!and a eltiienof
state," the in the' act of1888,aS was given them in' construing the act of 1867, thus holding that the class of Cases removable on the ground of prejudice and local influence is confined to those in which there is a controversy between a citizen or citizens of the state in which the suit is pending, and a citizen or citizens of at:.other or other states, but not includingeuch in which there is a controversy partly betVveen a citizen or citizens of the state wherein the suit is pending, and a. or citizens of other states, and partly between -citizens of the same state. Admitting that there is doubt as to the proper construction of the act, it still follows that this court should not retain the case, as it is better to leave the cause in the court whose jurisdi':tioll is undoubted. The motion to remand is sustained. . .
PORTER LAND
&
WATER
Co.
BASKIN.
(Circuit Court, S. D. CaliffYl'rl,ia. August 8,1890.) !
WRITST""SERvtOB BY PUBLIOATION.
.
III a suit to establish a trust in real estate, service may be had on a non-resident. though the bill also prays for an accounting aud for other relief.
In Equity. On motion to dismiss. GraveB, O'Melvrmy &: Shankland, for complainant. Anderson, Fitzgerald &: Anderson, for defendant. · Ross, J. This action was commenced in one ofthe superior courts of thA state on the 7th of February, 18R9. Among other things, the complaint alleges, in substance, that during the times therein mentioned the plaintiff was and still is a corporation duly organized and existing under the laws of the state of California, for the purpose, among other purposes, of buying, selling, and otherwise disposing of lands,waters, and water-rights; and that from the time of its organization until May 2, 1888, the defendant was one of its directors. That on the 29th of J,me, 1887, defendant, while such director, entered into a contract with plaintiff by which defendant was constituted sole agent of the corporation pla:intiff for the selling of its lands, with his compensation fixed at $100 per month, and 6 per cent. commissions on all sales, which compensation, the complaint alleges, "was an exorbitant, unjust, and unconscionable sum." It alleges that many sales of the lands of the corporation made under the agreement mentionM were made upon credit, without any paynlent being made to the corporation; that many sales were never completed, from which no consideration was realized by 'it', and were afterwards canceled or "treated as null and void," yet on all these transactions defendant charged against the corporation, and was allowed, commissions to the maximum extent provided for by the contract under which,he acted. "That, in the capaeity of agent, as aforesaid,'and dis-
324 ".',.'.',)
REPQRTER,
vol. 48.
his duties. as director, and with a view solely to his personal profit,saiddefendant effected pretended sales to many persor.s, without any money coming therefrom to the treasury of the corporation, bqt upon which he charged his full commissions, and caused credit to be given himself therefor .upon. the books of said corporation." That, in this way, during a period of less than 10 months, defendant received from plalntiff,in pretended payment of his services, under the contrfl,ct mentioned, the sum of 315,727.71 in carh; "also a promisso!:,y note exec.uted by said corporation, dated April 19, 1888, payableill ninety days, bearinginterest at the rate of ten per cent. per annum, unpaid ,34,379.50, with interest; also the further sum of $2,000," .which 8qcrued to ,the defendant in this wise: A certain tract of plaintiff's land was sold by defendant to one Byran for $2,000. No money was in fact paid by Byran to the corporation; nevertheless defendant caused the corporation to be credited upon its books with $2,000 on account of the sale, and himself to be charged with sll,me amount, and took from Byran to himself an assignment 6famortgage executed by one Charlotte:E. Smith to Byran on August,20, 1887, on a certain lot ofland in Los Angeles city, to secure the payrnent of two 'promissory notes, each for the sum of $1,000, one payable one year, and the other two years, after .date. That on the 19th of April,1888;alldwhile defendant was a director of the corporation plaintiff, he procured the corporation to transfer and hypothecate to him, as security for the payment of the aforesaid note of the corporation, certain notes ()f third parties, specifically described in the complaint, all of which, it iSttlleged, were secured by mortgages recorded in the office of the recorder of Los county. That defendant, while a directoro{ the corpor!1ti9n plaintiff, bought from the oorI\oration cer.. tain desClribed lots of lan\i lind,water, situated in Los. Angeles county, deeds for which he caused to .be