Troy Bank of Troy, Ind. v. Whitehead

Decision Date28 December 1910
PartiesTROY BANK OF TROY, IND., et al. v. WHITEHEAD et al.
CourtU.S. District Court — Western District of Kentucky

George W. Jolly, for complainants.

J. D Atchison, for defendants.

EVANS District Judge.

It appears from the bill that on July 18, 1908, one Henry W Eigenmann and wife by deed conveyed to G. A. Whitehead certain lands in Owensboro, Ky., in consideration: First, of $3,600, which the grantee assumed to pay upon an indebtedness of the grantor to the Owensboro Planing Mill Company, and which was secured by a previously created and then existing vendor's lien on the property; and, second, of $2,400 which latter sum was evidenced by two promissory notes executed by Whitehead to Eigenmann for $1,200 each, one payable 12 months after date and the other 24 months after date. Subsequently Whitehead and his wife conveyed the lands to the defendant corporation. The bill of complaint gives no intimation as to whether the previous lien for $3,600 has been discharged, nor, if it has not, why the Owensboro Planing Mill Company was not made a party to the action, so that the existence and amount of that lien might be ascertained, and, if desired, a sale made subject thereto. The note due at 12 months was discounted by and transferred to complainant the Troy Bank, and the other note was assigned to complainant Biedenkopf, and the two present owners of the notes have joined as complainants in this action and seek an enforcement of the vendor's lien reserved in the deed to Whitehead to secure the payment of the notes. The complainants also ask 'for a judgment against defendant Whitehead for the same if necessary.'

The corporation defendant, G. A. Whitehead & Co., has filed a demurrer to the bill, whereby three distinct objections are taken to the jurisdiction of the court. They are:

First. That it does not appear, upon the face of the bill, and it is not shown, that the matter in dispute exceeds, exclusive of interest and costs, the sum or value of $2,000.

Second. That it does appear upon the face of the bill that this court has no jurisdiction of the action in that the complainant Biedenkopf sues upon a separate and distinct note for $1,200 and no more, and that the complainant the Troy Bank sues upon another separate and distinct obligation for $1,200 and no more, and that separate decrees are prayed in their favor respectively, and that they have no joint interest in the two notes.

Before noticing the third ground of demurrer, it will be convenient to dispose of the first two, which may be treated together, as they depend largely, if not altogether, upon the same considerations.

Section 1 of the judiciary act (Act March 3, 1875, c. 137, 18 Stat. 470 (U.S. Comp. St. 1901, p. 508)) provides:

'That the Circuit Courts of the United States shall have original jurisdiction * * * of all suits of a civil nature at common law or in equity where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars, and * * * in which there shall be a controversy between citizens of different states in which the matter in dispute exceeds' the sum or value aforesaid.

Here the complainants being citizens of Indiana and the defendants citizens of Kentucky, and the amount in dispute (which means the amount claimed in the bill) obviously exceeding $2,000 exclusive of interest and costs, the two statutory prerequisites to the jurisdiction of this court are met, provided the claims of the complainants can be united so as to make up the amount in dispute. Whether, in order to maintain the jurisdiction of the court in this case, we are at liberty to add together the separate claims of the complainants, has been the subject of very industrious research and careful consideration.

Undoubtedly, unless the limited jurisdiction of the federal courts prevents, the proper practice would be for both holders of the two promissory notes to join in the suit to enforce a lien in which, obviously, they have a common and an equal interest. 9 Encyclopedia of Pleading & Practice, 268-271. In no jurisdiction, probably, could the holder of either of the notes enforce his lien without making the holder of the other note a party to any suit filed for that purpose. Indeed, each of the equal beneficiaries of the lien would be an indispensable party to the suit. If the holder of one of the notes sued and made the holder of the other note a defendant, the latter, by a cross-bill, could join in a prayer for the appropriate relief. In this instance the vendor's lien was properly created under the law of Kentucky by the terms of the deed to Whitehead. That lien secured both notes-- one as much as the other-- and, when the vendor assigned the notes and passed the title to one of them to the plaintiff bank and the title to the other of them to plaintiff Biedenkopf, the lien also thereby passed to the new holders of the notes, though the indebtedness continued to be the principal thing to which the lien was an incident. The title to one note passed altogether to the bank. The title to the other passed to Biedenkopf alone. Neither of them has any interest in the note not owned by him nor any interest in the money to be collected upon it. In other words, neither plaintiff either has or claims to have any interest in that part of the purchase money which must go to the other, though each has an equal interest in the incident-- the lien.

