WILSON V. UNION SAY. ASS'N.
421
may remove such suit to the circuit court of the United States for the proper district, at any time. before the trial thereof, when it shall be made to appear to said circuit court that from prejudice or local influence he will not be. able to obtain justice in such state court. ... ... *" L. E. Stanton,.for plaintiff. Daniel Davenport and William N. O'Hara, for defendant. WALLAC1i:, J. The question in these cases is whether, under the local prejudice clause of the act of March 3. 1887, the matter in dispute must exceed in amount the sum of $2,000 to entitle the defendant to remove the suit from a state court. This question has been considered in several of the circuits, with a diversity of opinion as to the true construC'tion of the clause. My own views accord with those expressed by Mr. Justice HARLAN in Malonev. Railroad Co., 35 Fed. Rep. 625, and it is unnecessary to reiterate his reasons for the conclusion reached. I think it was the intention of congress to place the right of removal for local prejudice upon the jurisdictional basis of all other removable controversies, discriminating in favor of the defendant only as to the time of making,the application, and permitting a single defendant to remove. The motion to remand is granted.
WILSON '0. UNION SAY. ASS'N
et al.
(Oircuit Oourt, E. D. Mi88ouri, E. D. March 10, 1890.) 1.. RULRO,AD
'.roWI\Ship .bonds issued in aid of 8 railroad company were, with the assent of t.lle com.pan.y, deposited by the township .trustee in a. bank, a.nd a. receiPt. taken binding bank to surrender them upon the joint order of the trustee and a contractor to whom they were to be paid for construction work. It was agreed between the trustee and the contractor that the bonds were not to be delivered to the latter till he had paid all debts for labor ilndsupplies on the work in the township. These payments the contractor failed to make. Held, on a bill by his assignee J;o compel thedeIivery of the bonds, that the assignor had failed to comply with the conditions precedent on which he was to receive them, and that the assigp.eehacl no title.
.Am BONDS-DELIVEl\y-No:-:-PERFOl\MANOJl OF CONDITIONS.
.
,
2.·
SAME-LJlGALiT1" OF ISSUE-CANOELLATION.
The bondS were in of the amount which the township was authorized to issue, and were obtained from the state treasurer on a false certificate by the townsllip, trustee that the conditions on which they were issued had been co'niplied with. The railway company was cognizant of the fraud, and receipted to the treasurel' for the bonds, but never had actual possession of them, though it assented to their delivery to the contractor by the township trustee in payment for construction work. Held, that this did not cbnstitute a negotiation of the bonds to an innocent purchaser; /lnd, as tlle conditiol\s on which they were issued had not beem com.; plied with, the consideration had faVed, and the township was entitled· to a decree , for their surrender and cancellation.
In Equtty. . This is a controversy as to right of possession of 22 bonds, of the denomin,ation of $500 eacb, issued by Oswego township, of the state of Which, at the date of the filing of the bill, were in the actual
BlDBltA:LREPORTER ,
vol. 49.
