Waverly Stone & Gravel Co. v. Waterloo, C.F. & N. Ry. Co.

• Decision Date: 09 February 1917
• Docket Number: 121.
• Citation: 239 F. 561
• Parties: WAVERLY STONE & GRAVEL CO. v. WATERLOO, C.F. & N. RY. CO. et al.
• Court: U.S. District Court — Northern District of Iowa

239 F. 561

WAVERLY STONE & GRAVEL CO. v. WATERLOO, C.F. & N. RY. CO. et al.

No. 121.

United States District Court, N.D. Iowa, Eastern Division.

February 9, 1917

Paulsen & Wood, of Waterloo, Iowa, for the motion.

Edwards Longley, Ransier & Smith, of Waterloo, Iowa, opposed.

REED District Judge.

This action was commenced by the plaintiff for the January term 1916, of the district court of Iowa in and for Black Hawk county (a court of record of that state), which began on January 3d of that year, to recover from the defendants jointly damages for their alleged wrongful acts in preventing the plaintiff from redeeming certain property from a bill of sale given by plaintiff to the defendant Cedar Valley Railway Construction Company, which will be called the Cedar Valley Company, as security for a loan of money made by the defendant Waterloo, Cedar Falls & Northern Railway Company an Iowa corporation, which will be called the Railway Company, to plaintiff. In a general way the petition alleges that the defendant Railway Company agreed to make a loan of money to the plaintiff, and that plaintiff was to make to the company or to the Iowa Investment Company, a bill of sale upon certain property of the plaintiff as security for the loan, but when the transaction was closed, the security to be given by plaintiff for such loan was, at the request of the Railway Company and the Iowa Investment Company, made to the Cedar Valley Company for the benefit of the Railway Company and that all of the defendants thereafter wrongfully refused to permit the plaintiff to redeem the property from said bill of sale as provided therein, to the damage of the plaintiff in the sum of $25,000, for which wrongful acts judgment is asked against all of the defendants jointly.

The defendant Cedar Valley Company filed in the office of the clerk of said state court a petition and bond for the removal of said cause to this court upon the ground of diverse citizenship, which petition is indorsed by the clerk as filed January 17, 1916. Nothing further appears to have been done in the case at the January term of the state court. At the May term of said court, which began May 1, 1916, the state court made and entered an order as follows:

'On the 12th day of the May term, May 16, 1916, the defendant Cedar Valley Railway Construction Company presented in open court its petition for the removal of this cause, so far as said defendant is concerned, from this court to the District Court of the United States for the Northern District of Iowa, Eastern Division, and also a bond with good and sufficient surety, in the penalty of $500, conditioned as required by the act of Congress in such case made and provided; and said petition having been presented at or before the time the said defendant is required by the laws of the state of Iowa, or the rules of this court, to answer or plead to the declaration of the plaintiff in this suit, it is ordered and adjudged by the court that said petition be filed, that said bond (which was duly proved in open court) be accepted, that this suit be removed from this court to the District Court of the United States for the Northern District of Iowa, Eastern Division, at Dubuque, that the clerk of this court forthwith transmit to that court a full, true, and perfect copy of the record in this suit, duly certified according to law, and that no further proceedings be had in this suit in this court as to the said defendant the Cedar Valley Railway Construction Company.'

A transcript of the record in said cause, including said order, was thereafter made by the clerk of said court, duly certified by him on May 19, 1916, and filed in this court May 25, 1916. January 3, 1917, the plaintiff first appeared in this court and filed a motion to remand said cause to the state court upon the ground that there was no separable controversy between the plaintiff and the removing defendant; and this is the only ground upon which plaintiff has invoked the action of this court.

