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any question arises between two defendants to a bill, that the court cannot make a complete decree without a cross-bill or cross-bills to bring every matter in dispute completely before the court to be litigated by the proper parties and upon the proper proofs.'” Morgan's Co. v. Texas Central Ry. Co., 137 U. S. 200, 11 Sup. Ct. 61, 34 L. Ed. 625.
The late Justice Miller held, quoting from the first paragraph of the syllabus :
"A cross-bill will be sustained in the federal court, where a defendant is compelled to avail himself of that mode of defense, in order to protect himself from an injustice resulting to him from the position in which the cause stands, although the parties plaintiff and defendant, or some of them, are citizens of the same state; provided the defendants in such bill are already before the court, and are, as parties to the original bill, subject to its jurisdiction." Schenck v. Peay, 21 Fed. Cas. 667, Case No. 12,450.
This case is cited approvingly by Justice Harlan in Jesup v. Illinois Central Ry. Co. (C. C.) 43 Fed. 483-496.
Again, the rule that a cross-bill must relate to the transactions set up in the original bill has been declared as follows:
"If it be true that Vannerson and Leverett are both citizens of Georgia, the one can have in this court no relief against the other in a cross-bill filed to an original bill against them both, which he could not have obtained by original bill here. In other words, the fact that they are both sued in one bill here does not confer any power on them to litigate their controversies inter sese in this court. Most clearly, if the plea is true, Vannerson had no standing in this court as a suitor by original bill. He prays no relief against Bates, Reed & Cooley. His cross-bill has no relation to the subject-matter of their suit, nor is this cross-bill in any sense a reply to allegations of the original bill. The Circuit Court of the United States is limited in its jurisdiction, and, when it does not obtain, it is an inilexible rule that the judicial power of the United States must not be exerted, even if both parties desire to have it exerted.” Vannerson v. Leverett, 31 Fed. 377.
Again, it has been held, quoting from the syllabus :
“A controversy between codefendants to a bill in equity cannot be a matter of a cross-bill, unless its settlement is necessary to a complete decree upon the case made by the original bill.” Weaver v. Alter, 29 Fed. Cas. 486, Case No. 17,308.
Again, it has been said:
"A cross-bill is like an original bill, except that it must rest on what is necessary to the defense of an original bill." Brandon Mfg. Co. v. Prime, 4 Fed. Cas. 19, Case No. 1,810.
This last case, of which I shall have more to say later on, is the one in which Judge Wheeler challenges as dictum the statement of Justice Curtis in Shields v. Barrow, that "new parties cannot be introduced into a cause by a cross-bill.”
Osborne & Co. v. Barge (C. C.) 30 Fed. 805, does not antagonize, but is in accord with the views I have above expressed, so far as concerns the relation, which the cause of action set up in the crossbill must bear to that set up in the original bill. In that case, which was a suit to foreclose a chattel mortgage, the cross-complainant claimed to be the owner of a part of the property in controversy, and thus stated a defense to the foreclosure sought in the original bill, the court holding, quoting from the third paragraph of the syllabus, that "in such a case the party claiming the property need not have put
his claim into judgment before filing his cross-bill, as he already has such an interest in the property as will enable him to question the validity of the mortgage.
Lilienthal v. McCormick, supra, is not an authority on the point now under consideration, because there a dispute existed as to the amount due the original complainants and to that extent the crossbill of the Bank of Woodburn was an attack upon the mortgage of said complainant, and thus a part of the transaction on which the original complainant sued. Referring to this point, the court, at page 95 of 117 Fed. (54 C. C. A. 475), says:
"It is true that, if no suit had been brought by the complainants, the Bank of Woodburn could have brought suit in the state court to enforce its liens and obtain full relief, but it was properly made a defendant by complainants, and having been brought into the suit in the United States court it had the right to assert its claims and seek affirmative relief by filing a cross-bill for the foreclosure of its liens and it had the right in such suit to litigate the question whether the complainants had any lien against the property for damages."
Mercantile Trust Co. v. A. & P. R. R. Co., supra, is likewise wholly inapplicable here, for the reasons given in a previous reference to that case.
A careful review of the authorities satisfies me that a junior mortgagee, in order to foreclose his own mortgage, cannot, under general rules of equity pleading and practice, by cross-bill or otherwise, make himself a party to a suit brought for foreclosure of a prior mortgage. That there may be no misconstruction of this conclusion I will add that the words "under general rules of equity pleading and practice” are used to save the exception which arises when the court has possession of the mortgaged property.
Third. The third ground which defendants urge in support of their demurrer and motion, namely, that “new parties cannot be introduced into a cause by a cross-bill,” is unquestionably supported by Shields v. Barrow, supra, and it will be observed, that, in stating this ground, I have employed the precise language used by the Supreme Court in that case.
