160 U.S. 556 (1896), 627, Missouri Pacific Railway Company v. Fitzgerald

Docket Nº:No. 627
Citation:160 U.S. 556, 16 S.Ct. 389, 40 L.Ed. 536
Party Name:Missouri Pacific Railway Company v. Fitzgerald
Case Date:January 13, 1896
Court:United States Supreme Court

Page 556

160 U.S. 556 (1896)

16 S.Ct. 389, 40 L.Ed. 536

Missouri Pacific Railway Company



No. 627

United States Supreme Court

January 13, 1896

Submitted December 9, 1895




The decision of the Supreme Court of Nebraska that the Missouri Pacific company could not maintain its claim for damages because its possession had not been disturbed or its title questioned involved no federal question, and where a decision of a state court thus rests on independent ground not involving a federal question and broad enough to maintain the judgment, the writ of error will be dismissed by this Court without considering any federal question that may also have been presented.

Page 557

In deciding adversely to the claim of the plaintiff in error that, by reason of the process of garnishment in attachment against the Missouri Pacific company in the action removed to the circuit court from the state court, the circuit court acquired exclusive jurisdiction over the moneys due the Construction company from the Pacific company, the Supreme Court of Nebraska did not so pass upon a federal question as to furnish ground for the interposition of this Court.

In appointing a receiver of the Construction company to collect the amount of the decree against the Missouri Pacific company, the Supreme Court of Nebraska denied no federal right of the Missouri Pacific company.

When a party to an action in a state court moves there for its removal to the circuit court of the United States, and the motion is denied, and the party nevertheless files the record in the circuit court, and the circuit court proceeds to final hearing, (the state court meanwhile suspending all action) and remands the case to the state court, the order refusing the removal worked no prejudice, and the error, in that regard, if any, was immaterial.

An order of the Circuit Court remanding a cause cannot be reviewed in this Court by any direct proceeding for that purpose.

If a state court proceeds to judgment in a cause notwithstanding an application for removal, its ruling in retaining the case will be reviewable here after final judgment under Rev.Stat. § 709.

If a case be removed to the circuit court and a motion to remand be made and denied, then, after final judgment, the action of the circuit court in refusing to remand may be reviewed here on error or appeal.

If the circuit court and the state court go to judgment, respectively, each judgment is open to revision in the appropriate mode.

If the circuit court remands a cause and the state court thereupon proceeds to final judgment, the action of the circuit court is not reviewable on writ of error to such judgment.

A state court cannot be held to have decided against a federal right when it is the circuit court, and not the state court, which has denied its possession.

[16 S.Ct. 389] This was a petition filed December 24, 1888, in the District Court for Lancaster County, Nebraska, by John Fitzgerald, suing on behalf of himself and all other stockholders of the Fitzgerald & Mallory Construction Company against that company and the Missouri Pacific Railway Company, a corporation organized under the laws of Missouri, Kansas, and Nebraska. The petition was based on two contracts (copies of which were annexed), one bearing date April 28, 1886, between the Fitzgerald and Mallory Construction Company and the Denver, Memphis and Atlantic Railway Company, a corporation

Page 558

organized under the laws of the State of Kansas. By this contract, the Construction Company agreed to build a railroad in Kansas from the east to the west line of that state; to furnish all materials and money; to equip the same with at least one thousand dollars of rolling stock per mile; to grade the line according to the engineer's surveys; to furnish oak ties on curves, not less than 2,600 to the mile, and steel rails not less than twenty-six pounds to the yard; to build such depot and stations as the Denver Company should require, and all necessary sidings or turnouts, and, generally, to construct the road equal to railroads then being built in Southern Kansas. The Denver Company agreed to pay $16,000 per mile of its full-paid capital stock for every mile of completed road constructed, and $16,000 in its first mortgage bonds per mile of single track of the road which bonds were each to be for one thousand dollars, or such other denomination as the parties should agree upon, draw interest at six percent, be dated July 1, 1886, run thirty years from date, and be secured by a trust deed on the line and branches. They were to be delivered as the Construction Company required them. The Denver Company was also to deliver to the Construction Company all municipal and county bonds voted and to be voted in aid of the railroad and all donations thereto and procure the right of way in advance of the work, so as not to delay the construction, but the Construction Company was to pay for the right of way.

