Opposition Brief — FARMERS'LOAN & C., CO. v. Lake St. Rd. Co.

Office Supreme Court U, S.

FILED

” BS%e, /OF deraa iis

JAMES A. meh ciNZY,

ie oy Serres Bigs a es

“Ot, & fae

an d States.

ike eme Court of the U

OCTOBER TERM, A. D. 1898.

THE FARMERS’ LOAN AND TRUST COM-

PANY,

Plaintiff in Error,

v8. Writ of Error

) to the Supreme

THE LAKE STREET ELEVATED RAILROAD sa ahi

COMPANY, THE AMERICAN TRUST AND

SAVINGS BANK and THE NORTHERN

TRUST COMPANY,

Defendants in Error.

BRIEF IN OPPOSITION TO MOTION TO DISMISS

OR AFFIRM,

HERBERT B. TURNER,

WILLIAM BURRY,

JOHN J. HERRICK,

SOLICITORS FOB PLAINTIFF IX ERROR.

The Gunthorp-Warren Printing Company, 53 Dearborn St, Chicaga

NCLB RADE SL ENING hee WL MH is i Rehstoeom SIRO La OLR hE Cc a aA ee cetiniticlss

IN THE

Supreme Court of the United States

OCTOBER TERM, A. D. 1898.

THE FARMERS’ LOAN AND TRUST COM-

a

PANY,

Plaintiff in Error, t

vs. Writ of Error &

to the Supreme E

THE LAKE STREET ELEVATED RAILROAD diese eli teats z

COMPANY, THE AMERICAN TRUST AND . £

SAVINGS BANK and THE NORTHERN :

TRUST COMPANY, :

Defendants in Error. :

BRIEF IN OPPOSITION TO MOTION TO DISMISS :

OR AFFIRM. ;

The defendant in error, The Lake Street Elevated i

Railroad Company, and the American Trust and Savings

Bank have presented to the court what appear to be three

motions :

1. To dismiss the writ ef error for want of juris-

diction.

2. To vacate the order of supersedeas.

3. To affirm because the writ of error is frivolous.

It appears, however, from the brief of counsel in sup-

port of the motions, that the motion to dismiss and the

motion to discharge the sxpersedeas are in fact intended

as one motion, based on the single ground that this court

has no jurisdiction.

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Counsel say :

‘*The defendant -in error, the Lake Street Elevated

Railroad Company, has submitted — to this Honorable

Court a motion to dismiss the writ of error and quash the

supersedeas upon the grounds that the court ix without

Jurisdiction of this cause, and also has joined in said

motion a motion to affirm in case the court should hold

that it has jurisdiction.” (Brief for Lake Street Com-

pany, p. 1.)

In their printed motion, the grounds on whieh the

motion to affirm is based are thus stated by counsel (Pr.

motion, pp. 1-2):

** If this court shall determine that it has jurisdiction

of this cause, then the said defendant in error, the Lake

Street Elevated Railroad Company, moves to affirm the

said judgment of the Supreme Court of the State of IIl-

inois, tor the reason that it is apparent that the questions left

in the record for determination in this court are Frivolous .

and that the appeal is taken for delay.” :

In connection with the printed motion,is given what pur-

ports to be a statement of facts. In the brief for the Lake

Street Company, tiled with the motion, is given a state-

ment of the case, covering 16 pages, and in the addi-

tional brief, filed for the American Trust and Say-

ings Bank, this statement is referred to as accurately

stating all the facts. It is manifestly impossible to

properly — discuss — this lengthy statement of — the

case, and the arguments of counsel based on it, by

reason of the fact that counsel making the motion have

not complied with the established practice of this court,

which requires that the record, or so much thereof. as

may be necessary for the court to consider in passing on

the motion, should be printed. Counsel discuss the facts

so fully, and in some respects so inaccurately , that to fully

answer their briefs would require repeated references to

the record, no part of which has been printed.

THE MOTIONS SHOULD BE DENIED ON THE GROUND THAT

THE DEFENDANTS IN ERROR HAVE NOT PRINTED AND

PRESENTED TO THE COURT WITH THE MOTIONS SUCH

PARTS OF THE RECORD AS IT IS NECESSARY FOR THE

COURT TO CONSIDER IN PASSING ON THE MOTIONS.

The rule of practice in this court which requires a party

making a motion based on the record, before the record

has been printed, to print and present to the court such

parts of the record as it is necessary for the court to con-

sider in passing on the motion, has heen laid down in

numerous cases.

Andin Crane 1. Co. y. Hoagland, 108 U.S, 5, this

court applied the rule to a motion to dismiss or affirm,

and denied the motion on the ground that it had not been

complied with.

And in Powers v. Baker, 112 U. S., 710, the same ral-

ing was made us to a motion to vacate a supersedeas, and

was stated to be applicable to all. motions of that kind,

and the motion was denied for non-compliance with the

rule.

In fact, the case before the court forcibly illustrates the

reason for the rule and the necessity of its enforcement.

On examination of the briefs of counsel for the defend-

ants in error, it will be seen that they have found it

necessary to the presentation of their motions to refer the

court to the following pages of the record: 2 to 5%, 73,

80, 156, 190, 329, 331, 654, 677 and 682. It thus ap-

pears that a proper consideration of the motions on the

briefs for defendant in error alone, and without reference

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to any counter-statements for plaintiff in error, will in-

volve an examination of different parts of the entire

record.

We submit, therefore, that the motions should be de-

nied for non-compliance with this well-settled rule, as was

done in the cases of Crane |. Co. v. Hoagland, supra,

and Lowers v. Baker, supra,

If, however, it is the view of the court that the motions

should not be denied on this ground, we contend that

enough appears from the facts, as stated in the briefs of

counsel, and without referring to the record, to show con-

clusively that the motions should also be denied on the

merits.

In this connection, we call the attention of the court to

the stipulation, printed at the beginning of the brief for

the Lake Street Company, and to the fact that by reason

of this stipulation it is important to the rights of others,

as well as plaintiff in error, and to avoid possible ques.

tion and complications in the future, that the motions

made should be now disposed of, and not continued until

the final hearing.

It appears that at the time the supersedeas was al-

lowed, this stipulation was made at the suggestion of Mr,

Justice Brown, in granting the writ of error and super-

xedeus,

The stipulation provided that no action should be taken

in the foreclosure suit, brought by the plaintiff in error

and still pending in the Circuit Court of the United States

for the Northern District of Illinois, until a motion to dis-

charge the writ of error and supersedeas (which it was

stipulated should be made the first day of the October

term) was decided.

items ang te APR STROBE en AR EES eat ae ra RS

5

By a subsequent stipulation, filed herewith, the time

for making the motions referred to was extended to Oc-

tober 24th, or the next motion day thereafter, with the

further provision that the motion should then be submit-

ted without further notice on briefs and without oral ar-

gument.

It will be seen that the effect of this stipula-

tion was to stay all further steps in the foreclosure

suit until the motion to vacate the supersedeas, which

counsel have united with their motion to dismiss, is decid-

ed. It is evident from the express terms of the sfipula-

tion that an early decision of the motion to discharge the

supersedeas Was intended, as otherwise it would result in

the suspension of all action in the foreclosure suit for an

indefinite time.

As a matter of fact, the foreclosure suit re-

ferred to, in its very nature, only involves the rights

of the bondholders, the interest on whose bonds is admit-

tedly in default. It clearly has no such relation to the

issue in this suit that it should be postponed pending the

ultimate decision of the case in this court. This is ap-

parent from the fact that, as the foreclosure suit was only

brought apd could only be brought to enforce the rights

of bondholders, it cannot be defeated by a decree of the

state court removing the trustee, rendered while it was

pending, even if that decree should be finally affirmed

and carried into effect.

In that event, the bondholders, whose rights

alone are involved in the foreclosure suit, would

have a right to intervene ind prosecute the pend-

ing suit of which the court had acquired jurisdiction,

either in the name of the removed trustee or as substi-

tuted parties. So long, however, as the trustee continues

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and it is a question whether the bondholders can

properly intervene without its consent, which it is

doubtful) whether it can give without violating

its stipulation, and obviously no harm can come

to act, the suit should properly be proseeuted by it

from such prosecution, as the real question in the

‘ase would be as to the rights of the bondholders. If

they have no rights growing out of the admitted defaults

in the interest, the court will so hold, and no harm. will

come from the farther prosecution of the suit. If, on

the other hand, they have such rights, there is no just

reason why the seit brought for their enforcement should

be delayed, pending a contest over the question of the re-

moval of the particular trustee.