executed by the corporation to his wife, Mary G. Baskin, wpopaifl no consideration therefor, and whc received the title lJIerelj'fortheacyommodation and to the use and bcr.efit of the defendant, and thereafter transferred the same to him. The complaint alleges that the services rendered by defendant to the corporation plaintiff,beyond his director, were reasonably worth $100 per month. :which plaintiff offers to pay, together with any Sum defendant may have expended on plaintiff's account; but beyond that it is alleged that the charges and commissions made and received by defendant were false, simulated, and fictitious. The prayer is that the agreement made by plaintiff defendant be annuLled; that defendant be adjudged to be a trustee for the,.plailltiff of all moneys, promiss@ry notes, choses in action, and real property, includingthe real property transferred by plaintiffto defendant's wife, apd by her to defendant, and. that he be adjudged to convey the same to plaintiff, or, if such transfer cannot be made, that he be charged wit.h the vaiue thereof; that an iqjuncti.onbe issued to restrain defendant !rom tt:ansferring apy of the said property, or collecting or disposing of that promissory note by plaintiff to defendant be can.. celed, and the. $ecurities to Sec.urethe same bedireoted to
PORTER LAlSD & WATER CO, 11. BASKIN.
325
be retransferred to plaintiff; that an accounting be had between the plaintiff and defendant, and plaintiff be given judgment against defendant for such sum as it may be justly entitled to, and for such other and further relief as in equity it ought to have. The defendant being, at the time of the bringing of the suit, a resident of the 8tate of Kentncky, the plaintiff' caused summons to be served upon him by publication, pursuant to that provision of the Code of Civil Procedure of California providing for such service in cases where the person on whom it is to be made resides out of the state. On the 8th of October, 1889, the defendant appeared in the state court for the special and only purpose of moving the court to set aside the attempted service of summons. on the ground that the action is one in personetm, and, the defendant being a non-resident of the state; service by publication is void. The motion was overruled by -the state Cdurt, to which action the defendant excepted,and tendered his bill of exceptions, which was settled. Thereupon the cause was, on defendant's motion, removed to this court, and here the defendant, disclaiming any genera] or voluntary appearance, moves the court to dismiss the suit upon the same grounds urged by him in the state court for the quashing of the service of summons. H.is special appearance in the state court for the. purpose of calling attention to the alleged illegality of the service was in no respect a waiver of such illegality, if it in fact existed. Harkness v. Hyde, 98 U. S. 479; Powers v. Bmly, 75 Cal. 238, 17 Pac. Rep. 197. It is, however, contended for the plaintiff that, defendant haviIlg submitted to the state court the question of the validity of the service upon him, and that court having held it valid, the case comes here with that adjudication in force, and that it must therefore be here considered that the state court acquired jwisdiction of the defendant by the service in question, and therefore this court will take jurisdiction, even. though it would not have acquired such jurisdiction had the case bee'n' commenr.ed here. In none of the cases referred to by counsel do I find that the precise point now made was decided. In Brooks v. Far. well, 4 Fed. Rep. 166, relilld on by the plaintiff, the state court having ruled in effect that the facts set up by the defendant to defeat the ser,," ice of SUmmo'1S could, under the Code of the state, be pleaded by answer, the cirCUIt court held that it must accept as correct and conclusive the ruling of the state court in respect to the proper practice under the state. statutes, and, in accordance with that ruling, that the plea must be received in the circuit court. The cause was doubtless an action at law, in which the rules of 'practice in the state court would prevail in the circuit court. In Loomis v. Carrington, 18 Fed. Rep. 98, also relied upon by the plaintiff, it was held that in cases removed from a state court the circuit court will not review an order made prior to the removal, if the state court acted within its jurisdiction, but will take the case precisely as it finds it, accepting all prior decrees and orders as adjudications in the cause. In DUl1can v. Gegan, 101 U. S. 810, the supreme court:sajd that" the circuit court, when a transfer is effected, takes the case':ffi 'the condition it w,all when the state 'court was of its
326
J'EDEBAL :nElJORTEB, vol. 43.
