« AnteriorContinuar »
It has been held by the Supreme Court of Wisconsin in Fowler v. Superior, 85 Wis. 411, 418, 54 N. W. 800, that these bonds and accompanying coupons are issued on the faith and security of said assessment; but there is no condition that the bond shall be payable only out of that fund. In other words, that the city has obligated itself generally to pay the bonds, and has also pledged its faith to provide a sinking fund which shall be an additional resource and security for the faithful fulfillment of its promise. There is no conflict of authority between the Fowler Case, supra, and Uncas National Bank v. Superior, 115 Wis. 349, 91 N. W. 1004, because the bonds were issued under different statutory provisions. This is clearly pointed out in the opinion of Judge Seaman in White River Savings Bank v. Superior, 148 Fed. 4, 78 C. C. A. 169. See, also, King v. Superior, 117 Fed. 115, 54 C. C. A. 499. The language of the opinion in Jewell v. Superior, 135 Fed. 22, must be read in connection with the fact that by virtue of a stipulation in that case resort should alone be had to the sinking fund and to the liability of the city as statutory trustee, and any claim based on general liability of the city was expressly waived. If the underlying statute authorized the issuance of such a bond, the reasoning by the Wisconsin court in the Fowler Case has been indorsed by the federal courts.
United States v. County of Clark, 96 U. S. 214, 24 L. Ed. 628; United States v. Ft. Scott, 99 U. S. 152, 25 L. Ed. 348; United States v. Saunders, 124 Fed. 124, 130, 59 C. C. A. 394; King v. Superior, 117 Fed. 115, 54 C. C. A. 499. But it is not for us to consider whether the Fowler Case was correctly decided. We must adopt its construction of a local statute, and therefore must proceed upon the theory that these bonds impose general liability upon the defending city.
Does the averment of general liability of the city in connection with the equitable cause of action create such a misjoinder as would render the bill multifarious ? Both obligations inhere in the bonds, and the pleader has correctly stated their legal effect. Under the authorities the difficulty may be resolved, if the assertion of general obligation may properly be treated as incidental to the equitable remedy sought by the bill. As we read this complaint, its primary purpose is to work out the conservation of a special fund to which the bondholder is entitled to resort by way of security, and thus an accounting is rendered indispensable.
It is strenuously contended by defendant's counsel that under the averments of this bill the claim for legal damage is primary and not subordinate, and that the case falls within the doctrine of Cherokee Nation v. Kansas Ry., 135 U. S. 641, 10 Sup. Ct. 965, 34 L. Ed. 295, and Hurt v. Hollingsworth, 100 U. S. 100, 25 L. Ed. 569. These two cases are clearly distinguishable. In the former the bill presented in the alternative two distinct aspects that were irreconcilable. An injunction was prayed on the ground that the railway company had not sufficient authority to take the land, while at the same time asking damages on the theory that the taking was lawful. It was obvious that, if the equitable cause of action failed, the strictly legal action was not available in the equity tribunal. In the Hurt Čase, supra, the complication arose under the Texas practice act. The complainant's bill was to remove a cloud from the title to real estate, which was purely equitable, but under the state practice the defendant had interposed a claim of legal title to the land and demanded damages such as are awarded in an action of ejectment. The cause having been tried in the state court without objection, the question was whether the federal court on obtaining jurisdiction could tolerate the two conflicting claims in the same suit. Manifestly the legal counterclaim had no standing in the equity suit. Here there is no demand for alternative relief predicated upon inconsistent theories and diverse facts, but a well recognized equity suit, based upon certain bonds, which were a lien on a special fund, coupled with an assertion of an additional legal remedy growing out of the same transaction, springing from the same bonds, which the court is asked to employ if necessary to do complete justice between the parties. The right to resort ultimately to the general liability and general funds of the city is guaranteed by the law and by the terms of the bond, but it must be regarded as an incidental or subsidiary remedy, in that it does not come into play unless and until the primary equitable remedy shall have been exhausted either in whole or in part.
If the court, by means of the peculiar remedies of equity, shall succeed in recruiting and conserving the special assessment fund, so that the complainant's bonds may be liquidated, there will then be no outstanding cause of action either legal or equitable. But on the other hand, suppose that after such sinking fund has been applied and all equitable remedies have been exhausted, a balance still remains due and unpaid; may not the court, having settled the rights and equities of the parties, retain jurisdiction to do complete justice and to render final judgment against the city for the amount still due on the bond? The authorities are so numerous which recognize such authority as residing in a court of equity that we can cite but a few of those collected by complainant's counsel.
