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Justice Story calls, in Clarke v. Mathewson, 12 Pet. 164, 172, 9 L. Ed. 1041, a 'dependent bill.'”
This Krippendorf Case is referred to approvingly in a later case, as follows:
"The jurisdiction of the Circuit Court did not depend upon the citizenship of the parties, but on the subject-matter of the litigation. The property was in the actual possession of that court, and this drew to it the right to decide upon the conflicting claims to its ultimate possession and control. Minnesota Co. v. St. Paul Co., 2 Wall. 609, 17 L. Ed. 886; People's Bank v. Calhoun, 102 U. S. 256, 26 L. Ed. 101 ; Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27, 28 L. Ed. 145; Morgan's Co. v. Texas Central Ry. Co., 137 U. S. 171-201, 11 Sup. Ct. 61, 34 L. Ed. 625."
Central Trust Co. v. Bridges, 57 Fed. 753, 6 C. C. A. 539, so far as concerns the point now under consideration, is simply an earlier declaration of the same doctrine.
Society of Shakers v. Watson, 68 Fed. 730, 15 C. C. A. 632, is simply in line with Phelps v. Oaks, supra, Stewart v. Dunham, supra, and Hardenberg v. Ray, supra, and, at page 736 of 68 Fed., page 638 of 15 C. C. A., the doctrine of the case is epitomized thus:
"Permitting a party to intervene in a pending suit to represent an interest involved does not oust the jurisdiction of a federal court already acquired by reason of the diverse citizenship of the original parties, of whatever state the intervenor may be a citizen. Stewart v. Dunham, 115 U. S. 61, 5 Sup. Ct. 1163, 29 L. Ed. 329; Freeman v. Howe, 24 How. 450, 16 L. Ed. 749; Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27, 28 L. Ed. 145; Phelps v. Oaks, 117 U. S. 236, 6 Sup. Ct. 714, 29 L. Ed. 888; Osborne v. Barge (C. C.) 30 Fed. 805. We think, therefore, that the jurisdictional objection founded on the citizenship of the parties is not well taken."
In Tug River Coal & Salt Co. v. Brigel, 86 Fed. 818, 30 C. C. A. 415, from which complainant quotes the first paragraph of the syllabus, there were two plaintiffs, one a citizen of New York and the other a citizen of Ohio, while the defendant was a citizen of Kentucky. After the commencement of the action the New York plaintiff changed his citizenship to Kentucky, and it was with reference to that change, set up in a plea to the jurisdiction, that the court held, as set forth in the first paragraph of the syllabus, quoted in complainant's brief, that “the citizenship which determines the jurisdiction of a federal court is that which existed at the time of commencement of the suit, and subsequent changes can neither divest nor confer jurisdiction.” There were no new parties added, and yet the language quoted might well apply, in the absence of the facts with reference to which the language was used, to changes of parties. This case clearly illustrates and strongly emphasizes the fact that, in order to correctly understand a decision, it must be read in connection with the facts, upon which it was rendered, and particularly is this true of complainant's citations upon the point now under consideration. In most of these citations, the opinions of the court, unless the facts of each case are comprehended with accuracy and kept steadily in mind, are subject to serious misconstruction.
The distinction between Shields v. Barrow, supra, and Krippendorf v. Hyde, supra, and the numerous cases in line with the latter, has been indicated as follows:
“In the way attempted in the present case, there are no pleadings on behalf of the original plaintiff as against Kemp Van Ee, and could be none. The whole basis of making him a party defendant was in the allegations of Swift's answer. This practice, although prevailing in some localities, is condemned, by necessary implication, in Shields v. Barrow, 17 How. 130, 145, 15 L. Ed. 158, by Justice Bradley, in 1873; in Searles v. Railroad Co., 2 Woods 621, 625, Fed. Cas. No. 12,586; by Justice Blatchford, in 1868, in Drake v. Goodridge, 6 Blatchf. 151, Fed. Cas. No. 4,062; and in the notes to Daniell, Ch. Prac. (6th Am. Ed.) 286, 287.