The other contract, dated May 4, 1886, was between the Missouri Pacific Railway Company and the Construction Company. It recited the contract of April 28th and also that the Missouri Pacific Company desired to obtain control of the railway. The Construction Company agreed to sell to the Missouri Pacific Company all the securities which it should receive under the first contract, for which the Missouri Pacific Company was to deliver to it five percent bonds at the rate of $12,000 per mile of completed road. The Missouri Pacific Company also agreed to transport at cost the men and material of the Construction Company while it was carrying on the work.

The petition alleged that the Construction Company was a

Page 559

corporation of Iowa, having a capital of a million and a half, divided into shares of one hundred dollars each, of which Fitzgerald held fifteen hundred, S. H. Mallory fifteen hundred, and Gould and other citizens of New York something over ten thousand; that the holders of over eight thousand shares were officers and directors of the Missouri Pacific Company, and that the bankers of the latter company held two thousand shares. It was further alleged that shortly after the execution of the two contracts, all the directors of the Denver Company except Fitzgerald and Mallory resigned, and their places were filled by officers and directors of the Missouri Pacific Company; that the directory of the Construction Company was changed so that of its five directors three were connected with the Missouri Pacific Company, Fitzgerald and Mallory being the other two. The work in the field was carried on by Fitzgerald and Mallory, and the financial dealings of the Denver and the Construction Companies were in the hands of the New York directors. Fitzgerald complained of many transactions of the New York directors of the Construction Company which were prejudicial to himself and other creditors and stockholders and in the interest of the Missouri Pacific Company.

The road was built by the Construction Company, and Fitzgerald alleged that after that was accomplished, he made efforts to secure an accounting between the Missouri Pacific and the Construction Companies which were unsuccessful, and he brought the suit as a stockholder for the purpose of settling the dealings between the two companies.

The petition also averred that the Denver Company failed to comply with the provisions of the contract in reference to procuring the right of way, to the damage of the Construction Company, for which it charged that the Missouri Pacific Company was liable.

It was also alleged that the Construction Company not only owed Fitzgerald individually a large amount of money, but for money expended in the bringing of this as well as other suits, for attorney's fees, and other like matters, for which he asked reimbursement.

Page 560

The prayer of the petition was that an accounting be had between the Missouri Pacific Company and the Construction Company; that certain action of the board of directors and arrangements between the Missouri Pacific Company and the Construction Company be declared null and void; that the Missouri Pacific Company be compelled to account in relation to certain enumerated matters and generally, and pay over all moneys found due to the Construction Company; also that complainant

be reimbursed for all expenses and attorneys' fees in other suits that he has been forced by the action of said directors to commence, as well as in this case,

and for general relief.

The answer of the Missouri Pacific Company was filed January 19, 1889, and admitted that defendant was a corporation duly organized under the laws of Missouri, Kansas, and Nebraska, but averred that the liability proceeded on, if any, was a liability of the company incorporated under the laws of the State of Kansas. It charged that while the contract between the Denver and Construction Companies required the Denver Company to acquire the right of way, the Construction Company undertook to procure it, and became responsible to the Missouri Pacific Company for a good title; that some fifteen or more miles of the railroad were built over the public lands without complying with the act of Congress of March 3, 1875, granting to railroads the right of way through the public lands, so that for that distance of road, the Missouri Pacific Company did not acquire such title as it was entitled to, and it claimed that if there should be an accounting between the Construction Company and itself, it should not be required to pay or account for any portion of the line where the lawful right of way had not been secured, and that a deduction of twelve thousand dollars per mile of railroad so situated should be made...

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