The familiar doctrine is thus stated in 1 Pomeroy's Eq. Juris. § 181:
“When a court of equity has jurisdiction over a cause for any purpose, it may retain the cause for all purposes, and proceed to a final determination of all the matters at issue, and may thus establish purely legal rights and grant legal remedies which would otherwise be beyond the scope of its authority." Paeific R. R. V. Atlantic Ry. (C. C.) 20 Fed. 277, 280; Patton v. Glatz (C. C.) 56 Fed. 367; Krohn v. Williamson (C. C) 62 Fed. 869, 877; Burlington Bank v. Clinton (C. C.) 106 Fed. 269; Ward v. Todd, 103 U. S. 327, 26 L. Ed. 339; Phosphate Mining Co. v. Bradley, 105 U. S. 175, 26 L. Ed. 1034; Beecher v. Lewis, 84 Va. 630, 6 S. E. 337; Robinson v. Cross, 22 Conn. 171. See, also, Continental Ins. Co. v. Garrett, 125 Fed. 589, 593, 60 C. C. A. 395.
There is such conflict and confusion in the authorities as to what constitutes multifariousness that it is impossible to lay down any exact rule. As Mr. Foster in his work on Federal Practice (Fed. Pr. 206) says: “The cases upon the subject are extremely varied, and the court in deciding them seems to have considered what was convenient in particular circumstances, rather than to have attempted to lay down any absolute rule.” It is a subject largely controlled by the discretion of the court. Certain it is, however, that if a good equitable cause of action has been stated in the bill, no error of judgment on the part of the pleader, either in giving undue prominence to a mere subordinate remedy, or in framing a prayer which confuses legal distinctions, will prove fatal on demurrer. No such erroneous legal conclusions will conclude the court or render the bill multifarious. De Neuville v. N. Y. Ry., 81 Fed. 10, 13, 26 C. C. A. 306; Brown v. Guarantee Trust Co., 128 U. S. 412, 9 Sup. Ct. 127, 32 L. Ed. 468; Lehigh Zinc & Iron Co. v. N. J. Z. & I. Co. (C. C.) 43 Fed. 548. Here there is but one cause of action, and that is for the recovery of the amount due on the bonds; but the bonds and the statute under which they were issued offer two remedies, or two methods of enforcement, one in personam, and one by way of security. Shall not both be available when a court of equity has properly assumed jurisdiction?
Upon the argument great reliance was placed upon Plankinton v. Hildebrand, 89 Wis. 214, 61 N. W. 839, “A careful examination of the facts will show that the case is not in point, and that it was expressly distinguished by Mr. Justice Pinney in his opinion. There two separate and distinct causes of action were insisted upon-one the foreclosure of a pledge of chattels, and the other the contingent liability of certain of the defendants as indorsers of a promissory note evidencing the debt. If all the defendants had fallen under the same legal liability on the note, a different conclusion might have been reached, as appears from the earlier case of Wilson v. Johnson, 74 Wis. 337, 339, 43 N. W. 148, where in an equity action to foreclose a pledge of chattels, a judgment for deficiency was sustained on general principles without the aid of any statute. That the Supreme Court of Wisconsin is in accord with other courts on the general doctrine above announced appears by reference to Turner v. Pierce, 34 Wis. 658, and Pinkum v. Eau Claire, 81 Wis. 301, 51 N. W. 550.
Perhaps no better or more authoritative statement of the rule can be found than the case of Clews v. Jamieson, 182 U. S. 480, 21 Sup. Ct. 845, 45 L. Ed. 1183:
"It often happens that the final relief to be obtained by the cestui que trust consists of the recovery of money. This remedy the court of equity will always decree, when necessary, whether it is confined to the payment of a single specific sum, or involves an accounting by the trustee for all that he has done in pursuance of the trust and a distribution of the trust moneys among all the beneficiaries who are entitled to share therein.”
We recall the vigorous language of Lord Chancellor Nottingham in Parker v. Dee, 2 Ch. Cr. 200: “And when this court can determine the matter, it shall not be handmaid to the other courts nor beget a suit to be ended elsewhere."
The fifth ground of demurrer is that the bill is multifarious because it attempts to join a cause of action involving the general liability of the city with one based upon the trust relation arising out of the contract and the circumstances of the case. It is sufficient to say that there is not here disclosed such trusteeship as to make the objection pertinent. The trust relation here is constructive merely, and such as the court of equity has invented to work out justice in a large class of cases where the strict accountability of the trustee is imposed to extend the remedial power of the court. 1 Pomeroy Eq. Juris. $$ 155, 157, 158.
For these reasons the demurrer of the city of Superior is overruled, and said defendant may interpose an answer to the bill, if so advised, on or before the October rule day. Otherwise, complainant will be entitled to a decree.
From the propositions above laid down it follows that the complainant is entitled to a preliminary injunction against the city of Superior pendente lite, substantially as prayed in the bill. Complainant's counsel will however prepare such preliminary injunction and submit the same to counsel for the city before presenting the same for signature.
UNIVERSITY OF THE SOUTH Y. JETTON et al.
(Circuit Court, M. D. Tennessee. August 14, 1907.)
