Flynn v. Des Moines & St. Louis R'Y Co.

• Citation: 19 N.W. 312,63 Iowa 490
• Parties: FLYNN ET AL. v. THE DES MOINES & ST. LOUIS R'Y CO. ET AL
• Decision Date: 25 April 1884
• Court: United States State Supreme Court of Iowa

19 N.W. 312

63 Iowa 490

FLYNN ET AL. v. THE DES MOINES & ST. LOUIS R'Y CO. ET AL

Supreme Court of Iowa, Dubuque

April 25, 1884

Appeal from Polk Circuit Court.

THE petition states that plaintiff entered into a written contract with the Des Moines & St. Louis Railroad Company for the construction of a portion of the line of railway of said company between the city of Des Moines and Albia, and afterwards entered into a certain other contract with said company for the construction of a certain other portion of said railway; (Copies of the contracts are attached to and made a part of the petition;) that the plaintiffs fully performed said contracts upon their part, except as to the stipulated time of performance, which was waived; that they have filed in the office of the clerk of the district court of Polk county a sufficient statement and account to entitle them to a mechanic's lien; that said company has failed to pay for the work and labor done under said contracts, and is indebted to the plaintiffs therefor.

The Wabash, St. Louis & Pacific Railroad Company, James F. How and others, were made defendants, on the ground that they claimed some interest in or lien on the property on which a mechanic's lien is sought, which interest or lien however, it was stated in the petition, is inferior to the lien of the plaintiffs. The relief asked is that the plaintiffs may recover a judgment against the Des Moines & St. Louis company, and that for the amount found due them a mechanic's lien in their favor may be established, and that the rights of the other defendants may be declared inferior to those of the plaintiffs.

The Wabash company filed a petition for the removal of the action to the circuit court of the United States, and asked the court to make an order to this effect, which was refused. Separate answers were filed by the several defendants for whom an appearance was entered.

The Des Moines company denied that it entered into or was a party to the contracts, and pleaded, in substance, that the plaintiffs and James F. How entered into said contracts, under which the former did some work, but as to the extent and value thereof the defendant had no knowledge, information or belief; that it is provided in said contracts that ten per cent of the contract price shall be retained by said How as compensation for damages sustained by the failure of the plaintiffs to perform said contracts on their part, and that the plaintiffs have been fully paid for all they did; "that, if the work done by them upon said road shall, at the rate of compensation provided for in said contracts--as to which this defendant has not sufficient knowledge or information to form a belief--exceed the amount which has been paid therefor said excess is less than the sum of ten per cent, which said contracts provide shall be retained as aforesaid, and that by reason of said failure so to perform their said contracts, this defendant has sustained damages in a sum greater than the whole amount of said excess, or any money which would have become payable to the said plaintiffs upon a full and complete performance of said contracts;" that, by the terms of said contracts, the amount unpaid upon the completion thereof was to be certified by the chief engineer of said railroad company, and that the same did not become due until ninety days had elapsed after said certificate had been furnished; and in case of dispute between the parties thereto the plaintiffs, under the terms of the contracts, waived any right of action at law or other remedy, and agreed that the decision of the chief engineer should be in the nature of an award, and be final and conclusive as to the claims of the plaintiffs under said contracts; and that no such certificate has been obtained. No affirmative relief was asked.

The defendant, How, in his answer, states that he made the contract as agent of the Wabash, St. Louis & Pacific Railroad Company, and denies the statements in the petition, and, in substance, pleaded the same defenses as the Des Moines company.

The Wabash company adopts the answer of How and the Central Trust Company. It is not deemed material to state the defenses pleaded by the latter company. To the answer of How there was a reply.

The court found for the plaintiffs, and rendered judgment against the Des Moines company, and established a mechanic's lien as asked in the petition. The defendants appeal.

AFFIRMED.

Parsons & Runnells, for appellants.

Wright, Cummins & Wright, for appellees.

OPINION

SEEVERS, J.

I.

