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CASES ARGUED AND DETERMINED . , 1 .'J
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CHESTER V. CHESTER
and others·.
(Oircuit Oourt, W. D.Tenn688U. April 25,1881.)
A bill in equity to establish a resulting trust in land in possession of a mortgagor, upon facts occurting before the mortgage, to which the mortgagee, a .citizen of another. state than the plaintiff, is· made a defendant, cannot be removed to the federal court on his application, where the mortgagor, being also a defen,dant, is a citizen of the same state with the plaintiff, the controversy of the plaintiff· with eitl;ter defenda.nt being inseparable from the other. 2. SAME SUBJECT.
Cases since Judge Dillon's second edition of Removal cited in a note.
of Caus.es
Moti<?n to Remand. The plaintiff and all the defendants are citizens of Tennessee, except the Life Association of America, which is a Missouri corporation, now dissolved, and represented by W. Belfe; its statutory assignee, who is a citizen of Missouri and a substituted defendant. The bill alleges that Robert H. Chester, one of the defendants, was the plaintiff's guardian, v.7,no.l-·1
FEDERAL REPORTER.
and as such was possessed of her money; that he, with Robert I. Chester and W. B. Chester, other defendants, executed a trust mortgage to secure a debt due the life association upon certain lands in Madison county, Tennessee,-another defendant, C. B. Wellford, being the trustee, with usual powers of sale j that in :this trust deed was executed, a certain part of this land had been levied on under an execution and,ltQld, by as property of the redeemed "by the payment defendant Robert i Chester, to the creditor of the plaintiff's money, this being done by her guardian for the benefit' of 'Bobert I. Chester, but withanyJegal 9bligl1ticm,to do it j 'that this was dgne after the redetn;pt.\onhad' ap.p, py (,If'the pa.r ties, the purchaser executing a quitclaim to Robert 1. Chester; that, having now come of age, she elects to follow her money into this land, and claims it as hers, a trust having resulted in her favor; that, as. to the other part of the land conveyed in the deed of'trust; her gmi.tJdian has used other parts of her money in making on the debt secured to the Life Association, whereby the amount has heen reduced; that all the parties, including the corporation, had knowledge of the facts and all her equities, and participated in the wrongful cOl:;rversion of her fund,S by he,: guardian; and as to the land not included in ,her claim under the redemption contract she claims a right to be substituted to the company's security and priority of satisfaction. The bill prays for relief according t,o these alleged facts, and, on an allegation that the corporation is insolvent and non-resident, prays an attachment and injunction. The attachment was refused, but the trustee was enjoined from selling.' The bill alleges that the Chesters are in possession of the land. Relfe appeared in the state court, was allowed to become a party, and immediately filed his 'petition and bond to remove the cause to this court, and the plaintiff now moves to remand for want of jurisdiction. The petition for removal alleges that the matters in controversy are those in which the plaintiff and the petitioning defendalit "are solely interested," and that they "are wholly between tne said plaintiff on the one side and your petitioners on the
OI;IE.STER
v.
CBEllrEn.
other, a,nd can be fully determined as between them." It should be stated the petition is that the e;xtinot tion and Relfe, the sj1bstituted defendant. There is gation in the petition that tile said Robert I. Chester, RqbeJ;t H. Chester, and W. B. Chester in fact procured the said D. V. Chester to institute said ,suit .and to file the said bill for the express purpose of defeating: the right,. title, and claiI;U of petitioners, as shown and set forth in the answer in said cause, and are now united with. her, the said D. V. Chester, in the prosecution and maintenance of the said suit or bill for the purpose aforesaid." C. G. Bond, for plaintiff. Wright, Folkes <t Wright, for defendant. HAMMOND, D. J. In the case of Chester· v. Wellford, MBS. February 22, 1879, in this court, there had been a bill filed in the state chancery court by Robert 1. Chester and his co-defendants of that name in this case against Wellford, the trustee, and the Life Association of America, attacking the" deed of trust mentioned in this case for fraud, or, in the event the deed should be sustained, for an account of dividends and profits realized by the company in its business of life insurance: As appears by the answer of Relfe in this case, it appeared by the bill in that oaae that these Chesters took out policies of life insurance and borrowed money of the company, executing this deed" of trust to secure the deferred premium notes and the loan notes. There was subsequently a. settlement, also attacked for fraud, by which the policies were cancelled,leaving the loan notes, or certain portions of them, unpaid; and WeUford, the trustee, was proceeding under his powers to sell the land until arrested by injunction in that· case. It was removed, as this oaso is sought to be, to this court, and a motion made to remand, because Wellford was a citizen of Tennessee, and a defendant along with the insurance company. That motion I oVE:lrruled, and maintained our jurisdiction, distinguishing the. qase fr.omthat of Gardiner v. Brown, 21 Wall. 36, on the ground that the trustee in a court of equity was, as the case was there presented, oo)y aformal party, and, at most, had no in the controversy,