This question of making defendants is entirely different from that of an intervention pro interesse suo, as authorized in Harrison v. Nixon, 9 Pet. 483, 540, 9 L. Ed. 201, Krippendorf v. Hyde, ubi supra, and in Morgan's L. & T., etc., Co. v. Texas Cent. R. Co., ubi supra, and in the notes to Daniell Ch. Prac. (6th Am. Ed.) 1853. There seems to be no doubt that, under the authority of these cases, Kemp Van Ee would have been entitled to an intervention by summary petition after the fund came into the registry of the court in equity, and to thus maintain his interest. This, however, would have been an essentially different proceeding from that of making parties to the main controversy, and would have been of the character of the intervention of Mr. Talbot in the case at bar. This question has no relation to the so-called 'class suits,' nor to the coming in of a cestui que trust or a stockholder, nor to cases like White v. Hall, 1 Russ. & M. 332, where new parties come into the accounting after a decree. In none of these are the issues presented by the bill substantially changed by the interposition of the new parties." Gregory v. Pike, 67 Fed. 845, 15 C. C. A. 33.
The foregoing review of complainant's citations removes any apparent lack of harmony between them and Shields v. Barrow, and, accepting all of said cases as authoritative here, the conclusion necessarily results that a new party cannot be brought into a suit, whose presence at its commencement would have defeated federal jurisdiction, unless such party represents an interest already before the court, or claims an interest in property of which the court holds possession. Nor is this conclusion at all antagonized by Lilienthal v. McCormick, 117 Fed. 96, 54 C. C. A. 475. There the cross-complainant, Bank of Woodburn, was an original defendant, and, even after the filing of the cross-bills, the citizenship of each of the defendants, under a proper alignment, was different from that of both complainants. So, whatever use may be made of that case as a precedent on other points, it certainly is not an authority to the proposition that a cross-bill may introduce a new party, although the citizenship of said party be the same as that of the complainant, for the simple reason that the lastmentioned fact was not in the case.
Furthermore, it is worthy of note that the defendants to the original bill had paid into court the sum of $1,063, and I am not sure but that this fact brings the case within the principle enunciated in the numerous cases already cited, that possession by the court of the property in litigation carries with it jurisdiction to determine all claims thereto. It is true that the court at page 96 of 117 Fed. (54 C. C. A. 475) used this language: “Consolidations, cross-bills, and interventions do not oust the jurisdiction of the court in the main suit, whatever the citizenship of the parties thus brought in may be”; but, since there was neither a consolidation nor an intervention in that case, the words "consolidations” and “interventions” are without application. While there were cross-bills, yet, as I have already shown, the citizenship of the parties thereto was diverse to that of the complainants, and of course federal jurisdiction was not ousted. More
over, the clause above quoted is obviously but the statement of a general principle, and its limitations are to be found in the authorities from which the principle is deduced. The three cases cited in said clause are all cases where the property in litigation was in possession of the court. Two of them, Sioux City Terminal R. & W. Co. v. Trust Co. of North America, and Morgan's Co. v. Texas Central R. Co., I have already noticed. The third, Park v. Railroad Co. (C. C.) 70 Fed. 641, is entirely in line with the other two, as shown by the following extract from the opinion, at page 642:
“Having acquired jurisdiction of the property, and having appointed receivers with the express consent of the defendant railroad, the court does not lose jurisdiction when other persons interested therein come in, and are made parties, even though some of them be citizens of the same state with those whose interests in the same property are adverse to the intervenors; for, when property is in the actual possession of a federal circuit court, this draws to it the right to decide upon conflicting claims as to its ultimate possession and control.”