It is claimed by counsel for the appellants that the court erred in refusing to change the forum on the petition of the Wabash company. Counsel agree that the petition asking the removal to the federal court is based on the following portion of the act of congress, passed March 3, 1875: "And when in any suit mentioned in this section there shall be a controversy which is wholly between citizens of different states, and which can be fully determined as between them, then either one or more of the plaintiffs or defendants actually interested in such controversy may remove such suit into the circuit court of the United States for the proper district." The petition for removal, in substance, states that the Wabash company is a corporation organized under the laws of the state of Missouri, and that the controversy between it and the plaintiffs can be fully determined between them without the presence of the Des Moines company. The petition was filed and determined before the answer, was filed or any other pleading which presented any issue of law or fact between the parties, which any court was called on to determine. This court has held that, under such circumstances, the case cannot be removed to the federal court. Stanbrough v. Griffin, 52 Iowa 112, 2 N.W. 1011; Bosler v. Booge, 54 Iowa 251. But it is said, the federal courts hold otherwise. Possibly this is so, but our attention has not been called to any decision of the supreme court of the United States so holding. We, therefore, are not disposed to overrule the cases above cited.

But, conceding that we are in error in this respect, we are not satisfied that this is a controversy wholly between citizens of different states. The material question is whether the Des Moines company is indebted to the plaintiffs, and whether the latter are entitled to a mechanic's lien. It is self-evident that the controversy is primarily between the Des Moines company and the plaintiffs. If there is no debt, or if there is but the plaintiffs are not entitled to a lien, then the Wabash company has no interest in this controversy. If there should be a transfer to the federal court, the questions above stated must be determined by that court, and we apprehend that it would not do this without the presence of the Des Moines company. If the Wabash company is entitled to have this cause transferred to the federal courts, then it will follow that every case brought by a citizen of this state in the state courts to foreclose a mortgage, in which action a non-resident is made a party for the purpose of cutting off a junior lien, such non-resident may have the case transferred to the federal courts. When the supreme court of the United States so decides, it may be our duty to follow such ruling.

II. The contracts on their face show that they were entered into and executed by the plaintiffs as party of the first part, and James F. How, agent, of the second part. The contracts do not show for whom How was agent, and the plaintiffs seek to recover on the ground that they were made with the Des Moines company, and that How was its agent; or, if this be not so, then it is claimed that the company so acted as to induce the plaintiffs to believe that How was its agent and that he contracted for said company. The defendants claim, as we understand, that How was agent of and made the contracts for the Wabash company. We find from the evidence that the latter company, in 1881, desired to construct, or have constructed, a line of railroad from Albia to Des Moines, and, for some reason satisfactory to it, preferred to have the road constructed by and in the name of an Iowa corporation. To effect this object, it made an arrangement with four gentlemen, Clarkson, Runnells, Polk and Hubbell, whereby they were to organize a corporation under the laws of this state, and the persons just named were to take sufficient stock therein to enable then to act as directors and officers of the company, and the Wabash company was to furnish a subscriber for all the balance of the stock, and such subscriber, or the Wabash company, was to furnish the money for the purpose of constructing the road. The gentlemen above named were to contribute their services upon terms satisfactory to the parties. The result of this arrangement was the formation of the defendant, "The Des Moines & St. Louis Railroad Company," of which Mr. Clarkson was chosen president. The defendant, How, is the subscriber furnished by the Wabash company, and we presume he held the stock in trust for that company. Mr. Clarkson caused to be published in the public journals the following:

"PROPOSALS WANTED.

"OFFICE OF DES MOINES & ST. LOUIS RAILROAD CO. "DES MOINES APRIL 5, 1881.

"Bids are invited for the grading and bridging of the first twelve or fifteen miles south-easterly from the city of Des Moines on the Des Moines & St. Louis Railroad. Bids will be received for the grading and bridging together, or separately. Profiles and specifications can be seen at the office of the company in Des Moines, on and after April 15. Bids will be opened at 11 o'clock A. M., April 20. Good and sufficient bonds will be required. The company reserves the right to reject any or all bids. The rest of...