Iowa Lillooet Gold Min. Co. v. Bliss

Decision Date29 March 1906
Docket Number192.
PartiesIOWA LILLOOET GOLD MIN. CO., Limited, v. BLISS et al.
CourtU.S. District Court — Northern District of Iowa

This action was commenced in the district court of Iowa, in and for Hardin county. From the petition of plaintiff which is in one count it appears: That plaintiff, the Iowa Lillooet Gold Mining Company, Limited, is a corporation organized under the laws of Canada, doing business in Iowa with its headquarters in the city of Iowa Falls, in Hardin county; that the defendant Bliss is a citizen of Iowa residing at Iowa Falls and was or had been the secretary of the plaintiff, and that part of his duties was to draw orders upon its treasurer for the payment of money when directed to do so by its board of directors; that upon his appointment as secretary he was required by plaintiff to furnish security for the faithful and honest discharge of his duties, and to protect it against loss or damage by reason of any wrongful acts on his part as such officer; that in pursuance of such requirement he did on August 5, 1903, procure the defendant United States Fidelity & Guaranty Co. (hereinafter called the guaranty company) which is a Maryland corporation organized to furnish indemnity bonds and securities to individuals or corporations employing others in the transaction of their business, to make and deliver to plaintiff its certain bond in writing to indemnify and secure plaintiff against any pecuniary loss not exceeding $25,000, that it might sustain from specified wrongful acts of defendant Bliss as secretary of the plaintiff. A copy of said bond is attached to the petition and contains, among others, the following provisions 'That said guaranty company shall, within three months next after notice, accompanied by satisfactory proof of a loss as hereinafter mentioned, has been given to it, make good and reimburse to the plaintiff all and any pecuniary loss sustained by it of money, securities, or other personal property in the possession of the employe (Bliss) or for the possession of which he is responsible, by any act of fraud or dishonesty on his part in the discharge of the duties of his office or position, amounting to larceny or embezzlement, and which shall have been committed during the continuance of this bond or any renewal thereof. * * * And the said employe (B. B. Bliss) doth hereby for himself, his heirs, executors and administrators, covenant and agree to and with said guaranty company, that he will save, defend and keep harmless the said company from and against all loss or damages of whatever nature or kind, and from all legal and other costs and expenses direct or incidental, which the said guaranty company shall or may at any time sustain or be put to (whether before or after any legal proceedings by or against it to recover under this bond, and without notice to him thereof) or for or by reason or in consequence of the said guaranty company having entered into the present bond. ' Signed by said B. B. Bliss, and by the said guaranty company by its proper officers.

It is then alleged that, after the making of said bond and during its continuance, the defendant Bliss did, without right, and without authority of plaintiff, by means of certain orders upon the treasurer of the plaintiff wrongfully and fraudulently drawn and signed by him as such secretary, withdraw from the treasury of the plaintiff $12,000 of its money, and fraudulently embezzle or convert the same to his own use, and has failed to pay or account for the same to the plaintiff; that due notice of such fraudulent acts of said Bliss, accompanied with satisfactory proof of plaintiff's loss, has been given to the defendant guaranty company, as provided by the terms of said bond, and demand made of it that it pay to plaintiff the amount of its said loss, which it has refused to do. Judgment is asked against the defendant Bliss and the guaranty company jointly for said sum of $12,000, with interest and costs. The defendant guaranty company seasonably presented to the state court its separate petition duly verified, and bond for the removal of said suit to this court, upon the ground that it appears from the petition of plaintiff that there is in said action a controversy wholly between it, a corporation of Maryland, and the plaintiff, a corporation of Canada, in which the amount in dispute exceeds the sum or value of $2,000 exclusive of interest and costs, which can be fully determined between it and the plaintiff without the presence of the defendant Bliss as a party thereto; and further alleging that said Bliss was not a necessary or proper party to the controversy between the plaintiff and said guaranty company, but was joined as a party defendant with said guaranty company by plaintiff, with the fraudulent intent on its part to prevent the removal of said action to this court. The state court refused to order a removal. The defendant guaranty company thereupon filed a copy of the record of the cause in this court, and caused the same to be docketed herein, and the plaintiff moves to remand the cause to the state court.