In Osborne & Co. v. Barge (C. C.) 30 Fed. 805, the decision was rested on the ground that, inasmuch as the alleged ownership of the intervenor went to the validity of the mortgage sought to be foreclosed, therefore the cross-bill was ancillary to the original suit, as appears from the second paragraph of the syllabus, which is as follows:
"Where a suit to foreclose a chattel mortgage is properly cognizable in a court of equity, a party who claims to be the owner of a part of the property mortgaged may intervene in the suit, although he would have a remedy by action at law, and in such case the court will have jurisdiction of the proceeding in his behalf as ancillary to the original suit."
While it does not appear that the mortgaged property had been sequestered, yet the court cites in support of its ruling Freeman v. Howe, Krippendorf v. Hyde, and Phelps v. Oaks. The first of these three cases lends little support to the decision, and I presume that it was rested upon a real or supposed analogy to the last two cases, in each of which the court had actual possession of the property. If the decision cannot be sustained on this theory, then it is in conflict with Shields v. Barrow, and cannot be accepted as an authority here. Mercantile Trust Co. v. A. & P. R. R. Co. (C. C.) 70 Fed. 518, is clearly in line with Krippendorf v. Hyde, supra, and Morgan's Co. v. Texas Central Ry. Co., supra. Indeed, the latter case is cited and quoted from in support of the court's ruling.
In order to avoid any mistake about the matter, the learned jurist who delivered the opinion, Judge Ross, carefully reiterates four or five times, as the ground of his decision, the court's possession of the mortgaged property, as appears from the following quotation:
“All of the property covered by both mortgages that is situated within this judicial district having been taken by the court into its possession by means of receivers, for the benefit of all parties concerned in it, in accordance with their respective rights, I am unable to see any valid reason why every right sought to be enforced by the United States Trust Company by the bill it seeks to bring may not be set up and enforced in the suit brought by the Mercantile Trust Company, to which it is already a party. Having the actual possession of all of the property of the Atlantic & Pacific Railroad Company situated within this judicial district that is covered by the first mortgage to the United States Trust Company, as well as by the second mortgage to the
Mercantile Trust Company, there is surely no good reason why the court may not, in the one suit, ascertain and determine how much is due on the first mortgage and how much is due on the second, and decree a sale of the mortgaged property to pay, after discharging the necessary and proper expenses of the receivership, first, the amount due upon the first mortgage, and, nest, that due upon the second mortgage, with the proper judgment or judgments over against the mortgagor for any deficiency that may be found to exist. The fact that three foreign corporations, namely, the Atchison, Topeka & Santa Fé Railroad Company, the St. Louis & San Francisco Railway Company, and the Boston Safe-Deposit & Trust Company, are made parties defendant to the proposed bill, and are not parties to the suit brought by the Mercantile Trust Company, is unimportant, first, because by the bill the United States Trust Company asks leave to bring, no relief is asked against those corporations; and, second, if there was, since the rights of the United States Trust Company grow out of contracts with respect to the subject-matter already in the possession and control of the court, that possession draws to the court having it the right to decide upon every conflicting claim to its ultimate disposition and possession that may be held or asserted by either of those corporations. Morgan's L. & T. R. & S. S. Co. v. Texas Cent. Ry. Co., 137 U. S. 201, 11 Sup. Ct. 61, 34 L. Ed. 625, and cases there cited. They can be brought into the suit of the Mercantile Trust Company just as easily as they can be made parties to the suit the United States Trust Company seeks to bring. The court itself may, and always would, order them brought in if they should at any time, pending the suit, appear to be necessary parties to its proper determination. Nor is 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."
The jurisdiction of a court, as I have already shown, growing out of its possession of the property in litigation to determine all conflicting claims thereto, necessarily carries with it the right to bring in every party whose presence is necessary to a full disposition of the case, without regard to citizenship, and Judge Ross was unquestionably correct, when, referring to the bringing in of new parties, under the peculiar facts before him, he said: “The court may, and always would, order them brought in if they should at any time pending the suit appear to be necessary parties to its proper determination.”
