Adams v. Shirk

• Decision Date: 06 May 1902
• Docket Number: 833.
• Parties: ADAMS v. SHIRK et al.
• Court: U.S. Court of Appeals — Seventh Circuit

117 F. 801

ADAMS v. SHIRK et al.

No. 833.

United States Court of Appeals, Seventh Circuit.

May 6, 1902

William Burry, for plaintiff in error.

Frederic Ullmann, for defendants in error.

In March, 1891, Smith took a 99-year lease of certain real estate in Chicago from Elbert W. Shirk, in whose name the legal title then stood. The lessee agreed to pay rent, taxes special assessments, and insurance. The lease contained covenants that the lessee would not assign without the written consent of the lessor; that, if an assignment were made, it should be evidenced by an instrument in writing containing a clause sufficient in law to the effect that the assignee personally accepts and assumes all the terms covenants, and agreements in the lease, and will personally comply with and be bound by them; and that the lessor might declare a forfeiture for breach of any of the lessee's covenants. In December, 1895, Smith assigned the unexpired term to Adams, plaintiff in error. The assignee was evidenced by a written instrument executed by Smith and Adams, which contained the clause provided for in the lease, whereby Adams assumed all the terms, covenants, and agreements in the lease, whereby Adams assumed all the terms, covenants, and agreements in the lease, and agreed personally to comply with and be bound by them. A written consent to the assignment was indorsed thereon, signed by Elbert W. Shirk, Milton Shirk and Alice S. Edwards. Under these writings Adams entered and retained possession until February, 1897, when he assigned the unexpired term to Petterson. In March, 1891, when the lease was made, the realty was under mortgage, which was paid off in April, 1895. In November, 1891, Elbert W. Shirk conveyed an undivided one-third interest in the realty to his mother, Mary Shirk, an undivided two-ninths interest to his brother, Milton Shirk, and a like interest to his sister, Alice S. Edwards. This was in fulfillment of the purpose of the purchase, in which he acted for himself and his relatives named, but there was nothing in the deed to him to indicate that others were interested in the purchase. Mary Shirk died testate in August, 1894. By her will she gave and devised all her estate, real and personal, to her three children named, as trustees, to pay debts and legacies, and to hold the residue intact as one fund, the income of which should belong to the three children for their own use, until the expiration of the trust on the death of the last survivor, when the principal should be divided per stirpes among their children then living. The will also gave the trustees full power to sell, convey, and rent real estate in which the testatrix had any interest, and to deal with her business interests at their discretion. When the lease was made, the Illinois statute authorized 8 per cent. interest, which was reserved in the lease upon delinquent installments of rent, and upon taxes, special assessments, and insurance paid by the lessor. The maximum legal rate had been reduced to 7 per cent. prior to the assignment from Smith to Adams. In July, 1899, prior to the commencement of this action, Adams procured from Smith a written release of the obligations Adams had assumed in the assignment from Smith to him. The defendants in error, Elbert W. Shirk, Milton Shirk, and Alice S. Edwards, personally and as trustees under the will of Mary Shirk, refused to recognize the assignment from Adams to Petterson; and, as citizens of Indiana, they brought this action in assumpsit to recover from Adams, a citizen of Illinois, for delinquent rent accruing in 1898 and the first quarter of 1899, and also for taxes and special assessments paid by them, together with 8 per cent. interest thereon. Adams filed pleas of the general issue, of usury, and of want of jurisdiction, on the ground that Elbert W. Shirk was a citizen of Illinois. The replication was a general denial of the special pleas. There was no conflict in the evidence. The facts hereinbefore stated were proven. Respecting Elbert W. Shirk's citizenship, he testified as a witness for defendants in error substantially as follows: 'Prior to 1896 I resided in Chicago.

Since that year my residence has been, and now is, at Indianapolis, Indiana. I live at 439 Pennsylvania street in Indianapolis. I have an office in Chicago. I belong to two clubs in Chicago, and, although I am a nonresident member, I pay the dues of a resident member. At one of the clubs I have a room, and have had for some time. My wife is now in California with her mother. I was in Europe last summer, and always registered as being from Indianapolis. ' No other evidence on the subject was introduced or offered by either party.