11.

THE MOTION TO DISMISS AND DISCHARGE THE SUPERSEDEAS

SHOULD ALSO BE DENIED ON THE MERITS.

The motion to dismiss the writ of error for want of

jurisdiction is not argued, and no ground or reason. is

presented in support of it, in either of the briefs sub-

mitted for defendants in error.

On examination of both of these briefs, it will be seen

that every proposition stated is directed to the’ single

question whether the state court decided rightly that it had

jurisdiction. (See brief for the Lake Street Company,

pages 17-26, where the points of counsel are stated, and

the argument following in support of them, pages 27-58.)

In the additional brief, filed for the American Trust

and Savings Bank, counsel say :

‘It is obvious the only question presented for deter-

eM een es Oona a BROUGH RL EN AE

7

mination by this court is that of the jurisdiction of the

state Superior Court.”’ **1ts (their client’s) belief in

the soundness of the position of the state court on the

jurisdictional questions involved leads this defendant in

error to present the following suggestions. ** (Brief, p. +.)

(See, also, their propositions at pages 5-9 of their brief,

all of which are limited to the question of the jurisdic-

tion of the state court.)

Every proposition stated in each of the briefs for de-

fendants in error involves the consideration and determin-

ation by this court of the very questions decided by the

state court, and, therefore, assumes that this court has

jurisdiction to decide them, and thas review the decision

of the state court. ;

The entire discussion in the 100 printed pages of the

two briefs can only have reference to the motion toaffirm,

and the ground assigned in support of it -that ‘+ it is ap-

parent that the questions left in the record for determin

ation in this court are frivolous, and that) the appeal is

taken for delay.”

That this court has juris /ction of the ease, and, that the

motion to dismiss 2nd discharge the supersedeas for want

of jurisdiction should, therefore, be denied, is clear beyond

possible question from the undisputed facts, as stated in

the briefs of counsel.

The following facts appear from the statements in the

briefs of counsel for defendants in error

1. The bill was brought by the Lake Street Company,

a citizen of Hlinois, agaist the Farmers’ Loan and Trust

Company, a citizen of New York. The Northern Trust

Company and the American Trust and Savings Bank,

citizens of Hlinois, are also named as defendants, bat no

allegations are made in the bil! against either of them.

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The only controversy presented by the allegations of the

bill is as to the right of the complainant, a citizen of

Illinois, to an injunction against the bringing or proseeu-

tion of a foreclosure bill by the Farmers’ Loan and Trust

Company, a citizen of New York (which the bill, prays

may be made perpetual), and a decree for the removal of

the Farmers’ Loan and Trust Company, as trustee under

the mortgage. The only allegations of the bil] on which

any claim to relief is based are the allegations which set

forth the two alleged grounds on which the injunction

and decree for removal against the Farmers’ Loan and

Trast Compan ¥ are prayed for. These are:

(1) Its alleged action in filing a bill for fore-

closure of the mortgage on account of the admitted

defaults in the payment of interest, against the asserted

objection of the majority of the bondholders, whose in-

terest was being promptly paid through the device of

debentures secured by their bonds, and

(2) The alleged failure of the Farmers’ Loan and

Trust Company to comply with the law. of Hlinois re

quiring trust companies doing business in Ilinois, before

accepting any trust, to make a deposit with the state

auditor,

The only other relief Which it is claimed is sought by

the bill is the consequential relief of the appointment of a

“ew trustee in case of and after the removal of the Farm-

ers’ Loan and Trust Company, a matter in which that

company would manifestly have no interest or concern.

2. The bill was filed January 30, 1S96. and, on the

day following, the Farmers’ Loan and Trust Company,

appearing specially for the purpose, filed a petition for

the removal of the cause to the United States court. un-

9

der the removal act. It also filed with its petition a bond,

conditioned as required by the removal statute, and signed

by two persons, whose sufficiency has never been ques-

tioned, but in which the petitioner was not named as an

obligor, and which was not signed by it. (Br. for Lake

St. Co., pp. 10-11.)

It appears from the statements in the briefs of counsel

that the petition for removal presented the following

questions, the determination of all of which adversely to

the petitioner was necessary to a denial of the removal

prayed for. :

(1) Whether, in the view that the case only involved

a single controversy, the complainant and the defendant,

the Farmers’ Loan and Trust Company being admittedly

citizens of different states, the Northern Trust Company

and the American Trust and Savings Bank were necessery

parties to the controversy, and if they were, whether

they should be ranged on the same side of the controversy

with the Farmers’ Loan and Trust Company.

(2) Whether, in any view, there were not in fact F

different, separable controversies, which could be wholly :

determined, as between the Lake Street Company and the F

Farmers’ Loan and Trust Company, without the presence 4

of the other defendants. j

(3) Whether that the allegations of the bill as to ;

the action of the Farmers’ Loan and Trast Company in 4

proceeding for foreclosure under the mortgage, and the .

prayer for a decree against the bringing or prosecution 4

of the suit for foreclosure it had already brought in the E

United States court, and the proof of the pendency of f

which was necessary to the maintenance of its bill and the §

relief prayed, did not present a Federal question, entitling :

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the Farmers’ Loan and Trust Company to a removal of

the case.

The presentation and discussion of these questions, for

the purpose of showing that the state court correctly de-

cided them adversely to the Farmers’ Loan and Trust

Company, covers over 58 printed pages of the briefs of

counsel. (See Brief for the Lake Street Company, pp.

27-46; 52-56; Brief for Am. T. & S. B., pp. 9-46).

In addition to these questions, there were other ques-

tions, involved in the claim of the Farmers’ Loan and

Trust Company that the case should be removed, such as

the sufficiency of the bond, ete., the presentation of which

by counsel covers over 30 printed pages, making over 88

printed pages in all, which counsel have devoted to estab-

lishing that the state court decided rightly in retaining

jurisdiction of this cause.

3. The state court denied the removal prayed for by

the petition, and entered an order to that effeet, and in so

doing denied the right of removal claimed under the act

of Congress.

4. After the presentation of the petition and bond to

the stute court, the petitioner, the Farmers’ Loan and

Trust Company, procured a transcript of the record and

presented it to the United States court, and thereapon

an order was entered by that court, docketing the cause.

The case having been docketed in the United States court,

the Lake Street Company, and also the Northern Trust

Company and the American Trust and Savings Bank, each

appeared in that court and made motions to remand the

case to the state court. The United States court, on

full consideration of these motions, held in an extended

opinion that the petition and bond were sufficient to give

11

the Federal court jurisdiction, (Luke St. El. R. R. Co.

v. Farmers’ Loan & T. Co., 72 Fed. Rep., 804), and

entered an order accordingly, overruling the motions to

remand, An order was also made by the United States

Court, dissolving the ec-parte injunction which had

heen issued in the state court, and from this order

an appeal was taken by the Lake Street Company to the

United States Court of Appeals, and that court overruled

the appeal, but without passing upon the question of

jurisdiction. (Lake Street El. R. R. Co. v. Fo Lo & Zz

Co. 17 Fed., Rep., 769.)

5. After the overruling of the motions to remand by

the United States court, the Lake Street Company re-

turned to the state court. and proceeded with the prose-

cution of its case there. The Farmers’ Loan and Trust

EMPL LO ERO LG ROD TOE LEST PRP AAPL TE LE

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Company having filed an answer, setting up, among other

things, the action of the complainant in moving to remand, (

and the order of the Federal court denying the motion, t

the case was set for immediate hearing. The order deny - :

ing the motions to remand was entered on March 16th, 4

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and, on May 5th following, the cause was brought on for

final hearing in the state court, and on June 4th a decree

was entered by that court, removing the Trust Company

as trustee, and enjoining it perpetually from bringing or

prosecuting My suit to foreclose the mortgage.