Section 29 of the Judicial Code (U.S. Compiled Stats. 1916, Sec. 1011) provides:

'Whenever any party entitled to remove any suit mentioned in the last preceding section (28 of the Judicial Code) * * * may desire to remove such suit from a state court to the District Court of the United States, he may make and file a petition, duly verified, in such suit in such state court at the time, or any time before the defendant is required by the laws of the state or the rule of the state court in which such suit is brought to answer or plead to the declaration or complaint of the plaintiff, for the removal of such suit into the District Court to be held in the district where such suit is pending, and shall make and file therewith a bond, with good and sufficient surety, for his or their entering in such District Court, within thirty days from the date of filing said petition, a certified copy of the record in such suit, and for paying all costs that may be awarded by the said District Court if said District Court shall hold that such suit was wrongfully or improperly removed thereto. * * * It shall then be the duty of the state court to accept said petition and bond and proceed no further in such suit. Written notice of said petition and bond for removal shall be given the adverse party or parties prior to filing the same. The said copy being entered within the said thirty days as aforesaid in said District Court of the United States, the parties so removing the said cause shall, within thirty days thereafter, plead, answer, or demur to the declaration or complaint in said cause, and the cause shall then proceed in the same manner as if it had been originally commenced in the said District Court.'

Under this section a party having the right to remove a cause from a state to a federal court must file the required petition and bond therefor in the state court at the time or any time before the defendant is required by the laws of the state, or the rule of the state court, to answer or plead to the petition or complaint of the plaintiff.

The Code of Iowa (1897) provides:

'Sec. 3550. The defendant shall, in an action commenced in a court of record, demur or answer to the original petition, or assail the same by motion, before noon of the second day of the term.'

'Sec. 3554. The court may extend the time for filing any pleading beyond that herein fixed, but shall do so with due regard to making up issues at the earliest day practicable.' The act of Congress fixing the time within which a party entitled to remove a suit from a state to a federal court is of course controlling, and it is imperative that the application therefor shall be made within the time so fixed or the cause cannot rightly be removed. Kansas City Railroad v. Daughrtry, 138 U.S. 298-303, 11 Sup.Ct. 306, 34 L.Ed. 963. But for the words 'or rule of the state court,' in the Removal Act, there would seem to be no debatable question in this case. What, then, is meant by the phrase 'the rule of the state court,' as used in the Removal Act? The decisions of the Circuit and District Courts of the United States upon this question are not in harmony, and cannot easily be reconciled. In some of such decisions it is held that, when the state court in its discretion extends the time fixed by the statute in which the defendant shall answer or plead to the petition in a state court, when authorized by law to grant such extension, such extension, when granted, is a 'rule of court' within the meaning of the Removal Act, and that a removal may be had within such enlarged period. Among the causes so holding are Rycroft v. Green (C.C.) 49 F. 177; Wilcox & Gibbs Co. v. Phoenix Insurance Co. (C.C.) 60 F. 929; Lord v. Lehigh Valley Railroad Co. (C.C.) 104 F. 929; Dancel v. Goodyear Shoe Machinery Co. (C.C.) 106 F. 551, and other cases.

Rycroft v. Green, above, was decided without discussion, and upon the practice then said to obtain in the New York courts. That case, however, is distinguished, and in part, at least, overruled, by the same court in Schipper v. Consumer Cordage Co. (C.C.) 72 F. 803. In Wilcox & Gibbs Co. v. Phoenix Insurance Co., above, it is held in a case coming from a state court in South Carolina that the right to remove such a suit exists as long as the defendant is not in default in the state court for want of an answer or other pleading to the plaintiff's petition; and if defendant obtains an order of the state court extending the time in which he may answer or otherwise plead to the plaintiff's petition, the cause may rightly be removed during such extended period. This ruling seems opposed to the great weight of the authorities, and the reason given therefor is not persuasive.

Pullman Palace Car Co. v. Speck, 113 U.S. 84, 5 Sup.Ct. 374, 28 L.Ed. 925, arose under the Removal Act of 1875, which required that a party desiring to remove a cause to act at the first term at which the cause could be tried and before the trial thereof. The Supreme Court, speaking by Mr. Justice Miller, quoting approvingly from Murray v. Holden (C.C.) 2 Fed. 740, 1 McCrary, 341, said:

'One of the objects of the act of 1875 was to prevent the abuses which had been practiced under the acts of 1866 and 1867, which allowed a removal at any time before the final hearing. It was evidently the purpose of Congress to fix an earlier and a definite time, which would not permit the litigant to experiment in the state court until satisfied he would fail there, and then change his forum. In all the states there is, by law or rule, a trial term--i.e., a term at which a cause may for the first time be called for trial. In practice, but few contested cases are tried at the first trial term, and it often happens that controversies arise upon

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