Is the latter a joint interest or right sufficient to support the jurisdiction, is the question upon which the learned counsel have presented two separate lines of cases, many of which, in terms, relate to the appellate jurisdiction of the Supreme Court, but by analogy they indicate the rules for construing those provisions of the judiciary act which fix the limits of the jurisdiction of the Circuit Courts. The first line (as we shall call it) of such cases is relied upon by the complainants in support of the jurisdiction, while the second of them is advanced in opposition thereto. Our effort has been to find the test by which to determine in which line this case should be placed. There could be no doubt of the jurisdiction if a trustee in whom the right to the lien had vested for the security of both notes had sued, for in that event his suit would have put the entire indebtedness, thus secured, in litigation. Freeman v. Dawson, 110 U.S. 264, 4 Sup.Ct. 94, 28 L.Ed. 141; New Orleans, etc., Ry. v. Parker, 143 U.S. 50, 12 Sup.Ct. 364, 36 L.Ed. 66. Nor would there be any doubt in a case where one tax had been levied for the payment of several demands which in the aggregate exceed $2,000. Davies v. Corbin, 112 U.S. 36, 5 Sup.Ct. 4, 28 L.Ed. 627. Equally the jurisdiction could be maintained if the entire estate of a decedent were sued for. Nor would this be affected by the fact that when that entire estate should be recovered it would have to be divided among heirs whose individual shares would be less than $2,000. Overby v. Gordon, 177 U.S. 214, 20 Sup.Ct. 603, 44 L.Ed. 741.

In McDaniel v. Traylor, 196 U.S. 415, 25 Sup.Ct. 369, 49 L.Ed. 533, the relief sought was the removal of a cloud upon the title to all the real estate of a decedent. The heirs at law were permitted to unite their undivided interests, though that of neither would separately exceed in value $2,000. The one title was to be cleared.

In Marshall v. Holmes, 141 U.S. 589, 12 Sup.Ct. 62, 35 L.Ed. 870, it was held that as the several judgments at law obtained in a state court, and which were sought to be enjoined as having been wrongfully obtained, were held in the same right and against the same person, and as their validity depended upon the same facts, the plaintiffs in said judgments might be united as defendants in one bill, although no judgment separately was for the jurisdictional amount. The fact was emphasized that the cases at law were practically one case, as all the plaintiffs in them had agreed to abide by the judgment in one of them.

In The Connemara, 103 U.S. 754, 26 L.Ed. 322, joint claimants of a single salvage united in an action for its recovery, and were decreed $5,000. The jurisdiction was upheld, though the individual share of no one claimant, when the sum was divided by the decree, was sufficient in amount to have given the Circuit Court jurisdiction. In its opinion the court very significantly said that the claimants when suing had a common and undivided interest, and that it was immaterial to the other side how the entire fund was to be shared among the claimants after it was obtained.

There are many other cases to the same effect, but we will only notice the two which appear to come most nearly to complainant's contention. In Clay v. Field, 138 U.S.at page 479, 11 Sup.Ct.at page 425 (34 L.Ed. 1044), after alluding to several cases directly and to others incidentally, the court stated the rule by which that and similar cases should be governed, as follows:

'The general principle observed in all is that if several persons be joined in a suit in equity or admiralty, and have a common and undivided interest, though separable as between themselves, the amount of their joint claim or liability will be the test of jurisdiction; but where their interests are distinct, and they are joined for the sake of convenience only, and because they form a class of parties whose rights or liabilities arose out of the same transaction, or have relation to a common fund or mass of property sought to be administered, such distinct demands or liabilities cannot be aggregated together for the purpose of giving this court jurisdiction by appeal, but each must stand or fall by itself alone. The principal cases in which the interest has been deemed common and undivided, and appeals have been sustained, are
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