CRW MEDALS OT

6. On appeal from this decree, the Illinois Appellate

Court affirmed the decree in| an opinion in which it ex:

pressly considered and passed upon the question of re-

moval to the United States court. (F. L. & T. Co. ¥. :

Lake St. El. R. R.Co., 68 Tl. App.. 666.) And, on ap-

peal from this judgment, the State Supreme Court affirmed

the judgment and decree in an opinion in which it also

expressly considered and passed upon the question of re-

SNOT IVER IFO BG ERIE TRIS a URE IROL DOI SY oe |

12

moval to the Federal court. (F. LZ. d& 7. Co. v. Lake

St. E.R. R. Co., 173 Ill, 439.)

7, The State Supreme Court, from whose judgment

this writ of error was taken, based its decision denying

the right to removal, claimed under the act of Congress,

on the single ground that the bond filed was not in ac-

cordance with the act of Congress, as construed by that

court, by reason of the fact that it was not signed by the

petitioner. (See 173 Ill, at pp. 449-450.) The State Ap-

pellate Court also based its decision denying the right of

femoval on the same ground. (See 68 III. App., at pp.

669-670. )

Under that section of the Revised Statutes (See. 709),

which gives this court jurisdiction to review the final

judgments or decrees of the highest court of the state in

the particular cases provided, it has been so many times

decided that a writ of error will lie from this court to re-

view the judgment of the highest court of a state, deny -

ing the right of a party to remove a case to the United

States coarts under the removal statutes, as to he ele.

mentary.

See the following direct decisions :

Kanouse vy. Martin, 14 How., 28.

mn. &. Co. ¥, Aoontz, 104 U. S.. 5. at

p. 15.

m. &. Ce. 2. Mississippi, 1020. S., 135,

at p. 141,

Ry. Co. v. Dunn, 122 U. S., 513, at p.

516.

Ry. Co. vy. Fitzgerald, 160 U.S.. 556, at

p. 582.

Removal Cases, 100 U.S... 457, at p. 472.

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In the first of these cases, Kanouse v. Martin, 14 How.,

23, supra, the plaintiff in error claimed in the state court

the right to remove the case to the United States Circuit

Court. The state court denied the removal, and gave judg-

ment against the plaintiff in error, and this judgment was

affirmed by the highest court of the state. On motion to

dismiss a writ of error from this court, Chief Justice

Taney, delivering the opinion of the court, said:

‘<The plaintiff in error claimed the right to remove

this case from the state court to the Circuit Court of the :

United States under the twelfth section of the Judiciary 4

Act of 1789. ‘The right claimed was denied by the state ;

court, which retained the case and proceeded to give a f

final judgment against him, It is, therefore, precisely i

one of the cases enumerated in the twenty-fifth section of :

the act of 1789, in which jurisdiction is conferred upon i

this court, and in which the judgment of the state court f

may be reviewed upon writ of error, for the construction &

of an act of Congress was drawn in question, ana the de- &

cision of the court was against the right claimed under it &

by the plaintiff in error.”” &

This court has also many times held that, on a motion ;

to dismiss for want of jurisdiction, the question is, if

whether the conditions exist which give this court juris: rs

diction under the act of Congress to review the judgment F

of the State Supreme Court, and not whether the state ‘

court decided rightly. :

Kanouse v. Martin, 14 How., 238. =

Cohens v. Virginia, 6 Wheat, 264, at pp.

423, 424. £

Furman vy. Nichol, 8 Wall., 44. '

Murdock v. Memphis, 20 Wall., 590. 3

In AKanouse v. Martin, 14 How., 28, quoted above, the

court (Chief Justice Tangy delivering the opinion), in

overruling a motion to dismiss, on the ground that the

Ses DLP SALE CH MNT TTI OR NEC PERI i

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court had jurisdiction to review the decision of the State

Supreme Court, denying the right of removal under the

act of Congress, say :

«* As to the authority of the Superior Court of the

City of New York to retain the case, and the validity or

invalidity of its proceedings and judgments after the

motion to remove; that question, according to the prac-

tice of the court, will stand for hearing when the case is

reached in the regular call of the docket, but the motion

to dismiss for want of jurisdiction in this court is over-

ruled,’

There are also other Federal questions involved and

mentioned in the assignment of errors, as appears from

the briefs of counsel for defendants in error, such, for

instance, as the right of a state court toenjoin the further

. ® a)

prosecution of a foreclosure case, commenced in the Fed-

eral court prior to the institution of the injunction case

in a state court. That question was properly raised by

answer in the v7s/ privs court, and that court sustained

the right to stop by perpetual injunction the proceedings

in the Federal court.

There is also the further question, raised by the answer

and proofs on the hearing, whether, after the action of

defendants in error in going into the Federal court and

submitting the question of jurisdiction to that court by

the motions to remand, and the direct adjudication of

that court, overruling the motions, that it had jurisdic-

tion of the case, and denying the motion to remand, the

state court could properly proceed further in the case.

That it could not, and that the decision of the Federal

court on the motions was an adjudication of the Federal

question of the removability of the case, binding on the

state court, we contend follows from the previous adjudi-

cations of this court, and was expressly held in cases

15

se

which presented the direct question, by the Supreme

Court of Lowa and the Supreme Court of Wisconsin.

Under the well-settled rule of the decisions of this court

cited, supra, and the undisputed facts, it is clear beyond

possible question that this court has jurisdiction of the

case, and we do not, therefore, blame counsel for defend-

ants in error for at once and promptly abandoning the

motion to dismiss for want of jurisdiction, and saying

nothing in support of it.

The second motion made by defendants in error is Te

vacate the supersedeas. No ground is assigned for this

motion in anything submitted by defendants in error, €X-

cept as it is stated to be on the same ground as the

motion to dismiss—that this court bas no jurisdiction of

the case. Probably counsel had some idea that it depended

upon, and would go with, a motion to dismiss the writ of

error for want of jurisdiction. It may be that they con-

sidered that, if there was no jurisdiction to entertain the

writ of error, it was improper to order a superseded.

Even in that case, however, such a motion would be un-

necessary, for if the writ were dismissed for want of juris

diction, of course the supersedeas would fail, and what we

have already said as to the motion to dismiss should, there-

fore, dispose of the motion to discharge the supersededs,

We will add, however, that the appeal from the State

Superior Court to the State Appellate Court operated as

a xuperscdeas, and the same is true as to the appeal to the

State Supreme Court. The record in this case was -0

voluminous that it was impossible to prepare it within the

ten days in which the supersedeas is a matter of right, and

the record was presented to a justice of this court 4 few

days thereafter, and a xu persededs allowed.

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In any view, no ground for discharging the supersedeas

has been suggested by either counsel, except the single

one of want of jurisdiction to issue the writ. This we

have shown cannot be sustained.

In fact, it is net contended that any action can be taken

under the decree which the sxpersedeas interferes with,

except that counsel for the American Trust and Savings

Bunk argue that, by the decree, the American Trust and

Savings Bank is directed to appoint a new trustee, and

that it cannot do this if the supersedeas is retained. But,

manifestly, no advantage would be gained by appointing a

new trustee until the removal of the old trustee is established

by a final decree. Unless it is the purpose to put the new

trustee in office in place of plaintiff in error by this ap-

pointinent, no possible advantage would be gained. But

to withdraw the supersedeas for the very purpose of per-

mitting defendants in error to appoint a new trustee, in

order to oust plaintiff in error, in fact would be to give to

the defendants in error the very right in controversy, viz:

the removal of the plaintiff in error in advance of the de-

cision of this court,

The very office of a svpersedeas is to maintain the status

quo, and we do not understand that there is any practice

which authorizes its discharge for the very purpose of en-

abling the defendants in error to do the precise thing, its

right to do which is the very matter in controversy.

Again, it appears from the record that the defendant

in error, the Lake Street Company, is in default in the

interest due on the mortgage bonds, Under the express

terms of the mortgage, so long as this default continues

the trustees can exercise none of the powers-—except the

single one of tiling a bill to foreclose the mortgage—the

precise thing which has been done by plaintiff in error.

17

It is not claimed that the appointment of the new trustee

is in any way necessary to the efficient protection of the

bondholders in the foreclosure suit. On the contrary,

the manifest effort of both of the defendants in error is to

obstruct and delay in «very way possible the assertion of

the right of the bondholders, not assenting to the sealing

arrangement, to their interest, and their remedy by the

foreclosure bill for its enforcement.

i111.

