410
FEDERAL REPORTER.
Here is a distinct and independent cause of action given by the last clause of the section. The plaintiff's allegations are founded upon fa.cts which he claims bring him within the terms of this section. The gravamen of his action is fraud, and he prays judgment for damages. It may have been necessary 'for him to set out the jUdgment and show that an execution has been returned unsatisfied, to meet the conditions of the l083d section, but the ju,dgment is not the foundation of his action. He has a controversy with new parties distinct from that upon which the judgment was rendered; He seeks establish anew liability against these new parties. Itis further argued by defendant that this action cannot be tained here because it is in the nature of an action to enforce a statutory penalty. To this the answer is that it is hot an action to l'ecover penalties, but unliquidated damages. It is a"civil, not a penal action. Its object is not punishment, but indemnity for.a civil injury. It is to no purpose to say that the same sectionol the stat. utes provides for the punishment of the otIence committed by the defendants as a crime. It is not unusual fo{ the same statute thus to provide for indemnity by civil to the individual injured, and 'protection to the public by penal action and indiotment. The motion to remand in this case is denied. NOTE. Proceedings in garnishment process are ancillary to the main suit, and they cannot be removed after judgtnent. Pratt v.Albright, 9 :FED. REP. 634.-[ED.
MAnION
v.
ELLIS.·
(Circuit (Jourt, E. lJ. Louisiana.
February 14, 1882.)
1.
JURISDICTION OFCmCUIT COURTS-TRANSFER OF NEGO'fIABLE PAPER TO GIVE JURISDICTION.
Where a citizen of one state transfers mortgage notes held by !lim to a citizen of another state, or a foreigner, who thereupon, by virtue of hiR citizenship, brings suit upon the same in a circuit court; the circuit court will take jurisdiction of such a suit, although the transfer was made for the purpose of giving the court jurisdiction. provided such transfer be not accompanied with an agreement to retransfer the property to the grantor after the termination of the litigation. The court, in the absence of such agreement, will not inquire into the motives which induced the transfer. De Laveaga v. Williams, 5 Sawy. 574, followed. -Reporteu by Joseph P. Hornor, l'sq., of New Orleans bar.
MARION V. ELLIS.
411
PARDElTI C. J. When ,this cause was lately beforecthe· comt;· it was dceided that "the demurrers herein filed will be sustained except so far as the issue of Marion's ownertlhip is concerned, and that will leave the petition or cross-bill substantially a plea to the jurisdiction, on the ground that Marion has been collusively made a party in order to give the court jurisdiction." On this plea to the jurisdiction evidence has been taken and the !parties have been heard. The evidence shows that the firm of Grobel & Co., being the holders of the mortgage notes in controversy, pledged them to plaintiff, Marion, to secure the SUIn of $250 borrowed money; that the object of Grobel & Co. was to transfer tht' notes to such a holder as could institute foreclosure proceedings in the United States court; that plaintiff, Marion, loaned the money to Grobel & Co., and took the notes in pledge, without any knowledge of the object of Grobel & Co.; that he only learned the object after the transaction was completed. On this showing the matter is submitted to the court, and the question is whether the transaction is a pure simulation or a veritable contract. There seems to be no doubt that, as between Marion and Grobel & Co., the arrangement is a binding contract. Marion paid the money over, and has not been repaid:. He took the notes in pledge, as he had a right to do. He had no knowledge of the object of Grobel & & Co., even if that object would affect the transaction. This conclusion decides the plea adversely, for there can he no doubt that if plaintiff became the pledgee of the notes in good faith, he would have undoubted right to bring suit for foreclosure. See Armstrongs v. Baldwin, 13 La. 566; Garrish v. Hyman, 29 La. Ann. 28; and see Giovanovich v. Citizens' Bank, 26 La. Ann. 15. The citizenship of the parties would give the court jurisdiction. The case of Law1'ence v. Holmes, decided at the last term, was a case of simulation; in other words, "there was no actual transfer of the account sued on. The transfer alleged was a pretence." But it is urged that the friendly relations shown to exist between Marion and Grobel & Co., and the large amount of notes-over $3,000 -given in pledge between friends- to secure so small a 10an,-$250evidences that the transaction, although a contract, was one made to give the court jurisdiction, and it is argued that this is a fraud on the court. Concede that the contract of transfer was made by both parties with a view to enable suit to be instituted in this court, and still the
""See 9 FED. !\El'. 3G9·
.