9Jtist.o4yd» .the Uilion 'SaVlingsAssOciation of Mo. Wilson ,olaitnlithemas purchaSelhiIid assignee under Edward Burgess. His ls, in .brief,; thaHhebonds were duly issued by the township 'of OSwego. in aid of;the·· building of the Memphis, Carthage & Northwestern Railroad, and were delivered to the railroad company about December 1, .1872; that-the bonds were thereupon placed by the railroad company in the joint custody of Burgess, who was the contractor tfor"bullding its roadr,through Oswego :township , and C; M(}ntaglie as 'tl'uatee fortherailroad:cotnpany, upon the understanding that they llhQuld .be turned over to Burgess, in payment for work: done, on the .cQmpletion by him of certain work t3eil\ in progress; up to the amount and:;Malue of saidbondsj and that Burgess and Montague lodged them for safe-keeping in the mean time with the Union Savings Association, ,taking ·therefor its receipt, by the terms of which they could only bQ Qbtained ,on the joint order of the deposit@rs. He claims that Burgesa ,subsequently did the work, on the completion whereOf his .right to the bonds,became absolute., .but that Montague has ever since wrongfully refused to join in an order whereby the bonds could pe obtained from the a$Socil;Ltion·. On the other hand, Oswego township denies, both in its answer and cross-bill which has been filed, that the bouds in question were ever by it delivered to the Memphis, Carthage & Northwestern Railroad Company, or that the railroad compal1Y ever delivered them to Burgess and Montague under the circumstances stated in the bill, or that they were ever deposited with the Union Savings Association in the manner and for . tae ' puq:iollealleged. The contention on the part of the township is that the borids in question are part of an issue of 160 bonds that wereor}ginally executed in the name;o( the township without consideration, and without authority of lawj that the whole issue wasfraudulently delivered to Olle, Joseph Nelson, lit tlle time town',ship trustee, who fraudulently them to be registered by the auditor of the state of Kansas, and then took them to St. Louis, Mo., deposited the bonds now in controversy with the Union Savings a receipt by which they were to be surrenAssociation, taking 'ijered.by the associatiop on the joint order of Edward Burgess and himselfas township trusree;that the agreement between Burgess and Nelson was that Burgess should have the 22 bonds so deposited when the Memphis, Carthage & Northwestern Railroad was completed through the township of Oswegq il:nd into· the city of Oswego, and a depot had been there constructed, and when Burgess, and those engaged with him the work'of ha(l. paid debts contracted for labor and suppliesj that the delivery of the bonds by thetowDship to Nelson, its trQstee, was on the they shouto. not be delivered to Burgess until he had complied with the terms last mentioned; that the receipt so given by the association to the order of Burgess and Nelson, trustee, was subsequently surrendered, and a similar one executed ,by theassocia'tion in' favor of Burgess ahd C. Montague, trustee, when thel8itter had succeeded Nelson as township trustee; that the Memphis, ICartilage & Northwestern' Railroad was not constructed by Burgess
WILSON" '!l.UNIONUV.' ASS'N.
through Oswego township; as contemplated, when the bonds were d&.: posited, and the receipt taken therefor, nor wa!l a depot built. nor did Burgess ever pay the; labor and supply claims by him contracted, and hence never became entitled to the bondEl under the terms of his agreement with Nelson as township trustee, even if the bonds were lawfully executed. The controversy is thus seen to be between Wilson, assignee of Burgess,on the one hand, and the town!lhip of Oswego on the other. " The township, by its crosB-bill, prays that the bonds may be surrendered to itfor cancellation. The Union Savings Association disclaims any interest'in the controversy except as a mere stakeholder. M. &: J.R. Kincaly and Bacon &: Woodward, for complainant. John O'Day and E. D. Kenna, for Oswego Township. Hitchcock, Madill &:Finkelnburg, for Union Sav. Ass'n. THAYER, :J., (after 8tatingthe facts as above.) Before considering the' questions of law that have been discussed by counsel, it will be necessary to settle some disputed questions of fact. There is a controversy uoder the pleadings as to whether the 22 bonds that form the subjectmatter of contention were ever delivered by Oswego township to the .Memphis, Carthage & Ndrthwestern Railroad Compary, and a further controversy as to the terms of the agreement under which the 22 bonds were originally deposited with the Union Savings Association, on De;. cember2, 1872, and as to whether C. Montague, who succeeded Nelson as township trustee. acted as trustee or agent for the Memphis, Carthage & Northwestern Railroad Company when the second receipt for the bonds in question was executed by the Union Savings ASi3ociation, on December 17, 1873. These seem to, be material questions of fact, that should be disposed of in limine; and the court will dispose of the same by stating concisely the facts in relation to the several transactions that seem to be estl1.blished by a preponderance of evidence. After the whole number of bonds issued by Oswego township in favor, of the Memphis, Carthage & Northwestern Railroad Company, to-witt 160, had been deposited with the state treasurer of Kansas, and are..' ceipt therefor had been signed by L. P. Cunningham as president of the Memphis, Carthage & Northwestern Railroad Company, the whole issue passed into the actual custody of Joseph Nelson, township trustee, and was by him taken to the city of St. Louis; 'Mo., on or about December 1,1872. The testimony fails to show that the railroad corilpany,though it receipted for the bonds on the books of the state treasurer, ever in fact had actual possession of any of them before they were taken to St. Louis, Mo. At the latter place, 24 bonds, Nos. 1to 22, inclusive, and Nos. 49 and 50, were undoubtedly delivered to the president of the Memphis, Carthage & Northwestern Railroad Company, fortha' use of the company, with the consent of Burgess and Nelson, the township trustee. At the same time, 50 other bonds, Nos. 51 to lOO;bOl,h inclusive,were undonbtedly paid to Burgess on account {jf oonstruction work theretofore done for the railroad company, with1he latter company?s consent, and· for its account.' Sixty other bonds, Nos.'
