Fritzlen v. Boatmen Bank

• Decision Date: 23 February 1909
• Docket Number: No. 99,99
• Parties: D. G. FRITZLEN, Edna P. Fritzlen, and W. H. Weldon, Plffs. in Err., v. BOATMEN'S BANK
• Court: U.S. Supreme Court

212 U.S. 364

29 S.Ct. 366

53 L.Ed. 551

D. G. FRITZLEN, Edna P. Fritzlen, and W. H. Weldon, Plffs. in Err.,

v BOATMEN'S BANK.

No. 99.

Argued January 28, 29, 1909.

Decided February 23, 1909.

Messrs. D. R. Hite, H. J. Bone, and F. C. Price for plaintiffs in error.

Messrs. James S. botsford, Buckner F. Deatherage, and Odus G. Young for defendant in error.

Mr. Justice White delivered the opinion of the court:

On the 23d of July, 1903, in a court of the state of Kansas, William H. Weldon, a citizen of that state, sued D. G. Fritzlen and his wife, Edna, also such citizens, and the Boatmen's Bank, a corporation organized under the laws, and a citizen of, Missouri. The cause of action against the Fritzlens was a note for $3,750, dated July 2, 1903, maturing in ten days, alleged to be secured by mortgages covering described real estate and certain live stock. The bank was made a defendant upon the averment that it claimed to have a mortgage on the real estate and personal property which secured the note sued on, and this alleged mortgage was asserted to be illegal and void, and, in any event, to be 'junior and subordinate to the right, title, interest, and lien of this plaintiff.' Judgment for the amount of the note, with interest, was prayed, as also that the mortgage securing the same be decreed to be a first and prior lien over all others on the property; that so much of the property as was necessary be sold to satisfy the judgment; and that 'the pretended claim, lien, and interest of the said defendant the Boatmen's Bank be declared to be illegal and void.' Summons by publication was made, calling upon the bank to answer before September 4, 1903. On July 30 Weldon applied for a temporary injunction, preventing the defendants, pending the suit, from removing any of the property beyond the jurisdiction of the court, and a restraining order was allowed. On August 13, 1903, the bank demurred to the petition, because facts adequate to establish that the mortgage by it held was invalid were not averred, and because two distinct causes of action were unlawfully joined,—the one to enforce the alleged mortgage against the Fritzlens, and the other assailing the rights of the bank. On the day the demurrer was filed, the bank, giving the necessary bond, asked removal of the cause to the circuit court of the United States for the district of Kansas, on the ground that the controversy as to the validity of its mortgage was separable from the controversy concerning the enforcement of the alleged mortgage against the Fritzlens, and, additionally, because of local prejudice. On September 14 the circuit court of the United States, presided over by Lochren, J., overruled motions to remand made by Fritzlen and Weldon, the court basing its action upon the separable nature of the controversies, and not considering the ground of local prejudice, and on that day the court dissolved the restraining order previously allowed by the state court. A copy of the order refusing to remand was filed in the state court. On the 9th of October, 1903, in the United States district court for the district of Kansas, the bank brought an action of replevin for the possession of the personal property embraced in its mortgage, and the marshal, under a writ of replevin, took and delivered the property to the bank. More than six months after the order refusing to remand, the circuit court of the United States for the district of Kansas, presided over by Pollock, J., granted a motion of Weldon to remand the cause to the state court. In making this order the court considered that the prior refusal to remand was not binding upon it, because it deemed the question of jurisdiction to be always open, and it was its plain duty to decline to take jurisdiction over a cause if the power to entertain it did not obtain. 128 Fed. 608.

Thereupon the bank, in the state court, on May 14, 1904, withdrew its demurrer and answered. Besides denying the averments of Weldon's petition, it was alleged that the bank was the holder for value of a note of Fritzlen for $32,920.15, dated November 30, 1901, and secured by mortgage on the personal and real property referred to in the petition of Weldon, the mortgage having been recorded on December 6, 1901. It was averred that the lien of the bank was paramount to any lien resulting from the Weldon mortgage. The prayer was only this: 'Wherefore, having fully answered, said Boatmen's Bank prays judgment, and that it may go hence without day,' and with costs in its favor. About ten days court for an order directing the bank to court for an order directing the bank to restore to them the personal property taken under the writ of replevin. The motion stated the prior issue of a restraining order; recited the facts as to the refusal to remand by Lochren, J., the bringing of the replevin suit, and the subsequent remanding of the cause under the order of Pollock, J. It was recited that the replevin suit had been dismissed for want of jurisdiction by the circuit court of the United States. Upon this motion, on the same day, the court directed the return of the property, or, if sold, the deposit of the proceeds in a designated bank. As the effect of this order and the subsequent procedure concerning it is not relevant to the question which we are called upon to decide, it is not necessary to further refer in detail to the subject. Suffice it to say that the bank thereafter moved to set aside the order on the ground, among others, that the restraining order had been set aside by the circuit court of the United States while the case was there pending, and that, although the replevin suit had been dismissed for want of jurisdiction, the question of the rightfulness of the dismissal was pending before the circuit court of appeals for the eighth circuit.

On the 26th day of May, 1904, Fritzlen answered the petition of Weldon by admitting the debt and mortgage, but charging that all the interest claimed was not due. The answer then proceeded to set out matters which were alleged to be Fritzlen's 'cause of action against his codefendant, the Boatmen's Bank.' The matters alleged

First. It was charged that the note which

First. It was charged that the note which was held by the Boatmen's Bank embraced the sum of a previous note or notes given by Fritzlen to the firm of Elmore & Cooper, and an association known as the Elmore & Cooper Live Stock Commission Company, a Missouri corporation. These previous notes, it was charged, were secured by a chattel mortgage, but were not negotiable, and had been assigned to the Boatmen's Bank, and were subject to any equity existing in favor of Fritzlen. The notes, it was alleged, were made up in considerable part of charges or commissions which had been exacted by Elmore & Cooper or the commission company for commissions relating to the sale and handling of live stock for Fritzlen at the Kansas City stock yards. These commissions, it was alleged, had been exacted because of an illegal combination in restraint of trade, in violation of the laws of the state of Kansas controlling the method of doing business at the Kansas City stock yards, to which Elmore & Cooper and the commission company were parties, and hence Fritzlen was entitled to recover the sum thereof. The amount of the commissions thus referred to exceeded $3,000.

Second. That prior to the time when the bank had acquired the note or notes from Elmore & Cooper or the commission company, and subsequent thereto up to the time when the bank obtained the note described in its answer, it was a Missouri corporation, and had not complied with the laws of Kansas authorizing foreign corporations to do business in that state. It was charged that the dealings concerning the assignment of the notes from Elmore & Cooper and the commission company, as well as the dealings which led up to the...