I am fully satisfied that the cross-bill was improperly filed and ought not to stand, for the reason that federal jurisdiction would be thereby ousted. While this conclusion is, of itself, sufficient to dispose of the pending hearing, still, since the other two grounds of the demurrer and motion have been largely discussed in the briefs of both parties, and each is a separate and independent objection, which, if good, calls for dismissal of the cross-bill, I will present briefly the views I entertain of both grounds.
Second. Assuming, then, for the purposes of the two objections yet to be considered, and contrary to what I have just held, that the intervention of the Northern Counties Investment Trust, Limited, did not oust federal jurisdiction, and that the intervenor is properly before the court, I come next to the question whether or not the foreclosure of a junior mortgage is the proper subject of a cross-bill in a suit brought for the foreclosure of a prior mortgage. The rule, established by an overwhelming current of authorities, is that the grounds for the affirmative relief sought in a cross-bill must grow out of the transaction on which the original complainant sues.
A cross-bill is defined as follows:
“The cross-bill is a bill brought by a defendant in a suit against the complainant in the same suit, or against the other defendants in the same suit, or against both, touching the matters in question in the original bill." 1 Beach on Modern Equity Practice, 8 421.
The same author says:
"A cross-bill will be dismissed with costs, where it seeks no discovery, and makes no defense which was not equally available by way of answer to the original bill, or by amendments to the answer.” 1 Beach on Modern Equity Practice, $ 422.
Another text-writer defines a cross-bill as follows:
"A cross-bill is a bill filed by a defendant in a suit in equity against one or more of the other parties, in order to obtain, either discovery of facts in aid of his defense, or complete relief to all parties as to the matters charged in the original bill." 1 Foster's Fed. Prac. & 169.
The expositions of cross-bill given by the courts are in line with the definitions above quoted.
The Supreme Court has 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. It is brought either to obtain a discovery of facts, in aid of the defense to the original bill, or to obtain full and complete relief to all parties, as to the matters charged in the original bill. It should not introduce new and distinct matters not embraced in the original bill, as they cannot be properly examined in that suit, but constitute the subject-matter of an original, independent suit. The cross-bill is auxiliary to the proceeding in the original suit, and a dependency upon it." Ayres v. Carver, 58 U. S. 591-594, 15 L. Ed. 179.
Again, it has been said:
"The office of a cross-bill is either to warrant the grant of affirmative relief to the defendant in the original suit, to obtain a discovery in aid of the defense in that suit, to enable the defendant to interpose a more complete defense than that which he could present by answer, or to obtain full relief to all parties, and a complete determination of all controversies which arise out of the matters charged in the original bill. The fact that a cross-bill fairly tends to accomplish either of these purposes is generally a sufficient ground for its interposition. It must seek equitable relief, but, subject to this qualification, a complainant who has brought a defendant into a court of equity in order to subject him to an adjudication of his rights in a certain subjectmatter cannot be heard to say that there is no equity in a cross-bill which seeks an adjudication of all the rights of the parties to the original suit in the same subject-matter. The issues raised by the cross-bill must be so clearly connected with the cause of action in the original suit that the cross-sult is a mere auxiliary or dependency upon the original suit, but, subject to this qualification, new facts and new issues may properly be presented by a crossbill.” Springfield Milling Co. v. Barnard & Leas Mfg. Co., 81 Fed. 261, 26 C. C. A. 389.
To the same effect is the following extract:
"A cross-bill,' says Mr. Justice Story (Eq. Plead. § 389), 'ex vi terminorum, implies a bill 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. A bill of this kind is usually brought, either (1) to obtain a necessary discovery of facts in aid of the defense to the original bill, or (2) to obtain full relief to all parties, touching the matters of the original bill. And, as illustrative of cross-bills for relief, he says ($ 392): 'It also frequently happens, and particularly, if