DbERAIiREPOR'l'ERj
vol. 42.
101 to 160; .both inclusive, were deposited by Nelson,trusteEl, in the T;Tnion Savings Assooiation, as a speoial deposit, for purposes and under donditions unneoessary to be here stated. The remaining 26 bonds, Nos. 23 ·to 48, both inclusive, of which the 22 bonds now in question tormeda part, were also left by Nelson in the custody of the Union Savings Association, and a receipt was issued, by which the association bound itself to surrender the bonds on the joint order of Burgess and Nelson, as trustee. I aql satisfied that, at the time this latter deposit wfiS, made, the November estimate of construction work done on the line of the Menlpbis, Carthage & Northwestern Railroad had not been received j that it was known that such estimate would show considerable of that township construction work done in Oswego township by who had been employed by Burgess, or at least who claimed to have been so employed j that Burgess promised to pay such subcontractors theaD;l,<)unt so shown to be due when the estimate was recei verl, or shortly thereafter; and that it was agreed by and between Burgess and Nelson, and other citizens of :the township who appear to have· been present, (the Memphis,Carthage & Northwestern Railroad Com pany assenting thereto,) that, ,when Burgess had made the payment, the 26 bonds, including those jp. controversy" should then be delivered to him, and become his property. The foregoing seems to be the most satisfactory conclusion deducible from all the circumstances and evidence in the case. As the occurred 18 years ago, and as no written statement of thei purpose £,or which the bonds were deposited appears to have been prepared, and as the interests of the parties are now at variance, there iil,. might be expected, considerable' conflicting oral testimony. The coutt.also concludes that C. Montague did not intend or assume to act as trustee or agent of the Memphis, Carthage & Nort!lwestern Railroad CompanY,when he accepted the receipt for the 22 bonds of date December 17, 1873. The fact seems to be that that receipt was a mere substitute for the previous receipt of December 2, 1872, drawn to the qrder of Burgess and Nelson, trustee, Montague haVing in the mean time succeeded Nelson as township trustee, and that such seco11d receipt did ·not, and was not intended to,work any change in the conditions on which th.e bonds were held. , In view of the above findings, it seems obvious that complainant cannot recover the bonds on the title set forth in the bill, or on any other. title disclosed by the evidence. The bonds were not, as alleged, placed in the joint.custody of Burgess, and an agent or trustee of the railroad company, to be delivertld to Burgess on the completion of certain constructionwork in an amount and value equal to the face of the bonds, which work has since been done; but they were placed by the township trustee with the savings association, under. an agreement between Burgess and the trustee that the latter.would surrender themto Burgess whp.n he had made a certain payment on account oJ certain COlli:ltruction work done in the township. There is no testimony in the case, nor j,q itpl!etended, that Burgess ever made the payment which was to be a to the delivery of. the bonds. Nor did he claim
WILSON t1. UNION SAV.
