NEW YORK TRANSIT
GARRETT and others v. NEW YORK TRANSIT & TERMINAL CO., Limited, and others.
(Oi'l'cuit OOU'l't, S. D. Np/w York.
November 27, 1886.)
COURTS-JUltISDICTION- UNITED STATES CmCUlT COURT-COLLUSION IN JOINDER OF PARTIES.
The statute which requires a suit to be dismissed when it appears that a party has been collusively made or joined for the purpose of creating a case cognizable by the United States circuit court is not intended to restrict those who contemplate bringing a suit, from selecting as adversaries all those against whom any substantial relief may be sought.
Where the judgment record, made a profert III a plea, showed that the de· cree in the former suit was without prejudice to the right of the plaintiffs to bring a new action against all but one of the several defendants who joined in the plea. held, that the plea was bad. S, SAME-SETTING UP IN PLEA FACTS REQUlRED TO BE IN BILL-RuLE 94 IN
EQUlTY-PLEADING-PROFERT-JUDGMENT REco;aD-FoRMER SUIT.
A plea is bad which sets up matters of fact appearing on the face of the bill, and which sets up affirmatively, by way of defense, a fact which a plaintiff ill required to allege in his bill by rule 94 in equity.
In Equity. Edward W. Sheldon, (William W. MacFarland, of counsel,) for complainants. O. A. Seward, for defendants. WALLACE,J. None of the pleas which have been set down for argument are good. The first plea is to the jnrisdiction of the court, and is an attempt to allege that three persons specified, who are made parties defendant, with others, should have beenm.ade parties plaintiff, but have been made defendants collusively, in order that the necessary diversity of citizenship between the parties may appear. The bill calls for relief against certain fraudulent acts of one Barnes and the corporation he dominates, as to which the three defendants have similar interests to the plaintiffs; but it also calls for an account to ascertain and establish the claims and liens of the plaintiffs, of the three defendants, and of Barnes, as between each other, growing out of the joint adventure which culminated in the frauds of Barnes. These· three defendants are adversary parties to the plaintiffs upon- the issues to which the second and third prayers for relief in the bill are addressed. No facts are alleged in the plea to show that these are not genuine issues; but the plea states merely legal conclusions. The statute which requires a suit to be dismissed when it appears that a party has been collusively made or joined for the pu.rpose of creating a case cognizable by the circuit court is not intended to restrict those who contemplate bringing a suit from select· ing as adversari'es all those against whom any substantial relief may be sought. v.29F.no.3-9
The second plea is bad because the judgment record, made a proferUn the plea, sbowsthat the decree in the former suit was with.... out prejudice to the rigM of the plaintiffs to bring a new action who joined in the plea. against all but one of the several Without aid from the record the plea would be bad, because it does not deny the allegations of fact contained in the bill respecting the bringing .ofthe former suit, the matters in issue therein, and the de-. cision and judgment rendered. The third plea sets up ·matterswhich, if material in auy aspect. should be relied on by demutrer; because the facts brought forward appear bnthe face of the bill, and present only a.n issue of law. The plea sets up affirmatively, by way of defense, a fact which a plaintiff is required to allege in his bill by the terms of the ninety-fonrth rale in equity. Besides this, the ninety-fourth rule has no application to a case like that made by the bill. The pleas are overruled, with costs to the plaintiffs.
RINDSXOPF fJ. PLATTO.
(Jourt,B. D. Wz,conain.
DmCOVERY-PARTmS COMPETENT WITNESSES.
A bill for discovery in aid of an action at law cannot be maintaIned where full discovery may be compelled by examination of the adverle plU"Ly., · . witness in the suit at law.
In Equity. .Bill for discovery. Mr. Monroe, for complainant. J. V. V. Platto. in pro. per.
DYER, J .· (orally.) This is a bill for a discovery. The discovery sought is of certain facts in aid of a suit at law pending in this conrt bet,ween the same parties. The bill is demurred to on the ground that iUs not maintainable upon the case prellented. . The suit at law was brought by the present complainant to recover from the defendant certain of money which the complaint in that case alleges he collected,as attorney for the plaintiff, upon a promissory'note placed in his hands for collection. To that com· plaint. the defendant made answer to the effect that, at the time na.med he collected upon the ,the sum of $1,350, and paid the same to the plaintiff; that subsequently he collected the further sum of, $251.38, which was indorsed upon the note, and retained in his hands to apply upon It. is then further alleged in the answer that, at a later date, by virtue of certain proceed. ings which he says were instituted for the purpose, further sum of· $2,487.15, and paid the same to the plaintiff. There is then a
RumSKOPF V. PLATTO.
