Edmunds v. Illinois Cent. R. Co.

• Decision Date: 21 April 1897
• Citation: 80 F. 78
• Parties: EDMUNDS v. ILLINOIS CENT. R. CO.
• Court: U.S. District Court — Northern District of Iowa

80 F. 78

EDMUNDS v. ILLINOIS CENT. R. CO.

United States Circuit Court, N.D. Iowa, Western Division.

April 21, 1897

Harl &amp McCabe, for plaintiff.

B. F Ayer and J. F. Duncombe, for defendant.

SHIRAS District Judge.

This is an action in which the plaintiff seeks to recover damages against the defendant railroad company for alleged overcharges upon interstate shipments of freight, the right of action being based upon the provisions of the interstate commerce act. The first count in the petition seeks to recover damages accruing to the plaintiff upon shipments made by himself, and the remaining counts are founded upon claims accruing to third parties, and by them assigned to the plaintiff. The defendant company demurs to the second and subsequent counts, upon the ground that claims for overcharges, in violation of the provisions of the interstate commerce act, are not assignable, and that the language of the act is such that the right to sue for damages is confined to the person or corporation suffering the damages in the first instance.

It is not questioned that at the common law a chose in action, of the nature of those counted on in this case, is not assignable, so as to enable the assignee to maintain an action at law thereon in his own name; and therefore, to confer the right of action upon an assignee, it must appear that the right is conferred by some statute or rule of law applicable to the particular case. Thus, in Glenn v Marbury, 145 U.S. 499-509, 12 Sup.Ct. 914, 918, it is said:

'The right which the express company acquired by the defendant's subscription to its capital stock was only a chose in action. It passed by the deed of September 20, 1866, to the trustees Blair, Kelly, and O'Donnell, but subject to the condition that a chose in action is not assignable, so as to authorize the assignee to sue at law, in his own name, unless the right so to do is given by a statute, or by settled law, in the jurisdiction where suit is brought. This is the well-established rule of the common law, and the common law touching the subject governs the District of Columbia.'

On behalf of plaintiff it is claimed that it is the settled law of the state of Iowa that choses in action are assignable so as to confer a right of action in the name of the assignee, and such seems to be the effect of the rulings of the supreme court of the state. Weire v. Davenport, 11 Iowa, 49; Vimont v. Railway Co., 64 Iowa, 513, 17 N.W. 31, and 21 N.W. 9; Everett v. Railway Co., 73 Iowa, 442, 35 N.W. 609.

On behalf of the defendant company it is claimed that the causes of action set forth in the counts of the petition that are demurred to arise solely under the provisions of the interstate commerce act; that jurisdiction to entertain the same is confined to the courts of the United States; that as the cause of action is created by the act of congress, and certain remedies are therein provided for, no other proceeding can be maintained, save those named in the statute; that these are limited, by the express provisions of section 9 of the act, to the right to make complaint to the commission or to bring suit for damages on behalf of the party injured; that neither the interstate act nor the statutes of the United States provide for or authorize the assignment of claims for damages under the interstate commerce act; and that, as congress has legislated upon the mode of enforcing claims for damages arising under the act, that fact prevents recourse to the provisions of state laws upon that subject.

This court has held in this and other similar cases now pending that the state courts have not concurrent jurisdiction with the courts of the United States over actions for damages, based upon the provisions of sections 8 and 9 of the interstate commerce act. See Van Patten v. Railway Co., 74 F. 981. In that case it was held that, as the suits were expressly based upon the cause of action created by section 8 of the act, the only remedies available were those provided in section 9, and these were limited to a right to make complaint to the commission, or to bring suit for damages in a district or circuit court of the United States; and the question now presented for determination is whether a claim for damages arising under the act can be assigned to a third party, so as to authorize him to maintain an action thereon in his own name. This question presents two matters for consideration, the first one being whether a claim for damages based upon the provisions of section 8 of the interstate commerce act is assignable, so as to transfer the beneficial interest therein to the assignee; and, second, if the claim is assignable, can the assignee maintain an action at law thereon in his own name?