425
the bonds for years after they were so deposited, although it is evident that, if he or his assignee is now entitled to them,his right thereto became absolute more than 10 years before this suit was filed. It is suggested by counsel for complainant that whatever engagement the township trustee may have entered into with 'Burgess for the surrender of the bonds was in excess of the trustee's authority as a township officel;, rii1tl hence that the contract was voidable at the election of Burgess. This may be true, but, in the opinion of the court, it is unnecessary to whether it is or is not a correct view of the trustee's authority. On the assumption that the contract was voidable, and that Burgess and his assignee have elected to ignore it,then complainant is utterly with()utright to' the possession. of the bonds. On the assumption that the )lgreerrierit was voidable, the bonds are in the possession of the township trustee, or his bailee; the Union Savings Association, and are held ptecisely as they were when the township trustee received them from hands of the' statetreas\1rer of Kansas. At that stage of the transaction, it will not be'claimed tHat Burgess could have interposed, ahd replevied them from the hands of the township trustee. His right to the possession of the bonds obviously arose out of transacti"ns that occurrediu' the city of St. Louis. But at the latter place the 22 bonds in controversy do not appear to have been at any time in the . actualposse.ssion of the Memphis, Carthage & Northwestern Railroad Company ,with whom Burgess had contracted to receive bonds in payment for work, nor does the railroad company appear to have then and there delivered the bonds to Burgess i nor does Burgess appear at that time to have given the railroad company an absolute credit as for so many bonds. On the contrary, there was a qualified arrangement entered into, which was assented to by Burgess, the township trustEle, and the raoilroad compnny, to the effect that a delivery should be made on some future occasion, when Burgess had made a certain payment'. which, as it now appears, he has not made. I accordingly conclude that the complainant's bill must be dismissed. The next question to be considered is whether the township is entitled to affirmath'e relief on its cross-bill. It prays that the bonds may 00 ordered to be surrendered up for cancellation because, as it contends, they are not vnlid obligations against the township. That the honds were originally issued without authority of law, on the testimony in this case, admits of no controversy. They appear to have been authorized by a vote of the dtizensof the townshi p at an election held on December 20, 1871. The total issue authorized amounted to $80,000, and the annual interest thereon to the sum of $8,000. The township had previously issued bonds to the amount of $100,000, bearing 10 per cent. interest, in aid of the Missouri, Kansas & Texas Railroad Company, which issue was outstanding and unpaid. The laws of Kansas then in force provided that the amount of bonds that might be voted by any township in aid of railway construction "should not be above such an fHllount as would require a levy of more th'an one per cent. per annum on the taxable property of such township to pay the yearly interest on
:ChIlpter 90, Laws .1870, § 1. The· of all ,p,ljoplllrty in pswego township for the year 1871, aphaye been .bi. tax of 1 per cent. thereon would rl:lBlize. only .$1,59.9, ::wherewith to pay Qonded interest to ,the tt;moqnt of $18,000·.. But,evenif the township: had ,had authority ,bonds to of $80,000 to the Memphis, Carthage & Railroad, COll)pany, the evidence shows: beyond c9ntradic.ti01ldthat the railroad fulfilled the terms of the subscriptiM" Il:nd,neverbecaqle enti.tled to tJw bOl;lds, either the terms of the :s.ub!!cript,iol1. or under the laws oft1)lestate of Kansas.. The bonds were to the.;l'ailroad company until it had,constructed its.road thrQugh ,the township. to, the city of Oswego, .and had IOGated and a .side track in the city .of Osw.ego. The,se conditions it never fu1thetownshipt:rusteE1 and executed 160 QQnds,to the a,mount of $80,000, and, d,eposited them :with the state trensllT:elUm October 25, 1812, On the 27,th of Novemb,er, +8Z.2, the township ,Q(lrtified to tbestate "thec6nqitions of the sub* * * ha4 :o.f:;such 1 certificate bonds into the posse,asion of the. towQship trustee, taking;,therefOl;,the receipt Qfl the·ra.ilroa.d cOl;l1pany.. .The <:er·,tificatesomll<lElby confessedly Jalse ,and frap,dulentj alld of .the ,railj.lqQ.d 1company, whp lligned tpElreceipt for the 1)oDl;Is I although he did at the timE! obta.in, Mtpal of any, of was obviously the active party therllto.