THE MOTION TO AFFIRM SHOULD BE DENIED ON THE

MERITS.

Counsel have united with their motion to dismiss a

motion to affirm under the rule authorizing such a motion.

The rule of court, under which the motion is made, pro

vides that a motion to affirm may be joined with a motion

to dismiss. It was not, however, the intention of this

rule to give a party a right to simply make a written

motion to dismiss, and, addacing no reason or authority

in support of it, immediately abandon it and hang upon

it a motion to affirm.

It is settled by a long line of decisions of this court that

if there is no color for the motion to dismiss, that is, if

this court clearly has jurisdiction of the writ of error,

the court will deny the motion to affirm, without in-

quiring into the merits of the case. Otherwise, it

would be in the power of a defendant in error in every

case, by making a motion to dismiss and uniting with it a

motion to affirm, to obtain a hearing and decision of this

court on the case in advance of its being reached on the

docket, and thus in effect advance the case by a motion to

dismiss or affirm.

TAPERS NSE PETITE TLE RE ee A

ERE ELH

ya

EOE ES GS PES ESR AO LE

seg

18

That if there is ne color for the motion to dismiss, the

court will deny the motion to affirm without inquiring

into the merits of the case, has been many times decided

hy this court.

The rule was applied and the motion to aftirm there-

upon denied, where there was no color for the motion to

dismiss, in the following, among other cases :

School District vy. Hall, 106 U. S., 425.

Davies v. Corbin, 113 U. S., 687.

Vew Orleans vo Lo OC. do., 129 U. S., 45.

See, to same effect,

Whitney v. Cook, 99 U.S. 607.

In School District v. Hall, 106 UL S., 428, supra, the

court said :

‘* There is not in this case such a color of right toa

dismissal as to make it proper for us to consider the

motion to affirm.”

In Davies v. Corbin, 143 UL S.. OST, supra, the court

expressly held that, unless there is some color to a right

to dismissal, the court would not entertain a motion to

affirm, saying, after referring to Whitaey v. Cook, 99 U.

S., 607:

** This practice has been steadily adhered to ever since,

and in our opinion prevents our entertaining the motion

to affirm in this case.*

In Ver Orleans vy. Coustruction €o., 129 U. S., 45,

supra, the court said :

; ‘* The motion to dismiss is therefore denied, and, as we

3 do not think there was color for it, the motion to aftirm

s must be denied also.”

* — +. a a tah

Es In Whitney v. Cook, 99 UL S., 607, supra, the court

am

‘ said :

F ‘* This is a motion to affirm only. Our amended rule

ES et oe ee —! . aad

ee Saal Se eal Bo Benak 2 RE ee 5 te ILE WE LE eng OTE apsameripahet eAaadd .

19

does allow a motion to affirm to be united with a motion

to dismiss. This implies that there shall appear on the

record at least some color of right to a dismissal. That

is not pretended in this case. We are, therefore, com-

pelled to deny the motion.”

That in the case before the court there was color for

the motion to dismiss, is nowhere argued by counsel. Coun-

sel de say that the claim that the case was removed is

« frivolous.’’ Just what counsel mean by this, in view

of the fact that they devote 100 pages to the discussion

of the question of the removability of the case, is not q

clear, but we will assume that it means in effect that there

Fond

was color for their motion to dismiss.

That there was no color for the motion to dismiss is

clear beyond question, :

Fe

1. The very fact that in both of the briefs tiled in sup- :

4

port of the motion, not a single line is devoted to the

only ground on which the motion is based, viz: that this 4

court has no jurisdiction, shows this. There is no pre- :

tense even of an argument in either of these briefs that :

this court has not jurisdiction. The entire 100 pages of :

the two briefs, which set forth the grounds relied on in

support of the motion, are devoted to the discussion of the

question whether the state court decided rightly in deny-

jug the reanoval and retaining jurisdiction, This discus-

sion is manifestly wholly aside from the question of this

court’s jurisdiction, and cau only have reference to the

motion to affirm.

». The very fact that counsel deem it necessary to de -

vote 100 printed pages to the discussion of the question

paeneeeemnmen a

: SEERA ogy re ERE

whether the case was removed for the purpose of satis-

fying this court that the State Court decided rightly that

should be conclusive of the claim made that

Ee et ae ay cu Bs

it was not,

ROD

EMESIS a SRO PER PE LEEPER RR FE? EAT EEE PE aagoe corse gg

tary

ELA SE OCT LS PAT PLU

—_ a

20

the claim of jurisdiction in this cour

ment of the State Court is «« frivolous.*’

3.

t to review the judg-

The single fact that the judge of the United States

Court, on full argument, denied a motion to remand the

case, ina full written opinion, is in itself conclusive evi-

lous, °

dence that the claim of right tothe removal is

dismiss.

4.

not *‘frivo-

"and that there was no color for the motion to

The very fact that the Supreme Court of the st

expressly considered and passed upon the question of the

right of removal is further conclusive evidence that the

claim of right toa removal under the ac

ute

tof Congress is

uot ** frivolous,’’ and that there was no

motion to dismiss.

5.

state places

color for the

The further fact that the Supreme Court of the

its decision

on

ground that the bond was in form insu ficie

the narrow and teehnical

to its construction of the Federal statute, contr.

b]

ary to the

removal.

construction placed on the act by repeated Federal]

demonstration of the hona fides of the claim of right of

nt according

ions und all the text writers on Federal practic

decis-

ve, is further

And this argument is further confirmed by the fact that

the Tlinois Appellate Court bases its decision

same narrow and technical ground.

‘ 6.

solely on the

of this

We submit that no ground or reason has been pre-

sented by counsel for the consideration of the merits

case on a motion to affirm, which would not

apply equally to every case in which a removal is

denied by the state court, and that the effect of the con-

tentions of counsel would be that. in

every case in which

the act of Congress gives this court jurisdic

tion to review

BAA Mas aN Kd RNR WTF RAN AE I a

ye LLY EO ESA ERROR IRN ie AIG ERE EN MNS LEAD SDI SE POR

21

a decision of the State Supreme Court, denying a removal,

the defendant in error can in effect advance the case to a

ng upon the very question to be reviewed by making

ng with it a motion to affirm.

heari

a motion to dismiss and uniti

It is argued by counsel that, even if this court should

decide that the case was properly removed, and must

therefore proceed in the United States court, that court

will have no course open to it but to follow the decision

of the State Supreme Court on the question of the re-

al of the trustee, and that, therefore, plaintiff in error

, even from a reversal, except delay,

mov

‘an expect nothing

and that it follows that this writ of error is prosecuted

only for delay.

The argument is, in effect, that the question of the re-

ff in error as trustee depends solely on the

Pees eS es

moval of plainti

construction to be given to the state statute, providing

for a deposit by trust companies, doing business in the :

state, before accepting any trust, ete., and that the State - a

construction to this

Supreme Court, having given a

statute in the opinion filed in this case, which requires the :

deposit, the United States court will of necessity follow f

that decision, and, therefore. remove the plaintiff in error.

(Brief for Lake Street Company, 26, 27.)

There are several answers to this argument. ‘

1, The precise question of the construction to be :

by

given to this statute was expressly passed upon by Judge :

Jenkins of the United States Cirenit Court, in a case g

decided long before the filing of the present bill. (Aarm- :

ore’ Loan & Trust Co.v. 0. & N. P. R. KR. O., 68 is

Fed, Rep., 412.) And in that decision, the precise con- 5

struction of the statute contended for by plaintiff in

adopted, Judge JENKINS holding that a mort

Mat arora

error Was

A IAT PY es a cain ack RENE AMI ROINT EHLERS LT OE ER enema, |

ae aes ee

22

sage of the character of the one in question was not a

trust within the meaning of the statute, and that, there.

fore, the trusiee was not required to make the

before accepting and acting under it.

counsel is, in effect, that the St:

deposit

The contention of

ite Supreme Court, by as-

suming a jurisdiction, which his contention assume

did not have, has in elect forestalled the

the United States court: in

s it

decision of

a case of which it alone

had jurisdiction, and precluded it even from

following

its own previous decision to the contrary,

It is a novel proposition that the very dee

ision of the

State Supreme Court,

which the proposition assumes is

coran now judice, is in effect a decision of the case, bind-

ing upon the Federal court which alone had jurisdiction

to hear and determine it, precluding it even from follow-

ing its own previous decision,

2. But in fact, this alleged ground for the removal of

the plaintiff in error has been taken aw

ay bya subsequent

express statute, amendatory

of the previous law, passed

by the legislature of the State of Illinois in 1897,

and

after the rendition of the decree in the

state court, a copy

of which tmendatory act is appended to this brief

By this amendatory act, the section of the

original act,

Which required the deposit

to be made, is amended by

substituting a@ new amended section in its place.