If the chose in action is of such a character that it can be assigned, so as to transfer the beneficial interest therein to the assignee, then the question whether suit thereon can be maintained in the name of the assignee, or must be brought in the name of the assignor for the benefit of the assignee, is merely a question of the mode of procedure, determinable by the law of the forum; but question whether the chose in action can be assigned, so as to confer any right or interest therein on the assignee, is a matter affecting the merits, and is controlled by the law creating the cause and right of action. Ë HC80 If the causes of action assigned to the plaintiff in this suit were not entirely creations of the act of congress, but arose under the principles of the common law, and of which the courts of the state would have concurrent jurisdiction with the federal courts, the question at issue might not be difficult of solution. The cause of action, however, and the right of action with regard to these claims for damages are alike created by and based upon the act of congress, and it would seem, therefore, that the question of the assignability of claims of this character is determinable by the federal law, and not by that of the state of Iowa. Thus, in Pritchard v. Norton, 106 U.S. 124-130, 1 Sup.Ct. 102, 106, it is said:

'Whether an assignee of a chose in action shall sue in his own name, or that of his assignor, is a technical question of mere process, and determinable by the law of the forum; but whether the foreign assignment, on which the plaintiff claims, is valid at all, or whether it is valid against the defendant, goes to the merits, and must be decided by the law in which the case has its legal seat. * * * It is to be noted, however, as an important circumstance, that the same claim may sometimes be a mere matter of process, and so determinable by the law of the forum, and sometimes a matter of substance, going to the merits, and therefore determinable by the law of the contract.'

The question, therefore, is whether claims for damages based upon section 8 of the interstate commerce act, under the provisions of the laws of the United States, are assignable. It will be remembered that the court is considering now only the point whether the property interests represented by the assigned claim are assignable, so as to convey the beneficial interest therein to the assignee; and this does not involve the question whether suit thereon can be maintained in the name of the assignee. The choses in action sued on in this case do not grow out of purely personal torts, which at the common law would lapse at the death of the party injured, but constitute property rights, which would pass to the legal representative upon the death of the original owner thereof.

In regard to choses in action of the latter character, the general rule is, as I understand it, that the beneficial interest therein may be lawfully assigned to another, subject to the exception that, in case the substance of the claim be such that public policy forbids the assignment thereof, then it is not assignable; and of course, if there be an express statutory prohibition against the assignment of a given class of claims, that would except that class from the operation of the general rule. In Traer v. Clews, 115 U.S. 528, 6 Sup.Ct. 155, Henry Clews brought an action at law to recover as damages, the value of 50 shares of the capital stock of the Cedar Rapids Northwestern Construction Company, and the dividends which had been declared thereon. Clews was the original owner of the stock, having subscribed therefor in 1870. In November, 1874, Clews was adjudged a bankrupt, and his property, including the named shares of stock, was assigned to Tappan, trustee of his estate. Subsequently Traer purchased the stock and the dividends declared thereon from the assignee, under circumstances which rendered the purchase a fraud upon the assignee and the rights represented by him. In December, 1877, Tappan, the assignee, sold all his claims and demands on account of the stock to Clews, who thereupon brought suit for damages. In response to the objection that the transfer from Tappan to Clews was merely of a right to bring an action, which could not be assigned, the supreme court held that 'we are of opinion that, so far as the question under consideration is concerned, the assignment of Tappan to Clews was the transfer, not merely of a naked right to bring a suit, but of a valuable right of property, and was therefore valid and effectual. ' In Erwin v. U.S., 97 U.S. 392, it was held that a claim for the proceeds of cotton captured by the military forces of the United States, and sold by the government, was in the nature of a property right, and, as such, passed by assignment to an assignee in bankruptcy. In Lewis v. Bell, 17 How. 615, it was held that a claim against the Brazilian government, growing out of the seizure of a vessel, was assignable, so as to authorize the assignee to demand and receive payment...