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MEXICAN NATIONAL RAILROAD COMPANY v. DAVIDSON. DAVIDSON V. MEXICAN NATIONAL RAILROAD COMPANY.

decided: March 18, 1895.

MEXICAN NATIONAL RAILROAD COMPANY
v.
DAVIDSON.

DAVIDSON
v.
MEXICAN NATIONAL RAILROAD COMPANY.



CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

Author: Fuller

[ 157 U.S. Page 204]

 MR. CHIEF JUSTICE FULLER, after stating the case, delivered the opinion of the court.

This action was based as to its first cause upon an alleged indebtedness of $104,244.10 existing October 1, 1886, in favor of the construction company and against the railway company, with interest. The obligation to pay the indebtedness devolved upon the railroad company by reason of an agreement, annexed to the complaint, between the persons to whom the construction company had disposed of the first mortgage bonds of the railroad company and the construction company. This agreement provided for the foreclosure of the mortgage upon the property of the railway company and the formation of a new railroad company under the laws of Colorado; the conveyance of the property bid in at foreclosure sale to the new company; the issue of new first mortgage bonds by the latter company; the sale of these to a certain amount and from the proceeds of such sale the deposit with the new railroad company of a sum not exceeding $217,000 to be applied to liquidate the indebtedness of the railway company. The complaint set forth the agreement and the proceedings thereunder resulting in the deposit of the sum of $217,000, and alleged that of that sum "there remains to liquidate the indebtedness of the railway company" a sum exceeding that for which the complaint demanded judgment. The issue on the merits was therefore whether the construction company was entitled to recover this

[ 157 U.S. Page 205]

     claim against the railroad company out of the fund of $217,000. Was the action brought, as to its first cause, "to recover the contents of a chose in action," and could it have been originally brought in the Circuit Court of the United States? If not, could the jurisdiction be sustained on removal?

The language of section 11 of the judiciary act of 1789, c. 20, was as follows: "Nor shall any District or Circuit Court have cognizance of any suit to recover the contents of any promissory note or other chose in action in favor of an assignee, unless a suit might have been prosecuted in such court to revoer the said contents if no assignment had been made." 1 Stat. 78.

In Sere v. Pitot, 6 Cranch, 332, 335, an action was commenced in the District Court for the District of New Orleans to foreclose a mortgage given by a citizen of Louisiana to another citizen of the same State. The plaintiff was the general assignee in insolvency of the mortgagor and was an alien, and Chief Justice Marshall delivering the opinion of the court said: "Without doubt, assignable paper, being the chose in action most usually transferred, was in the mind of the legislature when the law was framed; and the words of the provision are therefore best adapted to that class of assignments. But there is no reason to believe that the legislature were not equally disposed to except from the jurisdiction of the Federal courts those who could sue in virtue of equitable assignments, and those who could sue in virtue of legal assignments. The assignee of all the open accounts of a merchant might, under certain circumstances, be permitted to sue in equity, in his own name, and there would be as much reason to exclude him from the Federal courts, as to exclude the same person, when the assignee of a particular note. The term 'other chose in action' is broad enough to comprehend either case; and the word 'contents' is too ambiguous in its import to restrain that general term. The contents of a note are the sum it shows to be due; and the same may, without much violence to language, be said of an account."

In Sheldon v. Sill, 8 How. 441, 449, a bill in equity had been filed in the Circuit Court of the United States by the

[ 157 U.S. Page 206]

     assignee of a bond and mortgage for a decree of sale of the mortgage premises. The mortgagor and mortgagee were both citizens of Michigan and the assignee was a citizen of New York. It was held that the court had no jurisdiction, Mr. Justice Grier saying: "The term 'chose in action' is one of comprehensive import. It includes the infinite variety of contracts, covenants, and promises, which confer on one party a right to recover a personal chattel or a sum of money from another, by action."

In Corbin v. County of Blackhawk, 105 U.S. 659, it was decided that a suit to compel the specific performance of a contract or to enforce its other stipulations was a suit to recover the contents of a chose in action, and not maintainable under section 11 of the act of 1789, as reenacted in section 629 of the Revised Statutes, in the Circuit Court by an assignee if it could not have been prosecuted by the assignor had no assignment been made. And this was reaffirmed in Shoecraft v. Bloxham, 124 U.S. 730. But while the exception extended to all actions ex contractu, it has been held not applicable to a tortious taking or wrongful detention of a chose in action against the right or title of the assignee where the injury is one to the right of property in the thing and the derivation of title unimportant. Deshler v. Dodge, 16 How. 622, 631; Ambler v. Eppinger, 137 U.S. 480

In the acts of March 3, 1887, c. 373, 24 Stat. 552, and August 13, 1888, c. 866, 25 Stat. 433, the provision is couched in these words: "Nor shall any Circuit or District Court have cognizance of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee, or of any subsequent holder if such instrument be payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made." The act of 1875 referred to suits "founded on contract," but the act of 1887 restored the words of the ...


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