Defendants in error had a verdict and judgment for the amount of delinquent rent, taxes, and special assessments set up in the declaration, together with 8 per cent. interest thereon. Motions for a new trial and in arrest of judgment were overruled. Under his 48 specifications of error, based on various adverse rulings to which exceptions were duly reserved, plaintiff in error presents contentions which may be grouped thus: (1) The citizenship of Elbert W. Shirk was in issue, and was not proven to be such as to give the court jurisdiction. (2) When the lease was made, Elbert W. Shirk owned only the equity of redemption. The legal title was in the mortgagee, Shirk, therefore, did not have such an estate in the land as authorized him to reserve the covenant not to assign without written consent. (3) By his conveyance to his mother, brother, and sister, Elbert W. Shirk severed the reversion and destroyed the covenant not to assign. The covenant, therefore, was not operative when Smith assigned to Adams, and Adams to Peterson. (4) The written consent to the assignment from Smith to Adams was not sufficient. The restriction was therefore waived. (5) Adams took the leasehold by privity of estate only. There never was any privity of contract between him and defendants in error. His assignment to Petterson in 1897 broke the privity of estate, and he was not liable for rents accruing thereafter. (6) Adams's covenants in the assignment from Smith to himself were for the benefit of Smith. Defendants in error were not parties to those covenants. Therefore Smith's release of Adams, made before this action was commenced, was a bar. (7) Adams's contract of assumption was usurious. (8) This action was not maintainable on the law side of the court. Defendants in error claim that all of these questions, except the first, sixth, and seventh, are res adjudicata by the decision of this court in Adams v. Shirk, 43 C.C.A. 407, 104 F. 54; same case on petition for rehearing, 44 C.C.A. 653, 105 F. 659,-- which, it is said, was an action between these same parties to recover rent for 1897 under the lease and contract of assumption involved in this case. In their pleadings, however, defendants in error did not tender any issue of former adjudication.

Before JENKINS, GROSSCUP, and BAKER, Circuit Judges.

BAKER Circuit Judge, after stating the case as above, .

Inasmuch as no issue of former adjudication was made, tried, and determined in favor of defendants in error, the questions that are duly presented by the present record remain at large.

1. Prior to the act of March 3, 1875 (18 Stat. 470), if the necessary diversity of citizenship was duly pleaded in the declaration or bill of complaint, evidence to the contrary was inadmissible, except under a plea in abatement in the nature of a plea to the jurisdiction, and a plea to the merits was a waiver of the plea in abatement. Farmington Village Corp. v. Pillsbury, 114 U.S. 138, 5 Sup.Ct. 807, 29 L.Ed. 114; Hartog v. Memory, 116 U.S. 588, 6 Sup.Ct. 521, 29 L.Ed. 725. By that act it was provided: 'That if, in any suit commenced in a circuit court or removed from a state court to a circuit court of the United States, it shall appear to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or a controversy properly within the jurisdiction of said circuit court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said circuit court shall proceed no further therein, but shall dismiss the suit or remand it to the court from which it was removed, as justice may require.'

Of the effect of this act in modifying the former procedure, the supreme court, in Hartog v. Memory, supra, said:

'Neither party has the right, however, without pleading at the proper time and in the proper way, to introduce evidence, the only purpose of which is to make out a cause for dismissal. The parties cannot call on the court to go behind the averments of citizenship in the record, except by a plea to the jurisdiction, or some other appropriate form of proceeding. The cause is not to be tried by the parties as though there was a plea to the jurisdiction, when no such plea has been filed. The evidence must be directed to the issues, and it is only when facts material to the issues show there is not jurisdiction that the circuit court can dismiss the case upon the motion of either party. If in the course of a trial it appears, by evidence which is admissible under the pleadings, and pertinent to the issues joined, that the suit does not really and substantially involve a dispute of which the court has cognizance, or that the parties have been improperly or collusively made or joined for the purpose of creating a cognizable case, the court may stop all further proceedings and dismiss the suit.'

Defendants in error...