further allegation that he rendered other serviceswhicb were incident to the collection of the note, and that his entire services were worth the sum of $500; and, after applying upon that sum the $251.38 before referred to, he demands, in a counter-claim contained in his answer, a judgment against plaintiff for the sum of $248.62. This answer was amended so as to set out more fully and particularly the services which the defendant alleged he rendered for thE'plaintiff. Otherwise the amended answer is like the original. To the counter-claim thus set up the plaintiff replied, denying that there was anything due to the defendant for services rendered to the plaintiff, and alleging that he had been fully paid for all 'services' performed by him in the collection of the note. This suit at law being pending, the plaintiff therein filed this bill upon the equity side of the court. It is not, it should be observed, a bill for discovery and relief, but a bilLfor discovery purely, and the facts which the court has already stated are set out in the bill. It is, moreover, alleged in the bill that the defendant collected various sums of money, to apply upon the note in suit, from parties against whom the complainant's husband had held accounts and choses in action, which accounts and demands the bill avers had been placed in the defendant's hands for collection; and when collected the were to be applied upon this note. (I'he complainant also states that, in consequence of the lapse of time, she is ignorant of various facts which are material to the trial of the issues in the suit at law,-particularly with reference to the payments alleged to have been made to the defendant on account of services; and she calls upon the defendant in aid of the trial of the suit at law, to discover all the facts in relation, to such payments, and in connection with the transaction which is the subject of controversy between the parties. The bill concludes with numerous interrogatories addressed to the defendant, followed by a prayer for discovery, and for an injunction to restrain' further proceedings in the suit at law until discovery is made. The question to be determined is, is the bill maintainable? Under the chancery practice, ana independently of any statute by virtue of which a party can be compelled to testify as a witness in a suit at law, find the rule. as laid down by Mr. Story in his Equity Pleadings, (section 555,) to be as follows:
"In cases of a purely civil nature, courts of equity will not sustain a bi!' for a discovery in aid of a suit pending in another court of ordinary jurisdic tion if that court itself can compel the discovery reqUired; for, in such a case, the remedy is complete, and the interference of a court of eqUity is unnecessary and vexatious. Thus, where a bill, among other things. was filed for a discovery of the value of the respective real and personal estates of the inhabitants of a parish, in which certain church rates had been assessed, and how the money collected by iHeans of such rates had been disposed of, a demurrer was allowed, because the ecclesiastical court in which the suit was depending, and to which the ordinary jurisdiction belonged, was ca.pableof compelling the discovery."
Before the passage of the statute of the United States which permits parties to be sworn and examined as witnesses in suits at law, 1 suppose there is no doubt that such a bill as this would lie, because the case would then be within the rule thus stated by Mr. Story. Disoovery of the faots from the party could be in no other way obtained. But since the passage of. the act of July 2, 1864, (section 858, Rev. St,,) which provides that no witness shall be excluded in any civil action because he isa party to or interested in the issue tried, a party to a suit may be a witness, may be called by the adverse party on the trial, and may be compelled to disclose all facts within his knowledge touching the controversy between them. It was held by Judge BLATCHFORD in the case of Heath v.Erie R. Co., 9 Blatchf. 319, which was a bill of discovery, that, since the passage of that act, a bill for the disoovery of facts resting in the knowledge of the opposite party is unnecessary; for the discovery can be bad by an examination of the party in the first cause. "The theory and basis of a bill of discovery inequity in aid of a defense in another suit is that the oourt in whioh such other suit is pending has no means of compelling a discovery from the plaintiff therein of the facts material to the defense." Even more decisive and authoritative is the deoision of the supreme court of the United States in Brown v. Swann, 10 Pet. 497,-a case not referred to on the argument, and which must have escaped the attention of counsel on both sides. That was a case arising under the statute of. usury of the state of Virginia, and I read at some length from the opinion of the court, because the rule on the subject is clearly and fully stated. The court, referring to the statute, say:
"The third section of the statute is in these words: ·Any borrower of money or goods may exhibit a bill in chancery against the lenders, and compel them to discover on oath the money they really lent, and all bargains, contracts, or shifts ·which shall have passed between them relative tu such loan, or the repayment thereof, and the interest and consideration for the same.' . * * ... The first question, then, to be considered is, can the bill of the complainants be brought within the operation of the section? We think not. Besides only making the contingent and prospective offer to pay the principal when the affairs of the intestate · would admit of it,' which is altogether insufficient, as any other indefinite. offer or acknowledgment of obligation to pay the principal would be, tM bill is deficient in the material averment, essential to all such bills of discovery as this is, that the complainants are unable to prove the facts sought from the conscience of the defendant by other testimony; but, on the contrary, facts are stated in it from which a different presumption may be fairly raised. "When the legislature of Virginia passed the statute, it fixed the nature and of the jurisdiction of a court of equity to, compel a discovery upon oath from an interested party, in a suit either at law or in equity, and the rules which equity had prescribed to itself to enfurce its jurisdiction in this regard. It knew the distinction between a bill for Buch discovery and other bills in chancery, which are also bills for discovery. One of the former is a bill for the discovery of facts alleged to exist only in the knowledge of a person, a party to a private transaction with the person seeking the disclosure, essential to the establishment of a just right in the latter, and which would
RINDSKOPF V. PLATTO.
