676
BDERAt REPORTER,
vol. 46..
that portion of the property' which the plaintiff may claim, or on some portion he inny never claim; or,conc,eding that be may claim all said miningclairil, and that it is the matter in dispute, does sucb allegation it was of any show the value of the propetty exceeded $2,000, or value whatever? It certainly justifies avery strong presumption-even a belief-that the mining claim was worth such sum; but a presumption is not sufficient. Every jurisdictional fact must appear distinctly, clearly, and positively, and not be left a subject of speculation or question. For aught that appears here, the $50,000 may have been so improvidently expended as not to have benefited the property, nor does the allegation show that any of the expenditure was made prior to the commencement of the action. Having reached the conclusion that the value of the matter in dispute is not such as to give this court jurisdiction of the cause, whether in the determination of the issues a construction of congressional laws is involved will not be considered; neither will be noticed defendant's affidavit, stating the subsequent proceedings and trial of the cause in the territorial court after the request for transfer was refused, further than to add that, after refusal by such court to transfer the cause, the plaintiff was fully justified in appearing in the action, and protecting his interests in all subsequent proceedings in that court, and such action on his part cannot be questioned bere. The defendant's motion in this cause is "to strike from the files of this court, and dismiss therefrom, the alleged transcript of said cause," chiefly because it is a transcript, and not the original papers; but upon the argument all the questions above referred to were fully considered. While there is no motion to remand, nor any original papers, records, or files to be returned to any other court, it is the duty of this court, whenever it discovers a cause is improperly upon its calendar, even without motion of the parties thereto, to remand or dismiss it. It is therefore ordered that all papers, files, and transcripts in this cause on the files of this court be stricken out, and the cause be dismissed.
WILDER
et al. v.
VIRGINIA,
T. & C.
STEEL
&
IRON
Co. et al.
(Circuit Court, W. D. ViJrginia.
June 5, 1891.)
1.
REMOVAL OF CAUSES-SEPARABLE CONTROVERSY.
Some of the stockholders and creditors of a New Jersey corporation, part of whom were citizens of Virginia, brought an action ih a Virginia state court against the corporation and its prolnoters, who owned the majority of its stock, alleging that the latter had defrauded the corporation in the payment of their subscriptions, and that they bad wasted the funds of the New Jersey corporation in acquiring the stock of varions corporations, contrary to complainants' rights. The Virginia corporations were also joined as defendants, and the theory of the bill was that complainants had the right to have the entire assets of the New Jersey corporation brollght into court, and, to that end, that the various Virginia corporations, which had secured its funds, should also he wound up. Held, that inci-
v.
vIRGINIA, 'T;& C. STEEL & IRON CO.
dental averments of indebtedness of thEi ,New J'enley corpcation to the creditors who had joined as complainants in the bill did nol, constitute a separate controversy between them and the New Jersey corporation, so as to entitle the latter to remove the cause into a federal court o'n the,ground that sllch complainants were citizens of a state different from that of the corporation. 2. SAME.
Allegations in the bill that one of the Virginia corporations was organized by the promoters of the New Jersey corporation, with intent to defraud the stockholders and creditors of the latter, and that the New Jersey corporation had fraudulently conveyed land to the Virginia corporation without any valuable consideration, and at a grl\at loss, do not constitute a separate controversy between complainants and, the New Jersey corporation, so as to eatHle the latter to remove the Cause into a federal court, since the Virginia corporation and the promoters of the New Jersey, corporation, some of whom are citizens of the same state with complainants, are indispentlable parties defendant. ' The facts that some of the complaining stockholders hold full-paid stock, while others own assessable stock, that each of them may have purchased at different times, and unaer different circumstances from the others, aad that the claim ot each complaining creditor may be distinguishable from that of the others, do not operate to split the cause of action on which complainants are proceeding; nor is a separate controversy presented because complain!>" 's might. have severally prosecuted the suit which they have properly brought jointly. While a single defendant, being a citizen of a state other than that in which the suit is brought, who is jointly sued with other defendants, citizens of the same state as complainants, may remove the suit to the federal court on the ground of local prejudice, yet such removal cannot be made when complainants are not all citizens of the state in which suit Is brouljht, and all are concerned adversely to the non-resident defendant who seeks to remove the cause.
3.
SAME.
4.
SAME-LOCAL PREJUDICE.