Shields v. Barrow has been referred to approvingly in Connolly v. Wells (C. C.) 33 Fed. 205–207; Ayres v. Carver, 58 U. S. 591-595, 15 L. Ed. 179; Randolph v. Robinson, 20 Fed. Cas. 262, Case No. 11,561; Adelbert College W. R. U. v. Toledo, etc., Ry. Co. (C. C.) 47 Fed. 836–846; Toler v. East Tenn. V. & G. R. Co. (C. C.) 67 Fed. 168–170; Gregory v. Pike, 67 Fed. 837–845, 15 C. Č. A. 33; and Thruston v. Big Stone Gap I. Co. (C. C.) 86 Fed. 484, 485. And, in Ayres v. Carver, 58 U. S., at page 594, 15 L. Ed. 179, the Supreme Court said:
"A cross-bill is brought by a defendant in a suit against the plaintiff in the same suit, or against other defendants in the same suit, or against both, touching the matters in question in the original bill.
* The office of a crossbill has been very fully discussed at this term by Mr. Justice Curtis in the case of Victor Shields et al., v. Barrow; and I need not, therefore, pursue it, but refer only to that opinion for the true doctrine on the subject.”
Nor does the authority of Shields v. Barrow seem to have been anywhere questioned, until, after the lapse of nearly a quarter of a century, District Judge Wheeler, sitting in the Circuit Court, refers to it as “the remark of Mr. Justice Curtis in Shields v. Barrow," and further says: “That precise question was not involved in that case, but the mere dictum of such a judge of such a court would ordinarily be followed thereafter by lower courts." Brandon Mfg. Co. v. Prime, 4 Fed. Cas. 20, Case No. 1,810. The pertinent facts in the case were that a cross-bill for affirmative relief had been filed, pursuant to a previous order of the court, and by this cross-bill new parties were brought into the case, and a final decree in favor of the original complainant was rendered against them and the defendants to the original bill, and from this decree an appeal was taken to the Supreme Court. The decree was reversed, and the cause remanded to the Circuit Court, with directions to that court to dismiss the original and cross-bills, on the ground that the Circuit Court could make no decree as between the parties originally before it so as to do complete and final justice between them without affecting the rights of absent persons, whose introduction into the court, since they were citizens of the same state as complainant, would oust the jurisdiction of the court, and, on the further ground that the cross-bill brought in new parties, contrary to the rules of equity pleading and practice, the court declaring that “new parties cannot be introduced into a cause by a crossbill.” It will be observed, that either of these grounds, if tenable, required a reversal of the decree. This brief summary of the facts shows clearly, that Justice Curtis' declaration, that "new parties cannot be introduced into a cause by a cross-bill,” was not “mere dictum,” but a direct ruling upon one of the controlling issues of the case.
Mercantile Trust Co. v. A. & P. R. R. Co. (C. C.) 70 Fed. 518, las already been referred to in another connection, and I shall only add here that said case is in accord with Shields v. Barrow, supra. I use this affirmative form of expression that the two cases are in accord, rather than the negative statement that they do not conflict with each other, advisedly, and for the reason that, in the latter case, the decision was rested solely upon the ground that the court had possession of the mortgaged property, from which it is fairly, if not necessarily, inferable that the decision, in the absence of that fact, would have been different, and this harmonizes the two cases.
In Shields v. Barrow, Justice Curtis, in announcing the ruling of the court that it was error to bring in new parties by a cross-bill, was discussing simply a question of general equity pleading and practice, without any regard to the exception, which must necessarily arise when the court has possession of the property in litigation, while, in Mercantile Trust Co. v. A. & P. R. R. Co., the court was dealing with this precise exceptional case, and discussing, not the office of a cross-bill, or any other matter of procedure, but the jurisdiction and duties conferred and devolved upon the court by its possession of the property in litigation. Indeed, Judge Ross, in order to reach the substance of the controversy, brought before him solely through the court's possession of the mortgaged property, was insistent to brush aside any mere consideration of pleading or practice, and, 'herefore, referring to three foreign corporations, who were parties to the proposed bill but were not parties to the suit brought by the Mercantile Trust Company, he said:
"Nor is there any good reason perceived why the United States Trust Company, in setting up its rights under its first mortgage in the suit of the Mercantile Trust Company, may not bring them into that suit, if it is entitled to any relief against them in connection with the mortgaged property. Whether by a cross-bill, pure and simple, or by a bill in the nature of a cross-bill, is immaterial. In such a matter mere names are nothing. Here was a property, constituting a link in a great transcontinental railway, incumbered by two mortgages for large amounts, and in such a condition as rendered it imperative on the part of the court, at the suit of the second mortgagee, to take it into its possession, and operate it by means of receivers, in order to conserve the property, and to protect the interests of all parties concerned in it. With the property thus in the possession and control of the court, at the suit of the second mortgagee the holder of the first mortgage was made a party defendant by an amended and supplemental bill, and properly so made."