.j1itria.diCtion. The circuit court has no more power over :what was done ·befbre the removal than the 'State court would have bad if the suit had remained there; It takes the casEllipwhere the state court left it off." This language had reference to It condition in which the case had been placed;by the positive decree of:thIH:Jtate court. In Werthein v. TrU8t Co., 11 Fed.·Rep. 689, Judge S;aIPMANheld that whereone of the parties had, by his llon-actionwithin the time prescribed by the state court, prevented himself from asserting a .defense or an objection to the jurisdiction of the court, and thereafter in that court such defense or objectioncould not be considered as existing, the circuit court takes the case in the condition in which the non-action of the party left it, and accordingly refused tbpermit the defendant to plead in abatement in the ci1'cuitcourt the defective service of the complaint, on the ground that he had, prior to the removal, lost by his inaction the right to object to such defective service in the state court. In Kauffman v. Kennedy, 25 Fed. Rep. 785, before the removal of the cause from the state to the federal court, defendant appeared specially, and moved the court to quash the service of summons on the ground that service was obtained on defendant while he was attending as awitness in the state in a criminal prosecution against the plairitiff, defendant at the time being a resident of another state. The case having been subsequently removed to the federal court, the motion was insisted upon, and by the court granted. The motion does not appear tb have been ruled upon by the state court, in which reflpect it difl'ersfrolb the case at bar. In a number of cases defendant it has been held that the filing of the petition and bond Jor removal of the cause from the state to the federal court was not such an appearance aswaivec1 the question of jurisdiction, and precluded the defendant from moving in the federal court to quash the service of proooflS. In Atchison v. Morris, 11 Fed. Rep. 582, Judge DRUMMOND, in deciding the point there nlade that defendant, by making the motion and giving the bond for the removal of the case, made suchan appearance as admitted the sufficiency of the service upon him. and that he could not· thereafter in· the federal court move to set aside the service of sunlInons, said: " There was, in fact, no appearance entered in the state court, unless the filing of a petition and the giving a bond constituted an appearance; but I it was not, in any event, such an appearance as to deprive the defendant of the right to make objections in this court to the service of summons. In fact, it may have been, among other reasons, for the very purpose of objecting to the service of summons that defendant requested that the cause should be removed to the federal court, because in a proper case a partf has the right to the opinion of the federal court on every question that may arise in the case, not only in relation to the pleading and merits, but to the serviceof process; and it would be contrary totl1e manifest intent of the act of congress to a party who has a right to remove a cause is foreclosed as to any question which the federal court can be called upon under the law to decide: and I have this is SUC9 a question." On the contrary, it ,was said by Mr. Justice CURTIS, in Sayleav. lmuran.ceOo' f 2 Curt. 212, and, it seems tome, with great force, the de-
PORTER LANDcl:WA'1']tlt Cd.t1. DA:SXDr.
