to the right of such a defendant to claim the removal. As the corporation derives all its rights from the law of Congress, a suit brought against it on account of its action arises under the Constitution or laws of the United States. Osborn v. Bank of the United States, 9 Wheat. 738, 817, 828; Pacific Railroad Removal Cases, 115 U.S. 1. See also act of incorporation of the Texas & Pacific Railroad Company, 16 Stat., p. 573, c. 122, March 3, 1871, giving the right to the corporation (p. 574, § 1) to sue and be sued in all the courts of law and equity within the United States.

The right to remove, under the statute, depends upon whether the suit could originally have been brought in the Circuit Court of the United States. Traction Company v. Mining Company, 196 U.S. 239, 245; Cochran &c. v. Montgomery County, 199 U.S. 260.

The question then is whether the United States Circuit Court for the proper district (Northern District of Texas) would have had jurisdiction of a suit commenced in that district by the plaintiffs against the railway company and the two individual defendants. A suit against the company would, as we have seen, be one arising under the Constitution or laws of the United States, and as the individual defendants resided in the State of Texas (the same State as the plaintiffs) the ground of jurisdiction of the Federal court as to them must be that by joining all as defendants in a joint action for the same wrong done by all of them, the plaintiffs thereby made the suit against the individual defendants also one which arises under the Constitution or laws of the United States.

The plaintiffs themselves have made the act of which they complain a joint one, and, being one which arises under the Constitution and laws of the United States as to one of the defendants, it becomes so as to all, because it is joint. The Federal character permeates the whole case, including the individual defendants as well as the corporation. The case which plaintiffs make in their petition in the suit must determine the character of the cause of action. Alabama Great Southern Railway v. Thompson, 200 U.S. 206, 216. The acts of the individual defendants were not necessarily in and of themselves inherently of a Federal nature.

In Landers v. Felton, 73 Fed. Rep. 311, the question arose whether an action brought against the receiver of a United States court, and others who were citizens of the same State as that of the plaintiff, to establish a joint liability of all the defendants, was a suit arising under the laws or Constitution of the United States. The court held that it was, saying: "No separate liability could be asserted against the receiver, except by virtue of the same laws. Therefore the joint liability of the defendants with the receiver arises under the laws or Constitution of the United States. If the plaintiff wished to sue the other defendants without joining the receiver, he had his election to do so, because the liability of joint tort feasors is also several. He might, therefore, have maintained his action against the resident defendants in a state court, without any possibility of removal to a Federal court. He elected, however, to join the resident defendants with a person against whom he could establish no liability, in the capacity in which he sues him, except by virtue of the laws of the United States. Therefore the joint cause of action which he asserts against all the defendants must find its sanction in the Federal statutes. Hence, the cause of action is removable. The state court was in error in denying the petition of the receiver, and the motion to remand is overruled."

In Lund v. Chicago &c. Railway Co., 78 Fed. Rep. 385, a suit was brought in the state court against that company, together with the Union Pacific Railway Company and its receivers. One was a state and the other a United States corporation. The Union Pacific, by its receivers, filed a petition for removal of the cause, and a motion to remand was made, and it was urged that the cause was not removable because the state corporation was joined with the Union Pacific, and that as to the state corporation no Federal law was involved, and it could not remove the cause to the Federal court. The court held the defense was not well taken; that the statute organizing the Union Pacific Railway necessarily involved a Federal law, and as it was a joint cause of action it was clear that the whole case arose under the Federal law; that while a suit against the Rock Island Company, the state corporation, could have been maintained without reference to the Federal laws, yet, as it was sought to hold the Union Pacific Railway Company and its receivers jointly with the state company, then a new character was given to the action and a new element was introduced, to wit, the laws of the United States; therefore as it was necessary in order to maintain the action against the defendants jointly to invoke the Federal law, the case was one arising under the laws of the United States, and hence the whole case was removable under the statute. In such case it was said the Federal question affects all parties defendant in the suit, entitling it to be removed where all the parties unite in the petition. Martin v. St. Louis &c. Ry., 134 Fed. Rep. 134, is to same effect. And see Fish v. The Union Pacific Railroad Company, 8 Blatch. 243, per Circuit Justice Nelson and Judge Blatchford, opinion by Justice Nelson, upon question of removal, where the case arises out of the Constitution or laws of United States, although some of the defendants could not themselves apply to remove it.

We are aware that a different view has been taken of the rights of defendants, situated like those in this case by the Supreme Court of the State of Texas in Texas & Pacific &c. Co. v. Huber, 100 Texas, 1; S.C., 92 S.W. Rep. 832 (May 2, 1906); Eastin & Knox v. Texas &c. Co., 99 Texas, 654; S.C., 92 S.W. Rep. 838 (May 2, 1906); but as this is a case where we are called upon to exercise our own judgment, we have come to a different conclusion, notwithstanding our great respect for the decisions of the courts of that State.