In Equity. Motion to remand. Goode &- Goode, for complainants. John F. Dillon, Wager Swayne, R. 8. Ayers, and John N. Staples, for defendants. 1!"ULLER, Chief Justice. This bill was filed August 4, 1890, in the circuit court of 'Washington county, Va., being the sixteenth judicial circuit, by Bailey and Wellington, citizens of New York, Jonas Wilder and Hawkins, citizens of Virginia, A. B. Wilder, of Vermont, and Sheen, of Tennessee, against the Virginia, Tennessee & Carolina Steel & Iron Company, a corporation of New Jersey, the Southern Atlantic & Ohio Railroad Company, the Bailey Construction Company, and the Briiltol Land Company, corporations of Virginia, and certain citizens of New York, Massachusetts, Kentucky, Tennessee, Virginia, and South Carolina. Of the complainants, Bailey, the Wilden." and Wellington were stockholderF-; Bailey holding paid-up and assessable, Jonas Wilder paidup stock, and A. B. Wilder and Wellington assessable stock, and Sheen, Hawkins, and Bailey were simple contract creditors of the New Jersey corporation, and joined in the bill as such. The bill alleged that some of th" defendants, on or about April 18, 1887, associated themselves by written articles, with intent to form a corporation under the laws of the state of New Jersey, to be known as the" Virginia, Tennessee & Carolina Steel & Iron Company," whkh articles were acknowledged and tileu; that prior to the atterr"pted formation of the corporation, three of the defendants, claiming to own and control large tracts of lanel in Virginia, Tennessee, and South Carolina,
678
FJDDUA.L
vol. 46.
entered into an agreement with certain other of the defendants to tOrmand float a Gorporatioi(iowhich sold at$720',000, $150,000 to be paid to said three of the defendants,and $570,000 to the other defendants named, styled on the bill "pfomotersi" and that, after the agreethe promoters, the articles of association as a corporation were 'coni'pTainants':charge that thjs Was, not done in conformitywith the Jersey.· ' Defendimtspretend, however, cor:poration, themselves as director-si" that it was understood at the time of the· agreement between the prbriloters that when 'the corporation wRsorganized thj;llands should be sold to the company, and be paid for ou(of subscriptions for its stocki 1l,nil,' while a pretended sale was mad{j" the .lands were never purchased o)rthepromoters ofihe company, who'received $100,000 out of the subscriptipnsto the st')ck, and that '$570,000 was taken out of said subscriptions, and divided between the promoters, whereby innocent subscribers to the stock of the company ,and the stockholders therein, were made to pay in fqU .fqrthe land, and to pay the bont).s which the promoters, by their the company" were enabled to draw from the subscriptions to the stock; that theilldiyidual defendants have continued to control the company, owning a majority of the stotk and holding the excess thereof, and hll:ve conducted 'its afl'airs for their own benefit, and with intent to defraud the subscribers and stockholders of the company; that the promoters and directors of the: company represented to the complainants who are stockholders, and to' the puLlic, that the company was duly organized, and invited subscriptions, and published a circular, which is annexed, and induced by false and fraudulent representations certain of the complainants to subscribe for shares of the stock;, and others to make large subscriptions, while the promoters were conspiring together to take from the' moneys realized from subscriptions, the sums of $150,000 and $570,000; that the defendants have abused their trust as promoters and directors, .and grossly mismanaged the property of the company i that they have :loaned large sums of money of. the company' to the Bailey Construction Company ; that they have unlawfully purchased with the moneys of the Virginia, Tennessee & Carolina Company more than $l,OOO,OOO of the capital stock of the Southern Atlantic & Ohio Railroad Company. excepting a small amount . issued 'by that railroad, and the Bailey Construction Company has been purchased with funds belonging to the Virginia, Tennessee & Carolina CompaJiy, and the latter company is. withflut right, assuming to own, operate, and enjoy the franchises of the railroad company and the construction company; that the credit of the Virginia, Tennessee & Carolina Company has been pledged for large amounts for the Bailey Construction Company, and the property and assets of the company mortgaged, withouLright, to the Bailey Construction Company; that the defendants, assuming to be directors of the Virginia, Tennessee & Carolina Company. have misappropriated and squandered many shares of the capital stock of the Virginia, Tennessee & Carolina CO::'lpany, and the company has received no adequate consideration therefor, contrary to the laws of New
WILDER V. VIRGINIA-I''', '.lC.ST:EI!11,& IRON CO.