be defeated without such disclosure. In other words, it is a bill to discover facts which cannot be proved according to the existing forms of procfdure at law. The jurisdiction of a court of eqnity in this regard rests upon the inability of the courts of common law to obtain or to compel such testimony to be given. It has no other foundation; and whenever a discovery of this kind is sought in equity, if it shall appear that the saIlle facts could be obtained by the process of the courts of common law, it is an abuse of the powers of chancery to interfere. The courts of common law having full power to compel the attendance of witnesses, it follows that the aid of equity can alone be wanted for a discovery in those cases where there is no witness to· prove what is sought from the conscience of an interested party. Courts of chancery have then established rules for the exercise of this jurisdiction, to keep it within its proper limits, and to prevent it from encroaching upon the jurisdiction of the courts of common law." The court then cites some American authorities, and says finally: "Many other authorities to the same purpose might be cited from English and American reports. Unless such averments are required, is it not obvious that the boundaries between the chancery and common-law courts would be broken down, and that chancellors would find themselves, under bills for a discovery from an interested party. engaged in the settlement of controversies by evidence aliunde which the common-law courts have procured under the process of a subpoona; in delaying proceedings at law by pretenses that a discovery is wanted for the sake of justice; and in enjoining jUdgments upon indefinite allegations of the plaintiff having a knowledge of facts which give to a defendant an equity to be released, though the defendant might have availed himself of the evidence of third persons to establish the same facts in the progress of the cause, or of the powers of chancery to procure them, by a discovery to assist the court in deciding it, which last is the case now under consideration? " As is obvious, this decision of the supreme court is directly appli· cable to the case at bar. What is sought by this bill is a discovery, by the defendant, of certain facts which it is believed are in his .possession, and within his knowledge. All that would be accomplished if this bill were to be maintained, and a decree for a discovery made; would be a disclosure of those facts by the defendant. In the suit at law, as the present statutes of the United States provide, the defend· ant may be called as a witness, may be just as effectually examined as any other witness, and may be compelled to make just as complete a discovery as, in the absence of this statute, he could be compelled tfil make under a bill of discovery. This being so, it follows that this bill is not maintainable. The demurrer will therefore be sustained. and the bill dismissed.
UNITED STATEBV. MINOR
(Oz'rcuit Oourt, No
IJ. Oalifornia. November 23. 1886.)
PuBLIC LANDS-AcQUISITION BY PATENT-BONA FIDE PURCHASER.
A purchaser in good faith for a valuable consideration from a patentee of United States lands. without notice of adverse Claims. is entitled to rely on the record; and the patent, if valid on its face, will not b.evacated, as to him, for matters de1lOrs the record. A pre-emption claimant to an 80-acre tract, which he has included in his filing. but which be has never lived on, inclosed. or cultivated. and which is covered with a forest. though he has lived on. inclo·sed. and cultivated a portion of the lands he has filed on, over a quarter of a mile away from the land in question, has not had'such possession as constitutes constructive notice to a bona fide purchaser.
VENDOR AND VENDEE-BoNA FIDE PuP.eRASERs-NoTICE BY POSSESSION.
In Equity. Suit to vacate patent to land on ground of fraud. S. G. Hilborn, U. S. Atty., and J. D. Chamberlain, for plaintiff. Hiram Smith, for defendant, Oroghan. Before SAWYER, J.
SAWYER, J. This is a bill in equity to vacate a patent issued to defendant Minor to 80 acres of land, being the W. t of the N. W. fof a certain section, on the ground that it had been fraudulently procured. Minor, having no interest in the land, made default, and the decision must turn on the rights of defendant Oroghan upon the case as disclosed by the bill, answer, and stipulated facts. The material facts, as appear by stipulation, and by the uncontraanswer responsive to the bill, are as follows: Minor filed his declaratory statement for the land in question, as a pre-emptioner, October 23,1874. He made his proofs as a pre-emptioner, and paid for the land in full, June 23, 1875. He made his proofs without notice to or knowledge of Spence, by and through the mistake and inadvertence of the land departmlmt in not noting a contest between Spence and Minor. A patent regular in form was issued to Minor, January 5, 1876. He had a house on the land, but had not mad'e it his home, or inhabited the land, as required by law, when he made such proofs, and procured his patent. Being indebted to defendant, Oroghan, in the sum of $1,280, then due, on May 1, 1876, having, at , the time, the patent in his possession, in consideration of said indebtedness, and the further consideration of an extension for six months' time in which to pay said indebtedness, on interest at 11- per cent. per month, Minor gave his note for tbe amount to Oroghan, payable in six months, and, to secure payment, executed a mortgage on said land. Croghan, at the time of extending the time of payment and taking said mortgage, had in fact no notice of the fraudulent manner in which said patent had been obtained, but supposed it to have been in all respects honestly and properly issued, and no notice of any