82'1
sign of the act of 'congresswl18 to enable citizens of other states to remove their cases here for a trial of their merits; and that when a defendsnt"Appears in the state court, files a petition to remove the action, gives a bond to enter it in the circuit comt, and actually enters it there, he has thereby waived any personal privilege he might have had to be sued in another district. If pleading to the action amounts to a waiver of such a privilege, upon the ground that he ought not to be heard to object to the means by which he was brought into court. I do not perceive why tl;1ese proceedings should not have the same effect. 'fhe defendant comes ln, becomes the actor, treats the suit as one properly instituted. removes it to another court, arid enters it there, and then, says he was not obliged to appear at all, and the state court in effect had no suit before it. This, I am of opinion. he cannot do. I consider thab this court will not look back to inquire into or try the question whether the state court bad jurilldiction. The act of congress allows defendants to remove actual and legally pending suits from the state courts. If this was not such a suit, the defendant should not have brought it here.. By bringtreats it as properly commenced and actually pending ing it here he in the state courts, and he cannot, after it has been entered here. treat it other. wise." In answer to the suggestion that this would prevent citizens of other states from trying in the federal court the qUlilstionwhether the state court had jurisdiction, the justice said: . . "Not so. If the state court had no jurisdiction, and the defendant does not appear. its proceedings are all void. and may-be shown to be so in an action brought in this court against anyone who medflies with the person or propel·ty of tbe defendant under the color of such proceedings. The onlyobjections which the defendant will be precluded from trying 'bere are technical objections wbich do not affect the merits; and I Bee no good reason why he should not be prevented from trying theD? here." From the view I take of the nature of the present action it becon;les necessary to decide whether the bringing and entering of the suit: here by the defendant was such an 8ppearanceas precluded the objeciionto the exercise of jurisdiction over him, or Whether the decision of the state court that the service of summons upon defendant was a valid service is an adjudication of that question binding upon this court. The object of the suit,· in part, is to reach and control the title to certain lands .and water, and Certain interests in certain other lands situated in this state and within this judicial district. To the extent, at least, of determining the title to and interests in.the lands and water in question, I think the service of summons on defendant by publicat.ion, concerning the regularity of which no question is made, was a valid service under the state statutes, and sufficient to authorize a valid decree in the suit. Whether, should the facts warrant it, such decree may also establish a trust in respect to the moneys and other property alleged to have been unlawfully received by defendant, and include a valid money judgment against him, under the principle that, .where jurisdiction is acquired against t,he 'per. son by the service of process or by a voluntary appearance,a court of general jurisdiction will settle the matter in· controversy the parties,need not now be determined. In the late case of Arndt v. Griggs,
Rlj:PORTElt 1 'vol.
48.
10. Sup. Qt" Rep. 557,thesupreme court held that it is the established qoctrine.oftha t court that a state has power by statute to provide foJ' the ndjudication of title to real estate within its limits, as against non-resiwho are brought into court only by;publication. and that it ,was intention of the court in the case (j)f Hartv. Sansom, 110 U. S. 151"aSup. Ct. Rep. 586, to overthrow the series of cases affirming that power; on the contrary, that the court in Hart v. Sansom distinctly recognized it by saying, among other things, that'''Jtwould doubtless be within the powerofthe state in which the land lies to provide by statute tllat if the defendant is not found within the jurisdicor refuses to make or to cancel a deed, t,his should be done in his behalf by a)rustee appointed by the court for that purpose." , And in Arndt v. Griggs it is added: "Ofconrse it follows that, if a state has power to bring in a non-resident by publication for the putpose of appointing a trustee, it can in like manner bring him in and subject him to a direct decree." :'l;'he court in Arndt v. Griggs cited and reviewed the cases, upon the subject at length; among others that of Boswell's Lessee v. Otis, 9 How. ,336. whtwe, said the court,-:,I'Was prese,nted case of a bill for a specific performance and an accounthlg, and in which was a decree for specific performance and accounting, and an adjudication that the amount due on such