1. COURTS-JURISDICTION OF FEDERAL COURTS-FEDERAL QUESTION.
A federal court has jurisdiction of a suit by a landowner to restrain revenue officers of a state from prosecuting proceedings expressly based on a state statute to enforce the collection of taxes against such lands, on the ground that such statute as applied to complainant's lands impairs the obligation of a contract with the state exempting such lands from taxation.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Courts, $S 820, 821.
Enjoining proceedings in state courts, see notes to Garner v. Second Nat. Bank, 16 C. C. A. 90; Central Trust Co. v. Grantham, 27 C. C. A.
575; Copeland v. Brunning, 63 C. C. A. 437.) 2. CONSTITUTIONAL LAW-WHO MAY RAISE CONSTITUTIONAL QUESTIONS-TAX
ATION-EXEMPTION OF LAND-INTERESTS OF LESSEES.
An educational corporation, owning lands which by a contract with the state are exempted from taxation, may maintain a suit in equity to restrain the officers of the state from levying and collecting taxes on improvements made on such lands by lessees, which by the terms of the leases become part of the realty, to be paid for by the landlord on the termination of the leases; such taxes being in effect against the lands
themselves, and in any event in direct diminution of their rental value. 3. SAME_IMPAIRMENT OF CONTRACT-ERRONEOUS CONSTRUCTION OF STATUTE.
Where officers of a state are prosecuting proceedings under a state statute relating to taxation, the effect of which will be to impair the obligation of a contract, the right of a party to such contract to invoke the jurisdiction of a federal court for the protection of his constitutional rights is not affected by the fact that such officers may be proceeding upon an erroneous construction of the statute, and that, properly construed,
it is not unconstitutional. 4. COURTS-FEDERAL COURTS-JURISDICTION-ACTIONS AGAINST STATES.
An action by a university, whose lands are exempt from taxation, against officers charged with the duty of levying and collecting taxes, to restrain such officers from enforcing taxes on improvements erected by lessees on such exempt lands, is not a suit against the state, so as to exclude the jurisdiction of the federal courts.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Courts, $ 84442.
Federal jurisdiction of suit against state, see note to Tindall v. Wesley, 13 C. C. A. 165.]
5. SAME-CONFLICTING JURISDICTION OF STATE AND FEDERAL COURTS-ENJOIN
ING STATE COURT ACTION.
Nor can such suit be considered one to enjoin the action of a state court on the ground that the tax officers are charged with judicial functions.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 13, Courts, § 1418.] In Equity.
Spears & Lynch, Crownover & Crabtree, A. T. McNeal, and J. J. Vertrees, for plaintiff.
Lynch & Phillips, Charles T. Cates, Atty. Gen., and Thos. B. Lytle, for defendants.
CLARK, District Judge. In the study of this case it is found that the industry of eminent counsel on both sides has accumulated such a number of cases in the briefs as to make it impracticable to restate or to rediscuss these cases in this memorandum opinion without extending its limits beyond all reasonable length. In this situation I deem it sufficient to assure eminent counsel that I have examined the cases and have undertaken to give them the consideration which they deserve, in view of their bearing on the issues presented in this case for determination. Under such circumstances I shall content myself with a simple reference to some of the cases which seem to me to support and to require the ruling which is about to be made on the issues here to be disposed of.
It is probably best in the outset to remark that, so far as the lessee complainants are concerned, there is no statute of the state confessedly which has undertaken to exempt them from taxation, and their contention, consequently, does not and cannot involve a federal question such as to give this court jurisdiction; and this view makes it immaterial to consider whether the case as to each of these complainants would show a jurisdictional amount sufficient to sustain jurisdiction, for I think it is certain, upon the authorities, that the amount connected with the complaint of each one of these lessees is a separate matter, and that their several complaints could not be aggregated or put together to make up jurisdictional amount. However this may be, as just suggested, I do not now find it necessary to decide. There is, as to them, really no substantial federal question. And the second ground of the demurrer is special and separate against the complainants other than the University of the South, and is accordingly sustained, and all other grounds assigned in the demurrer, and the demurrer as a whole, so far as it applies to the University of the South, is overruled, for reasons which will sufficiently appear in the further statements of this memorandum opinion.
The first objection is that the bill presents no federal question, and that there is a want of federal jurisdiction, as distinguished from state jurisdiction. However, upon a careful study of this question, I am unable to accept the views so cogently presented by the able counsel on behalf of the state's revenue collecting and tax assessing officers. Reference may be made to the following cases: Bank of Kentucky v. Stone (C. C.) 88 Fed. 383; Union & Planters' Bank v. City of Memphis, 111 Fed. 561, 49 C. C. A. 455; Illinois Central Railroad Co. v. Adams, 180 U. S. 28, 21 Sup. Ct. 251, 45 L. Ed. 410; City Ry. Co. v. Citizens' Railroad Co., 166 U. S. 557, 17 Sup. Ct. 653, 41 L. Ed. 1114.