In other

Words, the particular section

» us it was at the time of the

decision and decree of the trial court, is repealed and a

new amended section js substituted for it.

This new amended section, after making change

the amount of the deposit: and other

clades with this language

Sas to

requirements, con.

> not in the original Ne

** This act shall not upply to taking or

gages or trust dveds ty SOCULE

ation, Viz s

leccepting jor -

bonds or money loaned.”*

PREDATOR TE

SS eH DOV Mae DRT) 2 24 3 “ . * . ‘ns

. ne 1 OLS AGRI e BS en |

23

There can be no question that a trust deed to secure

bonds, like the trust deed of the Lake Street Company to

plaintiff in error and its co-trustee, now before this

court, is ‘a mortgage or trust deed to secure bonds or

money loaned,’’ and is, therefore, excluded from the

operation of the act.

It will thus be seen that, by this amendment, it is ex-

pressly provided that the statute, on which the trial court

based its decision that it was necessary for plaintiff in

error to make the deposit required, merely to qualify ét to

act in the future (as the court held), sball not apply to

mortgages or trust deeds like that in question—‘+ mort-

gages or frust deeds to secure bonds or money loaned.”’

It thus appears that, whatever may have been the

proper construction of the act, as it stood at the time of

the hearing in the trial court, by an express provision of

the act as it now stands, no such deposit is now required

of plaintiff in error to qualify it to act as trustee in the

futare, and that if, at the time of hearing in the trial

court, the law had been as it now is, the trial judge

would not have entered the decree he did,

It is to be noted in this connection that it was not con

tended for defendants in error, and the trial court did not

hold, that the alleged failure to make the deposit. in any

way invalidated the title conveyed to the plaintiff in

error. Qn the contrary, it was expressly conceded that

the mortgage was valid, and vested the title in plaintiff in

error, subject to its terms and conditions. (See 68

Ill. App., at p. 681.)

The sole ground of the decision was, that until plaintiff

in error complied with the statute, it was not qualified to

act in the future, and that the complainant was entitled

i

i

3

RES

~~

Si SR Dy

“SNARK

PaaS

Same

24

tu a trustee qualified to act, and for that reason the trial

court by its decision gave plaintiff in error an opportunity

to comply with the statute by making the deposit before

decreeing its removal. (See Brief for Lake St. Co.,

p. 13.)

3. But the question stated by counsel as the sole ques-

tion involved in determining the question as to the re-

moval of plaintiff in error as trustee, is not the sole ques-

tion,

Other questions were raised, the decision of any one

of which in favor of plaintiff in error would be fatal te

the relief asked by the bill.

One of these questions was, whether all the bondhold-

ers were not necessary parties to this bill, praying for the

removal of the trustee, and this was one of the questions

considered at length by the IHinois Supreme Court. Clearly

this question, being one of general law, is one, on which

the decision of the state court would have no binding

force in the Federal court.

The State Supreme Court did not controvert, and the

State Appellate Court expressly held. in accordance with the

contention of plaintiff in error, that in a suit for the re-

moval of a trustee, the cestu/s que trustent are necessary

parties, and that, without their presence as parties, the

court should not proceed to a decree.

In its opinion in this case, the Illinois Appellate Court

say (68 Ill. App., at p. 675):

‘*The general rule undoubtedly is that @// the cestu/

que trustent ave necessyry parties to a bill to remove a

trustee. °°

And such is beyond controversy the law.

The State Supreme Court, however, held that under

25

the doctrine of representation, the parties being numer -

ous, the absent bondholders were in fact represented in

the case by the trustee sought to be removed, the plaintiff

in error, and its co-trustee, the American Trust and Sav-

_ings Bank.

We wholly controvert this view, and if the case should

proceed in the United States Court shall contend that it

in effect nullifies the very rule which is uncontroverted,

that the cestucds que trustent are necessary parties to a

suit for the removal of the trustee, and is contrary to the

principles and reasons of the rule of representation when

applied to the undisputed facts.

It is also said in the opinion that the Northern Trust,

the holder of the bonds consenting to the scaling arrange-

ment, was & party and ‘represented a large majority of

the bonds,’ viz., the bonds held by it.

The record shows that there are over 850 bonds not held

by that company. The record also shows, and the bill

expressly alleges, that the Northern Trust Company, re-

ceiving its interest by the device of debentures, was op-

posed to foreclosure, and desired the removal of plaintiff

in error as trustee.

It is perfectly manifest that the bondholders, whose in

terests were in favor of foreclosure or who were opposed

to the removal of plaintiff in error and none of whom

were made parties, cannot be held to be represented in

this suit by the Northern Trust Conpany, which opposed

the foreclosure, and, on the express allegations of the

bill, had put itself in the attitude of asking the removal

of plaintiff in error as trustee.

4. Another question raised hy plaintiff in error was

whether, under the facts and general rules of law goverr-

a

ROBRWREEK > BPE eA, ROBEY NEY?

26

ing the subject, a bill would lie for the removal of x

trustee for the alleged non-compliance with the statute.

The only ground of removal relied on was the alleged

failure to make the deposit with the state auditor. It

was not claimed that this in any way invalidated the title

vested in plaintiff in error, or its powers as trustee, and

the complainant, being admittedly in default in its mort-

gage interest, both at the time of the filing of the bill and

the decree, there were, under the express terms of the

mortgage, no powers which plaintiff in error could exer-

cise, or duties it could perform, except to take such steps

xs the mortgage authorized to enforce payment of the de-

faulted interest. And the only efficient one of these pow-

ers—the filing of a foreclosure bill—plaintiff in error had

already taken by filing the bill to foreclose.

The record shows that there had been an uninterrupted,

continuous recognition by the Lake Street Company, by

the co-trustee, the American Trust and Savings Bank, and

by all the other parties, from the time of the execution of

the mortgage down to the actual filing of the bill in this

case, of plaintiff in error’s right to act as trustee there-

under. It also shows that the claim that the plaintiff in

error has no right to act as trustee was never at any

time made by the Lake Street Company, until long after

the admitted defaults in interest and the service of the

different notices and demands by the bondholders to fore-

close and the statement by the agent cf this plaintiff in

error that it intended to file a bill of foreclosure. There

was no pretense either of any allegation or proof of any

previous demand or request on it to make the deposit. The

first suggestion in the record of any duty on the part of

the plaintiff in error to make the deposit, or that it was

in default in not making it, is found in’ the bill in this

' —7

27

case, filed after the filing of the bill of foreclosure by

plaintiff in error. If the case proceeds in the United

States court, we shall contend that, under these and other

undisputed facts and the rules of law governing the sub-

ject of removal of trustees, no ground was shown for the

removal of plaintiff in error as trustee.

5. Still another question was made, viz., whether the

plaintiff in error was, in fact, doing business in Illinois,

within the meaning of the statute. It was conceded, and

the Supreme Court of Illinois held, that unless it was, it

was not within the requirement. That court, however, a

held that, upon the evidence adduced in the particular

trial, it was doing business; non constat, but that, on :

another trial iv the Federal court, other evidence may be

introduced which will show that plaintiff in error was not :

doing business.

6. Still another question raised, was wiether, ander

any circumstances, the court should enter the decree it did,

enjoining the further prosecution of the foreclosure suit

previously brought and pending in the Federal court, ;

and of which plaintiff in error contends the Feceral court

acquired jurisdiction prior to that of the state court.

We think we might properly close these suggestions at

this point, but inasmuch as counsel for the Lake, Street £

Company have presented a brief of 56 pages upon a mo-

tion to affirm because the appeal is frivolous, and this ¢

brief is supplemented by another brief of 66 pages

for the defendant in error, the American Trust and Sav-

ings Bank, we will add some further suggestions.