ac:counting should operate as a ;judgmentat law. Service wllshad by publication, the defendants being nonl'esidents, TIlelvalidity.of a sale under such jUdgment was in question. The court held that portion of the decree and the sale made under it void; but, with reference to jnrisdiction in a case for speeiJic performaucea]one, made these observations.: JuriSdiction is acquired in one of two modes: as against the person of the defendant, by the service of process; or, second, by a procedure against tile p'l'operty of the defendant within the juris,; diction of the conrt, In the latter rase the defendant is not personal1y bound 'by the judgment beyond the pr6perty in question, arid it is immaterial whether the proceeding against the property be by an attachment or by bill in eery. ·It must be:substantiallya proceeding in 1"em. A bill for the specific A:l1Cecution of acol)tract tocon vey real estate is not strictly a proceeding in rem in ordinary cases; but, where such a procedme is authorized by statute on publication without personal service of process, it is substantially of that (;haracter .n .If a. bill fO!' the specific execution of a contract to convey real estate is substantially a proceeding in. rem, where by statute service of proces!l in such suit may be. had by publication, surely a suit to establish a trust in real estate is ot the Ilame character in cases ,,-here the statute authorizes a similar service. Inthecaseof Penrwyerv. Neff, 95 U. 8.,714, 727-734, in which the question of jurisdiction in cases of service by publication Was considered at length, the court, by Mr. Justice FIELD, thus stated the law: , "Suchserviee may also be sufficient in cases where the object of the action Is to reach and dispose of property in the state, or of interest therein, by enforcing a contract or lien respecting the same. OJ" it among different owners, or,where the pUblic is a party, to conllemn and appropriate it for a public purpose. 'In other words, such service may answer in all which are' su\)stantiaHyproceedings in "8m. * * * It is ,true
a
,.:
!
,
MONTGOMERY PALACE STOCK-CAR CO. V. STREET STABLE-CAR LINE.
329
in a strict sense a proceeding in 1'em is one taken directly against property, and has for its objert the disposition of the property without reference to the title of individual claimants; but, in a larger and more general sense, the terms a1'e applied to actions between parties where the direct object is to reach and dispose of property owned by them or of some interest therein. Such are commenced by attachment against the property of debtors, or instituted to partition real estate, foreclose a mortgage, or enforce a lien. So far as they affect property in the state they are substantially proceedings in 1'em, in the broader sellse which we have mentioned." The principle of these cases, in my opinion, sustains jurisdiction here to the extent, at least, of settling the rights of the parties in respect' to the real property in question. The motion to dismiss the suit is de"nied.
MONTGOMERY PALACE STOCK-CAR Co. V. STREET STABLE-CAR
LINB.
(Circuit Court, N. D. lllinotB. April 14, 1890,) FEDERAL COUR'1'S-'-JURISDlCTION-PATENTS-OWNERSHIP·
.Where a is brought to determine tbe ownership of .patents assigned to defendants, but which plaintiff claims under a contract by the patentee that all ented iniprovements on former Patents granted him, as those in suit are alleged to be, shall belong to the corporation under whom plaintiff claims, and both partiell are citizens of the same the United States circuit court bas no jurisdiction.
In Equity. A,lfred Moore, for complainant. J. J.McClellan andH'est &: Bond, for defendant. ' BLODliET'I,', J. This caSe is now before the ceurt on Q' demurrer, both general alid special, to the bill. The essential facts, as stated in the bill, are these: On the 25th of August, 1870, one John W, Street was the owner of patents Nos: 96,362, and 96,500, which had been issued less than a year previously for improvements in stock-cars, and on that day he made an.agreement with 18 oth3r persons for the formation of a corporation under the laws of Illinois to be' called the "Street Palace Stock-Car to utilize the said' patents by the construction and running of car" made in accordance therewith. The agreement related mainly to the amount of capital stock of the company, and the bution thereof among the parties to the contract and otherwise; but the only clause. in the contract material to the purposes of this case is the folloWing: ' , "It is further understood and agreed t,hat any inventions orimprovemeilts, to be applied as an improvement to the above-named cattle-car, heretofore or hereafter oHginatedor developed by any mt-'mber of said company, being patentable, shall be patented in the name and for the benefit of. the . . aforesaid company." The bill avers the subsequent formation of the said Street Palace Stock.-CarCompany under the laws of Illinois, and its entry upon busi:.