679
Jersey nndthe laws of'the state of Virginia, and in fraud of complain. & ants and the stockholders and creditors of the Virginia, Carolina Company; that the Bristol Land Company was organized for the benefit of the promoters,.' and with intent to defraud the Virginia, Tennessee & Carolina Company, and the stockholders and creditors thereof; that all the lands of the Virginia, '!'t'nnessee & Carolina Company, adjoining the city of Bristol, in Virginia, being of the value of $200,000, have been conveyed to the Bristol Land Company, without any consideration to the Virginia, Tennessee & Carolina Company, and such conveyance, which was grossly fraudulent, has resulted in a loss to the Virginia, Tennessee & Carolina Company of one-half of the value of the lands conveyed; that there is due to the Virginia, Tennessee & Carolina Company $780,000, on account of subscriptions to the capital stock, a large portion of which is due from the promoters and directors of the company; that the directors have refused and neglected to levy an assessment of stock to insure the payment thereof, ami propose to release and discharge said indebtedness in fraud of the stockholders and creditors, and have issued full-paid stock for the amount heretofore paid on subscriptions. Complainants bring the bill in behalf of themselves and all other creditors and all the stockholders of the Virginia, Tennessee & Carolina Company not named as defendants, and all stockholders of the Southern Atlantic & Ohio Hailroad Company wbo are not named as defendants, and all creditors of the Bailey Construction Company and the Bristol Land Company, and say that, upon information and belief, each of the said Virginia corporations made defendants herein, and the said Virginia, Tennessee & Carolina Company, are indebted to divers persons in different amounts,which are now due, and which they neglect and are unable to pay; that the Virginia, Tennessee & Carolina Company owns all the stock of the railroad company excepting a limited number of shares, and controls said railroad, and it owns all the stock of the Bailey Construction Company. and operates and controls the same; that the promoters and directors of the Virginia, Tennessee & Cftrolina' Company have interfered with the business of the railroad company and the construction company, and have intermingled their assets, and have altered and amended contracts existing between the two corporations, for the purpose of defrauding the stockholders of each, that they may more readily appropriate the assets to their own benefit; that the principal office of these corporations is in the city ofBristol, in the county of Washington, state of Virginia; and that the Virginia, Tennessee & Carolina Company, through the several local companies, has converted the greater portion of the land and valuable properties of the said several companies into bonds and mortgage securities, and all the assets have been taken out of the state, and made way with, by the Virginia, Tennessee & Carolina Company. The complainants charge that a receiver ought to beappointed instanter, and that due notice is impracticable; that the defendants have been, and are now, converting the assets of the company, and have been guilty of maladministration and misappropriation. The bill
. FED.ERAL REPORTER,
prays for an account of the moneys due the complainants, and all other n'loneys due from the fonr corporations defendant; that certaia conveyancesby the Virginia, Tennel:lsee & Carolina Company to the land company be declared void, and a reconveyance ordered, and, when sold to innocent purchasers, that an account be taken; that the land company be dissolved,andits assets, after the payment of the debts, be divided among the stockholders; that the construction company be dissolved, and its assets divided; that the railroad company be dissolved, and its assets divided; that an acmunt be had of the money wrongfully taken by certain .of the defendants while acting as managers and directors; that an account be taken of all the stock of the Virginia, Tfmnessee & Carolina Company issued without lawful consideration, for the benefit of certain of the defendants; that the issue be declared null and void, and these defendants be ordered to deliver up the same for cancellation, or pay the face value into court; that an account be had of all the stock of the Virginia, Tennessee & Carolina COllljJany subscribed to by the defendants, and they be directed to pay the balance un1-'aid thereon; that the property and assets of the Virginia, Tennessee & Carolina Company be applied to the paymeI\t of claims asserted against it, and all other just debts, and the balance be distributed among those equitably entitled thereto; that a commissioner be appointed to take and state an account, showing the amounts due to each of the complainants, the entire indebtedness of the compani.es, with their priorities, and the amount of stock held by each and every stockholder of each and everyone of said companies; that an injunction be issued, and a receiver appointed, etc. Upon this bill and accompanying affidavits an injunction was issued, and a receiver appointed; the proceeding being ex parte, and without notice. This order was entered by lhejudge of the circuit court for the fifteenth judicial circuit, acting for the judge of the sixteenth judicial circuit, but its operation was subsequently suspended by order of the latter. On the 15th of August, 1890, the Virginia, Tennessee & Carolina Company, the New Jersey corporntion, filed a petition and bond for the removal of the cause into the circuit court of the United States for the western district of Virginia. The state court was not in session, and the petition and hond were not pre:o:ented to it or any judge thereof. The record was thereupon filed in the United States court, and certain orders entered thereon. On the 16th of August application was made under the Code of Virginia, upon refusal of an injunction by the judge of the sixteenth judicial circuit, to a judge of the court of appeals of Virginia, upon the original bill and certain supplemental matter added thereto,· who entered an order of injunction and for the appointmmt of a receiver in substantially the same terms as the original order granted by the judge of the fifteenth judicial circuit. This application was ex parte, and with put notice. On the 2d of September the Virginia, Tennessee & Carolina Cqmpany applied to the circuit court of the United States for the western district of Virginia, by petition and affidavit, for the removal .of the supplemental proceedings into that court, upun the ground of local prejudice, and an order was thereupon entered by it, removing said
VIRGINIA, T. &: C. STEEL &: IRON CO.