· , cQup!iel in thjs case have. argued at some .,' .J!tlIlgth,.tbe, qqestion,wlwther the, bonds QOW in OQnt;roversy might nqtbe ,enfo.rced :Aga,il,l,&t the, t.()lwll:&bip, il;1 a. suit by an innocent purchaser for value" beCAllse o.f certi1in recitals. thl,1t the bond!> ,a.ppear to ,This , howeYer, appearE!W pean question,Jor the reason th.at 'J;IQ,one,.,so' far as the !recprd, discloses, can enforce payment of the .22 bonds now in controversy on the· PJiet(;lPSe that he is a.n,innocentpurchaser : . p never delivered,the particular bonds ip <;liiSpuw.tqtherailroad company, and the company never the actual ,PQll8e!!i1ion: pftpem. eyen if theJa,ct that tb,e ra.ilroad company retrefl,surer could pe h el<1to betantamount 4aipted for:t.l;le bondE! to. the ·tp A deHveJlY ;of then1 by .the township to the railroad company,as co;m·plfl,inant'E! <lounsel seems Wcontend, yet theevidenoe fails to show that the milroa.d company ever :del,ivered the poads to or that he. ever had J.mtualposseElsion releal;led any against the railroad compJl,lJY,or parted with in con.E!ideration of such deliv·., His rights the railroa,<;l, company, .und!3rhiscontJ;act, for thatthe testimony .in sllows, remained the sallle after .the dtlposHed in th.6 that they were before ',£I\lPh, .There'lis nQ: flj.ct ,in the case, .therefore, ani,nnocent oHhe ,nondsja.ndjhe S!l.ll)e \'flPlfir:k.may conjplainant, I ,who has merely, tQ QfBy.rgeS$' :whatevertheymaybe. of " ",' l' ". ... '.' \
427' AiDan W:l1o bUys negoiiable securities, as tlle complainant appell-rs to.hava' from a person who is not able to deliver them, because I at the time in the actual possession of SOlUe third party, certainly no greater right or better title. than his vendor possessed. As the 22 bonds in controversy were obviously issued without author-; ity of law; and as they have never been negotiated in such manner as to furnish any person or corporation with a pretense for attempting to force them against. the township as an innocent purchaser for value, a decree will be entered on the cross-bill 9.irecting their surrender to the proper officers of the township for cancellation.
KEITHSBURG BRIDGE Oo.et al. 1.
'V.
McKAY,
et ale , I
(Circuit Court, 8. D. IO'Wa, C. D.:May 22, 1890.) TAXATION-BRIDGE CoMPANIES-VOID ASSESSMENT.
The assessment of a tax against a bridge company; owning a bridge across the Mississippi river from Iowa to Illinois, by the, county auditor, (after the listll for that year have pasl*W.from the assessor,) under. COde Iowa, § 841, glvmg the eouJlty auditor power to eorrect the assessment or tax. books, where such asseS8-. mentIillllsde as on personal property, when the only property owned by the como' pany is part of its bridge and the approach thereto, is void, since Code Iowa, 5 makesruilroad bridges across the Mississippi river taxable as realty. '
I
808, ,
In suc)l, where the bridge company.is a non-resid\lnt of Iowa. the circuit court Of the United States has jUrisdiction to enjoin collection of the tax, and can. . . .
In Equity. Bill to restrain collection of tax, and to cancel saine; as void and illegal. ' " Anthony (J. Daly, for complainants. E. B. Tu.cker and Arthur Springer, for defendants. SHIRAS; J. The bill ill this CRuse was filed for the purpose of restrain- ' ing the collection of a tax standing against the Keithsburg Brid/1;e Company in Louisa 'county, Iowa, and for the cancellation of the same upoti the records, so as to remove the cloud cast thereby upon complainant'$' property, upon the ground that such tax is wholly void. The' case was submHted to the court upon the following agreed statement.of facts: "It is agreed. for purposes of trial in the above intervening matter: . "Fir;;t. That the' Keithsburg Bridge COIupany was, and is, and has lilways been sinooits oJ'/ol'Rnizl\tioll io1882, a corporatiun, resident, and a citizen of the state of Illinois; that E. L. Dudley was duly appuinted receiver of the Central Iowa 'UailwHy by order of this court, in this caUse. and that as such receiver, in the year A. D. 1887, and during the whole of .sHid year,he in the possession and control of the Keithsburg bridge. across the Mississippi river ,fIlum a point on the Iowa shore in the townsh ip of Eliot and county 'Of' I Louisa, Iowa. to thetuwn of Keithsburg. on the lIlinuis and of liU'af' its:appurtehsnces and' approaches, and he was, obligated' (0 pay the valid (8x.es oJ1said'bridgepro1Jerty: thattlle ,defendants are'eltizens and.resident8 Of Iowa, .. I. ' I