FEDERAL
being necessary only to convey title to whomsoever the court should decree it. Tha.t judgment I consider has been fully sus· tainedby the supreme court in Walden v. Skinner, 101 U. S. 577, and Life Association, etc. v. Rundle, 12 Cent. Law J. 130; S. C. 18 Chi. Leg. News, 185. (See 102 U. K when issued.) But this case is so different that the distinction between the two must be obvious. They are" not the same controversy at all. Here the deed of trust is not attacked for fraud,-at least, not the same fraud upon the Cheaters, who gave it, as that mentioned in that bill; nor is the settlement growing out of it between them and the company attacked, and the plaintiff in this case seeks no relief on account of any of the aIle. gations of fraud contained in that bill. She, as to one part of the land, indeed, seeks to maintain the trust deed as a security 'for the money paid by her guardian on the notes secUl,'ed by it with knowledge of the company, and to that extent her intel:est is the same as that of the company or Relfe, its assignee. And, as to the other portion of the land, she claims a paramount title to that of the insurance company and its mortgagor, but does not at all question the validity of the deed of trust as between the company and the other defendants. Briefly, her bill may be described as one to establish a fraudulent conspiracy, through which she claims a resulting trust in land in possession of a mortgagor to which she has properly made the mortgagee, whom she charges with notice and participation in the fraud, a defendant. Such controversy as she has with the mortgagee is inseparable from that she has with the mortgagor, and they are each indispensable parties to a bill like this, in any possible view that may be taken oUhe case. Hill, Tr. (3d Am. Ed.) 246; Perry, Tr. § 877; 1 Daniell, Ch. Pro (5th Am. Ed.) 246, et seq.; Story, Eq. Pl. §§ 209, 218; Burt v. Dennet, 2 Bro. Ch. 225; Lund v. Blanchard, 4 Hare, 9, at pp. 29-30; Bailey v. Inglee, 2 Paige, 278; Pindlay v. Hinde, 1 Pet. 241, 246; Mallow v. Hinde, 12 Who 193; Smith v.Shane, 1 MeL. 22; Hoxie V. Carr, 1 Bumn. 173; Gaylords v. Kelshaw, 1 Wall. 81. The only possible theory upon which this court can acquire jurisdiction over such a case is that suggested by Mr.
CHESTER V. CHESTER.
Justice Bradley in his dissenting opinion in the Removal Case8, 100 U. S. 457, 479, which I understand to be that, wherever there is in any case a substantial controversy between citizens of diffel'ent states, the constitutional grant of judicial power attaches to it; and, under the act of March 3, 1875, (18 St. 470,) the whole case may be removed to the federal court. I quite agree that, technically considered, the majority opinion in that case cannot be said to limit, by its construction, the constitutional grant of judicial power, so as to exclude a case like this from the operation of the act of congress, but 1also think it fairly inferable that the court is of opinion that the act of congress was not inten'ded· to vital. ize the constitutional power to its fullest extent, so as to include a case like this. This case requires, in my opinion, that the constitutional power shall be extended by act of congress to its utmost verge to include it; and, if there can be any case in a state court where one of the parties is a cit·' izen of another state than that of the petitioning party, which lies beyond the constitutional grant, it is this one. I do not decide that this is; and, so far as I may properly express an opinion at all, I may say that I do not now think it hIe for congress to include this case in a grant of jurisdiction to this court, but I do not ,think it has done so, and that is all I decide. It is not at all necessary for me to support this analysis judgment by an extended review of the cases, or of the statute in comparison with previous statutes, because the subject of the construction of this difficult statute is one of stich perplexity that the supreme court seems itself to be divided, and ther:e is quite as much diversity of opinion among the judges of the other courts. But I may properly say that, in making up this judgment, I have considered every case and authority accessible to me, and am left to follow the inferences to be drawn from the majority opinion in the Removal Case8, 8upra, and the very recent case of Barney v. Latham, not yet reported, rather than any authoritative adjudication to be found in either of them as applied to this case. If Mr; Justice Bradley's dissenting opinion is the law of the subject I am wrong here, and I frankly confess there is,
.