Albrook & Lundy, for plaintiff.

Healy Bros. & Kelleher, for defendant United States Fidelity &amp Guaranty Co.

REED, District Judge (after stating the facts).

The motion to remand challenges the jurisdiction of this court, and in support thereof is it urged: That plaintiff being a corporation of Canada, and defendant a corporation of Maryland, neither being a citizen or resident of Iowa, the action could not have been brought by original process in this court, and is not therefore one that is removable from the state court. This contention fails to distinguish between the jurisdiction or right of a court to determine a controversy, and the venue or place where that jurisdiction may be exercised. The first part of section 1 of the judiciary act of 1887-88 (Act March 3, 1887, c. 373, 24 Stat. 552 (U.S. Comp. St. 1901, p. 508)), confers jurisdiction upon the Circuit Courts of the United States, concurrent with the courts of the several states, of all suits of a civil nature at law or in equity, wherein the requisite amount is involved, and in which there shall be a controversy between (3) citizens of different states, and (5) citizens of a state and foreign states, citizens, or subject. The second part of that section provides that no civil suit shall be brought against any person in a Circuit Court of the United States by original process in any other district than that whereof he is an inhabitant; but, 'when the jurisdiction is founded only upon the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of either the plaintiff or the defendant. ' This suit is not of the class there described, for plaintiff is a corporation of Canada, defendant Bliss a citizen and resident of the Northern District of Iowa, and the Guaranty Company a corporation of Maryland. If it is one of which this court has jurisdiction, it might therefore have been brought in this court by original process against defendant Bliss, and if the Guaranty company is jointly liable with him on its bond, against that company also, especially if it did not object to being sued there, and is removable to this court if it is within the terms of the removal section.

The second clause of section 2 provides that:

'Any other suit of a civil nature at law or in equity of which the Circuit Courts of the United States are given jurisdiction by the preceding section, which may now be pending or which may hereafter be brought in any state court, may be removed into the Circuit Court of the United States, for the proper district by the defendant or defendants therein being nonresidents of that state.' 24 Stat. 552 (U.S. Comp. St. 1901, p. 509).

It is the first part of section 1 that confers jurisdiction upon the Circuit Courts of the United States, and this cannot be conferred by consent of the parties to a suit. The second part of that section, which restricts the place where the jurisdiction conferred by the first shall be exercised, is not jurisdictional, but is a personal exemption granted to the defendant from being sued in the class of cases there described, elsewhere than in the district of his residence, or that of the plaintiff. This exemption the defendant may waive, and if he is sued in a district other than that of his residence, or that of the plaintiff, he does waive it by appearing generally to the suit and not claiming the benefit of such privilege or exemption. This was early so ruled in Gracie V. Palmer, 8 Wheat. 699, 5. L.Ed. 719, which was a suit brought by an alien against a citizen of a state in a district other than that of his residence. That ruling has been uniformly followed since. Toland v. Sprague, 12 Pet. 300-336, 9 L.Ed. 1093; Ex parte Schollenberger, 96 U.S. 369, 24 L.Ed. 853; Railway Company v. McBride, 141 U.S. 127, 11 Sup.Ct. 982, 35 L.Ed. 659; Central Trust Company v. McGeorge, 151 U.S. 129, 14 Sup.Ct. 286, 38 L.Ed. 98; Kansas City & T. Ry. Co. v. Interstate Lumber Co. (C.C.) 37 F. 3 (Brewer, Circuit Judge); Long v. Long, (C.C.) 73 F. 369.

In Ex parte Schollenberger, 96 U.S. 378, 24 L.Ed. 855, it is said:

'The act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts. It is rather in the nature of a personal exemption in favor of a defendant, and it is one which he may waive. If the citizenship of the parties is sufficient, a defendant may consent to be sued anywhere he pleases, and certainly jurisdiction will not be ousted because he has consented.'

But it is urged that, under the present act, the consent of the plaintiff as well as that of the defendant is...

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