Coler v. Grainger County

TAFT, Circuit Judge (after stating the facts as ahoye). It is first objected that this court has no jurisdiction of the appeal here [21] taken, because it presents only the question of tlie jurisdiction of the court below. The argument is that by section 5 of the court of appeals act, where the question is alone of jurisdiction, it is to be certified to the supreme court, and by section 6 of the same act the court of appeals is given jurisdiction only in those cases of appeal and error not provided for in section 5. It lias been held that, where the only question raised upon the record before the court of appeals is a question of jurisdiction of the court below, the appeal must be dismissed, because the court of appeals is not vested with jurisdiction to consider that question only. Manufacturing Co. v. Barber, 9 C. C. A. 79, 60 Fed. 465; Railroad Co. v. Meyers, 10 C. C. A. 485, 62 Fed. 371; Allen v. Strong, 17 C. C. A. 124, 70 Fed. 273; U. S. v. Severens, 18 C. C. A. 314, 71 Fed. 768. The motion to dismiss the appeal, however, cannot be sustained in the case at bar, because the record does present questions other than that of the jurisdiction of the circuit court. This is quite evident from the assignments of error. It is true that the court below dismissed-the bill for want of jurisdiction, but this court could not dispose of the case, should it disagree with the court below on the question of jurisdiction, without proceeding to consider the other grounds stated in the demurrer to the amended bill, which questioned the equity of the bill, and the validity of the county’s subscription for stock. In such a case it is quite clear that an appeal lies to this court, and that, ex necessitate, this court must consider the question of jurisdiction in order that it may proceed to decide the other questions raised upon the merits. Railroad Co. v. Meyers, 10 C. C. A. 485, 62 Fed. 371. We are therefore brought to the question wrhether there1 was in fact jurisdiction in the court below to entertain the bill. Section 1 of the act of March 3, 1875, which fixed the jurisdiction of the circuit court of the United States, as amended by the acts of March 3, 1887, and August 13, 1888 (25 Stat. 433), contains this provision: "Nor shall any circuit or district court llave cognizance of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee, or of any subsequent holder if such instrument he payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made.” This clause has been construed by several circuit courts of the United Rates, and its effeei: has been held to be to prevent jurisdiction of the circuit and district courts in all suits by an assignee of a chose in action, except where the chose in action is a foreign bill of exchange, or where it is founded on an obligation made by a corporation that is payable to bearer, and is negotiable by mere delivery. Wilson v. Knox Co., 43 Fed. 482; Newgass v. City of New Orleans, 33 Fed. 196; Jackson & Sharp Co. v. Pearson, 60 Fed. 113. A contract to pay money for stock is a chose in action, within the meaning of this section. The term “chose in action'’ is one of comprehensive import. It includes tiie infinite variety of contracts, covenants, and promises which confer on one party the light to recover a personal chattel or sum of money from [22] another by action. Sheldon v. Sill, 8 How. 449; Corbin v. Black Hawk Co., 105 U. S. 664, 665. The original parties to the chose in action were both citizens of Tennessee. The obligor, Grainger county, was a corporation of that state, and the railroad was a corporation organized under its laws. The chose in action passed by voluntary assignment to the principal contractors of the railroad company; from them to the Western National Bank, as collateral, by voluntary assignment from the bank, through a public sale, to a citizen of New York; and from him to a citizen of New Jersey. It is sought to bring the case within an alleged exception to the statute by contending that the transfer of title was, by operation of law, like that from an intestate to his administrator, because it is said in the bill that the sale by the Western Bank of the stock to Mott, a citizen of New York, was a judicial sale. This contention is obviously untenable. The original assignment was to the principal contractors, and by them to the bank. These assignments were voluntary. The subsequent changes of title, whether forced by operation of law or voluntary, could have no effect to avoid the operation of the statute, even if it be conceded that a transfer of title by operation of law does not come within its terms. If such an exception could be upheld, it certainly could only apply to a transfer of title by operation of law from the original holder of the chose in action, — the original obligee under its terms. But the jurisdiction under the bill is sought to be upheld on another ground. It is said that Smith, the receiver, was a necessary party to the bill, because he held the legal title to the subscription, afid that the action must be brought in his name, for the benefit of the equitable owner, and is therefore one arising under the laws of the United States within the decision of Railroad Co. v. Cox, 145 U. S. 593, 12 Sup. Ct. 905. There is an averment in the bill that in the original contract of assignment it was agreed that the company should enforce the payment of the stock for the benefit of their contractors or their assignees, and that, as all assets of the company had passed into the hands of the receiver, it was the duty of the receiver to carry out this contract, and bring the suit for the benefit of the complainant. It is true that by the order of the court the receiver was vested with the power and right and title, so far as it was necessary, to take possession of the railroad, to operate it, and to assert the company’s title to any property in the hands of others. But the company had nothing except the naked legal title to the subscription. It had parted with all its beneficial interest. The naked legal title did not pass to the receiver, because it was not essential to the proper discharge of, his duties as receiver. Beach, Rec. § 195. Nor was there any ground for applying to the receiver to bring the suit on the subscription which the company had failed to bring. The receiver was not obliged to pay the claims against the company, or to perform its contracts. If the company had not complied with its contract to enforce the subscription, there "might possibly be a cause of action for damages, and a claim against its estate to be filed with the receiver, but it did not lie within the power of the court of equity to compel a compliance with the agreement [23] to collect the subscription. The remedy a,t law for the breach would have been quite adequate. If it had been necessary in the action that the owner of flu; naked legal title to the subscription should be made a party, then it would have been within the; power of Urn court of equity to bring in such party; but it was unnecessary here, because the subscription was not to be sold as property. And, even if it had been necessary, the company, and not the receiver, would have been the proper party, because the naked legal title had not passed to the receiver. In enforcing the subscription in equity, howeyer, the assignee could recover without the presence of the holder of the legal title, it is manifest, then, that the receiver was made- a party merely to create an excuse for federal jurisdiction, and not because his presence was necessary or useful. His presence as a mere nominal and unnecessary party could not give the court jurisdiction in a cause of action which was otherwise not within its cognizance. This conclusion makes it unnecessary for us to consider the effect of the decision of the supreme court of the United states as to the want of jurisdiction of the federal circuit court in the Coleman case to appoint Whitney a receiver. The decree of the circuit: court dismissing the bill for want of jurisdiction is affirmed, at the costs of the appellant.