As we have before said, the length of argument

deemed necessary by counsel for defendants in error is in

itself a refutation of the allegation of frivolity in taking

i

sepcitean> At TNR PEE SANS TERA LEE ELI EN LOO AL eras. |

CPTI FRR A ITN wae niet Urs 4 : .

ies Rr aa ra

28

this writ of error. On the single question of removal,

counsel themselves state that the state court held the case

not removable, and that the United States Cireuit Court

for the Northern District of Illinois, after full argument,

held the case removable.

Referring to the decision of the state trial court deny-

ing the removal, counsel for the Lake Street Company

say:

‘* The state court passed upon the question as to the

removability of the cause and retained jurisdiction there-

of. * * * It (plaintiff in error) had a full bearing

upon the question, and a judgment and finding was en-

tered by the court upon that question.’’ (Brief, 51-2.)

And both counsel argue that the decision of the United

States Circuit Court, overruling the motions to remand,

and the reasoning on which it was based, was erroneous.

On these facts alone, does not counsel’s charge of friv-

olity fall? Do counsel charge that the United States Cir-

cuit Court referred to made a ridiculous or frivolous de-

cision? Can it fairly be said that, when the state and

United States Courts have taken opposite views of a

question, a party is engaged in a frivolous appeal who

seeks to have reviewed the judgment of either the one or

the other court ?

We can scarcely credit counsel with making this

charge of frivolity in good faith. They would

hardly accuse the United States Circuit Court of

thus rendering a decision that should be _ fittingly

characterized as frivolous.

Viewing the case in this light, we consider that counsel

for defendants in error, by the motions and brief sub-

mitted, have by indirection sought to bring on this case

for final hearing out of its regular crder. For such

29

hearing, no record has been printed. We are not content

to accept the statement of fact made by counsel. — It is in

many places erroneous and misleading. Even the assign-

ments of error have not been printed to show what ques-

tions were raised.

The record is very voluminous, and it is difficult to

approach even a short statement of the case without the

printing required by the practice of the court.

We differ very materially from counsel for defendants

in error in the statement made of the case. We do not

deem it right or proper to bere* discuss the facts of the

case, or the questions on account of which the appeal has

been taken, at the length or in the way which would be

proper in answering the 124 pages of printed matter

which counsel have devoted to the subject, if the case

was now before the court for argument and decision on

the merits.

We deem it proper, however, to present a short state-

ment of the case and of the questions involved, without

discussion, for the purpose of further answering the

charge (if further answer is necessary) that the claim by

plaintiff in error that the case was removed is ‘ friv-

s

olous ** and that the ‘ appeal is taken for delay.”*

The Lake Street Elevated Railroad Company made a

mortgage trust deed to secure an issue of bonds not ex-

ceeding $10,000,000. The trustees named were the

American Trust and Savings Bank and the Farmers’

Loan and Trust Company. The evidence in the record

shows, and it is stated in the briefs of counsel for de-

fendants in error, that the Lake Street Company was un-

able to meet the interest on its bonds. It thereupon pro-

posed a scheme of so-called ‘* re-organization,” whereby,

L gtiag ry SORES GLBTA SALE RE LLL LIE ELLIS LEE SPORTED TREE FSP MONE IF

Py

30

in effect, the first mortgage debt of the company was to

be scaled to 60 per cent. of its face value, an additional

15 per cent. in unsecured non-cumulative income bonds

being also given the bondholders.

The record also shows that, at the time the holders of

the first mortgage bonds were asked to join in this so-

called ** re-organization,’ there was a floating indebted-

ness of nearly $1,000,000. The capital stock of the

company actually issued and outstanding amounted to

$10,000,000. By the proposed plan of so-called ‘ re-or

the holders of this $10,000,000 of stock

were to retain the same control of the company which

ganization,

they had always had. They made no offer either to sur-

render any part of this $10,000,000 of stock for the pur-

pose of issuing preferred stock to the first mortgage

bondholders to the amount they were asked to scale their

murtgage debt, or to advance any money whatever, either

in the payment of the mortgage interest or of any part

of the floating debt. By the proposed so-called ‘+ re-or-

ganization”’ the first’ mortgage indebtedness of this ad-

mittedly insolvent debtor was in effect scaled down 40

per cent. for the benefit of the stockholders in the com-

pany without any return from them whatever. In fact,

by the device of a non-cumulative income bond, the

stockholders were let into possible dividends in preference

to accumulations in interest even on these bonds.

The record shows that the Lake Street Company, or its

principal officers, had secured the ownership or control

of a number of the bonds, and by enlisting the services

of certain brokers and by holding certa'n meetings of the

bondholders, a start was made towards such so called

‘* re-organization,” on the ground that the company was

insolvent and could not pay its bonds or interest. By

31

various means, by defaulting in the interest due, by threats

that no interest at all would be paid to the non-assenting

bondholders (while the assenting bondholders were

promptly paid theirs in the form of interest on debentures,

secured by their bonds), by threats of prolonged litigation,

a large majority of the bondholders were induced to accept

the terms offered them. Some of the circulars leading up to

this were issued and signed by the American Trust and

Savings Bank, one of the trustees. and, as agent for the

disbursement of the interest, it refused to pay interest on

the bonds that would not come into the agreement,

although they were presented at its banking house. The

charge is made, and much evidence adduced in support

thereof, that in this matter the American Trust and Sav-

ings Bank were acting in the interest of the debtor com-

pany and not of the bondholders.

It was required that bonds consenting to the scaling ar-

rangement should be deposited with the Northern Trust

Company as custodian, anda very large majority, cov-

ering all but about $1,000,000 of the bonds were

so deposited with that company. There were $7,500,000

of bonds issued, and about $6,500,000 of them passed

into the hands of the Northern Trust Company. The

evidence shows that the American Trust and Savings

Bank, the Lake Street Company and the Northern Trust

Company were acting in harmony, not only in trying to

complete the scaling arrangement, but in endeavoring

to coerce bondholders to accept the proposition.

The non-assenting bondholders, holding about $1,000, -

000, including Ziegler, who owned $400,000 of the

bonds and many other holders, both in New York and

Chicago, were clamoring for the over-due interest, and

asked both the trustees to bring a suit to enforce the se-

SR pA BS kaha GR OSA LA RRR FO par RA (Ske RP ts

32

curity. And written demands to foreclose were served

on the trustees. Following these demands, a bill was

filed by the Lake Street Company in the state court to

enjoin the holders of 605 of the bonds, joining in the

formal demands, from enforcing the bonds, and an ea parte

injunction was obtained. This suit was removed by the

defendants to the United States Court, and a motion was

then made to dissolve the injunction, which was pending

at the time the present bill was filed.

The record shows repeated conferences between the two

trustees and the Lake Street Company, asa result of which

the American Trust and Saving Bank declared that it would

not bring or join in bringing any suit to enforce the se-

curity. On the other hand, the Farmers’ Loan and Trust

Company came to the conclusion that such a state of facts

was presented as required the submission of the matter toa

court of equity, and that the proper way in which to submit

that question was to file a bill for foreclosure,

At the time the foreclosure bill was filed, two install-

ments of interest (and a third in part) were in arrears.

The bill was so filed at about 10:30 a. M., on January

30, 1896. There were included as defendants to

it the Luke Street Company, the Northern Trust

Company, the American Trust and Savings Bank as

a refusing trustee, and several other companies which

had acquired rights to the mortgaged property by

grants from the Lake Street Company, subsequent to the

mortgage. On February Ist, several of these material

parties, including the American Trust and Savings Bank,

entered an appearance to the foreclosure Inill. All the

defendants appeared voluntarily, except the Lake Street

Company, which was served on February Isth.

We contend that by the filing of the bill, which con

33

tained a prayer for foreclosure, and a prayer, founded on

a stipulation of the mortgage, that the court should take

possession of the property by means of a receiver, the

right of the United States court to proceed with the fore-

closure suit in an orderly manner became perfected, and

that jurisdiction was certainly made complete by the vol-

untary appearance of some of the most material defend -

ants on February Ist.