While the opinion of the court quotes Judge Wheeler's criticism of Shields v. Barrow, yet it is done without words of approval, the only comment being as follows:
"The distinction referred to in the note to section 399 of Story on Equity Pleading, above cited, and in the authorities there referred to, between a cross-bill merely defensive in its character and one which seeks affirmative relief in respect to matters connected with the subject embraced by the original bill, is a very just and proper one."
And I repeat, with reference to this statement, what I have said of others, that, read in the light of the facts then before the court, it was accurate, but its use as an authority in connection with another and wholly different state of facts, is an erroneous application.
I am of opinion that the second and third objections to the crossbill, as well as the first one, following the order in which I have arranged them, are well taken, and the demurrer and motion will be accordingly sustained and allowed.
CLEARWATER TIMBER CO. v. SHOSHONE COUNTY, IDAHO, et al.
(Circuit Court, D. Idaho, N. D. June 29, 1907.)
1. TAXATION-PUBLIC LANDS SELECTED IN LIEU OF FOREST RESERVE LANDS
PASSING OF EQUITABLE TITLE.
Under the several acts relating to forest reservations which permit private owners of lands therein to transfer or relinquish the same to the government and to select other public lands in lieu thereof, no exchange is effected until approved by the Land Department. The act of March 2, 1899 (30 Stat. 993, c. 377), establishing the Mt. Rainier National Park, expressly provides for the approval of the Secretary of the Interior, but the general act of June 4, 1897 (30 Stat. 34, c. 2 [U. S. Comp. St. 1901, p. 1538]), contains no such express provision, and the approval may be made by the Commissioner of the General Land Office under paragraph 18 of the rules adopted by the department thereunder. In either case, it is contemplated that the department shall, through proper officers, consider all questions of law and fact affecting the title and validity of the conveyance of the base lands, and the character and condition of the lieu lands selected, and, until that has been done and a formal approval given, the equitable title to the lands selected does not pass from the government,
nor does the applicant acquire any right of possession thereto, and they are not subject to taxation, especially in view of the fact that the department requires the applicant to pay all taxes levied on the base lands up to the time the exchange is approved.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 45, Taxation, 88 31, 35, 38 44.
Of equitable title to public lands, see note to Northern Pac. R. CO.
v. Wright, 4 C. C. A. 196.] 2. SAME-EFFECT OF DEED TO PUBLIC LANDS.
A railroad company which owned patented lands within national forest reserves conveyed the same to the United States, and selected other public lands in lieu thereof, as permitted by statute. Thereafter it executed a deed to the lands so selected to complainant, but several years elapsed before such selections were approved by the Land Department and before the lands were even surveyed. Held, that the fact of its conveyance gave the county no right to tax such lands in the meantime while they remained unsurveyed public lands of the United States.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 45, Taxation, $8
40, 41.] 3. SAME-SUIT TO ENJOIN COLLECTION OF TAXES.
That a complainant was not the owner of lands at the time of an illegal levy of taxes thereon does not deprive it of the right to maintain a suit in equity to enjoin the enforcement of such taxes by a sale of the
lands after it has become the owner. 4. SAME-PLEADING-WAIVER OF DEFECT IN ALLEGATIONS.
A complainant is not debarred from maintaining a suit to enjoin the enforcement of taxes illegally levied upon lands because its bill did not allege it to be the owner of such lands where no objection was taken to the pleading, and the proofs, taken by stipulation, establish its owner
ship. 5. SAME-PROPERTY SUBJECT TO TAXATION-UNSURVEYED LANDS.
Lands which have not been officially surveyed by the United States are not as a rule taxable, nor are they under the statutes of Idaho, and such a survey is not completed until it has been accepted by the Land Department.
DIETRICH, District Judge. This suit was brought to vacate and annul certain assessments and tax sales of real property claimed by the complainant. The bill was filed January 9, 1906. The territory embracing said lands was formerly situated within the limits of Shoshone county, but afterwards, as a result of the election of 1904, the same became annexed to Nez Perce county, pursuant to an act of the Legislature of Idaho passed in the year 1904.
in the year 1904. The assessments in question were made in the years 1903 and 1904, and, the taxes thus assessed not having been paid by the plaintiff, sales for delinquency were made in the years 1904 and 1905, and certificates of such sales were issued to Shoshone county, the purchaser.
In its bill the plaintiff sets forth, in substance, the following facts: It is a corporation organized under the laws of the State of Washington, and it has complied with the laws of the state of Idaho relative to foreign corporations doing business in the latter state. It is the owner and entitled to the immediate possession of certain tracts and