Although the plaintiffs in their original petition in the state court state that the railway company was a corporation, duly incorporated, with an office and local agent in Dallas County, Texas, the fact that the corporation was incorporated by an act of Congress will be noticed by the court, even without an averment of that fact in the petition. Texas & Pacific Ry. Co. v. Cody, 166 U.S. 606, 610; Texas &c. Ry. v. Barrett, 166 U.S. 617.

In Chicago &c. Railway Co. v. Martin, 178 U.S. 245, the action was brought by the administrator of William Martin against the Chicago, Rock Island and Pacific Railroad Company (a state corporation), Clark and others, and the receivers of the Union Pacific Railway Company, in the District Court of Clay County, Kansas, to recover damages for the death of decedent. The Union Pacific Railway was a Federal corporation, and its receivers were appointed by the Federal court. Application to remove the cause to the Federal court was made by the receivers of the Union Pacific, which application was not joined in by the state corporation, and the application was denied, because all the defendants were charged with jointly causing the death of plaintiff's intestate, and all did not join in the petition for removal. The case was tried and judgment obtained for the plaintiff in the state court, and was taken on error to the Supreme Court of Kansas and there affirmed. 57 Kansas, 437. In this court the Chief Justice, speaking for the court, said: "Assuming that as to the receivers the case may be said to have arisen under the Constitution and laws of the United States, the question is whether it was necessary for the Chicago, Rock Island and Pacific Railroad Company, defendant, to join in the application of its co-defendants, the receivers of the Union Pacific Railway Company, to effect a removal to the Circuit Court." Upon consideration of the removal statutes it was held that it was necessary for the state corporation to join in the application. Here all of the defendants have joined, and, as we have seen, they are all under the circumstances able to assert and claim the right of removal of the cause to a Federal court. It was held in the Martin case, supra, that there was no separable controversy, and so failure of all the defendants to join could not be excused.

Some further objections are taken to the right of plaintiffs to maintain this suit in the Federal court, and therefore to the right of the defendants to remove from a state court. The objection is that the defendants Slayter and Rasmussen were not residents in the Northern District of Texas, but, on the contrary, were residents of the Eastern District, and consequently could not be sued in the former district; and also that the railway company was not a resident of the State of Texas, but was a resident of the Southern District of the State of New York. Upon the latter question the facts on deposition before the United States district judge in Texas showed that the company maintained an office in Dallas County, Texas, and that the senior vice president lived in Dallas, and that for many years the company had designated Dallas as its general office, and that all the acts of the board of directors taken in New York city are subsequently affirmed by the meeting of the board at Dallas before they are considered effective. We are of opinion that the defendant company was liable to suit in the Northern District.

By § 10 of the act of Congress entitled "An Act to divide the State of Texas into four judicial districts," approved March 11, 1902, 32 Stat. 68, c. 183, provision is made for the service of process against defendants, and if there be more than one defendant, and they reside in different divisions of the district or in different districts, the plaintiff can sue in either division or in either district in which one or more of the defendants may reside, sending a duplicate writ or writs to the other defendant or defendants, upon which the clerk shall indorse that the writ thus sent is a copy of a writ sued out of the court of the proper division of said district.

Articles 1222 and 1223 of the Civil Statutes of Texas provide for the service of process in suits against incorporated companies or foreign public or private corporations.

Under these various statutes the plaintiffs would have had the right to sue the Texas and Pacific Railway Company in the Northern District of Texas, because it was a resident of and doing business in that district, and had an agent there upon whom service could properly be made.

The individual defendants Slayter and Rasmussen, being residents of the Eastern District of Texas, could, under § 10 of the act above mentioned, be served with duplicate writs, and so the Circuit Court would obtain jurisdiction over them also.

We do not think that the tenth section of the act of 1902, supra, should be limited so as to apply only to local actions of the class described in § 8 of the act of 1875. 18 Stat. 470, ch. 137. That section relates to suits commenced to enforce any legal or equitable lien or claim to or to remove any incumbrance or cloud upon real or personal property in the district where such suit is brought. The first part of § 10 does not so limit its application, while the latter part makes special provision for suits and actions affecting the title to real estate, which directs that the action must be brought where such real estate is in whole or in part situated.

We are of opinion that the Circuit Court of the United States obtained jurisdiction by the proceedings for the removal of the case to that court, and the rule to show cause is therefore discharged and the proceedings in this court to obtain a mandamus are

Dismissed.

MR. JUSTICE HARLAN dissented.