The record shows that on January 30, 1896, within an

hour after the foreclosure bill was filed in the Federal

court, the suit now before the court was started in the

state court, and an er parte injunction obtained against

the further prosecution of the foreclosure suit, already

begun in the United States court. The complainant is

the Lake Street Elevated Railroad Company, and the de-

fendants are the two trustees and the Northorn Trust

Company. The prayer of the bill is to enjoin the bring-

ing of any suit, or prosecuting the suit already brought

to foreclose the mortgage and to remove the trastee.

The record also shows that there was no previous re-

quest on plaintiff in error to make the deposit required

by the Ilinois act of 1887, and that plaintiff in error

had been continuously recognized as trustee by the Lake

Street Company, the American Trust and Savings Bank,

and by all other parties, by correspondence and other

acts from the time of the execution of the mortgage

down to the actual filing of the bill in this case.

Even in the view that the merits of the questions in-

volved in reviewing the decision of the state court are

before the court on this motion, there is but one of these

questions which can be even discussed by reason of the

failure to print the parts of the record necessary.

Pets Ast hetwe ee SL

oP ren ran ll a EF cen ON

34

The single point on which the State Supreme Court

based its decision that the case was not removed—that the

bond was insuflicient—admits of discussion, for the reason

that the bond is printed in full in the brief for the Lake

Street Company. (See pp. 10-11.)

The sole ground on which the Supreme Court of Ili-

nois based its decision that the case was not removed,

was that the bond for removal, s gned hy two persons,

was not x/gued by the petitioner, and this, too, in face

of the fact that it appeared by the record that, before

the heaving below, the petitioner had in fact complied with

the condition of the bond by filing the record in the Fed-

eral court, and that, therefore, the sole purpose of requir-

ing the bond had been fulfilled,

And as further illustrating the narrowness of the

ground on which the decision was based, we have the fact

that, under the express decisions of this court, the giving

of the bond is one of the requirements of the removal act

which is held to be purely ‘*modal and formal’’ and

which may, therefore, be cured by amendment in the

United States Cireuit Court, and may a/so be waived by

not raising the objection. (Ayers v. Watson, 113 U. 8.,

598. )

In addition to this, the state court had before it, the

further fact that, after the docketing of the case in the

United States court, a motion to remand had been made

by the complainant in the case, and that an order had

been entered overruling this motion.

Not only, therefore, had the sole purpose of requiring

the bond heen actually fulfilled, to the knowledge of the

state court, but the precise question as to the bond had

been in effect passed on by the Federal court on the mo-

35

tion of the complainant before the hearing of the case,

and that court had decided that it acquired jurisdiction,

notwithstanding the alleged objection to the bond.

Furthermore, even on the assumption that technically

the law required the petitioner to ségn the bond, when the

Federal court had before it the fact that the case had been

actually docketed, it could not have properly ruled other-

wise on the motion to remand, both for the reason that

the condition of the bond had been fulfilled, and the

further reason that, the requirements being ‘* modal and

formal,”’ it would be its duty to permit an amendment to

the bond rather than remand the case,

Again, the record does not show that any objection was

wade in the state court to the sufficiency of the bond,

and this being so, the Federal court bad the right to re-

fuse to remand for the alleged insufficiency of the bond

on that ground also.

Ayers vy. Watson, 113 U.S. ,598, and eases

cited.

It isa fair presumption that if, in the opinion of the

State Supreme Court, there was any more substantial

ground for denying the jurisdiction of the Federal court,

notwithstanding the order of the Federal court overruling

the motion to remand and the other facts before it,

than the narrow one on which it decided that the case

was not removed, ete., it would have based its decision

on that ground.

And it would) seem clear that, if it can be estab-

lished that this, the sole ground of the decision

of the state court, is erroneous, it would be a sufficient

reason, in any view, for overruling the motion to affirm,

leaviag any other objections to the jurisdiction, not re-

36

ferred to in the opinion of the State Supreme court, to

be presented and considered on the final argument.

The ruling of the State Supreme Court that the juris-

diction of the Federal court is defeated by the alleged de-

fect in the bond rests on a narrow and technical construc-

tion of the removal act, and is contrary to repeated express

decisions of different Federal courts, and the construction

given to the act by every Federal decision on the subject

and by every text writer on removal or Federal practice.

The removal act provides (Sec. 3) that the party

petitioning for removal ‘+ sha// make and pile,”

‘© A bond with good and sufficient surety, for bis or

their entering in such Circuit Court, on the first day of

its then next session, a copy of the record in such suit,

and for paying all costs that may be awarded, etc.”

This section, it will be observed, does not require that

the party petitioning for a removal shall s/gv the bond.

And as the only object of requiring the bond is

to furnish indemnity to the party against whom a removal

is sought, that object is fully accomplished by giving it

the construction of which the language is clearly capable,

viz: that as the petitioner presents the bond for the pur-

pose of indemnifying the opposite party, then, if it con-

stitutes sufficient indemnity, he ‘* makes and files”? the

hond in law, although he has not signed it.

Such is the common-sense view of the provision in ques-

tion, which was, in 1881, adopted by Mr. Justice

BLaTCHFORD in Stevens v. Richardson, 20 Blatehf., 53,

and in 1883 by Judge Drummonp in Public Grain and

Stock Exchange vy. W. U. Tel. Co., 11 Biss., 568.

And the construction given to the statute in these decis-

ions by Mr. Justice BLATCHFORD and Judge DRUMMOND

eS

37

has been regarded by all the text-writers as the proper

construction.

And this construction is in accordance with the con-

struction given by this court to the act of Congress (Rev.

Stats., sec. 1000) providing for bonds on writs of error

from this court.

See

Brochett v. Brochett, 2 How., 238.

Seruggs v. R. R. Co., 181 U. S.: Appen-

dix, eciv.

In Stevens v. Richardson, 20 Blatebf., 53, supra,

(1881), in denying a motion to remand where the bond

was not signed by the petitioner, Mr. Justice BLatcu-

FORD said :

‘+ The plaintiff contends that, as section 3 of the act of

1875 says that the petitioner for removal is to ‘make and

file’ the bond, the bond is void and the removal invalid.

This objection is not tenable. The statute is satisfied, as

to the bond, if a bond with sufficient surety is filed. The

petitioner for removal makes the bond, in the sense of the

statute, if he offers it to the court as the bond required.

By section 639 of -the revised statutes, he was required

to offer good and sufficient security. Theact of 1875 means

no more.”’

In Public Grain & Stock Exchange v. W. U. Tel. Co.,

11 Biss., 568, supra (1883), on a motion to remand, it

was contended that the case must be remanded, because

the bond was not executed by the party seeking the re-

moval.

In overruling this contention, Judge DruMMoND said :

‘The objection taken to the bond is, that it was not

signed by the party. The language of the statute is, that

the party seeking to remove shall ‘ make and file? a bond.

It issimply for indemnity to the party--as security that

there shall be entered in the Circuit Court of the United

PRM GAS OREM RAD MOON Sate eI RE EET re ae Oe |

38

States, on the first day of its then next session, a copy of

the record, and to pay all costs that may be awarded by

the Circuit Court, if that court shall hold that the suit

was wrongfully or improperly removed. No objection is

taken to the sufficiency of the bond, or to the responsi-

hility of the principal or the surety. /f will be observed

that the statute does not declare that the party — sign

the bond, but only shall make the bond. *

It seems to me that, where the bond is saianiiel by the

party who seeks the removal, although he may not bave

signed it, but it is signed by others, ‘that it may be said

he makes and files it, “because he presents it for the pur-

pose of indemnifying the opposite party, and, if it con-

stitutes ample indemnity for that purpose, then — he

makes and files the bond in’ law, although he has not

signed it. When a case is taken to the Supreme Court of

the United States from the Cireuit Court, on appeal or

writ of error, it has never been supposed necessary that

the party, although required to give the security, should

sign the bond, but it has been considered sufficient pro-

vided a proper bond of indemnity is given by other per-

sons, I think, therefore, that the objection taken to the

bond is untenable.

It will be seen that by this express and well-considered

decision by Judge DrumMMonp, then United States Circuit

Judge, which has never been overruled, the construction

of the statute, which was followed and acted upon in draw-

ing the bond in this case, was established as the proper

construction in the Cireuit in which this petition and bond

were presented.