6
FEDERAL REPORTER.,
strictly considered, no authoritative case againl3t it, .unless it be .the majority opinion in the same case, and it is doubtful if that can he said to be so. But, independently, my own judgment is that the act of oongress does not apply to a case like this, and that, with deference for all who think otherwise, control me. until the supreme court. decides the point. It is not uecessary to determine whether the act of 1875 llas repealed the act of 1866, (Rev. St. § 639, subsec. 2,) because I am of opinion that this case is clearly not removable under, that act. As I understand the effect of the recent decisions, the distinction between the two acts amounts to this: If the case be one that could have been removed as to the separable conti'oversy, under tlle act of 1869, the whole case, and not the separable controversy only, may now be removed under the act of 1875. But where the controversy is inseparable as between citizens of different states from that between citizens of the same state, as this case is, there can be no removal under either act. It occurred to me that this petition for removal contained an allegation of a fraudulent conspiracy to defeat the jurisdiction of this court over this case by joining parties not proper to be joined, but the allegation amounts to nothing more than a negation of the plaintiff's cause of action by saying that she has, with the defendants, concocted this suit to avoid the deed of trust. If that be so, the suit must fail against both mortgagor and mortgagee; but it furnishes no basis for jurisdiction in this court. If she fails to prove notice of her equities against the mortgagee, she may fail of any relief as to him, while establishing her case against the mortgagors; but that does not render the controversy separable in the sense of these statutes. Remand the cause. NOTE. Consult Dillon, Removal Causes, (2d Ed.) pa8sim; 20 Amer. Law Reg. (N. S.) 24, 31; Dormitzer v. Bridge Co. 6 FED. REP. 217; Broadway Nat. Bank v. Adams, 12 Cent. Law J. 356; B.1fbee v. Hawkett, 5 FED. REP. 1; S. C.13 Chicago Legal News, 152; He8terv. Kernochan, 13 Chicago Legal News, 225; Smith v. McKay, 4 FED. REp. 353; Merchants' Nat. Bank v. Thompson, ld. 8i6; Shumwa,y v.'Railroad Go. rd. 385; Ruble v. Hyde, 3 FED. REP. 330; Bailey v. N. Y. Bank, 2 FED. REP. 14; Whitehou8e v. In8.
Id.452: Forrest Vi KullJ1';'Id. 522; Barney v. L,at1wJm, Supreme·QounJ1. S., Apri118,1881, not yet reported., (Ilee 102l!. &.:)Bl9kti v, preme Court U, S., May 2, 1881, not yet reported, dllcided since the. fore:going opinion was delivered. ." .
ao. Id. 498:
ad. v. McComb, 17 nlatChf.
Oooks T.
CUEW and othe,l'1il v. HYMAW, and others. ,
Oourt,z:.., P. nZinois. April' ;,
1881.)
DEBD-FoRECLOSURE-PARTIES.
Devisees, h,olding the fell jnan equity ofredf:llllption, are necessary parties to a suit to foreclose a trust deed by a jUdicial sale of the land under,the decree of a court of equity. ' ' 2. DONEE 'OF POWER-FEE. A power to in his own dIRcretlon,ant'l' re-inveRt, iluring the minority of devisees, d.oes not vest anexecuwr With the fee of the land. 8. TRUIn' DEED-JUDICIAL SALE.
A sale under a d,!cree of court is. judicial, when such sale is not made exclusively under the p.owers of a trust deed.
4.
SAME-FORECLOSURE SALE-RATIFICATION.
An executor, empowered to sell for the purpoRe of re-investmeitt, cannot bind devisees holding the fee in an equity of redemption, .by the ratificl,ltion of a foreclosure sale to Which. they were not parties. -[ED.
In Equity. Bill to Redeem. BLODGETT, D. J. By this bill the complainants seek to redeem the lands in question froni a trust deed given as security for the payment'of money. The material facts,'BS they appear in the record, are that, on and before the sixteenth of February, 1859, one William F. Johnston was seized in fee of the un(livided half of section 21, town 39 north, range 13 east, situate in Cook county, in this state, and on that day made a deed of the premises in fee to John V. Lemoyne, in trust, to secure the payment· of the bond of Johnston to Susan C. Williams, for $4,500, with power to the trustee, in case of default in the payment of the ness, 'to sell said premises at public vendue, after giving