681
cause. A motion is now made to remand the case under the original proceedings for removal, and to set aside the order of removal entered upon the second application. As to the alleged removal of the cause of August 15th, the statute contemplates that the petition and bond should be presented to the state court, which was not done, and it is insisted that the removal was therefore not effected; but it is not necessary to dispose of the serious question involved in that contention. That the petition and bond should have been brought to the attention of the court below is obvious. The question, then, for determination is whether there was a separable controversy ,which entitled the New Jersey corporation to remove thecaus'e. The petition for removal stated that "there is a controversy which is wholly between citizens of different states, and which can be fully determined between them, to-wit, a controversy between your said petitioner, which avers that it was at the commencement of this suit, and still is, a citizen of the state of New Jersey," and the complainants. giving the names of each of them, and showing that two of them were and are citizens of Virginia, two of them were and are citizens of New York, one of them was and is a citizen of Vermont, and one of them was and is a citizen of the state of Tennessee; and concluding: "And that the said Jonas· Wilder, Thomas S. Hawkins, John M. Bailey, John L. Wellington, A. B. Wilder, and William G. Sheen, and your petitioner, are actually interested in said controThis does not assert on the part of the petitioner that there was a separate controversy between it and each of the three simple contract creditors as such, namely Sheen, Bailey, and Hawkins. In this the petitioner was correct, though it is now contended on its behalf that there is a separable controversy between each of these complainants and it, because each of these complainants has an individual claim, as alleged, for so much money against the New Jersey company; but these averments of indebtedness are incidental to the real controversy raised by the bill, and cannot be treated as separate controversies, the basis of removing the entire ease, under the statute. Graves v. Carbin, 132 U. S. 571. 10 Sup. Ct. Rep. 196; Safe-Deposit Co. v. Huntington, 117 U. S. 280,6 Sup. Ct. Rep. 733. It is said there is a separable controversy between the complainants. and the New Jersey company. upon the allegations that the Bristol Land Company was organized for the benefit of some of the individual defendants, and with ·intent to defraud the New Jersey company and its stockholders and creditors, and that the New Jersey company had conveyed lands to the Bristol Land Company without any valuable consideration" and in fraud and at great loss; but as to that controversy the Bristol Land Company and the individual defendants in question are indispensable parties, and, besides, the combination charged makes the New Jersey company rightly and necessarily a party co-defendant with the Bristol company. The theory of the bill is the right of complainants to have the entire assets of the New Jersey company brought into court for the purpose of distribution, and that,. under its averments, involves the winding up of the various other corporatiops. Hthe .New .J ersey carpo-
REPORTER i
ration 'c011ldbeconsidered'us complllinsnt, and the Virginitl Co'tl'ip!iflies de1Emdants, there w0111dbe a sellaraole oontroversy between them; but they cannot be so arranged under the circumstances. 'For the pUl'pOSll1' bf determining 'whether a· controversy ,is separable,the allegationS' in the biIlrnust betaken as true; and the 'combination charged between these defendants, viewed in that light, does not present a separable controversy.' Railrond tCo. v. Gravson, 119 U. S. 240,7 8up. Ct. Rep. 190; Rail'road Co. v. Mill.s, 113 U. S. 249, 5 Sup. Ct, Rep. -456. And so in respect to the distinction between the holders of full-paid and of assessthe right to attack the validity of the incorporation able sHlck as of the Virgiliia company, and the. facfthat each ofthe complaining stockholders may have purchased at difJ'eretlt, times, and under different circumStances, from the others, and that the claim of.each creditor may be distiBguishable from that ofthe others, these matters do not operate to split the cause of action: upon which complainants are proceeding;, and separate defenses do not create separate controversies, within the meaning oftlle removal act., Nor is a separate controversy presented because cottJplainants might have, severally prosecuted a suit, which they have properly jointly brought, nor can a defendant say that an action shall be several which a plaintiff elects to nJake joint. Little v" Giles, 118 U. S. 596, 7 Sup. Ct. Rep; ,32'; v. Cvrbin, supra, and cases cited. As to the second order of removal, the snpplementalproceedings must be taken as a part of the entire case, which stands upon theo;riginal and supplemental and amended bills. As this court has already held the presentation of facts in relation to local prejudice to be prima facie sufficil'nt, that may be assumed. Of course, this