__
412
plea must fail under the rules laid down in numerous adjudicated cases. In the case of De Laveaga v. Williams, reported in 5 Sawy. 573, Mr. Justice Field said: "There is no doubt that the sole object of the dced to the complainant was to give this court jurisdiction, and that the grantor has borne, and still bears, the expenses of the suit. But neither of these facts renders the deed inoperative to transfer the title. '1'he defendants are not in a position to question the right of the grantor to give away the property if he chooses to do so. And the court will not, at the suggestion of a stranger to the title. inquire into the motives which induced the grantor to part with his interest. It is sutficient that the instrument executed is valid in law, and that the grantee is of the class entitled under the laws of congress to peoceed in the federal courts for the protection of his rights. It is only when the conveyance is executed to give the court jurisdiction, and is accompanied with an agreement toretntnsfer the property at the request of the grantor upon the termination of the litigation, that the proceeding will be treated as 11 fmud on the court." See, also, Briggs v. F1'eneh, 2 Sumn. 256; Smith v. Kemoehan, 7 How. 215; Barney v. Baltimore, 6 Wall. 288.
Counsel, by brief, attempt to raise the question that Grobel & Co" being themselves the pledgees of the notes against defendant, had no right to repledge them to plaintiff. To this it may be answered: (1) That is no issue no"!'" in the case; (2) the defendant can raise no such issue, it being no concern of his; (3) that so far as it was in this case it has been settled by the ruling on the demurrers lately decided. The complainant must have judgment on this plea to the jurisdict,ion. And as the balance of the defendant's petition or cross-bill has been held bad on demurrer, there is nothing left in the case to sustain the outstanding injunction to restrain the sale originally ordered in the premises. Judgment may therefore be also entered dissolving the injunction heretofore issued in this case, with costs, and reserving to complainant his right to proceed on the injunction bond for all damage incurred by reason of said injunction. Let a decree in accordance herewith be entered. NOTE. A bonafide conveyance of property in controversy for the express purpose of conferring jurisdiction, is no ground for remanding a cause to the state court, (Hoyt v. Wright, 4 FED. REP. 168;) but a defendant call not acquire the right to a removal by the purchase of the interests of his co-defendants. Temple v. Smith, 4 FED. REP. 392.-[ED.
FLAGG
MANHA.TTAN BY. CO.
418
FLA.GG
and others v.
MANHATTAN
By. Co. and others.-
(Oircuit Oourt, S. D. New York. December 21. 1881.)
CORPORATIONS-GuARANTY OF DIVIDEND-POWER Oll' DnmcTORs.
An agreement between two corporations, whereby one guaranties the other a certain specified annual dividend on its capital stock, is not a guaranty to its stockholders severally, but to the corporation, and the power to modify the terms of such guaranty is in the directors of such corporations, not in the stockholders. Where such power is fairly exercised by the directors, in view of all the circumstances, and in good faith, a court will not interfere, even though, on the same facts, it Dlight have arrived at a different conclusion.
In Equity. S. P. Nash, for plaintiffs. D. D. Field, for defendants. BLATCHFORD, C. J. This suit is brought by three persons as indio viduals and two persons as copartners, who claim to be owners of shares of the capital stock of the Metropolitan Elevated Railway Company, 155, 10, 150, and 75 in number, of the par value of $100 each, there being 65,000 shares in all. The three companies defendants are railroad corporations organized under the laws of the state of New York, and will be called the Manhattan, the Metropolitan, and the New York. The first company had no lines of railway. The second and third companies had elevated railways in the city of New York. On the twentieth of May, 1879, the three companies entered into a written agreement known as the "triparte" agreement. It recites that the agreement is made "for the purpose of avoiding the danger of crossing elevated railway tracks upon the same level, and otherwise securing to the people of New York the advantages of safer and more rapid transit through the action of one directing body." It provides for the execution of the leases hereinafter mentioned, and contains other provisions which it is not important at this point to notice. On the same day the Metropolitan and the Manhattan executed an agreement of lease in writing. It recites that the Metropolitan is authorized to construct and operate a line of elevated railway in the city of New York, a portion of which, specifying it, is completed and in operation by it, and is engaged in constructing other part,,; that the New York is the owner of and engaged in operating certain lines of elevated ra,ilway in said city over routes heretofore established by law for it, "which railways and routes at various places unite with the railways and routes" of tlle Metropolitan, "and -Reported by S. Nelson White, Esq., of the New York bar.