The decisions to which we have referred, have been

considered by all the text writers as settling the law on

this subject

In Dillon on Removal of Causes (4th Edo), see. 74,

note (4), svpra, Judge DILLON says :

‘*The bond is not required to be executed by the peti-

tioner, himself, if it be executed by sufficient sureties,”

citing Stevens v. Richardson, 20 Blatebf.. O35, SUprd,

per SUN io te ek 2 , Potads ere t AE ART. Op SESE, ARLES TRILL

39 4

In 2 Foster's Federal Practice, Sec. 3854, supra, the 4

author says: a

‘©The bond need not be executed by the petitioner if :

it have a principal and sufficient surety ”’ citing Stevens ‘

v. Richardson, 9 F. R., 191, supra, and Public Grain & :

Stock Exchange v. W. U0. Tel. Co., 11 Bis., 568, supra. 4

‘

In Desty on Removal (4th Ed.), sec. L060, supra, it

is said : ‘

‘The bond required for the removal of a suit from a :

state to a Federal court need not be signed by the appli- ‘

cant for removal if signed by others, named therein as f

principal and surety, or by sufficient sureties,’’ citing :

Pablic Grain & Stock Exchange Vv. W. 0. Tel. Co., 16 %

Fed. Rep., 289, supra, and Stecens vy. Richardson, 20 :

Blatchf., 53, supra, £

&

The State Supreme Court’s opinion, holding a different :

view from the foregoing authorities, is based solely on two F

previous decisions by the same court, both of which, it ‘

will be found on examination of the facts, were in fact 4

“

dicta, and that court wholly ignored (making no reference é

to them) both the Federal decisions and the text writers ¢

sustaining the contrary construction. f

On the merits of the case, we assert the following 3

a R ps &

propositions, all of which are presented by our assign- 3

ments of error: :

1. That in the view that the case only involved a 2

single controversy, the defendants in error, the American

Trust and Savings Bank,and the Northern Trust Company, 3

+ ae a &

were not indispensable or even necessary parties to the con- a

troversy, and, if they were, they should not be ranged on H

the same side of the controversy with the plaintiff in H

error, and for that reason the case was properly removed

to the United States court. f

'

SERA DION ILE ILENE pesca. |

I SORA I ET

40

2. That there were in fact two or more separable con-

troversies, which could be fully determined as between

the complainant, the Lake Street Company, and the de-

fendant, the Farmers’ Loan and Trust Company, plaintiff

in error here, citizens of different states, without the

presence of the other defendants, the American Trust and

Savings Bank and the Northern Trust Company.

3. The bill was brought for the purpose of enjvining,

by an injunction issued out of the state court, the further

prosecution in a court of the United States of a suit

previously brought in that court by the plaintiff in error,

under the authority of the constitution and the laws of

the United States, and therefore involved a Federal

question, entitling the plaintiff in error to remove the

case to the United States court.

4. The decision of the United States court on the

motions to remand was an adjudication of the Federal

question as to whether the cause was removed to the

United States court, made on the motions of defendants

in error submitting the question to that court for its de-

cision, and the state court erred in proceeding further in

the case after that) adjudication had been brought before

it by proper pleadings and proofs, and the action of the

State Supreme Court in holding that the trial court there-

after properly proceeded in the case is reviewable in this

court by writ of error.

5. The decree of the state trial court, perpetually en-

joining the further prosecution of the foreclosure suit

pending in the United States court, and of which that

court had acquired jurisdiction before the filing of the bill

in this case, was without jurisdiction, and in violation of

the right of the plaintiff in error, under the constitution

and laws of the United States, to bring and prosecute the

a ks Aha es set 3 & Spi) Pe te 7 PS GATE AAIS ET 0 D AE

—

+1

é

(

:

e

suit in the courts of the United States, and the action of

Py.

the State Supreme Court, affirming the decree, Is review -

met

ri

able in this coart by writ of error.

8 YR

It will be seen that, if any one of these five proposi-

RMA Te

tions is established, it will entitle plaintiff in error to a

reversal of the case, with the proper directions to the

state court.

AaB UME RATA

All of these propositions, the briefs of counsel for de-

fendants in error assume to be involved in the record,

and are controverted by them in different forms by ex-

tended arguments and the elaborate citation of authori-

ties.

It is manifest that the discussion by us of these propo-

sitions would involve reference to, and the consideration

of, different parts of the record (as their discussion

by counsel for defendants in error has), including the as-

signments of error, the original bill, the petition for re-

moval, the answers of the different parties, the record of

the proceedings in the United States court, the final de-

cree, ete., none of which have been printed. It would also ‘

involve the presentation of the different arguments, the

citation of the authorities on which we rely to sustain them.

as well as the discussion and analysis of the arguments

| advanced by defendants in error, and the great number

. of authorities, cited by them in the 12+ pages of printed

| matter they have submitted, including the correction of

their statements of the different parts of the record not

printed. This it would be manifestly impossible for us

to do on the motions as presented, for the reason that no

part of the record has been printed, and that even such

extracts as are made in the briefs of counsel are fragmen-

tary. the principal parts of the record relied on being

stated by counsel according to their construction of them

and not quoted.

42

In view, also, of the character of the questions in-

volved, and what we regard us the decisive reasons for

our contention that the merits are not properly before the

court on this motion, we regard it as wholly improper to

submit to the court on these motions the full brief and

argument we think necessary to properly present the

propositions on which we rely on the merits of the case.

Herbert B. Turner,

WiLuiaM Burry,

Joun J. Herrick,

Solicitors for Plaintiff in: Ervor.

43

APPENDIX.

‘‘An Act to amend section six (6) of an act entitled

‘An act to amend sections one (1), two (2), six (6) and

sixteen (16) of an act entitled ‘ An act to provide for and

regulate the administration of trasts by trust companies, ”’

approved June 1, 1889. Appoved May 7, 1897. In

force July 1, 1897.’

‘* Section 1. Be /t enacted by the People of the State

of Illinois, represented in the General Assembly. That

section six (6) of an act entitled ‘An act to amend sec-

tion one (1) two (2), six (6) and sixteen (16) of

aunact entitled ‘*An act to provide for and regulate

the administration of trusts by trast companies,’’* ap-

proved June 1, 1889, be and the same is hereby amended

so as to read as follows:

134. Corporation TO Deposit witH AUpITOR.] See.

6. Each company in all cities and towns of 100,000 in-

habitants, or more, before accepting any such appoint-

ment or deposit, shall deposit with the auditor of public

accounts the sam of $200,000, and each company in all

cities and towns of less than 100,000 inhabitants shall

deposit with the auditor of public accounts the sum of

$50,000, said deposits to be for the benefit of the credit-

ors of said company, and to consist of bonds of the United

States or municipal bonds of this state, or in mortgages

on improved and productive real estate in this state, be-

ing first liens thereon, and the real estate being worth at

least twice the amount loaned thereon. Bonds and se-

curites so deposited may be exchanged from time to time

for other securities receivable as aforesaid. Said bonds

of the United States or municipal bonds of this state to

be registered in the name of said auditor officially, and

all said securities to he subject to sale and transfer aud

to the disposal of the proceeds by said auditor only on

the order of a court of competent jurisdiction, and as

hereinafter provided in section 18. So long as the com-

pany so depositing shall continue solvent such company

44

shal] be permitted to receive from said auditor the inter-

est or dividends on said deposit.

PROVIDED, HOWEVER, that when it shall appear to the

auditor of public accounts from the annual report of any

such company that the value of the personal property

and cash held and possessed by such company by virtue

of the provisions of this act, and any amendment thereof,

exceeds ten times the amount of the deposit aforesaid, he

shall require said company, if in cities or towns of

100,000 inhabitants or more, to forthwith increase said

deposit to the sum of $500,000 in such securities, and in

all cities and towns of less than 100,000 inhabitants, to

forthwith increase its said deposit to the sum of $125,000

in such securities. And whenever it shall appear to the

auditor of public accounts that the amount of personal

property and cash so held by any such company has

heen reduced below ten times the value of its original de-

posit above provided for, and said company is not in any

default in its duties and obligations hereunder, he shall

allow such company to reduce its said deposits to the sum

originally required in this section by the withdrawal of

such additional deposits until such time as an inerease in

its holdings shall again require an additional deposit as

hereinbefore provided. But th/s act shall not apply to

taking or accepting mortgages or trust deeds to secure

bonds or money loaned.”