does not involve passing upon the complainants'right to contest that showing as a matter of fact. But thedifficultv of this order of removal is that' there is not a controversy ,within th"e intent and meaning of the ootween. citizens of the state in which the suit is brought and a citizen of another state. Any de:en<hnt, being such citizen of unother state, may remove: but it is essential that a controversy should 'exist between such citizen of another :state and citizens of the state in which suit is brought. Assuming that 11, single defendant, being a citizen of a state other than that in which the suit is brought, who is jointly sued with other defendants, citizens <{)f theaame state as the plaintiff', may remove the suit to the circuit -court, upon making it appear to the court that, on nccount of local prejudidror'local influence, he cannot obtain justice in the state court or MurtS',i'still the question' remains whether this can be done when the plain'titl's are not all citizens of thestll,t?in which isui1ds brought, being ullConcerned adversely to .the .nOn-hl&lclent defendant, who seeks to re· the case. The language of the act of 1887 is that, "when a suit is liow 1peliding, or may be hereafter brought, in any state court in which tben:i.is·.a controversy between: a oitizen of the stll,te in which the suit is brought- and a citizen of another state, any defendant being such citizen of another: state may retnoye'," etc. The language of the act of 1867, in describing'the suit, igthesame; a.nd, as to theMt of 1867, it has been uniformly held that' aU the'persol1f1 on one side must be citizens of the
UNITED STATES
,t'.
SOUTHERN'
PAC, R.
CO.
683
state in which the' suit is all those on the other citizens of some other state. Young v. Parker'8 Adm'r, 132 U. S. 267,10 Sup. Ct. Rep. 75, ano cases cited. Granted that the area of removability was enlarged by the act of 1887, inasmuch as any of the defendants may remove, still the rule under the act of 1867 ah,lies, that,when the citizenship on the plaintiff's side of the suit is such as to prevent the removal under that act, it is equally effective to defeat the right under the act of 1887. The suit was brought in Virginia, and the complainants are only in part citizens of that state. The petition admits this. It states"That. in the said suit there is a controversy between citizens of the state in which the said suit is brought and the citizens of another state, to-wit, a controversy between your said petitioner, who avers thllt he was at the time of the bringing of the said suit, and still is, a citizen of the state of New Jersey. and that the complainants Jonas 'Wilder and Thomas S. Hawkins were at the time of the bringing of said suit, and still are. citizens of the state of Virginia; that William G. Sheen was atthe time of the bringing of this suit, and still is, a citizen of the state of Tennessee; that A. B. ,"Vildpr was the time of the bringing of this suit, and still is, a citizen of the state of Vermont; and that.John L. Wt'llington and John M. Bailey were at the time of the bringing of this suit, and still are, citizens of the state of New York; and that both your petitioner salld the complainants in the bill are actually interested in said controversy." Upon the fnee of this bill there is no controversy (ltherwise than as stated, and this is fatal to the application. Weare not to be understood as expressing any opinion as to whether the bill ClUl be sustained as at present framed. . For the reasons given', the entire case must be remanded, and it is so ordered.
V.
SOUTHERN
PAC.
R. Co. et al., (two cases.) June 22, 1891.)
(Circuit Court, S. D. California.
RAILROAD COMPANJES-AMALGAMATION-CONGRESSIO:S-AL GRANTS.
The act of con!!'ress of March 3, 1871, authorized the Southern Pacific Railroad Company of California, subject to theJaws of California, to construct a certain line of railroad, and granted it certain lan,ds..' The Southern Pacific Railroad COlUpany, as it then existed, accepted said grant, and filed its plat of definite location the proper office August 12, 1873. Said.Southern Pacific Railroad Company, as authorized by the laws of California in force at the time of the passage of the act of CDLgress, consolidated with other companies under the name of the Southern Pacific Railroad Company, a part of its object; as stated in the articles of amalgamation, being to construct the railroad mentioned in said act. Thereafter said consolidated company completely built said road, as required by said act, and the road so built was accepted by the president, and has performer!, to the satisfaction of the government, all the services required of it under said act. Held, that said consolidated company if ,not, technically, is,substantially, the same company to which said act referred; Affirming Railroad Co. v. Poole, 12 Sawy. 544, i.l2l<'ed. Rep. 'l51; U. S. v. Railroad Co., and U. S. v. Colton, etc., 00,,45 Fed. Rep. 596. AMALGAMATION.,....RECOGNIZEDBY·
2.
Pursuant to state authority, recognized by and made a part of the congressional grant of March 3, 1871, the S. P. R. R. Co.', April 15. 1871, filed amended articles of